Businessmirror january 05, 2018 by BusinessMirror

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Friday, January 5, 2018 Vol. 13 No. 86

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he implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) should not empty the pockets of 6.8 million Filipino workers as every peso increase in their expenses due to price hikes would be offset by the P2.40 they would save from their personal-income tax (PIT) exemption on the average.

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TRAIN means ₧2.40 gain for every ₧1 loss for workers By Cai U. Ordinario

2016 ejap journalism awards

Live happy in 2018 Dr. Jesus Lim Arranza

Make Sense

₧137B vs ₧57B

t’s the first week of the year. And, as a tradition in the Christian world, let me greet everyone a happy and prosperous New Year.

The cumulative savings of some 6.8 million workers from their PIT exemption and the total additional cost they will incur due to price hikes resulting from TRAIN This is based on the computation given by University of Asia and the Pacific (UA&P) economist Victor Abola. In the first Economic briefing for

The year 2018 is Year of the Earth Dog. The year, according to the Chinese calendar, will be influenced with canine traits like kind, faithful, intelligent, warm and full energy. In sum, the year will not only be full of love, it will also foster economic prosperity.

Continued on A2

Continued on A10

Power rates to seesaw in Jan, Feb–Meralco By Lenie Lectura @llectura

anila Electric Co. (Meralco) customers can expect further reduction in power rates this month, mainly due to the decrease in generation charge. But they should also brace for hikes in their electricity bills starting in February due to the impact of the Tax Reform for Acceleration and Inclusion (TRAIN) Act on the power sector, a company official said on Thursday. Meralco, according to Utility Economics head Lawrence Fernandez, said there was a reduction in capacity-fees from power plants under power supply agreements (PSAs), due to reconciliation of outage allowances for the calendar year. Hence, it is “highly” likely, said the Meralco official, that there is a further reduction in the January 2018 generation charge, following the reduction last December.

GRAVY TRAIN A woman passes by an aisle at a major grocery store in Makati City. According to the government, authorities will monitor the prices of groceries to ensure manufacturers and businesses are not taking advantage of the implementation of Tax Reform for Acceleration and Inclusion Act to boost prices of commodities. ALYSA SALEN

Duterte says no to no-el, term extension By Elijah Felice E. Rosales

@alyasjah

tep aside, Senate President and House Speaker. President Duterte is not only opposed to the idea of no-elections in 2019, but is also in objection to the proposal to extend his term in office, as he even intends to cut short his six-year service, according to his spokesman. The President is resistant to the proposals of Senate President Aquilino L. Pimentel III and House Speaker Pantaleon D. Alvarez in

extending his term as Chief Executive and suspending the elections in 2019, respectively. Both proposals, according to Pimentel and Alvarez, will be borne out of the country’s looming transition to a federal type of government. However, this does not fancy Duterte. In a news briefing on Thursday, Presidential Spokesman Harr y L. Roque Jr. said his principal is willing to cut short his term if Congress will be able to craft an anticorruptionoriented Constitution.

PESO exchange rates n US 49.8570

“On the possible term extension, he has said it before: If we can amend the Constitution and provide for provisions that would minimize graft and corruption, he would even resign prior to the end of his term of office in 2022. So, the President is considering shortening his term, but has definitely rejected even the idea of prolonging his term,” Roque said. Pimentel on Wednesday said the President’s term may be extended if necessary during the country’s Continued on A2

₧4.6045 The generation charge per kilowatt-hour last December, down from P4.9080 per kWh last November

“ We expec t the overall rate to still go down this January, mainly due to significantly lower capacity fees from several plants under PSAs. This follows the annual reconciliation of outage allowance of the plants,” Fernandez said in a text message. In December 2017 electricity rates went down to P9.2487 per kilowatthour (kWh) from the previous month’s P9.6272 per kWh, mainly on account of a P0.3035-per-kWh decrease in generation charge. The generation charge decreased from P4.9080 per kWh last November

to P4.6045 per kWh last December, primarily due to the peso’s appreciation and lower Wholesale Electricity Spot Market (WESM) charges. The peso-dollar exchange rate affects around 97 percent of Independent Power Producers (IPPs) and 60 percent of PSA charges. IPPs and PSAs each provided 44 percent of Meralco’s total requirement. The share of WESM purchases to Meralco’s total requirement last month was 12 percent. While the rates are expected to go down this month, the same official warned that the TRAIN law is expected to affect power rates through higher coal and oil excises taxes and through the reimposition of value-added tax (VAT) on the National Grid Corporation of the Philippines’s (NGCP) wheeling charges. The Meralco official said the effect of excise taxes may be felt in the February bills to consumers. See “power rates,” A12

Researchers discover two major flaws in world’s microprocessors

omputer-security experts have discovered two major security flaws in the microprocessors inside nearly all of the world’s computers. The two problems, called Meltdown and Spectre, could allow hackers to steal the entire memory contents of computers, including mobile devices, personal computers and servers running in socalled cloud computer networks. There is no easy fix for Spectre, which could require redesigning the processors, according to researchers. As for Meltdown, the software patch needed to fix the

issue could slow down computers by as much as 30 percent—an ugly situation for people used to fast downloads from their favorite online services. “What actually happens with these flaws is different, and what you do about them is different,” said Paul Kocher, a researcher who was an integral member of a team of researchers at big tech companies like Google and Rambus and in academia that discovered the flaws. Meltdown is a particular problem for the cloud-computing services run by the likes of Amazon,

Google and Microsoft. By Wednesday evening, Google and Microsoft said they had updated their systems to deal with the flaw. Amazon told customers of its Amazon Web Services (AWS) cloud service that the vulnerability “has existed for more than 20 years in modern processor architectures.” It said that it had already protected nearly all instances of AWS and that customers must update their own software running atop the service, as well. To take advantage of Meltdown, hackers could rent space on a cloud Continued on A12

n japan 0.4434 n UK 67.3618 n HK 6.3783 n CHINA 7.6697 n singapore 37.5203 n australia 39.0879 n EU 59.8982 n SAUDI arabia 13.2949

Source: BSP (4 January 2018 )

A2 Friday, January 5, 2018

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TRAIN means P2.40 gain for every P1 loss for workers Continued from A1

2018 of the First Metro Investment Corp.-University of Asia and the Pacific (FMIC-UA&P) Capital Market Research, Abola said higher commodity prices due to the TRAIN will increase inflation by 0.6 percentage point. This placed the think tank ’s inf lation estimate at 3.5 percent to 4 percent for the whole of 2018. However, the decrease in the PIT will return P137 billion to households, increasing their purchasing power. “According to my calculations, the additional amount needed by consumers is about P57 billion, only P57 billion so in terms of total, the tax relief is bigger than the increase in prices,” Abola told the BusinessMirror on the sidelines of the briefing on Thursday. However, he said some households may spend more for certain commodities and see lower gains from their PIT exemption. “That’s why [for] the lower in-

Marina. . .

Continued from A12

the United States with his suspected mistress and, again, favorite DDB employees. Like Amaro, Santiago’s case also reached Malacañang through a letter reportedly written by the agency’s employees. The President has repeatedly warned public officials to stray from anomalous activities, including going on lavish trips abroad, and said he does not tolerate even the slightest whiff of corruption within his circle of men. On the other hand, the Alliance of Marina Employees (AME) denied it

comes, there is a need to provide subsidy so the [cash] transfers are quite important in order to really mitigate the probable price increase in basic necessities,” Abola said. The subsidies, Abola said, are needed to shield the lowest 40 percent of households from the higher value-added tax on fuel and the removal of a number of personal tax exemptions. He also said the government’s plan to extend subsidies to jeepney drivers will help them cope with the hike in the price of fuel products. This will prevent jeepney fares from going up, which could make goods and services more expensive. The FMIC-UA&P also said there is room for the Bangko Sentral ng Pilipinas (BSP) to adjust interest rates to keep inflation in check. Nonetheless, inflation will remain within the BSP’s target of 2 percent to 4 percent this year. “If you look at it, the lowering of the tax will be sufficient to cover the additional cost of higher inflation. I think that’s the way it’s been had a hand in the complaint against Amaro. In a resolution on Wednesday, the AME said it is “vehemently, adamantly and strongly denying the existence of the alleged letter-complaint” sent to Malacañang. “[The] AME executive directors and board of directors collectively agreed to come up with this official pronouncement against the fake news that the Alliance of Marina Employees filed the letter-complaint to once and for all clarify the sensitive matter, which will cause damage to the integrity and credibility of the association,” the resolution read. The letter, however, was apparently not enough to save Amaro from Duterte’s crackdown on junketeers.

structured, of course we’ll see how it actually works out,” Abola said. FMIC Vice President Cristina S. Ulang said private firms will also be affected by the TRAIN albeit minimally. The most affected will be mining, particularly Semirara Mining, due to higher coal taxes. Under the TRAIN, the coal tax will increase to P50 per metric ton (MT) on the first year, from the current P10 per MT, which has been in effect since the 1970s. This will increase to P100 per MT in 2019, and P150 per MT in 2020. However, Ulang said higher international coal prices, currently pegged at $8 per MT and more shipments, Semirara Mining would be able to recoup the increase in their cost due to the higher coal tax. “If you’re a miner, this is something you cannot pass on to your clients in a very competitive market. So we are seeing narrowing margins for the coal miners, specifically Semirara, which is the biggest producer in the country,” Ulang said.

“But we think they will be compensated in terms of shipments because they have huge deposits in Semirara Island and they are planning to ramp up shipments to around 62 million tons this year,” she added. Other sectors, Ulang said, that will be affected by the TRAIN include power distributors and generators. However, the firms can pass on the cost of higher coal tax to their consumers, which is included in their contract. In terms of sugar taxes, Ulang said only companies producing syrups and juices will be affected by the higher taxes on sugar-sweetened beverages. This will add P6 to P12 per liter, something that can be absorbed by the market due to the personal-income tax cuts.

‘Effective immediately’

Retailers on Thursday insisted that price increases should be implemented immediately as TRAIN has taken effect on January 1. They also noted that their stock is already thin following the holidays, when

consumers usually buy more items. In reaction to the Department of Trade and Industry’s (DTI) statement that the prices of basic goods and commodities should hold for the next two to three weeks, the Philippine Amalgamated Supermarkets Association Inc. (Pagasa) said this is not the case for all groceries. “Supermarkets stock up before Christmas, not during or immediately after. Why? Because most supermarkets do their physical inventory at the start of the year. They make sure stock levels are lean and convenient to count. This coincides with the effective date for excise tax on concerned goods,” Pagasa President Steven Cua said in a text message. Trade Secretary Ramon M. Lopez said on Thursday that the effect of TRAIN would only be felt in two to three weeks. He also warned retailers that they will be penalized for “preemptive price increases.” “From now until next week, there shouldn’t be an increase [in prices]

yet. We have seven monitoring teams in the National Capital Region, and 15 in others. Consumers shouldn’t panic, and should report any retailers that are taking advantage of the law,” Lopez said. Aside from the moratorium on price increases, the DTI chief said the overall impact of the tax reform on fuel, as a percentage of total production cost, is less than a percent. The DTI noted that if the suggested retail price (SRP) of a can of sardines is P13.45, it should go up by only P0.04 due to the increase in excise tax. The P7.30 SRP of instant noodles should only go up by P0.03. “We expect all the basic necessities and prime commodities to increase only next month. But this doesn’t mean that the impact of the TRAIN is a ticket for all retailers to increase as they want; as we showed the impact is minimal, and the increase should be within the SRP given,” DTI Consumer Protection Group Undersecretary Ruth B. Castelo said. Catherine N. Pillas

Duterte says no to no-el, term extension Continued from A1

shift to federalism. He added that, should Congress approve the transition to a federal type of government in 2019, the next three years then will become transitory period. He noted, though, it is still Duterte’s choice if he would like to cling on to Malacañang past 2022. Under Article 7, Section 4 of the 1987 Constitution, the President and the Vice President are disal-

lowed from extending their term past their six-year mandate. “The President and the Vice President shall be elected by direct vote of the people for a term of six years, which shall begin at noon on the 30th day of June next following the day of the election, and shall end at noon of the same date six years thereafter. The President shall not be eligible for any reelection,” the Constitution read. Roque a lso d ismissed t he

no-elections scenario in 2019 floated by Alvarez. He said the President is opposed to this, and will not allow the Constitution to be stepped on, not even by political allies. “ The President is the chief implementor of the Constitution and the laws of the land. Unless and until the Constitution is amended and ratified by the people, elections will push through in 2019,” Roque said. “ W h at t he P resident pro -

mises is that, if elections push through, we will have credible and honest elections.” Steering the country to federalism is one of the Duterte administration’s major policy reforms in a bid to decentralize Manila and distribute power and wealth to provinces. On the other hand, critics of federalism warned the proposed type of government will only perpetuate political dynasties, and it might lead rural areas to further poverty.

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Editor: Vittorio V. Vitug • Friday, January 5, 2018 A3

‘No Palace term extension for Duterte, but 2019 Senate polls may be scrapped’

By Jovee Marie N. dela Cruz

@joveemarie

ouse leaders on Thursday dismissed the possible extension of term of President Duterte, but admitted that the 2019 senatorial polls could be scrapped, and senators, whose terms are expiring that year, could be allowed to stay in their post on a holdover capacity during the transition period to the federal form of government, or up to 2022. House Speaker Pantaleon D. Alvarez said President Duterte has categorically said he would not stay in his post for a minute longer after his term expires. “The President is very clear when he said that his term will end on or before 2022. He is also willing to resign, if needed, to give way for the implementation of the new [federal] constitution,” Alvarez added. Alvarez also said he is convinced the President would honor his word, “having known Duterte personally for so long.” He also clarified that the no-election scenario he mentioned concerns the senatorial elections in 2019. “If the senatorial elections are held in 2019 as originally scheduled, the term of the winning candidates would

extend up to 2025,” Alvarez added. But, if a new constitution for a federal form of government is ratified in a plebiscite it would change, the entire structure of the government might pose legal complications with incumbent senators whose terms would last up to 2025. Among the senators who are up for reelection in 2019 include Senate President Aquilino Q. Pimentel III, Sens. Juan Edgardo M. Angara, Cynthia A. Villar, Joseph Victor G. Ejercito, Paolo Benigno A. Aquino IV, Nancy S. Binay and Grace Poe. On the other hand, the second term of Sens. Francis G. Escudero, Gregorio B. Honasan, Loren B. Legarda, and Antonio F. Trillanes IV, will expire on June 20, 2019, and being such make them ineligible for reelection.

The term of the remaining senators, who were elected in the 2016 national elections, will last until 2022. Also, Alvarez said the 2019 elections for officials of local government units and members of the lower chamber could still push through since they all had three-year term, which would expire on 2022.

‘Rubber stamp’

Meanwhile, Rep. Edcel S. Lagman of the First District of Albay said supermajority lawmakers will push for Constituent Assembly (Con-ass) that will amend the 1987 Constitution into a “virtual rubber stamp” of Duterte. “With the projected Constituent Assembly principally composed of Duterte’s dyed in the wool allies, what the President wants as amendments or revision will be delivered with alacrity and minimal debate,” Lagman said. “This imprudent fast-tracking happened in the two extensions of martial law in Mindanao and the approval of the reimposition of the death penalty by the House of Representatives,” he added. Since amending the charter affects the present and future generations, the lawmaker said the proposed amendments for the people’s ratification must be approved “only after serious and deliberate consideration, even as the assembly authorized to propose the amendments must not be dominated by partisans of the President.” He said a constitutional convention must be called where the delegates are elected by the sovereign people to singularly and precisely propose amendments to or revision

Fortune gazer

An elderly fortune-teller in Quiapo, Manila, uses tarot cards and a board for a glimpse of the future of an attentive customer. Superstitious and old-fashioned as it may be, some Filipinos still consult with fortune-tellers on matters they consider peculiarly important in their lives, especially at the start of every year. Nonnie Reyes

of the 1987 Constitution. “We must not count centavos and pesos in undertaking a Charter change by asserting that a Constituent Assembly is less expensive than holding a constitutional convention. It is not a question of expense, but a matter of independence and integrity,” he added. Meanwhile, the Bayan Muna partylist group said the proposed charter change and Con-ass will only lead to centralized power for Duterte.

This was the warning issued by Bayan Muna and Makabayan Chairman Neri Colmenares after the leadership of both Houses of Congress admitted that the terms of members of Congress may be extended and elections may be canceled in 2019. “All roads lead to centralized powers for President Duterte, whether its martial law, revolutionary government or Charter change. Worse, these roads may get the support of many politi-

cians as a result of the cancellation of the 2019 elections and the wholesale extension of terms of all government officials from the senators down to councilors,” Colmenares said. “If the mode for amending the Constitution is the Constituent Assembly, it’s a foregone conclusion that President Duterte’s supermajority in Congress can craft the new Constitution according to their will,” the lawmaker added.

Economy

A4 Friday, January 5, 2018 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

Draft policy on FiT for 2 RE tech to be signed soon–DOE

By Lenie Lectura

@llectura

N official of the Department of Energy (DOE) said a draft policy endorsing the continuation of the feed-in tariff (FiT) for run-of-river hydropower and biomass could be signed soon.

Energy Undersecretary Felix William B. Fuentebella said there is a “chance” that the FiT for the two renewable-energy (RE) technologies may continue until the original 250megawatt (MW) installation target has been met, possibly in three years. “It has not yet been signed but, yes, we are hopeful. There is a chance. We’re looking at three years or until the capacity is filled up for run-ofriver hydropower and biomass. There is already a draft. Once it’s signed, I will show it,” he said. Subscription to the FiT installation target for run-of-river hydropower and biomass expired at the end of 2017. It was also last year when Energy Secretary Alfonso G. Cusi said he is not keen on extending this policy because “it’s difficult for us to be giving subsidy or FiT, espe-

445 The total number of hydropower projects that have been awarded with service contracts as of end-June 2017. To date, only four run-of-river hydropower facilities—with a capacity of 26.6 megawatt— have reached construction, successful commissioning and have been endorsed under the FiT system.

cially when we want to bring down our energy tariff.” T he Philhydro A ssociation Inc. had said last year that its members were advised by the DOE to look for offtakers because the FiT was set to expire by December 31, 2017, implying the FIT as a mechanism will no longer be available. The group said this will put the projects of all run-of-river hydro developers in peril as the financial feasibility and the investment decisions were based on the assumption that the FiT mechanism is available until the installation targets have been fully subscribed. Based on Philhydro’s computation on the impact of all the hydro projects coming online by 2020 to the FiT allowance at the current digressed rate of P5.87 per kilowatt hour (kWh), allowing an extension of the hydro FiT and allowing hydropower developers to complete the 250-MW installation target will only have a P0.01034 per kWh impact to the FiT-All by 2020. The DOE commenced the awarding of hydropower-service contracts in 2009. As of end-June 2017, 445 hydropower projects have been awarded service contracts. To date, only four run-of-river hydropower facilities, with a capacity of 26.6 MW, have reached construction, successful commissioning and have been

endorsed under the FiT system. “Despite over 787 MW of potential hydropower capacity, only 26.6 MW have achieved commissioning,” Philhydro said. Based on its own study, the main cause for delay has been the difficulty in securing permits from various national and local government agencies, in particular, the water permit and FPIC with the indigenous people. “The most of the three years allotted for the FiT installation target are already consumed by the permitting process alone,” Philhydro said. Given the current status of the projects, time to complete the permitting requirements and construction period, Philhydro foresaw that a total of seven projects with potential capacity of 117.90 MW would be on stream by end 2017. In 2018 a total of projects with a capacity of 9.7 MW would be completed. A significant number of hydropower projects, totaling eight projects, with potential capacity of 58.3 MW, would be completed by 2019; and another seven projects, with potential capacity of 33.2 MW, by 2020. Counting in the four projects totaling 26.6 MW to date already with FiT-Certificate of Endorsement, then the 250-MW installation target will be fully subscribed in 2020, according to Philhydro.

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House committee endorses plenary approval of Evoss By Jovee Marie N. dela Cruz @joveemarie

he House Committee on Energy has endorsed for plenary approval a measure that seeks to streamline the process of securing permits for powergeneration projects. Under the unnumbered substitute bill, the government will create a one-stop shop through an Energy Virtual One-Stop-Shop (Evoss). This will ensure consumer access to quality, reliable and secure electrical power at reasonable cost through measures that guarantee supply meeting demand in a timely manner. The bill also helps power-project proponents by improving the ease of doing business and bringing down steep transaction costs associated with the numerous requisites for such projects. It also seeks to improve the transparency and accountability in the process of approving power projects as a means to deliver efficient and effective service to the public. By eliminating duplication, redundancy and overlapping mandates in the submission and processing of requirements, the bill would help ensure timely completion of energy projects. To achieve its goal, the bill establishes the Evoss under the supervision of the Department of Energy (DOE). The measure said the Evoss is an online system that allows single submission and synchronous processing

or required data and information. It said the portal also provides a single decision-making avenue for actions on applications for permits and certifications. “Evoss recognizes the legal effect and validity of electronic documents submitted in relation to applications for permits and certificates for power generation, transmission, subtransmission or distribution projects,” it added. For convenience of project proponents, the bill said it uses an online payment system for applications and provides a secure and accessible paperless processing system. Among its advantages include a unified permitting process, uniform templates for electronic documentary requirements and simplified manner of compliance with mandated processing time, as well as in updating and monitoring of electronic documentary requirements. Under the bill, an Evoss Coordinating Council shall be created with the energy secretary as chairman and the information and communications technology secretary as vice chairman. Members will include the secretaries of the departments of Environment and Natural Resources, Local Government and Trade and Industry; the Energy Regulatory Commission chairman; National Electrification Administration administrator; Securities and Exchange Commission and National Commission on Indigenous Peoples.

Reverse exodus gathers flocks of departing passengers at Naia By Recto Mercene @rectomercene

all it reverse exodus. After the arrival in the country of millions of overseas Filipino workers (OFWs), balikbayan and tourists during the “ber” months to spend the Christmas holidays here, it is not time to go back to work. Since Wednesday, January 3, thousands of departing passengers flocked the premier airport as early as 4 a.m., creating long queues of passengers at the airport entrances. There’s an estimated 2 million of these temporary visitors who come to the Philippines to spend the longest Holiday season. OFWs were found to be the most numerous, followed by balikbayan and foreign tourists, who lined up at the gates while undergoing body checks. This time, however, immigration booths are properly manned, allowing for a smooth flow of passenger traffic.

Manila International Airport Authority General Manager Ed Monreal instructed his men to prepare for the expected buildup of departing passengers and vehicular traffic. “Make sure passengers are properly assisted. I want full manning of posts inside the terminals,” he told his supervisors. Terminal managers, actions officers and help desks are told to station themselves in every terminal to attend to all kinds of complaints, if there are any, Monreal added. He further directed the four terminal managers of the Ninoy Aquino International Airport (Naia) to coordinate with airline operators and remind them to have their people within reach to attend to passenger concerns. The airport chief said he has specific instruction to the managers of Terminals 2, 3 and 4 to coordinate with domestic carriers regarding possible cancellations in the coming days due to bad weather of unforeseen events. At the same time, Monreal also

directed his security managers to address the traffic along major thoroughfares leading to the terminal complex. He told them to coordinate with local government units concerned and the Metro Manila Development Authority to reduce inconvenience to motorists and airline passengers who have flights to catch. “I want full visibility for all policemen, especially in critical areas in the complex,” he told the chief of the Airport Police Department, retired Brig. Gen. Romeo L. Labador. “Foot patrol at public areas should be round the clock, and vigilance of security personnel must be ensured. Parking areas should be closely monitored for illegal porters and enterprising individuals posing as airport workers offering help to arriving passengers.” Monreal also ordered continued vigilance among personnel at x-ray areas and to intensify collaboration with the intelligence community to thwart any terroristic attempt or to disturb airport operations.

PSA data gauge labor-agency hiring in PHL By Cai U. Ordinario

@cuo_bm

ore than half, or 54.7 percent, of firms employ workers through agencies, according to the Philippine Statistics Authority (PSA). Based on the 2015/2016 Integrated Survey on Labor and Employment, around 17,094 firms of the 31,277 nationwide make use of service agreements and do not include these workers in their establishment’s total employment. “Workers employed by contractors to perform or complete a job, work or service pursuant to a service agreement within the premises of the establishment,” the PSA said. Agency-hired workers refer to workers hired through contractors. They are excluded from firm’s total employment. PSA data showed around 691,341 employees, or 13.6 percent of the 5.076 million employed workers in June 2016, were agency workers. In terms of industries, the biggest number of agency-hired workers at 311,722, or 45.1 percent of total agency-hired workers reported in 2016, were employed in manufacturing.

“This means that roughly two in every five agencyhired workers were engaged in manufacturing activities,” the PSA said. The wholesale and retail-trade industry only ranked a distant second with 93,867, or 13.6 percent of total agency-hired workers. Many agency-hired workers were employed in transportation and storage at 5.6 percent, or 38,511 firms; accommodation and food service activities, 5.5 percent, or 38,148 firms; and administrative and support-services activities, 4.6 percent, or 32,027 firms. However, the presence of agency-hired workers were less visible in the repair of computers and personal and household goods, and other personal service activities with only 1,078 firms employing agency workers. Other industries with low numbers of agency workers were water supply, sewerage, waste management and remediation activities at 1,843 firms and the arts, entertainment and recreation at 7,171 firms. The PSA said that the total share of agency workers employed in these industries was only less than one percent.

Pricey drink A soft-drink warehouse worker in Manila arranges cases of different brands of soda and alcoholic drinks. Beverages with

caloric and noncaloric sweeteners are expected to be taxed with an additional P6 per liter, while those using high-fructose corn syrup, a cheap sugar substitute, will be charged additional P12 per liter. NONIE REYES

DOF sees stronger PHL-Japan economic relationship in 2018 By Rea Cu

@ReaCuBM

he economic ties between the Philippines and Japan is expected to further strengthen in 2018 with a number of investment pledges made by Japan to the Philippines during the visit of President Duterte in Tokyo last year, according to the Department of Finance (DOF). During the visit of the President in Japan last year, the government had witnessed the signing of 18 letters of intent by 20 Japanese companies to invest in the Philippines, which represent about $6 billion worth of new investments for the country. These include deals between Philippine and Japanese firms in the areas of manufacturing, shipbuilding, iron and steel, agribusiness, power, renewable energy, transportation, infrastructure, mineral processing, retailing, information and communication technology and

business-process management. The DOF added that bilateral relations between the Philippines and Japan, particularly in the field of economic cooperation, have emerged stronger amid increased efforts by the Duterte administration in 2017 to rebalance its foreign policy toward Asia. “I would not say the foreign policy is changing, I think it’s just being recalibrated so that we are more open to other markets,” Dominguez said. Last year, after attending the 31st Asean Summit and its Related Meetings in Manila, Prime Minister Shinzo Abe stayed behind for an official visit to personally witness the signing of several agreements with the Philippines, most notable of which was the Exchange of Notes for the ¥104.5-billion loan, or about $929.1 million, to fund the first tranche of loan requirements for the construction of the Metro Manila Subway Project (Phase 1) of the

Department of Transportation. Manila and Tokyo also signed the Exchange of Notes for the ¥9.399-billion loan, or about $89 million, for the Arterial Road Bypass Project (Phase 3) of Department of Public Works and highways in Plaridel, Bulacan; and the ¥2.5 billion, or about $22.2-million grant, for the nonproject grant aid for the Economic and Social Development Programme, which will benefit the Philippine Coast Guard’s antiterrorism efforts and DPWH’s quick rehabilitation program for war-torn Marawi City. Japan has committed a total of $1.26 billion in grants and soft loans to the Philippines in 2017 and has committed to provide some ¥1 trillion, or about $8.8 billion, in official development assistance and investments to the Philippines under the Duterte administration, according to the DOF.

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Editor: Jennifer A. Ng • Friday, January 5, 2018

TRAIN to make meat products more expensive By Jasper Emmanuel Y. Arcalas

@jearcalas

onsumers should brace for a possible hike in the prices of meat products as producers and traders would incur additional costs due to the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN).

Luke Sharrett/Bloomberg

Typhoon Vinta damage to agri hits ₧237.13M T

yphoon Vinta (international code name Tembin) destroyed P237.13 million worth of crops and livestock and affected 19,273 hectares of agricultural land, according to the latest data from the Department of Agriculture (DA). Field Programs Operational Planning Division Engr. Christopher V. Morales said that as of January 3, about 4,909 metric tons (MT) of crops in Regions 9, 11, 12 and 13 were damaged by the typhoon. Morales said the rice sector bore the brunt of Vinta as paddy destroyed by the typhoon accounted for 58.81 percent of production losses. Unmilled rice damaged Vinta was valued at P139.411 million based on the assessment of the DA regional field offices (RFOs). “[Rice] area affected is 15,880 hectares, or 5 percent of the total standing crop of 349,947 hectares, while volume loss amounts to 761 MT. The affected rice crops are mostly on their newly planted to seedling stages,” Morales said in

a memorandum addressed to Agriculture Secretary Emmanuel F. Piñol, a copy of which was given to reporters on Thursday. The latest assessment by the DA also showed that corn farmers lost P90.616 million, or 42.52 percent, of the total estimated production losses, according to Morales. Morales said high-value crops and livestock damaged by the typhoon amounted to P6.911 million and P129,700, respectively. “As for high-value crops [banana, rubber and pechay], there are no changes in the reported value of losses. It still amounts to P6.91 million, or 2.92 percent of the overall production losses, 1 hectare of area affected and 69 MT of volume losses,” he said. Morales added there was a recorded increase in the value of losses in livestock based on the report from Region 13. “Additional losses now include 10 heads of goat and one head of cow in Agusan del Norte,” he said. “In total, there are 142 heads of backyard chicken, 10 goats and

three heads of cow affected.” Morales also said the value of damages to agri-fisheries facilities reached P60,000. He said this figure could still increase as it is still up for validation. “It is expected that additional damages and losses will be reported as the concerned regional offices are conducting monitoring, assessment and field validation for Vinta. Regions 9 and 13 have already positioned their buffer stocks ready to be distributed to affected farmers after field validation,” he said. In a separate memorandum, Morales said the RFOs have not reported agricultural-production losses due to Tropical Storm Agaton (international code name Bolaven) as of January 3. “Based on the combined data of Regions 4-B, 6, 7, 8, 9, 11 and 13, which are the areas of influence by the path of Tropical Storm Agaton, the area of standing crops totals to 138,155 hectares for rice and 103,864 hectares for corn,” the memo read. Jasper Emmanuel Y. Arcalas

Arkansas panel stands by proposal to ban disputed herbicide

ITTLE ROCK, Arkansas— Arkansas regulators stood by their plan on Wednesday to ban an herbicide that farmers in several states say has drifted onto their crops and caused damage, despite a request from lawmakers to reconsider the restriction and a lawsuit by a maker of the weed killer. The state Plant Board again voted in favor of its proposal to ban the use of dicamba from April 16 through October 31. The proposed ban is scheduled to go before a legislative panel later this month. Lawmakers last December delayed considering the ban and asked the board to consider a new cutoff date based on scientific evidence and potentially a dividing line based on geography in the state. The 11-3 vote in favor of the ban on Wednesday came after the board’s pesticide committee discussed the reasons for the cutoff dates and recommended sticking with the proposal. Republican Sen. Bill Sample, who had called for delaying a vote on the ban last month, said he backed the ban after hearing the committee discuss the reasons behind it. “They did exactly what I asked them to and I will stick by them in

In this July 11, 2017, file photo, farmer Reed Storey shows the damage to one of his soybean plants in Marvell, Arkansas. Storey said half of his soybean crop has shown damage from dicamba, an herbicide that has drifted onto unprotected fields. Arkansas regulators are standing by their plan to ban the herbicide that farmers in several states say have drifted onto their crops and caused damage. AP Photo/Andrew DeMillo/File

their decision,” Sample said. Dicamba has been around for decades, but problems arose over the past couple of years as farmers began to use it on soybean and cotton fields where they planted new seeds engineered to be resistant to the herbicide. Because it can easily evaporate after being applied, the chemical sometimes settles on neighbor-

ing fields planted with seeds that are not resistant to dicamba. The state last year approved a temporary ban on the herbicide’s sale and use, and has received nearly 1,000 complaints about dicamba. Farmers have also complained about dicamba causing damage to their crops in other states, including Mississippi, Missouri, North Dakota and Tennessee. AP

Bureau of Animal Industry Assistant Director Simeon S. Amurao Jr. said the expected increase in fuel prices due to higher excise taxes on petroleum products would affect meat traders. “Definitely, [higher fuel prices] will add to the cost of our meat products,” Amurao told reporters in an interview on Thursday. “Imported meat products will also be affected, as trucking rates may also go up.” He added that logistical concerns and not the meat-supply situation would influence price movements this year. “This is more of a logistical concern because there is no expected hike in the raw ingredients used by the livestock sector.” The Department of Trade and Industry recently released a price matrix showing the possible impact of the excise tax on petroleum on the prices of some basic commodities. It showed that the prices of meat loaf (155 grams) and corned

beef (150 grams) could rise by P0.04 and P0.07, respectively. Meat Importers and Traders Association (Mita) President Jesus C. Cham said the hike in the excise tax of petroleum and the possible increase in electricity rates would translate to higher operating costs for meat importers and traders. “It is too early to determine the effect of TRAIN, but we are hearing the clamor to increase the transportation rates. That is a big factor for us. Plus, there is also an increase in power cost,” Cham told reporters in an interview. “Our business relies on cold storage facilities, and we do not know yet how much they would increase their rates,” he added. Cham added that meat importers would just pass on the additional costs to customers. “Well, for the majority of the meat importers, they will have to pass it

on because they make very, very little margins.” The Mita official said the increase in fuel prices would have a bigger impact on the local meat industry as producers use more fuel to transport their goods. “Freight cost is not affected by TRAIN, but domestic transport will be affected by it. The whole line of local meat production use gasoline to transport their feeds, food stuff to the farm and their produce to the city and markets,” Cham added. However, local poultry and hog producers told the BusinessMirror that they do not see TRAIN affecting their products, as their pricing is influenced by the supply situation in the domestic market. “No price increases because broilers are a commodity. Hence, its prices are determined by market conditions and not by cost-plus pricing,” United Broilers Raisers Association President Elias Jose Inciong told the BusinessMirror. “Broiler raisers are constrained to absorb the additional costs. It cannot be easily passed on to consumers,” Inciong added. Edwin G. Chen, President of Pork Producers Federation of the Philippines Inc., said the same scenario holds true for the local hog sector. “We will have to check if the impact [of the hike in the excise tax on diesel] will be big or not,” Chen told the BusinessMirror. “[Price increase] depends on the supply and demand of hogs.”

PHL sugar production reaches 516,165 MT–report P hilippine raw-sugar output has reached 516,165 metric tons (MT) as of December 17, 5.47 percent higher than the 489,407 MT recorded in the same period last year, according to data from the Sugar Regulatory Administration (SRA). The latest data on sugar production for crop year (CY) 2017-2018 showed that output in terms of 50-kilogram bags (LKg) have reached 10.323 million LKg, compared to last year’s 9.788 million LKg. Of the total sugar output during the period, 81.72 percent, or 421,821 MT, was produced by Negros-based millers. Under Sugar Order 1, the SRA projected that the country’s total sugar output in the current CY ending in August 31 would reach 2.38 million metric tons (MMT), 4.8 percent lower than the 2.5 MMT recorded in the previous CY. Sought for comment, SRA Administrator Herminigildo Serafica said he could not yet say whether the local sugar sector is on track to reach the projected output for the current crop year. “SRA is still collating the figures on crop estimate for Luzon, the Visayas and Mindanao,” Serafica said via SMS. The government-owned and -controlled corporation attached to the Department of Agriculture estimated local sugar demand at 2.17 MMT. Refined sugar production during the period expanded by 30.94 percent to 169,435.60 MT, from 129,395.75 MT recorded during the week ending December 18, 2017. Demand for refined sugar was pegged at 283,019.50 MT, 28.56 percent higher than last year’s 220,141.45 MT. The volume of sugarcane milled during the week ending December 17

reached 6.099 MMT, nearly 7 percent higher than the 5.707 MMT recorded last year. Milling recovery rate in the current CY was pegged at 1.74 LKg/ MT, 1.14 percent lower than the

previous year’s 1.76 LKg per MT. Composite mill-site price of sugar rached P1,202.83 per LKg, 20.65 percent lower than the P1,515.86 per LKg recorded in the same period last year. Jasper Emmanuel Y. Arcalas

The World BusinessMirror

Friday, January 5, 2018

Editor: Lyn Ressureccion | www.businessmirror.com.ph

China’s econ seen to stem slowdown anew

rom the strength of global trade to the resilience of domestic consumption, reasons to think China’s economy won’t slow as much as expected this year are gathering. The consensus among economists is that expansion in the world’s second-largest economy will slip to 6.5 percent in 2018 from 6.8 percent last year, according to Bloomberg surveys. Yet, as the latest data show that the official manufacturing gauge remains robust, and offshore shares had their best start to a year since 2009, there are voices predicting a better performance than that. JPMorgan Chase and Co. economists on Wednesday raised their 2018 growth forecast to 6.7 percent, from 6.5 percent, citing the “upbeat external outlook.” China International Capital Corp. and Shanghai Securities Co. project a second consecutive annual acceleration. The year 2017 started with economists projecting a deceleration, only to upgrade their outlook consistently through the year. For Morgan Stanley, higherthan-expected shantytown renovation targets, renewed pledges that liquidity won’t be too tight, and strong demand for China’s exports are among positive signs that have brightened expectations for this year. A gravity-def ying property market, buoyant consumption

a nd rapid prog ress i n h ig htech manufacturing facilities are among other factors economists have cited as areas that could help spur upside surprises this year. “Growth could accelerate in 2018, defying market expectations of gradual cooling,” said Frederic Neumann, cohead of Asian economics research at HSBC Holdings Plc. in Hong Kong. “More funds are being mobilized to advance the country’s advanced manufacturing capability. This could provide a lift to growth as capital expenditure soars.” “Risks remain significant. But the early signs for 2018 growth and reform are positive. In past years, China’s lowering of its growth target, from 8 percent to the current 6.5 percent, was viewed as a sign of weakness. In 2018 policy-makers could step back from the target from a position of strength,” said Tom Orlik and Fielding Chen of Bloomberg Economics. The following are among the areas f lagged by economists as hav ing the potentia l to help propel growth sur prises:

Consumption

Confidence in the global and

off faster than expected as China markets its high-speed rail industry and deep-sea exploration technology to other countries, according to Pauline Loong, managing director at research firm Asia-Analytica in Hong Kong.

Global tailwind

Men walk amid towering buildings in one of China’s cities. Bloomberg

domest ic econom ic out look s m ay he lp suppor t con su mer spend ing , sa id R ajiv Biswas, c h ief A si a-Pac i f ic econom ist at IHS Ma rk it in Singapore. Consumption spending already accounted for about two-thirds of the ex pansion in 2016 and 2017 and has become the economy’s most impor tant eng ine, he says. “A combination of strongerthan-expected export growth and buoyant domestic consumer demand could therefore generate an upside risk scenario for the Chinese economy,” he said.

Market boom

Financial markets may get a boost this year as investors with the equivalent of about $20 trillion of assets trapped in the countr y chase the best retur ns, said Derek Scissors, chief economist at the China Beige Book in Washington. “ The default is always property, but government discomfort with property prices, and belief the commodities rally is over, could push money toward stocks if benchmark interest rates are kept low, or bonds otherwise,” he said.

A n a ly st s don’t fore c a st a change to the rates, which set borrowing costs economy-wide, through early-2020, a Bloomberg survey showed.

Advanced manufacturing

The rapidly upgrading manufacturing base and Internet industry can now better aid growth, helping offset slowdowns in real estate and infrastructure investment, said Zhu Ning, deputy director of the National Institute of Financial Research at Tsinghua University in Beijing. That new economy may take

T he p o s s i bi l it y t h at g lob a l growth continues to accelerate this year would boost exports, pushing the economic expansion above 7 percent, according to Shane Oliver, the head of investment strategy at AMP Capital Investors Ltd. in Sydney. St ronger g row t h i n m ajor trade partners bodes well for exports, said Bloomberg economists Tom Orlik in Beijing and Fielding Chen in Hong Kong. They noted the consensus forecast for US and euro-area growth i n 2018 h a s r i sen i n recent months, and based on PMI readings for China’s major trade partners in December, momentum is at its strongest since 2010.

Pivotal property

So important a growth engine is real estate that it wouldn’t be a surprise if curbs on prices are loosened, both for mortgages and developers, said Christopher Balding, an associate professor at the HSBC School of Business at Peking University in Shenzhen. “C h i nese rea l est ate goes through these up and down cycles, and I won’t say we are at the trough yet,” he said. “But I wouldn’t be shocked by a surprise kick to real estate in 2018.” Bloomberg News

Najib election battle seen as key Tories don’t want 2nd Brexit vote, but everyone else does for Malaysia as economy booms

alaysia faces higher interest rates, currency risks and a contentious election battle in 2018 that will test Prime Minister Najib Razak’s grip on power. Malaysia has benefited from a global trade recovery and a pickup in domestic spending, with economic growth probably reaching 5.8 percent last year, according to the median estimate in a Bloomberg survey of economists. Growth is seen moderating to 5.3 percent in 2018. A booming economy and higher oil prices have boosted government coffers, allow ing Najib to funnel funds to voters burdened by rising living costs. He’s managed this without compromising on his fiscal targets, pledging to narrow the budget deficit to 2.8 percent of GDP this year, from an estimated 3 percent in 2017. The election, which must be held by August, is among the key issues investors are watching for this year, along with the following:

Interest eates

Malaysia’s central bank may be the first in Southeast Asia to raise borrowing costs this year, with some economists seeing a move as early as in three weeks. Bank Negara Malaysia signaled last November that it may be preparing to adjust policy given the strength of the economy, with Governor Muhammad Ibrahim clarifying later to say any adjustment would be a “normalization,” rather than a tightening. Inflation eased to 3.4 percent last November after reaching a five-month high last September, but that hasn’t changed economists’ expectations of rate hikes. “Our base case assumes Bank Negara Malaysia will raise the overnight policy rate in the first quarter of 2018, followed by an extended pause before hiking it again in 2019,” analysts at CIMB Group Holdings Bhd. wrote in a note.

The central bank may consider another hike in the second half of the year if inflation risks intensify, they said. CIMB is projecting an inflation rate of 2.9 percent this year, while the government is forecasting 2.5 percent to 3.5 percent.

General election

The timing of the general election may affect the outlook for interest rates, with some economists predicting the central bank will hold off until after the vote. Najib—who is yet to disclose the date for the vote—is in a strong position, having weathered the financial scandal around 1Malaysia Development Bhd., and benefiting from a rebounding economy and a political opposition in disarray. “Investors are likely to be a little bit cautious around the election,” said Rahul Bajoria, a senior economist at Barclays Plc. in Singapore. “Once we are through the election, then we’ll have a bit more clarity as to what kind of economic reforms, particularly on the fiscal side, can be undertaken in the course of the next two to three years.”

Currency strength

The ringgit ended 2017 as Asia’s se cond - b est p e r for me r w it h a 10. 9 - p e rce nt ap pre c i at ion against the US dollar, its first gain in five years. The Malaysian currency is projected to climb to 3.96 per dollar by the fourth quarter, according to the median estimate in a Bloomberg survey of economists. It traded as high as 4.0160 against the dollar on Wednesday in Kuala Lumpur. With the currency still cheap, and the central bank likely to raise interest rates, the ringgit may strengthen past 4 per dollar this year, said Sook Mei Leong, Southeast Asian head of global markets research at Bank of Tokyo-Mitsubishi UFJ. Bloomberg News

he overwhelming majority of members of Prime Minister Theresa May’s Conservative Party don’t want a second referendum on Britain’s European Union membership, according to a survey published on Thursday. For the other main United Kingdom parties, the opposite is true. Just 14 percent of Conservatives favor holding a second vote that might reverse Brexit, according to the YouGov survey of political party members for Queen Mary University of London.

By contrast, the proportions for the opposition Labour, Scottish National and Liberal Democrat parties are 78 percent, 87 percent and 91 percent, respectively. The data illustrate that May is beholden to her party members, which make up just a fraction of the electorate, which was split—52 percent to 48 percent—in favor of Brexit in the referendum in 2016. They also show how the country remains divided, with the Tories also poles apart from the three opposition groups when asked

whether they wanted to stay in the single market, and whether austerity has gone too far. “Britain’s party members are the lifeblood and the foot soldiers of our democracy,” said Tim Bale, professor of politics at Queen Mary. “That doesn’t necessarily mean they look like or think like their parties’ voters—or, indeed, look or think like each other. The Tory grassroots in particular are something of a breed apart from their Labour, Lib Dem [Liberal Democrat] and SNP [Scottish

Nationalist Party] counterparts.” A quarter of Tories favor staying in the EU’s single market, compared to 87 percent of Labour members, 95 percent of Scottish Nationalists and 96 percent of Liberal Democrats. On austerity, just 11 percent of Conservatives said the government’s cost-cutting measures have gone too far, compared with 98 percent of Labour members, 93 percent of Scottish Nationalists and three-quarters of Liberal Democrats. Bloomberg News

Huge swath of US hit by winter storm, bringing snow, cold

A R T FOR D, C on ne c t i cut—Residents across a huge swath of the US were hunkered down as a massive winter storm packing snow, ice and high winds, followed by possible record-breaking cold, moved up the Eastern Seaboard, with the worst conditions expected from the Carolinas to Maine. The massive storm expected on Thursday began two days ago in the Gulf of Mexico, first hitting the Florida panhandle. It has prompted thousands of canceled f lights, shuttered schools a nd bu si nesses a nd s pa rked fears of coastal f looding and power outages. Wind gusts of 50 to 60 miles per hour (mph), strong enough to cause downed trees and power lines, are predicted in places where the National Weather Service has issued blizzard warnings. They include the Delmarva Peninsula, which includes parts of Delaware, Virginia and Maryland; coastal New Jersey; eastern Long Island, New York; and coastal eastern New England. Winter stor m war nings stretched as far south as Sout h C a rol i n a on Wed nesd ay n i g ht , but Nat ion a l We at he r Ser v ice Meteorolog ist Da n Pe te r son s a id t he stor m shou ld b e o ve r b y e a rly T hu r sd ay i n t he sout he r n st ate s.

For most of Thursday, he said, the storm will impact the Northeast, with Boston possibly getting up to 14 inches of snow. The storm will then be followed by a wave of bracing cold. “We think there are going to be scattered records broken for low temperatures,” Peterson said, adding how the weather service expects 28 major cities across New England, eastern New York and the mid-Atlantic states will have record low temperatures by dawn on Sunday. State and local officials urged residents to prepare for possible power losses and stay home so crews can clear streets and roads of what could be as much as a foot or more of snow in some places. There were concerns in Boston and elsewhere that if roads aren’t properly cleared, they could freeze into cement-like icy messes by Friday, given the expected low temperatures. In other areas, plummeting temperatures already have caused water mains to burst. “As your governor, I am asking you, I am imploring you to stay home tomorrow. Let us do our work,” Rhode Island Gov. Gina Raimondo, a Democrat, said on Wednesday. The state’s electric utility, National Grid, predicted power could be knocked out to an estimated 50,000 customers

with the expected high winds that could gust up to 70 mph (113 kilometers per hour). The blast of winter weather and plunging temperatures that has gripped much of the US in recent days already has taken a human toll. The number of deaths linked to the relentless cold had risen to at least 17 on Wednesday. Two homeless men were found dead in Houston, where police said the deaths were believed to be the result of “exposure to frigid weather.” Deaths also were reported in Mississippi, Michigan and other states. In Virginia, where Democratic Gov. Terry McAuliffe declared a state of emergency, people were buying shovels and insulation for pipes as flurries began to fall on Wednesday. Some southern cities only experience storms like this every few years, at most. “ T his is probably going to keep the kids out of school until Tuesday. None of it is going to melt,” said Doug Nashold, 55, a retired US Nav y ship captain who had tubes of pipe insulation hung over his arm as he left a Home Depot in Norfolk. He already had one pipe burst from the intense cold. “I thought I was prepared, but it got colder a lot quicker than I thought it would,” he said.

Tressa Shifflett, 33, of Virginia Beach, Virginia, predicted she and her two children, ages 11 and 13, would be spending a lot of time on Thursday playing games of “Monopoly,” “Go Fish” and“ Pokemon,” as well as using the three new shovels she just purchased. “We basically just plan on hunkering down,” she said. T he stor m has resulted in thousands of canceled flights at major airports, such as Boston’s Logan International Airport and New York’s LaGuardia Airport, and disrupted the schedules at regional airports. A mt r a k pl a n ne d to o p e r ate a mod i f ied sc hedu le be t ween New York and Boston on T hursd ay. Nor t heast Reg iona l Ser v ice bet ween Wa sh i ng ton, D.C ., a nd New por t News/ Nor fol k , V i rg i n i a , w a s c a nce led for T hu rsd ay. The coastal Southeast got a rare blast of snow and ice on Wednesday. Schools were shut down just months after hurricane threats. In Charleston, South Carolina, the weather service reported 5 inches of snow, enough for Chris Monoc’s sons, ages 4 and 2, to go sledding outside their home. “They probably will be teenagers the next time something like this happens, and that’s kind of sad,” Monoc said. “But we’ll enjoy it while it’s here.” AP

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India and Thailand risk being added to US currency watch list

ndia and Thailand may have to give freer rein to the rupee and baht this year to avoid triggering United States accusations that they’re manipulating their currencies to support exports. The Reserve Bank of India (RBI) has already exceeded a key threshold on how much it can intervene to curb the rupee’s gains that the US monitors, according to Nomura Holdings Inc. Policy-makers in Thailand have also passed this level with the baht, said Bank of Tokyo-Mitsubishi UFJ Ltd. Should the two countries’ central banks seek to assuage US concerns—and avoid a range of possible penalties—it would likely lead to gains for their currencies, potentially reducing their export competitiveness. For all the efforts of policymakers last year, the baht appreciated almost 10 percent against the dollar, while the rupee climbed 6.4 percent. The two nations posted the biggest percentage gains among Asian emerging markets in their foreign-exchange reserves last year, more evidence their central banks are buying dollars to curb currency gains. China, South Korea and Taiwan—which have been previously called out by the US—recorded some of the smallest increases. The threat of US complaints will support more appreciation in Asian currencies in general this year, said Rajeev de Mello, head of Asian fixed income at Schroder Investment Management Ltd. in Singapore. There’s been a notable reduction in intervention from the three North Asian central banks, according to Schroder Investment and Australia and New Zealand (ANZ) Banking Group Ltd. “Thailand and India have been two exceptions, which have been actively accumulating reserves to stem appreciation pressure on their currencies,” said Khoon Goh, head of research at ANZ in Singapore. Thailand isn’t one of the top 12 trade partners that the US normally focuses on but could find itself under scrutiny if the net is cast wider, Goh said. The rupee and baht have made strong starts to the year, gaining 0.5 percent and 0.6 percent against the dollar, respectively, so far in 2018. W hile the US hasn’t branded any country a manipulator since 1994, meeting two of the following three criteria will get you on the monitoring list: A trade surplus with the US of $20 billion or more. A current-account excess of at least 3 percent of GDP. Net buying of foreign currencies amounting to at least 2 percent of GDP over a 12-month period

C h i n a a nd K ore a w e re t he on l y t w o e me r g i n g m a r k e t s on t he l i s t at t he l a s t s e m i a n nu a l re p or t l a s t O c t ob e r, w h i l e Ta i w a n w a s re mo v e d .

India

Nomura said in a December 11 note that the RBI had already passed the 2 percent of GDP annual intervention threshold. The US’s trade deficit with India was $19.7 billion at the end of October, according to data compiled by the US Census Bureau. A persistent cur rent-account def icit—1.4 percent of GDP in the third quarter—would appear to be India’s saving grace. An RBI spokesman didn’t respond to questions on its intervention policy. The monetary authority has consistently said in the past that it intervenes to curb undue volatility. T he Treasur y noted India’s net foreign-exchange purchases in its October report and said it wou ld be closely monitor ing the nation’s cur renc y and macroeconomic policies. “Overall, we expect RBI intervention to be constrained by the US Treasury’s focus,” Craig Chan, the global head of emerging-market FX strategy at Nomura in Singapore, said in the note.

Thailand

Thailand’s trade surplus with the US was at $16.7 billion at the end of October, according to the census bureau data, and its current-account excess has been more than 10 percent of GDP for the six quarters through September. The nation has passed the 2-percent intervention threshold and is one of 16 countries cited by the US as running high trade surpluses with it, Bank of Tokyo (BOT)-Mitsubishi said in a December 26 note. Thailand is more of a contender than India to be added to the monitoring list, said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore. “It’s got a very strong currentaccount surplus this year, but that trend is going to be watched a little longer.” BOT Spokesman Chantavarn Sucharitakul didn’t respond to an e-mail seeking comment. “The Trump administration will likely continue to try and name and shame countries that run large current-account surpluses and accuse them of currency manipulation,” said Guillermo Felices, London-based portfolio manager at BNP Paribas Asset Management. But it’s unlikely to lead to protectionist measures unless there’s a dramatic rise in the dollar or Trump decides to for domestic political reasons, he said. Bloomberg News

China is said to plan power curbs for some Bitcoin miners

hina plans to limit power use by some Bitcoin miners, people familiar with the matter said, a potential challenge to an industry whose energy-intensive computer networks enable transactions in the cryptocurrency. The People’s Bank of China (PBOC) outlined the plan on Wednesday at a closed-door meeting, according to the people, who asked not to be identified because it wasn’t public. They didn’t detail how authorities plan to enact the curbs. Chinese officials are concerned that Bitcoin miners are taking advantage of low power prices in some areas and affecting normal electricity use in some cases, the people said. Loc al officials have been asked to investigate the high consumption associated with the industry, they said. Some Chinese miners have set up around hydroelectric facilities in the provinces of Sichuan and Yunnan. The curbs will also involve other

regulators, such as the National Development and Reform Commission, which oversees the power supply. The PBOC didn’t immediately respond to a fax requesting comment sent after the close of regular business hours. “This may have contributed to Bitcoin coming off its daily highs and electricity usage certainly appears to be a significant challenge for the cryptocurrency in the years ahead,” said Craig Erlam, senior market analyst at online trading firm Oanda in London. Bitcoin, which surged 15-fold last year, pared gains on Wednesday and traded around $15,086 on Thursday. China is home to many of the world’s largest Bitcoin miners, who use massive computing power to verify transactions in the cryptocurrency. The global industry uses as much electricity as 3.4 million United States homes, according to the Digiconomist Bitcoin Energy Consumption Index. Bloomberg News

Friday, January 5, 2018

‘Furious’ Trump says ex-aide Steve Bannon ‘lost his mind’

ASHINGTON—President Donald J. Trump excommunicated his onetime chief strategist, Stephen K. Bannon, from his circle on Wednesday, ending for now a partnership of convenience that transformed United States politics while raising questions about the future of the nationalist-populist movement they cultivated together.

The rupture came after Bannon was quoted in a new book disparaging the president’s children, asserting that Donald Trump Jr. had been “treasonous” in meeting with Russians and calling Ivanka Trump “dumb as a brick.” Tr u m p, d e s c r i b e d b y h i s spokesman as “furious, disgusted,” fired back by saying that Bannon had “ lost his mind.” In a written statement, the president excoriated Bannon as a self-promoting exaggerator who had “very little to do with our historic victory” in the 2016 presidential election and was “only in it for himself.” R at her t h a n re present i ng Trump’s hard-core political base or supporting his agenda to “make America great again,” Bannon was “simply seeking to burn it all down,” the president said. W hile Trump had remained i n touc h w it h Ba n non a f ter pushing him out of the W hite House over the summer, the two now appear to have reached a breaking point. “Steve Bannon has nothing to do with me or my presidency,” Trump said. “When he was fired, he not only lost his job, he lost his mind.” The schism, assuming it lasts— and with Trump, nothing is ever certain—could test whether he or Bannon has more resonance with the conservative base that has sustained the president through a tumultuous tenure marked by low poll numbers. B a n n o n’s B r e it b a r t N e w s has been a key weapon in Tr u mp’s host i le t a keover of t he R e publ ic a n Pa r t y. C he e r i n g t he bre a k up on Wednesday were establishment Republicans who resent Bannon’s bomb-throwing style and his vows to wage war on incumbent law makers in the party primaries this year. Sen ate R e publ ic a n s cou ld barely contain their glee as they redistributed Trump’s statement blasting Bannon with the note “in case you missed it” and a smiling face symbol. B y a f t e r no on , c a nd id at e s whom Bannon has endorsed in a handful of races faced pressure to disavow his remarks about the president’s son. At the White House on Wednesday morning, aides who had kept a watchful eye on Bannon’s efforts to make himself a kingmaker saw an opening to finally rid themselves of him. T hey encouraged the president to hit back publicly, and Trump went through at least t h ree d ra f t s of a st atement w ith his communications director, Hope Hicks, and other aides before sending out a final version unlike any issued by a president against a top adv iser in modern times. “Steve pretends to be at war with the media, which he calls the opposition party, yet he spent his time at the White House leaking

false information to the media to make himself seem far more important than he was,” Trump said in the statement. “It is the only thing he does well. Steve was rarely in a oneon-one meeting with me and only pretends to have had influence to fool a few people with no access and no clue, whom he helped write phony books.” Bannon declined to comment on Wednesday. But people close to him said that he believed that the president would eventually come around because Tr ump would need help with his base at a moment when his own political muscle appeared to be on the wane. Bannon’s Breitbart site did not return fire against Trump on Wednesday. The president was responding to comments attributed to Bannon in a new book, Fire and Fury: Inside the Trump White House, by Michael Wolff. The forthcoming book was obtained by The Guardian, which first reported Bannon’s remarks, and New York magazine then posted an excerpt. A copy of the book was later obtained by The New York Times. I n t he book , B a n non w a s quoted suggesting that Trump Jr.; Jared Kushner, his brotherin-law; and Paul Manafort, then the campaign chairman, had been “treasonous” and “unpatriotic” for meeting with Russians after being promised incriminating information on Hillary Clinton during a June 2016 meeting at Trump Tower in Manhattan. “The three senior guys in the campaign thought it was a good idea to meet with a foreign government inside Trump Tower in the conference room on the 25th f loor—with no law yers. They didn’t have any lawyers,” Bannon said after The Times revealed the meeting in July 2017, according to Wolff ’s book. “Even if you thought that this was not treasonous, or unpatriotic, or bad shit, and I happen to think it’s all of that, you should have called the FBI immediately,” Bannon continued, according to the book. He also said that the chance that Trump Jr. did not introduce the Russians to his father “is zero,” a supposition rather than an assertion, but one that would contradict the president’s insistence that he knew nothing about the meeting at the time. According to Wolff, Bannon also predicted that a special counsel investigation into Russia’s interference in the 2016

President Donald J. Trump congratulates Steve Bannon, his former chief strategist, at Banon’s swearing-in ceremony at the White House in Washington on January 22, 2017. Al Drago/The New York Times

election and any coordination with Trump aides would ultimately center on money laund e r i n g , a n a s s e s s me nt t h at could lend credibility to an investigation the president has repeatedly called a witch hunt. “They’re going to crack Don Jr. like an egg on national TV,” Bannon was quoted as saying. Trump Jr. did not immediately respond to a request for comment. But he jabbed at Bannon on Twitter on Wednesday when he reposted a message noting that Alabama now had a Democratic senator. “Thanks Steve,” the younger Trump wrote. “Keep up the great work.” Bannon helped propel Roy S. Moore to the Republican nomination in Alabama and then stuck by him after the candidate was accused of sexual misconduct with several women and girls as young as 14. At Bannon’s urging, Trump decided to endorse Moore even after the allegations surfaced, only to be embarrassed when the Democrat, Doug Jones, won the election last year in a heavily Republican state that had not sent a Democrat to the Senate in a quarter-century. T he A labama debacle soured t he a l ready compl icated a nd often strained relationship between the president and Bannon, and Trump grew even more upset about an inter v iew Bannon gave to Vanity Fair last year that painted a poor picture of Kushner, criticizing his meetings w ith Russians during the presidential transition. During his Christmas break at his Mar-a-Lago resort in Florida, Trump stewed over what to say, consulting with aides and relatives about whether he should respond, according to three advisers. Ultimately, the president remained silent as aides cautioned against drawing more attention to Bannon’s remarks. But accusing the president’s eldest son of treason crossed the line. “Going after the president’s son in an absolutely outrageous and unprecedented way is probably not the best way to curry favor with anybody,” said Sarah Huckabee Sanders, the W hite

Steve Bannon has nothing to do with me or my presidency. When he was fired, he not only lost his job, he lost his mind.”—Trump

House press secretary. In a statement, she called the book “trashy tabloid fiction.” The book presents Trump as an ill-informed and thoroughly unserious candidate and president, engaged mainly in satisfying his own ego and presiding over a dysfunctional White House. It reports that early in the 2016 campaign, one aide, Sam Nunberg, was sent to explain the Constitution to the candidate. “I got as far as the Fourth Amendment,” it quotes Nunberg as saying, “before his finger is pulling down on his lip and his eyes are rolling back in his head.” The book quotes an e-mail from an unnamed White House aide offering a harsh assessment of Trump’s operation: “It’s worse than you can imagine. An idiot surrounded by clowns. Trump won’t read anything—not onepage memos, not the brief policy papers; nothing. He gets up halfway through meetings with world leaders because he is bored.” The book also asserts that Tr ump’s adv isers and associates deride him in private, calling him an “idiot,” a “dope” or “dumb as” dirt. Thomas J. Barrack, a friend and adviser to Trump, was quoted telling a friend that the president is “not only crazy, he’s stupid.” R e a c he d b y t e le phone on Wednesday, Barrack said that account was “totally false.” Barrack added, “It’s clear to anyone who knows me that those aren’t my words and inconsistent with anything I’ve ever said.” He said that Wolff never ran that quotation by him to ask whether it was accurate. A longtime media columnist and author, Wolff brings a high profile, v iv id w r iting st yle and years of e x per ience but sometimes mixed reviews to the task of chronic ling Tr ump’s W hite House. Inter view subjects have compla ined in t he past t hat he took comments meant to be off t he record and used t hem. Wolff clearly benefited from close cooperation from Bannon and the book is infused w ith his v iews. T he author was frequently seen in Bannon’s office while Bannon was working in t he W hite House. Accord ing to Sa nders, Wol f f spoke w it h t he pre s ide nt ju st once, for f ive to s e ve n m i nute s, i n t he f i r st mont h of t he ad m i n i st rat ion , w he n Tr u mp c a l le d Wol f f to t h a n k h i m for h i s c r it ic i sm of a Time s a r t ic le t h at t he pre s ide nt d id not l i k e. New York Times News Service

Banking&Finance

A8 Friday, January 5, 2018 • Editor: Jun B. Vallecera

BusinessMirror

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‘Economy should not surprise regulators in 2018’

he Bangko Sentral ng Pilipinas (BSP) is confident of meeting what challenges lie ahead and bared the recent adoption of a suite of measures both actual and prospective to help insulate the economy from external shocks.

‘In a recent speaking engagement, BSP Governor Nestor A. Espenilla Jr. acknowledged that while there are challenges in the economic horizon, the monetary authorities cannot live on an “alarmist mind-set” and vowed to address each challenge promptly and effectively this year. The risks to continued growth of the $305-billion economy this year pertain in part to so-called overheating presented by accelerated lending that coincides with the period of aggressive and deliberate fiscal expansion necessary to make long-haul growth possible in the first place. Such risk has caught the attention of the International Monetary Fund and appropriately flagged it at the conclusion of its Article Four Consultations with the Philippines in November last year. “While the coming year is likely to bring continued challenges for the Philippines, we are well-placed

to deal with these challenges,” Espenilla said. “We try very hard to be proactive. We carefully survey the landscape for potential threats. We ensure that our tools to deal with them remain sharp. We strive to stay on top of developments, and to always be prepared, so that we can address risks appropriately and in a timely manner. Our intention is to continue laying down foundations for the economy to withstand potential shocks,” Espenilla quickly added. According to the Central Bank governor, the initiatives include, among others, the launching of the enhanced government securities eligible dealers program designed to support secondary market liquidity, enhance the financial market infrastructure, increase the volume and consistency of Treasury primary issuances and issuance of improved interest rate benchmark guidelines. While the local currency, the peso, has posted more recent gains

DOF sees 7-percent growth, manageable inflation this year G

versus the US dollar, Espenilla said the BSP will continue to pursue a flexible exchange rate as its first line of defense against potential shocks in the foreign exchange market this year. “Maintaining a f lexible and market-determined exchange rate can better insulate our economy from external shocks that could disrupt the pace of economic growth,” he said. “We are currently drafting further amendments to adopt similar measures [on foreign exchange liberalization] on trade and nontrade transactions, and on foreign investments,” the governor added.

Espenilla also said the BSP “will not rest on its laurels in the coming year” and expressed confidence the economy would grow at the rate anticipated by the economic managers without exposing consumers to unwarranted price increases. “We have remained vigilant and proactive as we launch new and ambitious reform initiatives. These provide the solid foundation for confidence in our prospects for 2018 and beyond,” Espenilla said. Espenilla was swor n in as BSP governor in July last year, replacing t wo-ter m for mer BSP chief Amando M. Tetangco Jr. Bianca Cuaresma

Our intention is to continue laying down foundations for the economy to withstand potential shocks.”—Espenilla

Bloomberg launches electronic repo trading platform in the Philippines B loomberg, in partnership with the Bankers’ Association of the Philippines (BAP), the Money Market Association of the Philippines (MART) and the Philippine Depository and Trust Corp. (PDTC), recently launched an electronic repo trading platform for financial market participants in the Philippines. In support of the country’s road map to establish a peso repo market, the new platform is linked directly to PDTC, enabling straight-through processing and surveillance of all repo trades, a first in Asia. The inaugural repo trade was conducted and witnessed by Finance Secretary Carlos G. Dominguez III, Treasurer of the Philippines Rosalia V. de Leon, Bangko Sentral ng Philipinas (BSP) Governor Nestor A. Espenilla Jr., Securities and Exchange Commission Chairman Teresita J. Herbosa, other government officials and bank presidents and treasurers at the 120th anniversary celebration

of the Bureau of Treasury. Repurchase agreements, or repos, are a well-established source of money-market funding in the global financial market. Repo markets are essential in developing and deepening debt and money markets as an active repo market allows credit risk free access to funding. At the launch, Espenilla said: “While our local currency bond market has grown over the last decade, it still remains as one of the smallest in the regions. Understanding the importance of a deeper, a more active capital market to compliment bank lending to serve as an alternative source of industry financing, we made a bold commitment and unveiled the road map for developing the local debt market. This includes organising the repo market for government securities.” With Bloomberg’s repo platform in place, repo counterparties now have a standardized calcu-

lation and communication platform with complete transparency of collateral details. Once trades are electronically confirmed on Bloomberg, PDTC’s gateway will automatically pick up and display the trades for final verification and settlement authorization. MART has also set up a new governance structure to oversee the repo market and will have full visibility of all trades for efficient monitoring and surveillance. “This is a significant milestone for the Philippines money market. With Bloomberg’s electronic repo trading platform, the self-regulatory organization will have visibility on all trades, which, in turn, will strengthen regulatory oversight and ensure the repo market grows in an orderly manner and will aid reforms to develop the local debt market,” said Michael Delfino, president of MART. “The Philippines is setting a benchmark by being the first country in Asia to adopt straight-

through-processing and achieving full transparency in a repo market,” said Andrea Mosconi, Bloomberg head of sales, Asean. “We are pleased to support the establishment of an active repo market in the Philippines by 2019 and will continue to bring scalable and best-in-class technology to ensure optimal efficiency of the market in the long term,” she qickly added. In 2016 Bloomberg launched its tri-party ticketing system for the interbank community in the Philippines, providing real-time access to brokered foreign exchange forward transactions to market participants. The system allows brokers to seamlessly trade with clients and report their trades, hence improving operational workflow and enhancing market transparency. Bloomberg is also the official calculating agent for the Philippines interbank reference rate and provider of the FX forwards trading platform.

RCBC deploys mobile ATM service

izal Commercial Banking Corp. (RCBC), one of the largest universal banks, has introduced the country’s first neighborhood automated teller machine that extends to clients greater flexibility in managing their finances. Cash Express, the latest service from RCBC, allows customers to make transactions normally done over an ATM, such as cash withdrawals, bills payments, fund transfers, RCBC MyWallet reloading, mobile-phone reloading and balance inquiries. “This new facility will allow RCBC customers to do transactions at partner merchants that are closer, and more convenient to them. This is beneficial for our customers who live in far-flung areas. They won’t have to travel all the way to our

branches, but, instead, do their transactions at the accredited centers and merchants right in their own communities,” said Margarita Lopez, RCBC head for operations and digital banking. RCBC claims distinction as the first bank to offer a product providing all the functions of an ATM in a mobile point-of-sale or POS device. With RCBC Cash Express, customers can do a wide array of banking services, not just withdrawals, making it possible for them to use other utilities and providers, to make their lives better. Cash Express, Lopez said, is a result of RCBC’s continuous effort to make banking easier and accessible to more Filipinos. “We believe that all Filipinos deserve easy access to banking services no matter where they are in

the country,” she said. Under the planned service roll out, RCBC will offer free cash express sales kits to prospective merchants in order to reach as many potential partners as possible. Each Cash Express sales kit will contain a smart phone with a subscriber identity module or SIM, a pin pad, thermal printer and marketing collaterals. RCBC will also provide partner merchants the necessary training and assistance to efficiently facilitate each transaction. Partner merchants will also have access 24/7 to customer support service. Cash Express is just one of the many offerings that aims to uplift the lives of Filipinos. Lopez said RCBC will continue to introduce new products and services that provide customers with a new

level of convenience to do banking. “We believe that if we make a difference to one, we can help improve the lot of the communities, one barangay at a time,” Lopez said. “RCBC continues to provide innovative solutions amid the changing market landscape. We want to be able to respond to the everchanging needs and demands of our customers. We want them to achieve their full potential and RCBC is here to help them do it,” she added.

rowth averaging at least 7 percent should prove within reach this year with the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law along with the planned tariffication on rice and the buildup of public infrastructures under President Duterte, according to the Department of Finance (DOF). In an economic bulletin, Finance Undersecretary Gil S. Beltran said this would also enable the government to sustain a manageable inflation environment going forward. “Low inflation is an indication that the country’s macroeconomic fundamentals remain strong. Solid fundamentals backed by TRAIN 1 implementation, rice-sector reform and the ‘Build, Build, Build’ policy will push the country’s growth to 7 [percent] to 8 percent this year and sustain manageable inflation,” said Beltran, also chief economist at the DOF. The TRAIN was signed into law by President Duterte on December 19 and took effect last January 1. The law exempts compensation earners and self-employed individuals with an annual taxable income of P250,000 and below. For December 2017 alone, Beltran said inflation likely eased further to 3.2 percent from the previous month’s 3.3 percent, on the back of more stable food prices and lower power costs. Citing estimates from the Philippine Statistics Authority (PSA), Beltran said price increases of food and nonalcoholic beverages last month likely remained unchanged at 3.2 percent. Rice prices were also seen unchanged at 1 percent. Communication, education, and restaurant and miscellaneous services were likewise seen to stay at their levels. The commodity groups that likely recorded slower price increases last December are housing, utilities and fuels, 3.7 percent, from 4.2 percent a month ago; electricity, gas and other fuels, 8.1 percent from 9.7 percent; transport, 2.8 percent from 4.4 percent; recreation and culture, 1.5 percent from 1.6 percent. Also, data showed that Meralco’s per-kilowatt-hour rate for households consuming 200 KW for the month of December declined to P9.25, from P9.63 last November. Meralco’s generation charge for the month decreased to P4.60, from P4.91 a month ago. Prices of diesel per liter in the National Capital Region increased to P36.20 last month from P35.46 last November. But prices of gasoline per liter in NCR declined to P48.12 from P48.48 a month ago. Inflation in the first 11 months of 2017 averaged 3.2 percent, well within the government’s official target range of 2 percent to 4 percent for the year. Inflation peaked at 3.5 percent last October. The interagency Development Budget Coordination Committee (DBCC) last December 22 kept the current inflation target of 2 percent to 4 percent from

2018 to 2020. The economy grew by 6.7 percent in the first three quarters of 2017, mainly driven by robust domestic demand, higher fiscal spending and investments. This was well within the target range of 6.5 percent to 7.5 percent for the year. The P8.44-trillion Build, Build, Build infrastructure program of the Duterte administration is seen creating multiplier effects in terms of employment aside from further spurring economic activities. Under the program, the government aims to build more roads, bridges, airports, seaports, railways, water and irrigation projects nationwide. Also included is a 24-kilometer subway train in Metro Manila in a bid to decongest the metropolis of heavy traffic that has been causing billions of pesos in economic losses daily. Earlier, Beltran said the lifting of quantitative restrictions (QRs) on rice imports in favor of tariffs would bring several benefits to the economy, among them, slashing the retail price of the food staple by as much as P7 per kilo and help helping free some 730,000 Filipinos from poverty. Beltran said a 35-percent import tariff on rice in lieu of restricting rice import volumes would encourage private traders to bring in the staple into the country, which would, in turn, allow the influx of cheaper rice in the domestic market. “Pulling down rice prices is crucial to poverty reduction because this staple is a major driver of inflation,” Beltran said. The QR policy will allow the country to limit the volume of rice imports entering the Philippines with a tariff of 35 percent. Importing outside the volume restrictions will entail a higher import tariff. The economic managers decided to allow the expiration of the QR without applying for another extension before the World Trade Organization (WTO). Beltran said that at an expected import rate of 35 percent, the proposed tariffication would generate P27.3 billion, which the government could use to augment funding for socialprotection projects like cash transfers for the poorest families, as well as for palayproductivity programs. Finance Secretary Carlos G. Dominguez III said among the key objectives of the government’s inclusive growth agenda was to transform the Philippines into an upper middle-income economy and cut the poverty rate from the current 21.6 percent to 14 percent by the time the Chief Executive leaves office in 2022. The WTO granted the Philippines an extension of its QR on rice importation until June 30 to give local farmers more time to prepare for free trade. It first allowed the Philippines to impose a 10-year QR in 1995. It was extended in 2004 until 2012, and then was renewed again in 2014.

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The Regions BusinessMirror

Editor: Efleda P. Campos • Friday, January 5, 2018

Duterte wants enhanced antiterror maritime security patrol with Indonesia Urban planner signs MOA to develop Boracay, Aklan town By Jun N. Aguirre Correspondent

OR ACAY ISLAND, Malay, Aklan—Malay Mayor Ciceron Cawaling on Wednesday officially signed a memorandum of agreement (MOA) with Urban Planner Arch. Felino Palafox. Jimmy Maming, newly designated information officer of Cawaling, said the MOA is meant for the seven-month formulation of the Master Development Plan for this island. “The plan includes not only the development of Boracay, but may expand to the whole of Malay, as well. The plan includes formulation

for architectural development and tourism,” Maming said. “The Cawaling administration is also bent on including the environmental sustainability of this resort island,” he said. The plan to ink agreement with Palafox started last year. With the MOA, the local government of Malay is hoping to lure tourists and, at the same time, enhance both environmental and tourism sustainability. Palafox has been credited for the planning of more than 16 billion square meters of land and the design and architecture of more than 12 million sq m of building floor area in 38 countries.

By Manuel T. Cayon

@awimailbox Mindanao Bureau Chie

AVAO CITY—President Duterte said he wants to intensify the maritime border patrol with Indonesia as he disclosed reports of continuing maritime entry of foreign terrorists through its southern waters, shared largely with Indonesia. Duterte relayed his intention to Indonesian Foreign Minister Retno Marsudi who paid a courtesy call on him at the Presidential Guest House here on Wednesday. A Presidential communication dispatch on Thursday said he wanted intensified maritime security “in cooperation with Indonesia, as foreign and local ter-

rorists continue to enter and exit the country despite the military efforts to go after these elements.” His request came as he told the Indonesian envoy “the rehabilitation and reconstruction efforts in Marawi are in full swing.” Ma raw i C it y wa s t he site of the government’s first fullblown counterterrorism military

Cafgu fighter wounded in NPA clash in Compostela Valley By Rene Acosta

@reneacostaBM

MILITIAMAN was wounded in two successive attacks by suspected members of the New People’s Army (NPA) in Compostela Valley just after the end of the cease-fire between the government and the guerillas. The attacks drew condemnation from the military, saying it undermined the confidence building measure exerted by the government toward the rebels. Cafgu Active Auxiliary Jerick Ciel was wounded in the forehead after the rebels detonated a homemade bomb about 15 meters away from the Army’s Colapogon Detachment at Barangay Maparat, Compostela Valley, the 10th Infantry Division (ID) said. The attack, which the military claimed was perpetrated by members of the Guerilla Front 25 of the NPA’s Southern Mindanao Regional Committee, reportedly happened at around 10:40 p.m. on Tuesday. Hours earlier, the rebels also reportedly harassed the Cabuyoan Detachment of the 72nd Infantry Battalion located at Barangay Cabuyoan, Mabini, also in the province, triggering a brief firefight. “Said enemy positioned more or less 200 meters from the said detachment. Upon notice, the troops returned limited gunfire toward

GOLDEN HARVEST ON THE ROAD Bags of yellow-corn kernels are about to be spread on an idle road in Santiago City, Isabela, for solar

drying. The province is said to be “The Corn Capital of the Philippines.” The corn kernels are a major source of animal feeds and corn chips. LEONARDO PERANTE II

the suspected enemy position,” the 10th ID reported. “Firefight lasted for about 15 minutes after which the enemies withdrew toward an unknown direction.” The harassment occurred just 40 minutes after the expiration of the cease-fire, observed both by the

government and the NPA. The holiday-related cease-fire lasted up to 6 p.m. on January 2. The twin incidents drew criticisms from Maj. Gen. Noel Clement, commander of the 10th ID. “We strongly condemn the atrocities done by the terrorist NPA even

while the cease-fire was in effect. This incident showed the NPA is not sincere in ending this insurgency problem,” he said. “It’s about time people unite against the NPA so that we will have peace and development in our communities,” Clement said.

will share his best practices in the implementation of an efficient and effective tax-planning program. The valuable information you will learn in this seminar will become even more relevant with the imminent passage of the Philippine tax-reform law that increases the taxes across all industries in 2018. “The visit to Panay province is an opportunity to help big and small taxpayers in this area to save them on their taxes,” CGBP Founder and President Henry Belleza Aquende said. This comprehensive program will comprehensively discuss all the legally permissible means of avoiding taxes in all your transactions. This CPD-accredited lecture will include updates, examples, new regulations in specific situations, tax-minimization strategies, maximization of deductions, use of tax treaties, tools of estate planning, benefits under special tax laws, tax implications of selected IAS (international accounting standards), tax credits and

refunds, and remedies of taxpayers. All these will be discussed thoroughly to guide participants in executing their plans or solving their tax problems and issues effectively. This special seminar will feature expert tax practitioner Nicasio C. Cabaneiro, a certified public accountant and a lawyer. He is the partner in charge of tax programs at the CGBP. He is a recognized authority in the practice of taxation and commercial law with a track record and solid reputation of saving his clients across various industries billions in taxes. He is a sought-after lecturer and tax consultant of high net-worth families, individuals and business organizations to help them with their tax and other legal matters. Interested participants may avail themselves of the group discounts for three registrants and early-registrations savings. Accountants attending this event will earn six CPD units. This learning event is open to the general public.

tion on maritime security, eradication of terrorism, trade and education. The Presidential communication dispatch said Marsudi has also expressed her interest in pursuing the joint education program between the Philippines and Indonesia to “spread the Islamic values” in Southeast Asian nations. She disclosed of the Indonesian government’s move “to confer 300 passports for Indonesian descents living in Mindanao.” Marsudi was accompanied by Indonesian Embassy in Manila Chargé d’ affaires Budi Dhewajani, Consul General for Indonesian Embassy in Davao Berlian Napitupulu and Indonesia Ministry of Foreign Affairs Director for Southeast Asian Affairs Deni Abdi. Undersecretar y Enr ique Manalo of the Department of Foreig n A f fa irs, Undersecretary Lorna Dino and Director Marge Ballesteros of the Department of Education were also present during the meeting.

103 Capiz villages still under water

Seminar on how to effectively optimize tax savings

AX optimization is no longer a matter just for the multinationals and large enterprises. A growing trend of smart taxpayers who are small and medium enterprises is tailoring their strategies originally drawn up for the big players. To learn the secrets and tax-saving strategies utilized by these smart business organizations and individuals, the Center for Global Best Practices (CGBP) is running a special one-day seminar, entitled “Optimizing Tax Savings & Deductions—The Legal Way!” on January 11 at Hotel Del Rio, Iloilo City. (For details and a complete list of seminars, check www. cgbp.org, or call Manila telephones (+63 2) 842-7148/ 59 and 556-8968/ 69, or Cebu (+63 32) 512-3106 or 07). In this learning event, you will gain valuable insights from over 100 years of combined experiences and the rich sources of research materials put together by the CGBP tax group to be lectured by one of the most respected tax experts who

operation which f lattened the city in the course to dislodge local terrorists backed by the Islamic State of Iraq and Syria. The government military said mostly Asian terror fighters, including Indonesians, were among the slain terrorists. But as he was concerned about the continued maritime traffic of foreign terrorists going into the country, Duterte said he expressed his interest anew in the resumption of the Philippines-Indonesia routes to further strengthen trade between the two countries. The first Celebes Sea cargo route was launched in April last year between the Mindanao cities of Davao and General Santos and Indonesia’s Bitung City, but so far, succeeding cargo trips followed. Also, Duterte informed Marsudi he was interested in providing scholarships for Muslim students, particularly to those enrolled in the Madrasa institutions. Duterte and Marsudi agreed to elevate the two countries’ coopera-

LOILO CITY—A total of 103 villages from 12 municipalities of Capiz are still flooded until Thursday, the Provincial Disaster Risk Reduction and Management Office (PDRRMO) said. Flooding induced by Tropical Depression Agaton has affected 159 barangays. However, floodwaters have receded in 56 barangays. Meantime, only 786 of the 982 families who left their houses are still in evacuation centers. PDRRMO Officer Esperidion Pelaez said that there is an ongoing Rapid Damage and Needs Analysis (RDNA) in Capiz conducted by the Office of the Civil Defense (OCD), PDRRMO and local disaster risk-reduction management offices of affected municipalities. T he R DNA see k s to de termine the needs of affected municipalities, especially

the evacuation centers and preparations. A team from the OCD, headed by Regional Director Roberto R. Nuñez, inspected Capiz together with the regional RDNA team. Classes in Capiz also resumed on Thursday following the cancellation on Wednesday due to the heavy flooding. However, as of 1 p.m. on Thursday, a report from the PDRRMO revealed that water level of rivers at Maayon, Sigma, Mambusao, Cuartero, Dao, Panitan, Pontevedra and Panay are “above normal.” Also the Capiz Emergency Response Team has responded to a stranded truck carrying six passengers at Barangay Agkilo, Panitan, Capiz. Pelaez said one of the longterm solutions to the flooding problem in Capiz is the construction of the Panay River Basin Project. PNA

A10 Friday, January 5, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

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editorial

Searching for telecoms competition

he Philippine government—not just the Duterte administration—dug itself into a deep, deep hole with regard to the telecommunications industry and is still shoveling.

While it is true the telecoms sector saw modern life as crony capitalism pre-Edsa, Republic Act (RA) 6849, or “Providing for the Installation, Operation and Maintenance of Public Telephones in each and every Municipality in the Philippines”—passed in 1990—was the pinnacle of foolish government overreach. Forget about the fact that before the ink was dry on this law, secondgeneration cell phones were already in the hands of the public. At that time, the Philippines did not have the infrastructure or the money to set an effective wireless communication system. Well, actually it did. Australia has set up its “School of the Air” education program in 1951 for the remote areas, where there were not enough children for a formal school. Eventually, two-way communications between students and teachers were conducted over shortwave radio until replaced by the Internet in 2009. RA 6849 was needed as the Philippine government was “Recognizing that the benefits of modern communication technology are as important to rural development.” The program was never close to completion before modern wireless technology—not something invented in 1876 and in principle little changed since then—made the law useless and obsolete. Actually, the law was useless and obsolete on day one as a viable, efficient and cost-effective shortwave-radio system could have been put in place within months to connect each and every municipality. Certainly, a user could not have necessarily told a sweetheart in Manila how much he or she was loved without the whole world listening in. Yet, it could have fulfilled some of the basic communication needs of the general public. Something would have been better than the nothing that never came. Recognizing that the state owns the airwaves and that telecoms are a public utility, the government also failed with RA 7925—An Act to Promote and Govern the Development of Philippine Telecommunications and the Delivery of Public Telecommunications Services—in 1995. Article 2 only paid lip service to “a healthy competitive environment shall be fostered.” While other telecoms providers came, they all went, folded into the “Monopoly of the Two”—Smart and Globe. Note that both of these companies absolutely followed the law and did nothing improper. However, the law allowed them to buy not only the hard assets of other companies but, in effect, also the right to operate and use the airwaves allotted to those firms. If competition in the telecoms industry is going to be a reality, then the industry must be treated in somewhat the same way as other sectors. The argument that telecoms require massive infrastructure to operate is valid but not prohibitive. Further, if duplicating infrastructure is a problem, then follow regulatory pricing, as with water and electric supply services. It is unlikely that the telecom firms would want to go that route. The consumers deserve more than a “duopoly” or even a “triopoly” in terms of competitive pricing and service. While wireless communication is not its direct responsibility, the Department of Information and Communications Technology was established “to provide oversight over agencies governing and regulating the information and communications technology sector and ensure consumer protection and welfare, data privacy and security, foster competition and the growth of the ICT sector.” It is time genuine experts be brought in to offer concrete advice and plans to solve our telecoms problems. Since 2005

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James Jimenez

spox

elcome to the new year. The last one was remarkable, to say the least, for being such a roller-coaster ride. For the Commission on Elections (Comelec), it involved having to commit resources to an electoral exercise that everybody knew was going to be postponed, but whose postponement no one wanted to confirm or definitively deny, and which was eventually postponed anyway, but only after more than 50 million ballots had already been printed. The youth, on the other hand, were called on to step up, which they did in their millions, only to be told that they had to cool their heels for another eight months, and that in the meantime, they shouldn’t be disappointed because they would get their representation eventually, except that no one can give them any sort of ironclad guarantee for that either. And now, we’re about four short months away from getting confirmation either way. Although there have been no new murmurings of postponement, the takeaways from 2017 stay with us: There is absolutely nothing standing in the way of multiple, consecutive, postponements of the same electoral exercise, no

reasonable argument can be effectively made for an early resolution of the indeterminacy of fate of the polls, and that it can never be “too late” to postpone elections. Against that backdrop, the Comelec faces the new year with one major imperative: to prepare for the midterm elections next year. The preparations for the 2019 National and Local Elections can be broken down—conceptually, at least—into four major interlocking blocks: preparing the election “infrastructure”; automation preparations; “voter education”; and, to round everything out, inclusivity integration. By election infrastructure, I refer to those elements, which are

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Live happy in 2018

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essential to the successful conduct of elections—such as cleaning up and finalizing the lists of voters, updating the legal framework for the elections and securing the various physical requirements for free and fair elections, including procurement of election supplies. The infrastructure preparations will, of course, be influenced extensively by the work done for the second block—automation. This will include, first and foremost, resolving the issue of what sort of automated election system (AES) will be employed. Will we continue using the paper ballots with ballot counting machines, like we did in 2010, 2013 and 2016? Or will we begin using paperless election systems, similar to what was used in Maguindanao during the automated elections in the Autonomous Region in Muslim Mindanao in 2008? Or will we attempt a combination of both systems, operating in parallel, again as in 2008? To be perfectly frank, resolving this primordial issue alone will probably take more time than it ideally ought to. Resolved it must be, however— and preferably sooner rather than later—because only then can the more tedious parts of automation preparation start: procurement, customization, certification—including source code reviews—and deployment.

Equally dependent on the resolution of the question of what AES to use is the third block of preparations: voter education. Or at least “voter education” is what we’ve come to call the process of familiarizing the electorate with the AES they will be called upon to use—and trust—on election day. This will involve taking the chosen system out on a roadshow, to give the public an opportunity to see it working, to get comfortable with it, and to voice their concerns about it. Under the law, this process is supposed to start around December 2018; personally, I would prefer it if we could get this voter-education program up and running as early as October, giving us approximately seven months to get the voting public up to speed. The fourth block—inclusivity integration—has actually already started. In 2017 the Comelec launched its initiative to promote gender equality in elections, and much work has already been done in the area of promoting greater accessibility to elections for vulnerable sectors, such as persons with disabilities, indigenous peoples and detention prisoners. These thrusts will have to be continued and expanded in the coming year, in order to ensure that the elections of 2019 are not only the best they can be technologically, but also the free-est and fairest elections in our history.

exploited to further the greed and laziness of men. Able-bodied persons must not seek forgiveness for their being poor and/or for a wrongdoing borne out of laziness. Otherwise, they would forever be mendicants. According to the pope, to be happy is not to have a perfect life. But we should use the tears to irrigate tolerance, loses to train patience, mistakes to sculptor serenity, pain to plaster pleasure and obstacles to open windows of intelligence. “Never give up…. Never give up on people who love you. Never give up on happiness, for life is an incredible show,” Pope Francis said in closing his New Year’s message. Therefore, as we celebrate the New Year, let us look forward for more happy years ahead, even as we reflect on the lessons of the past. Change can happen if we want to. But remember that real change can only happen if we take, with all sincerity, that long lonely road that leads to the bottom of our heart. “Happy New Year to each and every one of us!”

T. Anthony C. Cabangon

Editor in Chief

Senior Editors

Hello 2018

ut, while astrologists see a good year in 2018, it is still up to us to do what is right, to forgive those who may have hurt us, to share part of what we have and to feed those who are hungry, if only to live a happy life. For what good are your riches if you live an impoverished life of peace and self-esteem. In his New Year’s message, Pope Francis shared his thoughts about living a happy life. “You can have flaws, be anxious and ever angry, but do not forget that your life is the greatest enterprise in the world. Only you can stop it from going bust,” Pope Francis said. According to the pope, to be happy is to find strength in forgiveness, hope in battles, security in the stage of fear and love in discord.

“To be happy is to stop feeling like a victim and become your destiny’s author. It is to cross deserts, yet to be able to find an oasis in the depths of our souls. It is to thank God for every morning, for the miracle of life,” the pope added. Indeed, we are the masters of our own lives. It is us who leads the way to where we would want our destiny to take us. And it is never too late to start discarding the bad traits and

to embrace the good ones. But the best time, however, to start living the happy life is the start of the year. Life, no matter how it is lived, has its failures and successes, joys and sadness, fears and triumphs. But being happy, according to Pope Francis, is not being afraid of your own feelings. It is to be able to talk about you, it is the courage to hear a “no,” it is confidence in the face of criticism, even when unjustified, it is to kiss your children, pamper your parents and to live poetic moments with friends, even when they hurt us. In short, to be happy is to be forgiving. But forgiveness should not be

Opinion BusinessMirror

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Friday, January 5, 2018 A11

Third-party information Speaking to signs of the stars is not ironclad Tito Genova Valiente

annotations

Atty. Ronald S. Cubero

Tax Law for Business

N many instances, tax examination includes findings of underdeclaration of sales and/or purchases through the generated data from the Bureau of Internal Revenue’s (BIR) Reconciliation for Listing and Enforcement (Relief ) Integrated Tax System. In essence, it is a no-contact audit approach, whereby the BIR compares the sale or purchase declarations of the supplier and the customer. This method has been questioned by many taxpayers for being unfair because the wrong declaration of a supplier may result to an audit issue on the part of the customer and vice versa. As guidelines, the Supreme Court explained in its decisions (213943 and 222743) that Relief system is a valid information-technology tool used by the BIR to improve tax administration. This is to support third-party information program and voluntary assessment program of the BIR through cross-referencing of third-party information. Through the consolidation and cross-referencing of third-party information, discrepancy reports on sales and purchase can be generated to uncover underdeclared income and over claimed purchases. Thus, timely recognition and accurate reporting of unregistered taxpayers and nonfilers can be possible. While the SC recognized the validity of the system using thirdparty information, the Court of Tax Appeals (CTA), in its long line of cases, have ruled that in order to stand the test of judicial scrutiny, the assessment must be based on actual facts. The presumption of correctness of assessment being a mere presumption cannot be made to rest on another presumption. Hence, assessment should not be based on mere presumptions no matter how reasonable or logical said presumptions may be. In fact, as regards the imposition of assessment of income tax, the CTA already clarified in its decision (8345) that it must be clear that there was an income, and such income was received by the taxpayer, not when there is underdeclaration of expenses. As such, the three elements in the imposition of income must be present. First, there must be gain or profit. Second, the gain

or profit is realized or received, actually or constructively. And third, it is not exempted by law or treaty from income tax. Similarly, in the recent decision of the CTA (1463), the latter clarified that finding of the BIR using Relief system may still be assailed by the concerned taxpayer. The CTA ruled that the assessment must fail if the taxpayer shall be able to prove that the sole basis of assessment is an unverified and unauthenticated document, without any support of externally sourced data and that the discrepancy between the amounts appearing in tax returns was the result only of an erroneous posting committed by the withholding agent. Noticeably, with the advent of technology, the call for tax compliance has risen to another level. The BIR has adopted tools and processes that provide frameworks for immediate detection of discrepancies. However, as earlier mentioned, the Relief system is not ironclad. Thus, on a final note, it is hoped that these tools must be used with caution to minimize injury to the propriety rights of a taxpayer.

Around scattered in various position were snowmen and Santa Clauses in varied weights and disposition. The hotel had just opened a buffet area but, given my diet limited for health reasons, I opted to leave the hotel and go to a shack offering veggies floating in light soup administered with vetsin. As I was about to step out of the foyer guarded by reindeer and dwarfs dressed in poinsettia red and evil green, I realized it was raining hard. I opted to go back to the restaurant lobby and partake of this unusual three-cheese sandwich, which contains a strip of local cheese flattened to timidity and to a cup of coffee, the latter one of the best in the city. If the hotel can be a bit pretentious, the coffee it serves is humble and sincere and good, with just the right amount of bitterness to help one pass the last night of the world of 2017.

Without the signs, I always believed in my candor. Under the stars, I now share this candor with the deviousness, deception and carnality of other signs. I wonder with what negative signs do the gentility of Dan and the generosity of Kristian share? As I was walking to where this magical coffee was to be served, a voice so solemn came from the rear end of the room. It was my good friend, Kristian, typing on his laptop. Without missing a beat, he told me that another friend Dan was about to arrive. Dan is a lawyer and a writer and is on the verge of falling in love and falling out of it as quickly as you can say “justice.” Kristian is a poet and a filmmaker at the cusp of being world

all over this place. The next sign we targeted was Gemini. Stop being together. You deserve to live away from each other. To Cancer I said, no crustacean shall rule my life. We were having fun. I told them, I needed to do more research. Horoscopes, despite being popular, are esoteric in character. How do I deal with my own sign? Sagittarius, the bows and arrows are not weapons anymore. They are part of a game. What was fun was becoming ponderous. I continued my research and stumbled upon a quote from Rosemary Breen in her Horoscope Compatibility of Zodiac Signs. She says: “While a Sagittarian tends to be candid, there’s a part of them [sic] that could be described as being more devious than Pisces, more deceptive than Gemini, more carnal than Scorpio.” Without the signs, I always believed in my candor. Under the stars, I now share this candor with the deviousness, deception and carnality of other signs. I wonder with what negative signs do the gentility of Dan and the generosity of Kristian share? I wanted to consult the sky and look at the stars but the rains had persisted for days now. Next time I see these two friends, I would console them with the thought of Ralph Waldo Emerson who, I believe, said: “Once you make a decision, the universe conspires to make it happen.” I like that. I truly like that.

E-mail: titovaliente@yahoo.com.

The author is a senior associate of Du-Baladad and Associates Law Offices (BDB Law), a memberfirm of WTS Global. The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at ronald.cubero@bdblaw.com.ph or call 4032001 local 350.

Talks with North Korea should unite allies

o one questions the size of Donald J. Trump’s nuclear button. Instead of bragging about it on Twitter to North Korean dictator Kim Jong Un, the US president might try spending more time on the phone with South Korean President Moon Jae-in. Kim is clearly hoping for the opposite. In addition to taunting the US by claiming to have his own “button,” he used his New Year’s address to take up Moon’s offer of talks over the upcoming Winter Olympics in South Korea. The timing suggests, as Kim himself did in his speech, that international sanctions are beginning to cause real pain inside North Korea. Presumably, he’s counting on exploiting Moon’s oft-stated desire for a rapprochement in order to ease pressure on his regime and drive a wedge between Seoul and Washington. That’s no reason not to hold talks. It’s important to remember that South Korea, not the North, first proposed negotiations—as well as a delay in joint military exercises with the US until after the Olympics. If such a pause now induces Kim not to interfere with the Olympics, or even to send North Korean athletes to the Games, it will be a small victory and a respite from months of mounting tension on the peninsula. A brief moment of Olympic harmony won’t solve the larger issue of the North’s nuclear program. But neither should it significantly reduce the pressure on Kim. It’s also important to remember that talks are valuable in themselves. Trying

N the last day of 2017, I decided to pass the night alone, as I did on Christmas Day. I booked myself in a local hotel that is quite huge and noted for its ingenious employment of kitsch. Right behind the lobby was a conglomeration of settee in deep, rancid violet, its wooden frame ghastly in the tone of bones.

class and always standing at the cliff of (let me mix my metaphors) raging emotions, which he refuses to call “love.” These two persons are quite the opposite of each other. Yet, they share one thing in common: the belief in fate. Still, there is a difference in how they measure fate. Dan senses people coming and when he sees them, he looks back at that moment he has felt fate telling him someone is about to manifest before him in a significant way. Kristian waves away any feeling about persons thinking of him in a good or bad way until that person does appear and make him aware of his sensing. Both laugh at this skill they are gradually discovering in them. I thrive between them because I do not bother with thoughts about destiny the way I am bothered by the sweetness in my cup of coffee. It was, thus, an opportune time for me to spend the last day of last year with these two friends, faced as I am with my eternal problem as a columnist: What should I write about in my first column for 2018? Kristian first broached the idea: “Why not question the horoscope?” You mean, critique what they are offering to those born under each sign? No, question the very essence of each sign. I looked at Dan who maintained a silence that meant he was all for this idea. Begin with Aquarius, Kristian pushed the topic. I grasped the wild suggestion and began: Aquarius, stop bearing water. There is enough rain

to divine Kim’s thinking from North Korean propaganda broadcasts is about as unrewarding as deconstructing Trump’s tweets. By contrast, taking up Kim’s invitation for dialogue through multiple channels could open new windows into the North Korean regime’s stability and priorities. If continued talks are predicated on a pause in the North’s nuclear and long-range missile tests, they will have served a useful purpose. In the most optimistic scenario, they could lay the groundwork for multilateral negotiations over denuclearizing the peninsula. Even a more modest hope is still worthwhile: The talks are an opportunity for the United States and South Korea to forge a more coherent and clearly coordinated strategy for dealing with the North. Handled well, there’s room for a good-cop, bad-cop routine, with the US administration continuing to marshal international consensus and tighten loopholes in the United Nation-imposed sanctions regime, while Moon tries to nudge Kim toward serious dialogue with a few carrots, including, perhaps, some humanitarian aid. Whether that’s what Kim has in mind is irrelevant as long as the United States and South Korea remain on the same page. The usual North Korean demands—immediate sanctions relief, a reopening of the Kaesong joint industrial zone, a halt to US-South Korea military exercises —should be no harder to dismiss now than before, absent any real concessions on Kim’s part. Bloomberg View

The clergy and consecrated persons as servants to the servants of the Gospel Rev. Fr. Antonio Cecilio T. Pascual

SERVANT LEADER

“…and he set aside his vestments…began to wash the feet of the disciples…” (John 13:4-5) The Lord, kneeling at the feet of his disciples, set aside his garment of protection and put on the towel of service. Showing his example of humility, he washed their tired and soiled feet. He later admonished them to do the same to one another, “… just as I have done for you, so also should you do.” (John 13:15)

N his pastoral exhortation for the Year of the Clergy and Consecrated Persons, Davao Archbishop and Catholic Bishops’ Conference of the Philippines President Most Reverend Romulo G. Valles, D.D. calls on the priests, religious and consecrated persons, given their role of leadership in our communities, and who often enjoy privileges and entitlements, should stand up from a comfortable and privileged position to generously and humbly serve.

While acknowledging the challenge of standing out in a world that is increasingly indifferent and even

hostile to the Good News, he said that this same world hungers for something it knows not.

“How lovely are the feet of him who brings the good news!” (Isaiah 52:7; Romans 10:15). The Scriptures acknowledges them who come with joyful tidings, who bear the Gospel message. The task of sharing the Good News entails reaching out, and traversing distances, here in our country and in neighboring Asia. We are careful not to neglect anyone needing the joy and hope that the Gospel brings. “To the peripheries!” Let us roll up our sleeves and work! The Church is like a field hospital! “Duc in altum!” Valles also calls on the faithful to continue supporting the clergy and consecrated persons in their journey as “servants to the servants of the Gospel.” As shepherds to the Lord’s flock, may they “take on the odor of their sheep.” As vulnerable “lovely feet” of the New Evangelization, may they encourage others to mission by serving with humility, by loving in action and by strengthening the poor, the hopeless, the victims of injustice and oppression (cf. Isaiah 52:7; Romans 10:15). He also called on everyone to

pray for the young men and women in the seminaries and formation houses, that as they prepare for a life of self offering and service may their communion with Jesus be the source of their inspiration, strength and joy. “Let us all together, lay, clergy and consecrated persons, remain united with Jesus. With Mary let us proclaim the greatness of the Lord and rejoice in God our savior. May we become servants of the new evangelization to one another so that one day, God may finally and truly be all in all,” Valles concluded in his pastoral exhortation. A blessed and peaceful New Year to one and all! To know more about Caritas Manila, visit www. caritasmanila.org.ph. For your donations, please call our DonorCare lines 563-9311, 564-0205, 0999-7943455, 0905-4285001 and 0929-8343857. Make it a habit to listen to Radio Veritas 846 in the AM band, or through live streaming at www. veritas846.ph and follow its twitter and instragram accounts @veritasph and YouTube at veritas846.ph. For comments, e-mail veritas846pr@gmail.com.

2nd Front Page BusinessMirror

A12 Friday, January 5, 2018

Pimentel: No hidden agenda in Charter change initiative

By Butch Fernandez

@butchfBM

enate President Aquilino L. Pimentel III on Thursday insisted that the main agenda of the Duterte administration-backed efforts to amend the 1987 Constitution is only to pave the way for a shift to a federal system of government espoused by the ruling PDP-Laban party. But his fellow senators say the opposition should not be blamed for bungled efforts by Duterte administration proponents to gain public support for the renewed scheme seen to tinker with the charter in order to lift existing term limits under the guise of shifting to a federal form of the government. “The opposition need not invent the best antidote to Charter change,” Sen. Panfilo M. L a c s o n Sr. said. “No less than the two leaders of both houses of Congress

have started campaigning against it, albeit subliminally,” he added, referring to President Duterte’s PDP-Laban allies Pimentel and Speaker Pantaleon D. Alvarez. Lacson noted that “floating a no-election and term-extension scenario, as recent history would suggest, won’t help their advocacy to shift to a federal form of government, inevitably via an amendment of the Constitution.” Senate President Pro Tempore Ralph G. Recto does not see the revived Charter change initiative

Lacson: “Floating a no-election and termextension scenario, as recent history would suggest, won’t help their advocacy to shift to a federal form of government, inevitably via an amendment of the Constitution.”

being fast-tracked by administration allies readily gaining ground, even as he junked the “no election” scenario being floated by some quarters. “It will be very difficult to revise the Constitution in a few months,” Recto said. “For starters, I have not read any details on federalism,” the senator said in a Viber message to Senate reporters, adding: “I expect to have elections on 2019.” Sen. Joseph Victor Ejercito also ruled out a possible cancellation of the scheduled midterm national polls, saying it “might be difficult to make people accept there will be no elections.” “The people look forward to elections, which is a referendum of all elected officials.” Earlier, Alvarez, in an apparent

bid to gain wide support for Charter change in the Senate, committed to support passage of a legislation that would extend the terms of incumbent senators up to 2022 “to avoid complications during transition to federal form of government.” Alvarez explained It would be “impractical” to hold midterm senator ia l elections in 2019, whose fresh terms would expire on 2025 should the federal form be adopted “with a different setup of a legislative body.” Expected to benefit from such a scheme are incumbent senators eligible for reelection to another six-year term in 2019, including Pimentel, Juan Edgardo M. Angara, Cynthia A. Villar, Ejercito, Paulo Benigno A. Aquino IV, Nancy S. Binay and Grace Poe. Pimentel assured that the shift to federalism favored by the Duterte administration would not adversely affect the scheduled national and local elections under the 1987 Constitution, pointing out that “what is important are the transitory provisions that will govern terms and duties of officials elected under the 1987 Constitution.”

Power rates. . . Continued from A1

“If the gencos [generation companies] and NGCP incorporate the effects of the TRAIN law in their bills to distribution utilities this January, end-users will see the increases starting their February bills,” Fernandez said in an interview. “For Meralco customers, the estimated increase due to a 12-percent VAT will be 7 centavos per kilowatt hour,” the Meralco official added. Fernandez explained that the effect of the VAT on the transmission will be on top of the impact of the excise taxes on fuel and other pending adjustments, such as for the feed-in tariff (FiT)-All. Meralco reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the NGCP. Taxes and other public policy charges like the FiTAll are collected by the government.

nazarene procession A man outside Quiapo Church sells handkerchiefs with the imprint of the Black Nazarene. The annual sojourn celebrates the transfer of the image of the suffering Jesus to the iconic church, where it is enshrined. Religious leaders point out the Feast of the Black Nazarene is actually on Good Friday, although many devotees mistake the annual event as its feast day. See related story on B3. NONIE REYES

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MARINA ADMINISTRATOR FIRED FOR RACKING UP 18 FOREIGN TRIPS IN 2017 By Elijah Felice E. Rosales @alyasjah

resident Duterte’s newly launched “war” against public officials reportedly going on unnecessary trips abroad at the expense of taxpayers’ money has claimed its latest casualty—the administrator of Maritime Industry Authority (Marina). Duterte is serious in his crackdown on junketeers, his spokesman Harry L. Roque Jr. said on Thursday, and will not hesitate to fire more of his appointees should there be complaints of lavish trips against them. Roque also announced the dismissal of Marina Administrator Marcial C. Amaro III for allegedly traveling abroad 18 times last year. “The President has tasked me to announce that he has terminated the services of Mr. Marcial C. Amaro, administrator of Marina. Last December 22 the Office of the President received the complaint purportedly coming from the employees of Marina complaining that administrator Amaro has had 11 foreign trips in 2017 alone,” Roque said in a news briefing. Upon reading through the complaint, Duterte ordered the Department of Transportation (DOTr), which is the mother unit of Marina, to investigate the matter. The DOTr wasted no time in probing Amaro’s records, and furnished the Office of the President a copy of his travels last year. It turned out the complaint against Amaro was partly false, Roque said, as the DOTr reported the sacked Marina chief went on 18—not 11—foreign trips last year. On top of this, the transportation department also claimed Amaro had six travels abroad in 2016, according to Roque. This, for the President, is just too excessive, leaving him no choice but to terminate Amaro.“We underscore the fact that previously, [Presidential Commission for the Urban Poor] Chairman Terry L. Ridon was also terminated because of seven foreign travels, and if seven foreign travels [were] deemed excessive by the President, 24 travels definitely [are] excessive by the President’s standard,” Roque said. Ridon and four other commissioners of the urban-poor agency

Let this be a reminder to all public officials that the President is serious in his mandate that they should live modest lives, that they should be true to their calling and that they should avoid unnecessary trips.”—Roque were all fired by Duterte last December for reportedly going on unnecessary trips abroad. Ridon, for his part, said the trips were related to his duty as urban-poor chief and were all approved by Malacañang. “Let this be a reminder to all public officials that the President is serious in his mandate that they should live modest lives, that they should be true to their calling and that they should avoid unnecessary trips,” Roque said. He also warned public officials there will be no sacred cows in the process, and the President is ready to remove anyone in office. “This is the President’s unilateral decision to crack down on foreign travel of government officials. He believes that government officials should concentrate on their jobs here in the Philippines, that travels should only be for officials from the Department of Foreign Affairs, and that any foreign travel must conform with the guidelines, related to the agency’s mandate, must not be too costly and must have significant benefits to the country,” he said. Aside from Amaro and Ridon, Duterte also removed in November Dionisio R. Santiago, former chairman of the Dangerous Drugs Board (DDB), for travelling to Vienna, Austria, with his family and alleged favorite DDB employees. He was also accused of going to See “Marina,” A2

Researchers discover two major flaws in world’s microprocessors Continued from A1

service, just like any other business customer. Once they were on the service, the flaw would allow them to grab information like passwords from other customers. That is a major threat to the way cloud-computing systems operate. Cloud services often share machines among many customers —and it is uncommon for, say, a single server to be dedicated to a single customer. Though security tools and protocols are intended to separate customers’ data, the recently discovered chip flaws would allow bad actors to circumvent these protections. The personal computers used by consumers are also vulnerable, but hackers would have to first find a way to run software on a personal computer before they could gain access to information elsewhere on the machine. There are various ways that could happen: Attackers could fool consumers into downloading software in an e-mail, from an app store or visiting an infected web site.

According to the researchers, the Meltdown flaw affects virtually every microprocessor made by Intel, which makes chips used in more than 90 percent of the computer servers that underpin the Internet and private business operations. Customers of Microsoft, the maker of the Windows operating system, will need to install an update from the company to fix the problem. The worldwide community of coders that oversees the open-source Linux operating system, which runs about 30 percent of computer servers worldwide, has already posted a patch for that operating system. Apple had a partial fix for the problem and is expected to have an additional update. The software patches could slow the performance of affected machines by 20 percent to 30 percent, said Andres Freund, an independent software developer who has tested the new Linux code. The researchers who discovered the flaws voiced similar concerns. This could become a significant issue for any business running web sites and other soft-

ware through cloud systems. There is no evidence that hackers have taken advantage of the vulnerability—at least not yet. But once a security problem becomes public, computer users take a big risk if they do not install a patch to fix the issue. A so-called ransomware attack that hit computers around the world last year took advantage of machines that had not received a patch for a flaw in Windows software. The other flaw, Spectre, affects most processors now in use, though the researchers believe this flaw is more difficult to exploit. There is no known fix for it, and it is not clear what chip makers like Intel will do to address the problem. It is not certain what the disclosure of the chip issues will do to Intel’s business and, on Wednesday the Silicon Valley giant played down the problem. “Intel and other technology companies have been made aware of new security research describing software analysis methods that, when used for malicious purposes, have the potential to improperly

gather sensitive data from computing devices that are operating as designed,” the company said in a statement. “Intel believes these exploits do not have the potential to corrupt, modify or delete data.” The researchers who discovered the flaws notified various affected companies. And as is common practice when such problems are identified, they tried to keep the news from the public so hackers could not take advantage of the flaws before they were fixed. But on Tuesday, news of the Meltdown flaw began to leak through various news web sites, including The Register, a science and technology site based in Britain. So the researchers released papers describing the flaws on Wednesday, much earlier than they had planned. For now, computer-security experts are using a patch, called Kaiser, that was originally discovered by researchers at the Graz University of Technology in Austria to respond to a separate issue last year. Spectre will be much more difficult to deal with than issuing a software patch.

The Meltdown flaw is specific to Intel, but Spectre is a flaw in design that has been used by many processor manufacturers for decades. It affects virtually all microprocessors on the market, including chips made by AMD that share Intel’s design and the many chips based on designs from ARM in Britain. Spectre is a problem in the fundamental way processors are designed, and the threat from Spectre is “going to live with us for decades,” said Kocher, president and chief scientist at Cryptography Research, a division of Rambus. “Whereas Meltdown is an urgent crisis, Spectre affects virtually all fast microprocessors,” Kocher said. An emphasis on speed while designing new chips has left them vulnerable to security issues, he said. “We’ve really screwed up,” Kocher said. “There’s been this desire from the industry to be as fast as possible and secure at the same time. Spectre shows that you cannot have both.” The Meltdown flaw was discovered by Jann Horn, a security analyst at a Google-run security research

group called Google Project Zero, last June. Horn was the first to alert Intel. The chip giant then heard from other researchers who had also discovered the flaw, including Werner Haas and Thomas Prescher, at Cyberus Technology; and Daniel Gruss, Moritz Lipp, Stefan Mangard and Michael Schwarz at the Graz University of Technology. The researchers had been working through the Christmas holiday on a patch, and coordinating with companies like Microsoft and Amazon to roll out the fix. The second flaw, Spectre, was also discovered by Horn at Google and separately by Kocher, in coordination with Mike Hamburg at Rambus, Lipp at Graz University and Yuval Yarom at the University of Adelaide in Australia. A fix may not be available for Spectre until a new generation of chips hit the market. “This will be a festering problem over hardware life cycles. It’s not going to change tomorrow or the day after,” Kocher said. “It’s going to take a while.” New York Times News Service