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Monday, January 9, 2017 Vol. 12 No. 89

Meralco all set for 20-day Malampaya shutdown

By Lenie Lectura

@llectura

he Manila Electric Co. (Meralco) said it has drawn up its own proposed measures to help mitigate possible price hike and power outage during the 20-day shutdown of the Malampaya gas facility.

In an initial report to the Department of Energy (DOE), the utility firm recommends, among others, to “postpone the reimposition of excise tax on fuels for power generation.” At the same time, Meralco also proposed for “the approval

of FiT-All [feed-in-tariff allowance] increase to mitigate the rate impact during the Malampaya shutdown”, which starts on January 28 and will last until February 16. On its own, Meralco said it would

₧4/kWh

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PPP calls for innovation: Are we ready? PPP Lead

The cost of natural gas used for power generation continue to carry out its information campaign on energy efficiency through its various programs. More important, it will conduct a forum for Interruptible Load Program participants for the possible ILP implementation in the event that the Luzon grid would be placed on red-alert status during the shutdown. ILP works by calling on business customers with loads of at least 1 megawatt (MW) to run their own generator sets, if

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Alberto C. Agra

oes a public-private partnership (PPP) arrangement require innovation? What does innovation mean? Who must innovate? What will happen to a PPP arrangement if a party or stakeholder fails to innovate? When PPP is policy-driven and undertaken as a development strategy, the government assumes a “not-business-as-usual” stance. The government breaks away from tradition and challenges the status quo. Prior to PPPs, it is the government, on its own, that designs, constructs, funds and operates projects. PPPs establish a formal relationship between the government and the private-sector proponent (PSP) and redefine their roles. Continued on A15

PHL ups game to police private sector

‘NOVEMBER FACTORY OUTPUT GROWTH LIKELY SLOWED TO 8%’ By Bianca Cuaresma

@BcuaresmaBM

He growth of the country’s industrial production may have slowed last November, but prospects for the manufacturing sector remain positive as improved external demand and sustained activity will likely buoy the industry in 2017. Moody’s Analytics analyst Jack Chambers said Philippine industrial production growth for November likely slowed to 8 percent, from the 8.4 percent seen last October. The slight deceleration of growth, as forecasted, was attributed to slower food production due to the negative impact of Typhoon Lawin (international code name Haima) on agriculture. Lawin, ravaged Northern Luzon in the latter part of October, costing millions of damage in the agriculture sector. Chambers, however, said the slowdown will likely be short term and t h e p o s i t i ve prospects for the country’s industrial production remain on track. “Despite this, the overall outlook for Philippine manufacturing remains positive. Higher external demand is boosting electronics production, while rapid growth in domestic demand will support production as a whole,” Chambers added. Continued on A3 Last October the volume of industrial production in the country grew by 8.4 percent, picking up from the minimal 1.5-percent expansion seen in the same month in 2015. The Philippine Statistics Authority (PSA) attributed the 8.4-percent expansion to increases recorded in half of the 20 major sectors, with significant contribution from four heavily weighted sectors, namely, petroleum products (37 percent), machinery except electrical (24.4 percent), transport equipment (19.4 percent) and food manufacturing (14.3 percent). Earlier, IHS Markit economist Bernard Aw said the outlook for industrial production in the country will likely be positive and will be driven by strong domestic demand. However, Aw warned of potential “reversal of growth trends” should concerns on the overall environment continue to grow and not be resolved. “There were concerns that traffic congestions and customs bottlenecks impeded the smooth delivery of pre-production materials. On the prices front, Philippines manufacturing companies faced the sharpest rise in cost inflation in December as a combination of peso weakness and higher costs for raw materials lifted input prices,” Aw said. “At the same time, hikes in selling prices were at broadly similar pace to recent months. If this continues, manufacturers’ profit margins may come under pressure in the coming months,” he added.

8.4% The growth in factory output recorded in October 2016

Photo shows the trading floor of the Philippine Stock Exchange in Makati City, where public shares are traded. The International Finance Corp., a member of the World Bank Group, and the Philippine Securities and Exchange Commission announced recently a new corporate governance code for publicly listed companies that aims to improve the functioning of boards, strengthen shareholder protection and promote full disclosure in financial and nonfinancial reporting. NONIE REYES By VG Cabuag

HERBOSA: “A strong corporate governance framework is key to the development of the Philippine capital market. The new code is intended to raise the corporate governance standards of Philippine publicly listed corporations to a level on a par with its regional and global counterparts.”

@villygc

Part One

HE term corporate governance always elicits mixed response depending on whom you talk to. For years, regulators, like the Securities and Exchange Commission, wanted companies—especially the publicly listed firms—to be more transparent in their dealings. Public corporations, meanwhile, silently abhor such term as it means more work for them. They need to comply with various requirements based on a set of “principles” as adopted by the government. Starting this year, however, the government will implement a new corporate governance code for listed firms. It will be the first of a series of codes that the government will release from now through 2020. The new code for listed firms updated the 2009 version, which the SEC in 2014 deemed obsolete, as the Philippines needed to comply with the internationally, or at least regionally, accepted standards. The new code, which took effect on January 1, provides guidance for Philippine publicly listed companies to adopt best governance practices, which will improve their competitiveness and ability to attract foreign investment. “A strong corporate governance framework is key

PESO exchange rates n US 49.5310

to the development of the Philippine capital market,” SEC Chairman Teresita J. Herbosa said. “The new code is intended to raise the corporate governance standards of Philippine publicly listed corporations to a level on a par with its regional and global counterparts.”

Requirements

FOR starters, all publicly listed companies are required to submit a new Manual on Corporate Governance to the SEC on or before May 31. The International Finance Corp. (IFC), the private-sector arm of the World Bank, helped in the crafting of the new code by sending its own people, such as consultants, to work with the government in the process of updating the old corporate governance principles. The IFC also funded the printing

of the materials for the code, among others. “Our global experience has shown that corporate governance codes set a benchmark and encourage companies to adopt effective governance practices,” Jane Yuan Xu, IFC Philippines country manager, said in a statement. “Improved corporate governance will make Philippine companies more competitive and enhance their ability to attract foreign capital, leading to the development of a vibrant and sustainable private sector.” The IFC said its support for the development of a corporate governance code in the Philippines is part of its efforts to promote effective corporate governance in partnership with the State Secretariat for Economic Affairs of Switzerland. In addition to working with the Philippine government and regulatory bodies, the IFC also supports the local institute of directors and provides corporate governance advice to Philippine companies. The IFC has contributed to the adoption of 95 corporate governance codes, laws and regulations in more than 30 countries worldwide.

Historicity

CORPORATE governance is termed as a system of stewardship and control to guide organizations in fulfilling their long-term economic, moral, legal and social obligations toward their stakeholders, according to the new code. Continued on A2

n japan 0.4286 n UK 61.5225 n HK 6.3874 n CHINA 7.1961 n singapore 34.6759 n australia 36.3310 n EU 52.5128 n SAUDI arabia 13.2055

Source: BSP (6 January 2017 )

A2 Monday, January 9, 2017

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PHL ups game to police private sector Continued from A1

It “is a system of direction, feedback and control using regulations, performance standards and ethical guidelines to hold the board and senior management accountable for ensuring ethical behavior—reconciling long-term customer satisfaction with shareholder value—to the benefit of all stakeholders and society. “Its purpose is to maximize the organization’s long-term success, creating sustainable value for its shareholders, stakeholders and

Meralco. . .

Continued from A1

needed, instead of drawing power from the grid. With the ILP, power supply from the grid that will not be consumed by participating customers will be available for use by other customers within the franchise area. Through this, the aggregate demand for power from the system will be reduced to a more manageable level, helping ensure the availability of supply. Around 900 MW are enrolled in the program. Of which, 793.07 MW are signed participants and 107. 54 M W cou ld be tapped as potential participants that would aid the utility firm in addressing sudden power outage in its franchise area.

the nation,” it said. Severa l studies point that investors have greater confidence in companies with good governance and in markets that are backed by sound legal and regulatory regimes. More foreign investment will create jobs, strengthen the business environment and improve privatesector efficacy. The first Philippine Code of Corporate Governance only started in 2002, shortly after the formation of the new government of President Gloria Macapagal-Arroyo. It was aimed at raising investor

confidence, develop the capital market and help achieve sustained growth for the corporate sector. It was then revised in July 2009, or about a year before Arroyo stepped down from office. In 2014 the SEC reintroduced specific references to stakeholders in the said code, as it wants to recognize the role of stakeholders in corporations. Stakeholders include customers, creditors, employees, suppliers, investors, as well as the government and community in which it operates. A year later the SEC released its

Meralco’s ILP had helped avoid power outages in some incidents of yellow and red alerts. A yellow alert is issued by National Grid Corp. of the Philippines (NGCP) when contingency reserve is less than the capacity of the largest synchronized unit of the grid. In Luzon this is equivalent to 647 MW, or one unit of the Sual power plant. A red alert, meanwhile, means that there is severe power deficiency. Further, Meralco has instructed First Gas, Santa Rita, and San Lorenzo gas plants to run on alternative or replacement fuel during the shutdown. However, this is more expensive than natural gas. Natural gas as fuel only costs around P4/kilowatt-hour (kWh), while replacement fuel, such as diesel, costs around P6 to P8/kWh. The Department of Energ y

(DOE) made an assurance that it is exploring all possible options and remedies to maximize protection for consumers. The DOE noted that, during the maintenance activities, some power plants are on scheduled maintenance, as well. Based on initial study, the lowest projected power-supply capacity during the period stood at 8,747 MW on February 18, while highest demand is projected to reach 8,610 MW on February 9. As such, the DOE also encourages consumers to practice effective “demand-side management.” “The public should also be proactive in computing the effect of price adjustments to be provided in the simulations given by the agencies concerned to for consumers to practice efficiency measures to avoid price shocks,” Energy Secretary Alfonso G. Cusi said.

corporate governance blueprint, which states its road map for the next five years beginning 2015 to raise the domestic corporate governance standards at par with the global practice. The new version of the code for listed firms adopted some of the Group of 20 and Organisation for Economic Co-operation and Development (OECD) Principles of Corporate Governance and the Association of Southeast Asian Nations Corporate Governance Scorecard. In the latter index, the Philippines only received average

Trump. . .

Continued from A16

In a related move, the Department of Homeland Security on Friday designated elections systems as “critical infrastructure,” which will allow the federal government to provide cyber-security resources to state and local jurisdictions. Trump has expressed admiration for Putin as a strong leader and predicted the pair can work together on issues, such as fighting Islamic State terrorists. He returned to that theme on Saturday: “Both countries will, perhaps, work together to solve some of the many great and pressing problems and issues of the world!”

‘Egregious’ actions

Steven Pifer, a former US ambassador to Ukraine and deputy assistant secretary of state for Russia and Ukraine, was skeptical. “I also would like to see better US-Russia relations, but that will require some change in Russian [and American] policies,” Pifer, now

scores compared to its peers. The said code has lined up what it called 16 principles, that focused on the board of directors’ governance responsibilities, disclosure and transparency of the listed firms, internal control system and risk-management framework, duties to stakeholders and shareholder rights. The SEC itself admitted that the new code addressed the perceived overregulation of the agency as it now adopted the “comply or explain” approach. This means firms can decide to shun all or

some the principles embodied in the new code but it has to explain it to the shareholders their reasons for doing so. Firms must also state in their annual corporate governance reports whether they comply with the code provisions and identify any area of noncompliance. Companies are also required to cite the reasons for noncompliance with the code provisions. The SEC hopes that the market itself will either reward or punish the firms for adhering or not with the principles set by the code. To be continued

a senior fellow at the Brookings Institution, said in an e-mail on Saturday. Trump “gives no indication that he wants any changes in Kremlin policy. The concern, thus, is that he might get to ‘good’relations with Russia simply by accepting a lot of egregious Russian actions.” Drawing on multiple intelligence sources, the Central Intelligence Agency, the Federal Bureau of Investigation and the National Security Agency said in the report that Russia’s operation blended covert activity, including cyber attacks, with public efforts by Russian government agencies, state-funded media and paid social-media users known as “trolls.” The president-elect“should make clear that that is absolutely unacceptable and will result in retaliation,” Pifer said. “This is not about relitigating the election—Mr. Trump won and will be presiden—it’s about protecting the core of the American democratic system.” The agencies emphasized that the public version issued on Friday, unlike classified versions presented to Trump, President Barack Obama and members of Congress, didn’t include all of the sources, methods and supporting

evidence used by the American spy agencies.

Undermining Clinton

Russia’s intelligence services initially carried out cyber operations against targets involved in last year’s presidential campaign, including the Republican, as well as the Democratic Party, the agencies said. “Moscow’s approach evolved over the course of the campaign based on Russia’s understanding of the electoral prospects of the two main candidates,” according to the report. “When it appeared to Moscow that Secretary Clinton was likely to win the election, the Russian influence campaign began to focus more on undermining her future presidency.” Eventually, the agencies said, “Putin publicly indicated a preference for Presidentelect Trump’s stated policy to work with Russia, and pro-Kremlin figures spoke highly about what they saw as his Russia-friendly positions on Syria and Ukraine. Putin publicly contrasted the president-elect’s approach to Russia with Secretary Clinton’s ‘aggressive rhetoric.”’ Bloomberg News

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Monday, January 9, 2017 A3

US recovery finally aiding most workers

T has been a long time coming— eight years, in fact—but the economic recovery is finally showing up in the average US worker’s paycheck in a big way.

There have been plenty of winners in the recovery, which began in mid-2009: companies, homeowners, investors and, especially, households at the apex of the economic pyramid. But the paucity of gains in take-home pay has stoked anxiety and frustration for many others, a factor in the wave of discontent that President-elect Donald J. Trump rode to victory last November. But even as Trump prepares to succeed President Barack Obama in two weeks, the Labor Department reported on Friday that average hourly earnings rose by 2.9 percent last year, the best annual performance since the recovery began. And many economists expect the trend to gain momentum this year, as a tighter labor-market forces employers to pay more to hire and retain workers. “This is a turning point for the overall economy,” said Diane Swonk, a veteran independent economist in Chicago. While wage growth was robust last year, government data for December 2016 showed a more tepid

increase in employment, with 156,000 jobs added during the month, and a slight uptick in the unemployment rate to 4.7 percent. Until recently, a rise in salaries one month would peter out the next, but the upward trajectory in 2016 reflects wage gains, even for Americans at the low end of the pay scale, Swonk said. Leisure and hospitality workers, for example, saw hourly earnings jump 4.4 percent from a year earlier, equal to the increase enjoyed by employees in the surging technology sector. To be sure, a number of the economic problems cited by Trump during the campaign remain: millions of former workers not even looking for jobs, ebbing factory positions and fewer opportunities for the 55 percent of Americans without college degrees or other post-high school credentials. “ St rong econom ic g row t h doesn’t really matter if it’s not widely distributed,” Swonk said. “You can have a better economy but still not good enough for people who aren’t participating at all.” A more comprehensive government barometer of unemployment,

which includes workers forced to take part-time jobs because fulltime positions were not available, stood at 9.2 percent last December, a much higher level than at this point in past recoveries. But rising wages should counter the economic undertow, especially if the gains remain broad-based. And while a 2.9-percent increase may not sound like much, it goes much further because inflation is about 1.7 percent. Economists expect wages to rise by up to 3.5 percent in 2017— still below the gains many workers saw in the recovery of the mid-2000s, and in the tech-fueled boom of the late 1990s. Although not reflected in the December figures, many low-wage workers are getting raises this year because of state increases in the local minimum wage. Some of the increases were substantial, with Arizona, Maine and Washington each raising the floor by $1.50 or more an hour. Even in California, where, at 50 cents an hour, the wage gain is not as steep, one in 10 workers has gotten a raise. And minimumwage gains can have a spillover effect, pushing up pay for workers just above the bottom salary tier. For all his criticism during the campaign of Obama’s economic stewardship, Trump will inherit an economy that is fundamentally solid. Consumer sentiment, corporate profits and the stock market are all at or near multiyear highs.

A worker loads luggage into the cargo hold of an American Eagle jet at La Guardia airport in New York, on May 10, 2016. As Donald J. Trump prepares to succeed President Barack Obama, the Labor Department reported on January 6, 2017, that average hourly earnings rose by 2.9 percent last year, the best annual performance since the recovery began. Karsten Moran/The New York Times

On Friday Wall Street embraced the not-too-hot, not-too-cold labor-market figures, lifting the Dow Jones industrial average close to 20,000 and a new nominal record. Investors a nd t raders a re watching the jobs data closely for clues about when the Federal Reserve Board may next raise interest rates. Last month the Fed increased interest rates for only the second time in a decade, and policy-makers

signaled that three more increases could come this year. The wage gains are among the reasons the Fed is likely to stick to that plan, said Swonk, the Chicago economist. Monthly job creation last year was well below the 236,000 average for hiring in 2014 and 2015. But with the economy close to what Fed policy-makers and other experts consider full employment, employers are increasing wages, to retain workers and to attract new ones.

While the minimum-wage increases provide a floor when it comes to pay, the ceiling continues to rise in fields like financial services, sales and technology, said Tom Gimbel, chief executive of LaSalle Network, a Chicago staffing company. “Across the board, I see more aggressive salaries being offered by corporations than at any time in the last 10 years,” Gimbel said. New York Times News Service

Economy

A4 Monday, January 9, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

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Lawmaker wants to overhaul BOT law By Jovee Marie N. dela Cruz

@joveemarie

fill the infrastructure gap at the local level should LGUs be armed with enough knowledge and expertise on how to effectively carry out this funding arrangement,” said Villafuerte, who is also the vice chairman of the House Committee on Appropriations. “Although our country is one of the pioneers in private-sector participation in major infrastructure projects in Asia with the enactment of the BOT law, we have yet to fully utilize the advantages of the PPP as shown by our status as among the laggards in the region in terms of public infrastructure,” he added. According to the lawmaker, the government needs to ensure that all LGUs can take advantage of the opportunities available to them in implementing their own PPPs, especially now that the Duterte administration has committed to dramatically increase spending on infrastructure over the next five years. The lawmaker, citing President Duterte’s economic team, said the

FILE PHOTO

O empower local government units (LGUs) to implement their own public-private partnership (PPP) ventures, a vice chairman of the House Committee on Local Government is seeking an overhaul of the build-operate-transfer (BOT) law.

In his unnumbered House bill, Nacionalista Party Rep. Luis Raymund F. Villafuerte Jr. of Camarines Sur introduced amendments to the BOT law, which aim to institutionalize the PPP mode of financing government projects for both national government and LGU projects. These BOT amendments, Villafuerte said, should “accelerate” public infrastructure development by strengthening the PPP institutional framework; provide financial and technical support through the Project Development and Monitoring Facility; and optimize project risks and obtain government support. These should also expand PPP contractual arrangements; provide for transparent and competitive bidding; set standard contents and implementation of PPP projects for transparency, consistency and predictability; and grant incentives to PPP projects, he added. “PPPs could be viable sources of financing to help the government

administration plans to spend P8 trillion on public infrastructure between now and 2022 to sustain high and inclusive growth and usher in what Budget Secretary Benjamin E. Diokno has described as the “golden age of Philippine infrastructure.” “We need to arm our LGUs with the technical expertise to properly prepare, monitor and implement PPP projects at the local level. Our LGUs can be able partners, rather than obstacles, to the Duterte administration’s infra-led growth agenda if we provide them with the tools they need to implement infrastructure projects in partnership with the private sector,” said Villafuerte. Also, the lawmaker, citing a

report by the Asian Development Bank (ADB), said many LGUs encounter snags in implementing PPP projects related to infrastructure, power generation and bulk water supply in their respective communities because of the lack of technical and financial resources to carry out these initiatives. Villafuerte said amendments to the BOT law must be institutionalized prior to the planned switch to federalism, so LGUs would be ready and capable of assuming greater fiscal and political autonomy to chart their respective growth and development agendas once the new form of government is in place.

He added that empowering LGUs in implementing PPP projects should be part of the preparatory measures that the national government should prioritize in paving the way for the switch to a federal system of government. Federalism, he said, “will empower LGUs to decide for themselves and craft their own development agendas customized in accordance to their respective resources, problems, development paths and potentials for growth.” Under a federal system, LGUs would be able to retain a huge chunk of their respective incomes and turn over only a portion to the federal government, he added.

Hotels, restaurants recorded lower income in 2014–PSA By Cai U. Ordinario

@cuo_bm

otels and restaurants in the Philippines saw their total income decline by 27.88 percent in 2014, according to latest data from the Philippine Statistics Authority (PSA). Based on the preliminary results of the 2014 Annual Survey of Philippine Business and Industry (ASPBI), the accommodation and food-service sector’s total income declined to P292.1 billion in 2014, from P405 billion in 2013. “[Total] income or revenue includes cash received and receivables for goods/products and byproducts sold and services rendered. Valuation is at producer prices (ex-establishment) net of discounts and allowances, including duties and taxes but excluding subsidies,” the PSA said. The decline in income may be due to the decline in the income of restaurants and mobile food-service activities, which accounted for the bulk, or 61.4 percent, of the sector’s income in 2014. Restaurants and mobile foodservice activities posted a total income of P179.4 billion in 2014, sig nif ica nt ly lower t ha n t he P302.2 billion, or 74.6 percent, of the total in 2013. In 2014 establishments engaged in short-term and other accommo-

dation activities posted an income of P101.9 billion, or 34.9 percent of the total, while beverage-serving activities had a share of P6.1 billion, or 2.1 percent. The lowest income was generated by event catering and other foodservice activities, with P4.8 billion, or 1.6 percent. Among regions, more than half of the total income of the sector was earned by establishments in the National Capital Region (NCR) amounting to P167.8 billion, or 57.4 percent. Central Visayas and Calabarzon followed with P26.1 billion, or 8.9 percent, and P25.9 billion, or 8.9 percent of the total, respectively. The Autonomous Region in Muslim Mindanao (ARMM) recorded the lowest income, with P61.8 million. The sector had a total of 5,492 establishments with total employment (TE) of 20 and over in the formal sector of the economy. Restaurants and mobile-food service activities registered the highest number of establishments, with 3,957 establishments, or 72 percent of the total, followed by short-term and other accommodation activities, with 1,151 establishments, or 21 percent. Beverage ser ving activities ranked third, with 300 establishments, or 5.5 percent, while event catering and other food-

‘DOF should slap higher taxes on beauty products’

MORE EXPENSIVE RICE

A farmer in Nueva Ecija carries a sack of unmilled rice. The Philippine Statistics Authority earlier said the farmgate price of unmilled rice continued to go up and reached P17.85 per kilogram just before 2016 ended. NONIE REYES

service activities recorded the lowest number of 84 establishments, or 1.5 percent. By geographic location, NCR or Metro Manila had the most number of accommodation and

food-service activities establishments, with 2,303 firms, or 41.9 percent of the total. Ca labarzon placed second, with 660 establishments, or 12 percent, while Central Luzon (Re-

gion 3) had 542 establishments, or 9.9 percent of the total. Firms based in ARMM had the smallest number of establishment, with only eight establishments, or 0.1 percent of total establishments.

party-list lawmaker on Sunday asked the Department of Finance (DOF) to increase taxes on the Philippine beauty industry instead of adjusting the excise taxes on petroleum products. In a statement, Party-list Rep. Rodel M. Batocabe of Ako Bicol said the DOF “should channel its energies” in coming up with a tax proposal on the country’s burgeoning beauty industry, which currently has an estimated worth of P200 billion and has remained relatively unregulated. Currently, the Philippines imposes a duty ranging 1 percent to 10 percent and a 12-percent value-added tax (VAT) on imported beauty products. Batocabe also wants the DOF to increase the 20 -percent excise ta x on perfume and toilet waters to 30 percent. “This would be preferable than any rise in our fuel prices,” he said. The imposition of excise tax on petroleum, removal of VAT exemptions for senior citizens and persons with disabilities and ad valorem tax on automobiles are among the offsetting measures being pushed by the DOF to cover the foregone revenues from lowering personal income-tax rates. The tax-reform package could result in foregone revenues of around P200 billion, but the government is also estimated to generate revenues amounting to P566 billion. In the government’s bid to provide funding for infrastructure projects, Batocabe said the government should find “reasonable taxation” that will not unduly burden those who have less in life. “Imposing an excise tax will increase the price of diesel, which will, in turn, increase the cost of transportation, which shall consequentially increase the price of goods and commute, a cascading effect that will impart an unavoidable encumbrance all the way down to Filipinos below the poverty line,” Batocabe said. “In comparison, any increase of price for beauty and cosmetic products and services shall only be shouldered by those who choose to and can afford it,” he added. While the poor can do away with beauty products, the lawmaker said they cannot avoid using public transportation or purchasing basic commodities. Since 2011, Batocabe said the Philippine market has observed a steady rise in beauty and cosmetic sales due to the increased demand among both male and female consumers with the developing mind-set that beauty and cosmetic products are now a necessity rather than a luxury, which is mostly credited to aggressive marketing campaigns in various platforms. “Many consumers nowadays are willing to spend on facial and underarm whitening products, special haircare applications and quality makeup products. The demand for raw materials and finished products for skin whitening and anti-aging products continue to thrive,” he said. “An additional excise tax for these would be a better compromise, and would balance the interest of the government with regard to sourcing funds and that of the general public who will now be subjected to a much more reasonable taxation,” Batocabe added. Jovee Marie N. dela Cruz

Fast ratification of PHL-Efta free-trade pact pushed T

he Philippines and the European Free Trade Association (Efta) are currently fasttracking preparations to ratify the Philippines-Efta free-trade Agreement (FTA) following its signing last year, according to a trade official. Both parties are now “undertaking their respective domestic processes for the ratification and entry into force of the agreement,” Fe del Rosario, officer in charge of the Investments Policy and Planning Serv-

ice of the Board of Investments, told stakeholders recently. Del Rosario, in her latest update on the Philippines-Efta free-trade deal, said the Philippines is keen to see its launch as part of the Philippines’s broader Europe strategy, as it looks to expand to markets in European countries outside of the European Union. She added that other Asean member-states have already made headway in FTA talks with Efta. The two sides signed the Phil-

ippines-Efta Joint Declaration on Cooperation on June 23, 2014, in Westman Island, Iceland, and inked the Philippines-Efta FTA April 28, 2016, in Bern, Switzerland. The Efta consists of four member-states—Iceland, Liechtenstein, Norway and Switzerland— that organized themselves in 1960 into a trade organization to promote economic cooperation among Western European countries while seeking to contribute to the expan-

sion of global free trade. According to the World Bank, Efta has a total GDP of $1.1 trillion, an average GDP per capita of $73,630, and a population of 13 million. The Philippines-Efta FTA covers trade in goods, trade in services, investment, competition, the protection of intellectual property rights, government procurement, and trade and sustainable development. In the area of trade in goods, Efta abolishes all customs duties on

industrial products as of the entry into force of the agreement, while the Philippines will gradually lower or abolish its duties on the vast majority of such products. Key outcomes of negotiations between the Philippines and Efta include duty-free market access for the Philippines for all industrial and fisheries tariff lines, del Rosario said. The Philippines also secured tariff concessions on substantially all Philippine agriculture exports to Efta.

“Philippine commitments are less than full reciprocity with exclusions, partial reduction and longer timeframe for elimination,” the trade executive said. In particular, for industrial goods and fisheries, Efta commits zero percent tariffs on all industrial goods lines upon entry into force of the agreement. In turn, the Philippines commits that 79 percent of all tariff lines or 97 percent of imports will be zero. Philexport News and Features

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Editor: Jennifer A. Ng • Monday, January 9, 2017

PhilRice, Irri to craft PHL rice-farming plan

Supply of chicken in December up 63.42%–NMIS report

The Philippine Rice Research Institute is encouraging farmers to plant “climate-smart” rice varieties to help them cope with the ill effects of changing weather patterns. Photo taken from www.gov.ph

By Jasper Emmanuel Y. Arcalas

@jearcalas

he Department of Agriculture (DA) said it would bank on the inputs of the International Rice Research Institute (Irri) and the Philippine Rice Research Institute (PhilRice) in crafting a national rice farming program.

“The government has plenty of work to do pertaining to rice. We would be very dependent on Irri and PhilRice in terms of formulating our program,” Agriculture Assistant Secretary for Operations Federico E. Laciste Jr. said in a statement issued by Irri over the weekend. Laciste, who is also the deputy director of the Philippines’s National Rice Program, said collaboration in

developing a national strategy for rice farming is important to uplift the lives of Filipino farmers. Irri said Laciste was briefed on the various collaborative research projects implemented jointly by the research institute and the PhilRice in support of the National Rice Program. The projects include Rice Crop Manager, a web-based decision support tool for precision farm-

ing; Philippine Rice Information System, a satellite-based rice forecasting and monitoring system; and Green Super Rice (GSR), climate-smart varieties developed under the Next Generation (NextGen) project. For the country’s rice sector to be competitive, farmers must produce at least 7 metric tons (MT) of rice per hectare at P7 per kilogram, according to Irri, citing a benchmarking study of an ongoing project it is conducting with the DA. “This is already possible,” said Dr. Jimmy Quilang, deputy executive director of PhilRice, adding that in one of their agency’s project, called Palayabangan (rice and pride) challenge, one farmer produced 10 MT of rice in a hectare at only P5 per kg. “With the technologies that we have developed with Irri, we already have ways to really make Filipino farmers more competitive,” Quilang added. Earlier, Agriculture Secretary Emmanuel F. Piñol said the DA will

plant hybrid-rice seeds in 1 million hectares of irrigated lands starting this year, in its bid to achieve rice self-sufficiency by 2019. Under the program, dubbed as Masaganang Ani (MA) 6000 program, the government will identify 10 initial areas with 1,000 hectares of irrigated land. “The DA is positive that it can be done. We are now in the process of finalizing the MA 6000 program, which will initially target 1 million hectares of irrigated areas,” Piñol told reporters. “These areas will be supported with hybrid-rice seeds, sufficient fertilizer, and efficient irrigation system and mechanization,” he added. The DA is eyeing to hike the national average rice production to 6 MT per hectare from the current 3.9 MT per hectare. Citing farmers’ testimonies, Piñol said they are able to produce more than the national average yield by planting hybrid-rice seeds in areas with proper irrigation system and efficient farm machines.

NOAA plans to open federal waters in Pacific to fish farming

ONOLULU—As traditional commercial fishing is threatening fish populations worldwide, US officials are working on a plan to expand fish farming into federal waters around the Pacific Ocean. The government sees the move toward aquaculture as a promising solution to feeding a hungry planet. But some environmentalists say the industrial-scale farms could do more harm than good to overall fish stocks and ocean health. The National Oceanic and Atmospheric Administration (NOAA) is creating a plan to manage commercial fish farms in federal waters, the area of ocean from 3 to 200 miles offshore, around Hawaii and other Pacific islands. The program is similar to one recently implemented by NOAA in the Gulf of Mexico. The farms in the Gulf and the Pacific would join the few aquaculture operations in US federal waters, though there are smaller operations in state waters close to shore. Fish farming has been practiced for centuries in Hawaii and around the world. But modern aquaculture, some environmentalists say, carries pollution risks and the potential for non-native farmed fish to escape and enter the natural ecosystem. Most shellfish consumed in America comes from farms, and their methods are widely considered

sustainable. However, some farms that grow carnivorous fish, such as salmon, have raised concerns about sustainability because they use wild-caught fish to feed the captive species. There are several ways to farm fish, including fully contained landbased systems that pump water in and out with little, if any, environmental impact; near-shore operations incorporating natural and man-made elements; and off-shore farms. Former NOAA chief scientist and founder of ocean advocacy group Mission Blue Sylvia Earle said there are more environmentally sustainable and economically viable options than open-ocean aquaculture, which uses floating net-pens or submerged cages. “We have to make a choice with aquaculture,” she said. “Is our goal to feed a large number of people? Or is our goal to create or to serve a luxury market?” Last year NOAA and the Scripps Institution of Oceanography put an economic value of $17 billion a year on the ocean off the west coasts of North and South America. That includes $4.3 billion from commercial and sport fishing and $12.9 billion for the capture of carbon. Earle said the ocean is worth more, and no dollar figure can be attached to keeping the ocean and, in turn, humans, healthy. “We now have recognition of other values of the ocean

In this March 22, 2016, file photo, fish caught by crews in the Pacific Ocean around Hawaii are stacked at the Honolulu Fish Auction in Honolulu. As traditional commercial fishing is threatening fish populations worldwide, US officials are working on a plan to expand fish farming into federal waters around the Pacific Ocean. AP Photo/Caleb Jones, File

beyond what we can extract either for food or for products,” she said. New technologies are being developed for open-ocean aquaculture, and many US companies are sending their crews overseas to farm, according to NOAA officials. “The US’s view is we’d rather have these US companies pursuing these opportunities in a sustainable, environmentally sound way in the US,” said Michael Tosatto, NOAA’s National Marine Fisheries Service regional administrator. The NOAA plan would create a

regulatory and permitting scheme for the industry. “It’s reasonably common knowledge that the environmental laws are less where aquaculture occurs the most, [that] being China and other Southeast Asia countries,” Tosatto said. Many foreign operations have US companies supplying the breed stock, then the fish are grown and sold back to the US as imported seafood. USfarmed fish in 2014 was valued at $1.3 billion, Tosatto said, and constitutes 19 percent of the nation’s seafood production. AP

he country’s chicken supply last December grew by more than half, reaching 25,220.80 metric tons (MT), or 63.42 percent, higher than the 15,432.70 MT recorded a year ago, according to the National Meat Inspection Service (NMIS). NMIS data showed that locally produced chicken accounted for 62.78 percent of the December inventory at 15,834.16 MT. The figure was more than three-fourths, or 78.77 percent, of the 8,857.15 MT locally produced chicken posted in the same period last year. The remaining volume consisted of imported chicken, according to NMIS data. The volume of imported chicken in cold storages expanded by 42.75 percent to 9,386.64 MT, from the 6,575.55 MT recorded in December 2015. On a monthly basis, localchicken inventory as of December 26 was 32.75 percent lower than the 37,503.89 MT recorded last November. The NMIS said it surveyed only accredited cold-storage facilities. Fresh-chilled chicken, mechanically deboned meat were not included in the NMIS data. Data from the attached agency of the Department of Agriculture also showed that frozen-pork inventor y before 2016 ended expanded by 20.14 percent to 13,891.48 MT, from 11,563.09 MT posted a year ago. Imports accounted for the bulk of the frozen-pork inventory. According to the NMIS, pork imports

abroad reached 13,079.59 MT, or 94 percent of the total December inventory. The volume of frozen-pork imports is 24.27 percent higher than the 10,525.41 MT recorded a year ago. Local pork in cold storages declined by 21.76 percent to 811.89 MT, from the 1,037.68 MT recorded in December 2015. For the frozen-pork data, the NMIS said it included stock inventory in accredited commercial and in-house cold storage in slaughterhouses and meatprocessing plants. Pork Producers Federation of the Philippines Inc. (Pro Pork) President Edwin G. Chen told the BusinessMirror that hog production in 2016 reached 2.16 million MT (MMT), 2 percent higher than the 2.12 MMT produced in 2015. “Hog production last year likely grew by around 2 percent, 1 [percent] to 2 percent, compared to the previous year’s production,” Chen said, attributing the output growth to the expansion of hog farms. Chen added that the usual uptick in demand during the holiday season is another factor that contributed to the increase in livestock production. Local traders are allowed to import chicken and pork under the so-called minimum access volume (MAV) scheme of the World Trade Organization. Pork imports within MAV are usually slapped a lower tariff. Jasper Emmanuel Y. Arcalas

Coconut-based products, adobo sauces among top food trends in 2017–Philexport By Cai U. Ordinario @cuo_bm

ilipino exporters could see better earnings this year by peddling more coconut products and traditional condiments, like adobo sauces, according to the Philippine Exporters Confederation Inc. (Philexport). Philexport said in a statement that coconut-based products, as well as adobo sauces, were included in the food trends predictions for 2017. The predictions were made by experts enlisted by US-based organic supermarket chain Whole Foods Market. “Philippine exporters can leverage the rising Western demand for coconut-based products, as well as for unique sauces and condiments like adobo sauce, to diversify markets,” Philexport said. The predictions of the Whole Foods Market stated that, aside from coconut oil and coconut water, demand for other unexpected coconut-based products is expected to crest. Philexport said the coconut is now being used in various ways, such as coconut sugar, which is an alternative to refined sweeteners; coconut oil is being used in a number of natural beauty products; and the flesh of the fruit is used as base for flours, tortilla, chips, ice creams, butters and others. Meanwhile, Philexport said

there is also an increased interest in condiments ranging from traditional global recipes to brandnew ingredients, including different kinds of adobo sauces. These sauces also include black sesame tahini, habanero jam, ghee, pomegranate molasses, black garlic purée, date syrup, plum jam with chia seeds, beet salsa, Mexican hot chocolate spreads, and sambal oelek or piri piri sauce. “Once rare and unfamiliar sauces and dips are showing up on menus and store shelves,” Philexport quoted the report. Philexport said other food trends this year include wellness tonics and drinks; roots used in alternative medicine and global traditions; and products from byproducts, such as Greek yogurt or spent grains from beer. The report also stated that some companies are now using water from olive-oil production as the base for household cleaners, repurposing leftover liquid from cooking in vegan mayo, and using leftover whey from yogurt production to create probiotic drinks. This year’s predictions came from Whole Foods Market’s experts and industry leaders who source items and lead trends across the retailer’s cheese, grocery, meat, seafood, prepared foods, produce and personal-care departments, and spot trends for the retailer’s more than 465 stores. AP

A6 Monday, January 9, 2017 • Editor: Dionisio L. Pelayo

The Nation BusinessMirror

Church leaders ask Duterte to end killings

By Marvyn N. Benaning | Correspondent

OMAN Catholic and protestant church leaders pleaded with President Duterte on Sunday to stop the killing of children, adolescents and innocent people in the course of his war against illegal drugs.

Leaders of the Rise Up for Rights and Life (RURL) issued a statement demanding justice, as three victims of the December 28 Bagong Silang Massacre in Caloocan City were buried on Sunday. The Duterte administration has asked for forgiveness for the thousands of Filipino citizens who have died since he took power that it considered to be “collateral damage,” without any promise of restitution and the dispensation of justice, RURL said. However, Duterte is sticking to his guns and offering nothing but more bullets for drug users, street

corner traders and innocent victims and not much about investigation of the 6,000 deaths traced directly to his campaign and his goading other people to dispense vigilante justice, the group said. “How many deaths will it take till he knows that too many people have died?” RURL asked, quoting the lyrics of Nobel laureate Bob Dylan’s “Blowin’ in the Wind”, adding that “the President apparently considers illegal drugs is the country’s only problem.” Fr. Gilbert Billena and Fr. Ben Alforque signed the statement along with Rev. Marie Sol Villalon of the

United Methodist Church (UMC) and Bishop Reuel N.O. Marigza of the United Church of Christ in the Philippines (UCCP). “We bury the dead and not the call for justice. Rise Up for Rights and Life accompanies bereaved families in burying their children after another senseless killing in a poor community. A so-called war on drugs must not be allowed to devalue the lives of the poor and cover up injustices committed against our nation’s youth and people,” the statement signed by Billena, Alforque, Villalon and Marigza said. A Requiem Mass was celebrated at 1 p.m. at the Saint Paul of the Cross Parish, Phase 8A, Bagong Silang, Caloocan City, before the three teenagers were buried. Citing Lamentations 3:47-49 (Panic and pitfall have come upon us, devastation and destruction. Streams of tears flow from my eyes because my people are destroyed. Tears flow from my eyes unceasingly; they will not stop), the religious leaders said: “Three teenagers will be laid to rest today, who are among seven

people massacred on December 28, 2016, in Bagong Silang, Caloocan, Metro Manila. In isolation, we lament the senseless violence that has ripped families asunder. We grieve the destruction of life, which had yet to bloom into full adulthood. The mourning of the bereaved calls us to empathy and moves us to compassion, especially as the families of these victims come from the margins—the vulnerable poor whom God has called us to serve.” Three days after the killing of the seven, gunmen returned and killed four more people in the same community. “And still, this is not an isolated case, as on January 2 four more were killed in the next street of this same area. We are witnesses to an unfolding travesty of unchecked scope and intensity. We must ask ourselves, ‘ how many more will die, if we remain silent?’ As a nation, we must rise above our tendencies to devalue the lives of the poor— we must rise up for life and condemn the onslaught of senseless killings,” Villalon, Marigza, Bil-

lena and Alforque added. “The teenagers who died on December 28, 2016, were merely invited guests at a friend’s house. As youth around the country similarly enjoyed holiday festivities with friends, the consequence for these young people was death. A thinly veiled cloak of a so-called war on drugs has once again been invoked to try to convince us that their deaths should not matter. But their lives matter. The poor are not less human than you and me; their dignity and human worth is ordained by God,” they added in the statement. “Today we lay to rest beloved children of God. Even as the police purport to quickly solve their killings, we must be more circumspect and seek out the truth of what is going on in poor communities. The daily slaughter and devastation of the poor in purportedly drug-related incidents should fill us with grief and pity, much like the Prophet Jeremiah. We must recognize the pitfalls in our midst. Our city is in ruin, as the poor are subjected to brutal liquidation,” the RURL leaders added.

MMDA, NDRMMC go on alert for ‘Traslación’ By Claudeth Mocon-Ciriaco Correspondent

HE Metropolitan Manila Development Authority will deploy more than 1,200 personnel for the annual “Traslacion” in Quiapo, Manila, to ensure the peaceful and orderly celebration of the Feast of the Black Nazarene on Monday. Acting MMDA Chairman Thomas Orbos said that since Saturday, a total of 1,245 MMDA personnel have been deployed around the Quirino Grandstand, Quiapo Church and along the route of the procession. The Grand Procession of the Black Nazarene will start at the Quirino Grandstand (Rizal Park) will pass throughKatigbak Drive, Padre Burgos, Taft Avenue, Jones Bridge, Dasmariñas Street, Plaza Santa Cruz, Carlos Palanca Street, Quezon Bridge, Quezon Boulevard, Arlegui Street, Nepomuceno Street, Concepcion Aguila Street, Carcer Street, R. Hidalgo Street, Plaza del Carmen, Bilibid Viejo, Gonzalo Puyat Street, Z.P. de Guzman Street, Bautista Street, right Globo de Oro, Quezon Bridge, Villalobos Street and Plaza Miranda on its way to Quiapo Church. The traffic personnel, Orbos said, will not only help in traffic management but also in public

safety and emergency-response operations of the city government and other government agencies. Orbos said the MMDA will put up an emergency-response tent at the Quirino Grandstand as early as Saturday. “Plastic barriers for the queue to the traditional pahalik were also be set up on January 7. The barriers were successful in ensuring orderliness last year, so we are doing it again this time, with some improvements,” he added. Ambulances and other road emergency vehicles, traffic patrol cars, tugboats, mobile surveillance and communications units, and all other equipment and vehicles needed will also be dispatched. The MMDA contingent will come from the Traffic Discipline Office, Road Emergency Group, Public Safety Division, Sidewalk Clearing Operations Group and the Metro Parkways Clearing Group, which will conduct a massive cleanup on the procession routes right after the procession passed through. To provide an alternate mode of transportation for the numerous devotees expected to join the Feast of the Black Nazarene procession in Manila, Orbos announced that the Pasig River Ferry System will extend its operating hours on January 9. At least two ferry boats will also

THE queue of devotees has reached as far as Roxas Boulevard, as thousands fall in line and wait for their turn to touch or kiss the centuries-old statue of the Black Nazarene (pahalik) at the Quirino Grandstand on Sunday afternoon. Oliver Marquez/PNA

be on standby near Jones Bridge to respond to emergency situations, the MMDA chief added. During the special run of the ferry service, the first trip from Guadalupe to Escolta Street will start at 5:30 a.m. The last trip from Escolta to Guadalupe station will be at 7 p.m. Apart from the ferry boats’ extended operating hours, Gwapotel,

the budget hotel managed by the MMDA, will also offer a 20-percent discount to all Black Nazarene devotees who will use the establishment from January 7 to 9. The National Disaster Risk Reduction and Managaement Council (NDRRMC) on Sunday said it is continuously monitoring situations related to the annual procession of the Black Nazarene on Monday.

NDRRMC Executive Director Ricardo Jalad said the agency’s operations center in Camp General Emilio Aguinaldo in Quezon City has been placed on “blue alert”. Jalad said the National Council has a lready activated the Regional Incident Management Team in the National Capital Region to monitor developments related to the “Traslación.”

news@businessmirror.com.ph

Don’t use NIA Road fire to evict squatters —Kadamay

HE urban-poor alliance Kalipunan ng Damayang Mahihirap (Kadamay) has warned that the recent fire that gutted the squatter community on NIA Road in Quezon City should not be used to push Mayor Herbert Bautista’s central business district (CBD) project. K adamay Chair man Glor ia Arellano said the fire gutted nearly 1,000 shanties, injured three and took the life of an elderly woman. Vice President Maria Leonor G. Robredo visited the site and offered practically the same relocation plan promoted by the Housing and Urban Development Coordinating Council (HUDCC) she once headed. “Mayor Bautista’s first reaction to the fire was relocation and not assistance. Either the residents will be forced to stay in the Bistekville, where amortization rates skyrocket or in relocation areas outside Metro Manila where basic utilities remain a luxury. Bautista has long-standing ambitions for the QC Central Business District project, which is why he has been trying to demolish the area for almost a decade. The fire did it for him and the government is busy adding more problems to the victims,” Arellano added. She said she would not be surprised if investigators finally tag arsonists to be the culprits. Kadamay said dozens of fires have hit squatter colonies in Quezon City that have been targeted for demolition for years. She explained that the CBD project “is a joint venture between the Quezon City government and the National Housing Authority [NHA]. It is the reason for many evictions and destruction of flea markets. The project seeks to build commercial establishments in place of public housing. There is no doubt that Bautista and his partners are elated at this incident.” Arellano added: “Any residents from Barangay San Roque in the North Triangle who have been relocated will tell you that the financial assistance afforded by the NHA and Quezon City Hall is a joke. From the promised P30,000, many received only P6,000 because of cuts and so-called fees.” Arellano also revealed that only around 600 families out of the 1,000 families victimized by the fire will receive assistance from the NHA since they are considered as “houseowners.” The rest will be left to fend for themselves, rely on help from the Department of Social Work and Development (DSWD) or scrounge for food and money wherever they could be found. Marvyn N. Benaning

Caraga region braces for 2017’s first weather disturbance By Noel B. Najarro Philippines News Agency

HE Caraga region has set all preparations to prevent massive destruction to life and property as the low pressure area (LPA) sighted east of Mindanao has developed into a tropical depression named Auring. The Regional Disaster Risk Reduction Management Council (RDRRMC) Operation Center has been placed on red alert to continously monitor areas expected to be hit by the weather disturbance and coordinate action in response to it effects as the regions five provinces were placed under Tropical Cyclone Warning Signal (TCWS) 1. Continuous light to moderate rains had been experienced in most places of the region, including Butuan City and Agusan del Norte. According to RDRRMC, the Coast Guard on Saturday has ordered the cancellation of sea travel

to and from Caraga region and firshermen are prohibited from venturing out to sea. Agusan del Norte Provincial Disaster Risk Reduction Management Council (PDRRMC) reported that as of 6 p.m. on Saturday, the Nasipit Port Passenger Terminal Building in Nasipit, Agusan del Norte, has some 100 stranded outbound passengers as all trips were canceled. Agusan del Norte Operation Center has gone on round-theclock operations and had suspended classes at all levels starting on Saturday. PDRRMC Agusan del Norte is now implementing “Code Blue”, or heightened alert, and ready to respond due to continuous light to moderate rains. Transport vehicles are now ready for deployment while the deployable emergency-response team and its operation center are now in full manning complement. The Department of Health-

Caraga has prepositioned medicines and medical supplies, hygiene kits and jerry cans worth P2,419,106.70 for the five provinces of the region. The Department of Social Welfare and Development-Caraga has also prepositioned 6,100 family food packs for the geographically hard to reach areas. Other than the family packs, the regional DSWD has available nonfood items amounting to P1,216,458.33 readied for augmentation. Auring is expected to move 85 kilometers east northeast of Hinatuan, Surigao del Sur, on Saturday afternoon and to be in the vicinity of Barangay Masao in Butuan City by Monday afternoon. Tropical Depression Auring maintained its strength as it threatened Surigao del Sur, the state weather bureau said on Sunday. In its 11 a.m. weather bulletin, the Philippine Atmospheric Geophysical and Astronomical

Services Administration (Pagasa) said Auring was located at 75 km east of Hinatuan, Surigao del Sur, with maximum winds of up to 55 km per hour near the center and gustiness of up to 70 km per hour. The tropical depression is slow moving in a west northwest direction at 7 km per hour. TCWS 1 is hoisted over the provinces of Bohol, Siquijor, Negros Occidental, Negros Oriental, Southern Leyte, Cebu, Guimaras, southern part of Iloilo, southern part of Antique, Agusan del Sur, Agusan del Norte, Surigao del Sur, Surigao del Norte, including Siargao Island, Dinagat province, Misamis Oriental, Misamis Occidental, Bukidnon, Camiguin, Davao del Norte, Northern Davao Oriental, Northern Zamboanga del Norte, Lanao del Norte, Northern Lanao del Sur and Compostela Valley. Auring is expected to make a landfall over Surigao del Sur between Sunday evening and

Monday morning. Pagasa advised residents from areas under TCWS 1 and the rest of Eastern and Central Visayas to be alert for possible flashfloods and landslides. The estimated rainfall amount is from moderate to heavy within 300 km diameter of the tropical depression. Fishermen and those with small boats are also advised not to venture out over the eastern seaboards of the Visayas and of Mindanao. Auring is forecast to be at 45 km west northwest of Butuan City, Agusan del Norte on Monday, at 130 km south of Cuyo, Palawan, on Tuesday and at 140 km west northwest of Puerto Princesa City, Palawan on Wednesday. It is expected to exit the Philippine Area of Responsibility on Thursday. At least two domestic f lights of Ph i l ippi ne A i rl i nes (PA L) were canceled on Sunday owing to bad weather.

These are the 2P 2095/2096 Manila-Surigao-Manila flights, the Manila International Airport Authority (MIAA) reported. Meanwhile, sea transport from Iloilo bound for Negros Occidental and Mindanao was canceled effective Sunday, following the hoisting of TCWS 1 in these places. LCdr. Ramil Palabrica of the Coast Guard (PCG)-Iloilo said Memorandum Circular 03, series of 2013, mandates that no sea vessel of any type of tonnage shall be allowed to sail, except to take shelter, when TCWS 1 or higher is hoisted within its point of origin, the intended route and point of destination. Trips to Negros Occidental via Estancia, Dumangas and Lapuz ports were affected by the cancellation. Palabrica said coordination with shipping agencies has been done on how they could extend assistance to affected passengers. Negros provinces have been placed under TCWS 1 by Pagasa.

AseanMonday BusinessMirror

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Indonesia govt to curb negative research by foreign banks

ndonesia’s government is considering curbs on negative research reports by foreign banks, building on its decision to punish JPMorgan Chase & Co. for issuing a bearish call on the country’s equity market. The finance ministry may ask top management at global banks, which hold primary dealerships in Indonesian sovereign bonds, to sign pledges to refrain from issuing research that could destabilize local financial markets, according to Loto Srinaita Ginting, the ministry’s director of government securities. The proposal was discussed with some primary bond dealers at a meeting last mid-December, according to a person familiar with the matter. It would require approval by Finance Minister Sri Mulyani Indrawati, another person said. Indonesia this week said it stopped using JPMorgan as a primary dealer and underwriter of sovereign bonds, a retaliation for a November report downgrading the country’s equities to “underweight” from “overweight” following Donald J. Trump’s US election victory. Commenting on the decision to cut government ties with JPMorgan, Mulyani said on Tuesday banks should take responsibility for economic reports that “could influence fundamentals and psychology.” Global banks that hold primary dealerships in Indonesian government bonds include Standard Chartered Plc., HSBC Holdings Plc., Deutsche Bank AG and Citigroup Inc. HSBC Indonesia’s head of communications, Daisy Primayanti, declined to comment on the proposed curbs, as did representatives of the other three banks.

Other warnings

Official attempts to deter critical research are nothing new in developing economies. Last July Turkey’s banking regulator issued an industry-wide warning to avoid negative reports. In 2014 then-Brazil President Dilma Rousseff chastised an analyst for suggesting her election would hurt the economy. As money managers around the world pull capital from developing economies on concerns over rising US interest rates and a stronger dollar, policy-makers are becoming especially sensitive to critical analyst opinions, according to Medley Global Advisors. Foreign investors sold a net $2.8 billion of Indonesian stocks and bonds last quarter as investors dumped emerging-market assets following Trump’s victory. That drove the rupiah lower, forcing policymakers to intervene to stabilize the currency. JPMorgan’s business in Indonesia continues to operate as normal and the bank is working with the finance ministry to resolve the matter, it said in e-mailed statement on Tuesday. The November research report issued by the bank was not “accurate or credible”, Robert Pakpahan, the Indonesian finance ministry’s director general for budget financing and risk management, told reporters in Jakarta.

Bond offerings

The biggest US bank was part of a underwriting syndicate when Indonesia sold €3 billion ($3.1 billion) of bonds last June. The lender wasn’t listed as a member of syndicates for two more recent offerings denominated in yen and US dollars, according to data compiled by Bloomberg. JPMorgan provides investment and commercial banking services to the public and private sectors in Indonesia, according to the bank’s web site. It obtained an Indonesian banking license in 1968 in the name of Chase Manhattan, and opened a branch in Jakarta, followed by a representative office in 1978. Bloomberg News

Editor: Max V. de Leon • Monday, January 9, 2017 A7

US official: Myanmar abuses against Rohingya appear ‘normal, allowed’

ASHINGTON—Abuses appear “normal and allowed” in Myanmar’s response to an armed uprising by Rohingya Muslims, a senior US official said in an interview, casting a pall over one of President Barack Obama’s legacy foreign-policy achievements.

Obama and his advisers have long held up the former pariah nation’s US-backed shift from military rule as a breakthrough for American interests and democratic values in Southeast Asia. But the situation in strife-hit Rakhine State makes the transition no straightforward success story. Rakhine has been largely closed off to foreigners, including aid workers, since a deadly insurgent attack against the police last October. Subsequent “clearance operations”, led by the military and reminiscent of its decades of junta rule, have left at least dozens dead. Tens of thousands of Rohingya have escaped to neighboring Bangladesh. A Myanmar government-appointed commission, led by a former general, this week said there was insufficient evidence so far to support allegations of rape and killings by security forces that have been made by Rohingya villagers fleeing northern Rakhine, which remains off-limits to journalists. Tom Malinowski, the State Department’s human-rights chief, questioned the credibility of that investigation. He said a video of Myanmar police kicking and beating Rohingya—filmed by the police

and recently surfaced on social media—suggests a disturbing pattern. “People don’t film themselves committing a human-rights abuse unless they think that doing so is normal and allowed,” Malinowski told The Associated Press. “What that video suggests to me is that this kind of behavior, at least with respect to whatever unit or elements of the security forces was involved, has become normalized, much as the photographs at Abu Ghraib taught us the same lesson about things that were going on in our military in Iraq at the time,” he said. The government of Myanmar, also known as Burma, has verified the video and detained the police officers involved. But it insists the incident is an “isolated case”. Human-rights groups and neighboring, Muslim-majority Malaysia accuse Myanmar’s civilian leader, Aung San Suu Kyi, of failing to protect the Rohingya. The Nobel peace laureate is hobbled by her lack of control over the powerful military but harsh national politics also play a role. Myanmar’s majority Buddhists loathe the Rohingya. Many of the more than 1 million-strong community have lived there for genera-

IN this December 3, 2016, file photo, Rohingya women and children wait in a queue to collect water at the Leda camp, an unregistered camp for Rohingya in Teknaf, near Cox’s Bazar, a southern coastal district about, 296 kilometers south of Dhaka, Bangladesh. Abuses appear to be “normal and allowed” in Myanmar’s security crackdown in response to an armed uprising among its Rohingya Muslims, a senior US official said in an interview, casting a pall over one of President Barack Obama’s legacy foreign-policy achievements. AP

tions, but they lack citizenship. The Rohingya bore the brunt of intercommunal violence with Buddhists in Rakhine in 2012 that left hundreds dead and forced more than 100,000 into squalid camps. The plight of the Rohingya has attracted the attention of Muslim extremists. US officials say there are credible reports that wealthy backers in Gulf nations and the Rohingya diaspora are providing funds and training for a newly emerged insurgency in Rakhine. The Myanmar government says the insurgent group—known as Harakah al-Yaqin, or Faith Movement—has hundreds of fighters. It

says the group is led by Havid Tuhar, a 45-year-old Rohingya who was raised in Saudi Arabia. The government claims he trained with Taliban in Pakistan. Havid Tuhar has appeared in several videos posted on social media surrounded by rag-tag, barefoot guerrillas, urging young Rohingya men to fight. As early as two years ago, Malinowski said, the US expressed fears to Myanmar’s government that the grievances of Muslims needed to be addressed. Otherwise, he said, “outside forces would eventually exploit those grievances to promote a violent reaction.”

“It does seem that something like that, at least on a small scale, has happened,” Malinowski said. The US would be prepared to share with Myanmar credible threat information to help the civilian leadership respond effectively to attacks, he said. He would not say if any actionable intelligence has been shared to date. “We do want to support the government of Burma in protecting its people and its borders. We want to help them do it the right way. That means not falling into the trap of an indiscriminate response that fuels recruitment for groups that may be using violence,” Malinowski said. AP

Uprooted by war, fearing troops, Myanmar girls learn karate By Esther Htusan Associated Press

E YANG, Myanmar—Every afternoon, dozens of teenage girls at the school for displaced children line up on the grounds, dressed in white uniforms with belts of various colors: yellow, blue and white. They kick high and jump with glee before settling into their exercises, shouting in Japanese as they punch into the air. The reason many of these girls are in this class is sobering: They want protection from their own country’s military. Mostly between 13 and 16, they have lost their homes, and in some cases their families, to the long-running civil war in Myanmar’s Kachin state—a war in which soldiers have been repeatedly accused of raping girls and women, but rarely prosecuted. This karate class offers some small sense of power to the vulnerable. “For all the girls, we teach them how to protect themselves when someone tries to sexually assault them and how to fight back,” instructor Hkun Naw said. “Basically teaching the girls to make themselves safe. “We wanted to make sure all the internally displaced children have the right to do something that gives them joy, and to be confident.” More than 100,000 people in Kachin state, in Myanmar’s north, have been forced from their homes by fighting between government troops and ethnic Kachin rebels who have sought greater autonomy for decades. A 17-yearlong cease-fire ended in 2011. Je Yang is among the most crowded camps, with more than 8,000 people, including 16-year-old Hkawn

ON this November 29, 2016, photo, internally displaced girls in Jeyang village camp, near the China border, join the karate training for self-defense in Kachin state, Myanmar. Forced from their homes and in some cases torn from their families, young girls and women at a refugee camp in Myanmar’s Kachin state are studying karate to help protect themselves from a known threat: the country’s own military. AP

Ra. She fled fighting in her village of Man Dung while she was at school five years ago, when she was 11. She has not seen her parents since. She once dreamed of becoming a nurse, but no longer. “Because of the political situation and civil war, I cannot become who I want to be, and I am not angry about it anymore,” she said. Hkawn Ra is, however, learning karate, after hearing about rapes and sexual violence against women in the region. A community-based organization operating under the Kachin Independence Organization has held karate classes in Kachincontrolled areas since the year the cease-fire ended, seeking to teach

girls and boys self-defense and selfconfidence. “They [the military] rape women and that’s why I was interested, and decided to learn karate to protect myself at least,” Hkawn Ra said. Women organizations say the military has been long using rape as weapon of war. The Women’s League of Burma says it has documented more than 100 cases of rape and sexual violence against ethnic women by the military army since 2010. The government and the military have remained largely silent on the issue. This fall Muslim Rohingya and rights groups have said soldiers and the police have repeatedly raped members of the ethnic minority

in northwestern Rakhine state. Authorities have been conducting sweeps of the region since last October, when nine border guards were killed by unknown attackers. The government has blocked foreign media from the area, but Rohingya who fled to nearby Bangladesh report rapes and murders by security forces, and satellite images back up their claims of village-burning. At a recent press conference, military Spokesman Soe Naing Oo denied that soldiers in Rakhine were committing any human-rights violations or sexual violence. The Kachin Women’s Association of Thailand and the Legal Aid Network last year released a report

on investigators’ lack of progress in the brutal 2015 rape and murder of the two Kachin volunteer teachers. Dozens of soldiers were housed closed to the rape scene, and several left shortly before the bodies were discovered, but no suspects have been identified. Prosecutions have been few. In 2014 a soldier was sentenced to seven years in prison for raping a 7-year-old Kachin girl in northern Shan state. Accused Myanmar soldiers normally face a military tribunal, but in that case lawyers successfully pressed for a civilian trial. Ethnic minorities overwhelmingly voted for Aung San Suu Kyi’s National League for Democracy last year, helping it replace an elected, but military-dominated, government. But many are now disappointed with her government’s efforts to resolve a host of ethnic conflicts and what they see as the military’s impunity. “Without talking about humanrights violations and ignoring the truth and justice for the victims, there won’t be a real peace and national reconciliation in our country,” said Julia Marip, secretary of the Women’s League of Burma. With little confidence that soldiers will be held to account for misdeeds, the girls in the karate class hope to at least deter them from committing any to begin with. They compete with each other, and some have dreams of fighting professionally. “Our instructor said we can go abroad to learn more skills, and I want to go overseas and be a professional fighter,” 14-year-old Nu Ja said. “When they know how to defend themselves,” said Hkun Naw, the instructor, “they will be able to protect their families, their people and their country.” AP

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Monday, January 9, 2017 • Editor: Lyn Resurreccion

BusinessMirror

Higher mortgage rates seen in 2017

ate Lowenstein has been shopping for a home in Los Angeles, on and off, for more than a year. His search has been stymied by a stubbornly low roster of homes on the market and the hurdles that come with it: multiple competing bids and higher prices.

“It’s not a great market, from a buyer’s perspective,” said Lowenstein, a lawyer. “The one good thing is that interest rates were quite low.” As recently as last summer, homebuyers had ultra-low mortgage rates on their side. It was good news for any borrower, but especially for those in expensive housing markets, like Los Angeles, Boston and Seattle. That was then. While mortgage rates remain very low by historical standards, they’ve risen sharply over the past couple of months, with the average rate on a 30-year fixed-rate mortgage reaching 4.2 percent this past week. The rate got as high as 4.32 percent a week before that, its highest level since 2014 and well above the past year’s average of 3.65 percent. Economists predict that mortgage rates will continue to climb this year, just one of the trends that suggest that 2017 will be a more challenging year for homebuyers. “With higher mortgage rates, you’re increasing the cost, challenging the budgets, challenging the ability to qualify and, as a result, likely reducing somewhat the pool of potential buyers,” said Jonathan Smoke, chief economist for Realtor.com. So far, the rate increases haven’t begun to worry Lowenstein, who is in the market for a house with at least three bedrooms in LA’s affluent west side. His budget: Between $1.6 million and $1.8 million. “We’re not priced out yet,” Lowenstein said. “But if it goes up to 5 percent or 6 percent, at some point we would be.” Long-term mortgage rates tend to track the yield on the 10-year US

The average mortgage rate this past week

Real-estate agent Lauren Newman (right) prepares to show Steve Martin a home for sale in Mount Pleasant, South Carolina, just over the bridge from historic Charleston. AP/Chuck Burton

information company. “My advice to buyers would be to not freak out and feel a sense of urgency,” she said. “If you aren’t able to buy a house at 4.5 percent, you probably weren’t able to buy a house at 4 percent.” The stakes are a bit higher for buyers in expensive markets, where housing can eat up a much larger share of household income. If mortgage rates continue to climb, there are moves that would-be homebuyers can make to better offset some of the higher borrowing costs. Consider lowering the interest rate by paying a fee to the lender up front, something known as buying down the interest rate. Or go with an adjustable-rate mortgage, which has a low fixed rate for a few years, typically five or 10, then adjusts to a higher rate. Another move: Ask the seller to pay the buyer’s closing costs. That can free up more cash for buyers to manage the higher borrowing costs. Higher mortgage rates could have one silver lining: As some buyers are priced out, sellers may have to be

Trump’s son-in-law eyes biz exit for White House role

EW YORK—Jared Kushner, President-elect Donald J. Trump’s son-in-law and one of his closest advisers, is taking steps to distance himself from his sprawling New York real-estate business in what is the clearest sign yet he is planning to take a position in the new administration. Kushner, who is married to Trump’s daughter Ivanka, must clear a series of hurdles before he takes any post in Washington. He will need to argue that a federal antinepotism law that bar officials from appointing relatives to government positions does not apply to him, as well as eliminate potential conflicts of interest between his family’s multibillion-dollar real-estate empire and his government duties. Kushner, who often has the last word with the president-elect before a major decision is made, has explored stepping away from his role as CEO of the real-estate business and has consulted with federal officials about resolving potential conflicts, according to his lawyer. “Mr. Kushner is committed to complying with federal ethics laws and we have been consulting with the Office of Government Ethics regarding the steps he would take,” said Jamie Gorelick, a partner at the law firm of WilmerHale, in a statement. “Although plans are not finalized, Mr. Kushner would resign from his position at Kushner Companies and divest substantial assets in accordance with federal guidelines.” Gorelick said Kushner “would recuse from particular matters that

would have a direct and predictable effect on his remaining financial interests. He would also abide by federal rules requiring impartiality in particular matters involving specific parties.” Kushner’s challenges highlight a notable pattern of the incoming administration. While some government officials will be forced to divest and rearrange their financial portfolios to comply with federal ethics laws, their boss will not be required to do the same. As president, Trump is exempt from laws aimed at ensuring federal employees’ personal financial interests do not influence their decisions. The president-elect has said he intends to distance himself from his own international real-estate business, but he has suggested he intends to break from precedent by retaining a stake in the company. Trump is expected to announce some plans for his business during a Wednesday news conference. The Kushner Companies is a major real-estate investor in New York and elsewhere and participated in roughly $7 billion in acquisitions in the last decade. If Kushner joined the administration, he would divest some of business interests, including his stake in a major Fifth Avenue skyscraper, according to his spokesman Risa Heller. Kushner has spent months negotiating a redevelopment of that building with Anbang Insurance Group, a real-estate giant with close ties to the Chinese government, The New York Times reported on Saturday.

China reserves hover above $3 trillion on govt support

4.2%

Treasury note. The yield goes down when investors bid up bond prices, as they did following last summer’s vote in Britain to exit the European Union. The move sent long-term mortgage rates tumbling as low as 3.41 percent. The reverse happened after Election Day. Investors bet that a Republican-controlled White House and Congress will have a clear path to implement policies that will drive inflation and interest rates higher. A sell-off in US bonds drove the yield on the 10year Treasury note last mid-December to the highest level in more than two years, and mortgage rates have floated higher with the tide. But will they continue to do so? Smoke predicts mortgage rates will reach 4.5 percent in 2017. Other economists expect rates to remain above 4 percent but not to go beyond 5 percent this year. That range would mean mortgage rates that would be low compared with the past decade. Average long-term mortgage rates were above 6 percent during the height of the last housing boom, and they hadn’t hit 5 percent before 2008. So someone looking to buy a home in the next few months doesn’t need to panic, said Svenja Gudell, chief economist at Zillow, a real-estate

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In addition to working through that nest of potential conflicts, Kushner has also been consulting lawyers about a federal antinepotism law that bars officials from appointing relatives to government positions. The 1967 law, which was seen as a response to President John Kennedy selecting his brother Robert Kennedy as attorney general, would also be a potential obstacle for Ivanka Trump, who is also expected to have a role in her father’s White House. Some Trump advisers have argued that the law does not apply to the White House, only Cabinet agencies. “The antinepotism law apparently has an exception if you want to work in the West Wing, because the president is able to appoint his own staff,” Trump adviser Kellyanne Conway said last December. “The president does have discretion to choose a staff of his liking.” As precedent, some Trump backers have pointed to the woman the president-elect defeated in last year’s bitter White House race: Hillary Clinton. President Bill Clinton’s decision to put his wife in charge of his healthcare reform efforts was challenged in court, but two federal appeals judges said the antinepotism law did not appear to cover White House staff appointments. But if Trump finds White House roles for his daughter and son-in-law, he’s walking an ethical tightrope that could set a precedent for future presidents, said Norm Eisen, who served as President Barack Obama’s chief ethics counselor. AP

more flexible on prices. Over time, that could help stem home prices. Low inventory and strong demand helped increase prices in 2016 at the fastest pace in 10 years, according to an analysis by Zillow. The company predicts that US prices will increase about 3 percent on average in 2017, down from a gain of about 6.5 percent last year. Declining affordability is one reason the National Association of Realtors (NAR) predicts that homes sales will rise 2 percent this year. Compare that with the 15-percent increase in sales through the first 11 months of 2016. Even buyers who can weather higher mortgage rates may have to brace for a long home search this year. The inventory of homes for sale is expected to be tighter in 2017 than it was last year. While it varies by market, nationally, fewer than 1.9 million homes were on the market last November, down 9 percent from a year earlier, according to the NAR. Homebuilders aren’t building enough homes to make up for the

shortage, citing a lack of ready-tobuild land, labor shortages and rising building materials costs. Buyers can also expect more competition in 2017 as millennials continue to transition from renting to homeownership, particularly in more affordable markets in the Midwest and South. First-time buyers accounted for roughly 32 percent of home purchases through the first 11 months of 2016, up from 30 percent in the same period a year earlier, according to the NAR. Affordability remains a hurdle for many first-time buyers, but qualifying for financing may get a bit more accessible in 2017. Fannie Mae and Freddie Mac increased the limit of the mortgages they will buy from lenders on January 1 to $424,100 from $417,000. In more expensive markets, the mortgage giants will accept loans as high as $636,150, up from $625,500. Banks may also have an incentive to loosen lending standards if rising mortgage rates continue to dampen demand for mortgage refinancing. AP

Merkel ally in Brussels faces grilling on EU budget post

erman Chancellor Angela Merkel’s appointee to the European Commission Guenther Oettinger is known to have teflon qualities. He may be about to prove it. Oettinger will face a hearing on Monday in Brussels on his new role as chief of the European Union (EU) budget, a position that carries increased influence as the bloc weighs the financial fallout of the United Kingdom’s planned departure. His switch from the EU’s digital-economy commissioner follows an outcry over an October speech in Hamburg in which he reportedly referred to Chinese people as “slit eyes”, said women couldn’t succeed professionally without quotas and questioned the merits of gay marriage. The hearing will be in the European Parliament, where some members lashed out at Oettinger for the comments that he later said “created bad feelings and may even have hurt people.” He might also be grilled for having failed to disclose a May 2016 flight from Brussels to Budapest on the private plane of a German businessman and lobbyist. Still, denying Oettinger the European budget job would be a political embarrassment for Merkel as she prepares to seek a fourth term and for the commission, the EU’s executive arm, as it gears up for the Brexit negotiations. It would also risk damage within the EU Parliament, whose two biggest political families—the Christian Democrats and Socialists— comprise the ruling coalition in Germany.

“Oettinger will probably make it through with bruises,” said Doru Frantescu, CEO of VoteWatch Europe, a Brussels-based think tank. “There will be a lot of noise coming from the antiestablishment parties on the right and the left, but the centrist political forces have strong reasons not to rock the boat.” Oettinger’s new job puts him in charge of a €140-billion ($148-billion) annual budget at a time when rich EU countries, including Germany, are increasingly sensitive about their net payments to the bloc. In addition to facing a Europe-wide public backlash against the EU, national capitals are bracing for a European budget blow from Brexit because the UK is among the net contributors. Oettinger, a Brussels veteran who was European energy commissioner from 2010 until 2014, has history and the rules on his side as he seeks to win EU Parliament backing for his latest commission role. The bloc’s Parliament has never vetoed a portfolio change by a standing European commissioner. In addition, because Oettinger is already a commissioner, the change of jobs faces a verdict merely by the leaders of the assembly rather than by its members as a whole. The January 9 hearing is scheduled to take place from 6 p.m. until 8:30 p.m. in front of the EU Parliament’s budget, budgetary-control and legal-affairs committees. They will then send a recommendation to the heads of the assembly’s political groups and its president, who will issue an opinion due on January 12. Bloomberg News

hina’s foreign-currency holdings remained above $3 trillion last December even as the yuan capped its steepest annual decline in more than two decades. Reserves fell $41.08 billion to $3.01 trillion, the People’s Bank of China (PBOC) said in a statement on Saturday. That matched a $3.01 trillion estimate in a Bloomberg survey of economists. China may take measures to keep its foreign-currency stockpile from slipping too far below the key $3trillion mark to avoid hurting investor confidence and spurring further declines in the yuan, according to economists at major banks. Policy-makers have recently rolled out extra requirements for citizens converting yuan into other currencies after the annual $50,000 quota for individuals reset on January 1. “China’s government is well positioned to control outflows more effectively if it wants to, though it may not want to be seen as reversing China’s ‘opening’ strategy,” Wang Tao, head of China economic research at UBS Group AG in Hong Kong, wrote in a recent note. “In the long run, it may not have much choice if FX reserves fall more sharply on the back of intensifying capital outflow pressures.”

Central bank

The decline of foreign exchange reserves last December was mainly because the central bank supplied funds to maintain balance in the foreign-exchange market and the depreciation of non-US dollar currencies, the State Administration of Foreign Exchange (SAFE) said in a separate statement on Saturday. For the full year of 2016, the SAFE said the central bank’s effort to stabilize the yuan was the key reason for the drop in reserves. “The combination of policyinduced yuan stabilization and higher reporting requirements for households buying FX will buy the PBOC a little breathing room, preventing escalating outflows in the first month of the year,” Tom Orlik, chief Asia economist at Bloomberg Intelligence in Beijing, wrote in a note. Policy-makers intensified new measures at the beginning of the new year to choke capital outflow, including extra requirements for citizens converting yuan into foreign currencies. Last week the currency posted greater volatility, with the offshore rate notching up its biggest two-day gain on record just days after completing its worst yearly performance against the dollar. The yuan fell 0.9 percent last month, capping a 6.5 percent drop over the year. Policy-makers now may prefer using capital controls instead of burning through foreign-exchange reserves to defend the yuan, said Gao Yuwei, a researcher at the Bank of China Ltd.’s Institute of International Finance in Beijing.

Dollar rally

There are still uncertainties facing the yuan as to whether the resurgent dollar will continue its rally in January and the Federal Reserve’s future US interest-rate hikes, said Wen Bin, a researcher at China Minsheng Banking Corp. in Beijing. China’s gold reserves stood at $67.9 billion by the end of December 2016, compared with $69.8 billion a month earlier. The nation kept gold reserves unchanged at 59.24 million troy ounces for a second month last December, the first time it halted purchases for two consecutive months since disclosing holdings as of June 2015. Bloomberg News

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In Sweden, happiness in a shorter work day can’t overcome cost

controversial experiment with a six-hour workday in one of Sweden’s largest cities wrapped up this week with a cheerful conclusion: Shorter working hours make for happier, healthier and more productive employees. There’s just one catch: The practice is too expensive and unwieldy to become widespread in Sweden anytime soon. The two-year trial, which took place in the southern city of Gothenburg, centered on a municipal retirement home where workers were switched to a six-hour day, from eight hours, with no pay cut. Seventeen nursing positions were created to make up for the loss of time, at a cost of around €700,000 ($738,000) a year. Although it was small, the experiment stoked a widespread discussion about the future of work, namely, whether investing in a better worklife balance for employees, and treating workers well rather than squeezing them, benefits the bottom line for companies and economies. “The trial showed that there are many benefits of a shorter working day,” said Daniel Bernmar, leader of the Left party on Gothenburg’s City Council, which had pushed for the experiment. “They include healthier staff, a better work environment and lower unemployment.” But the high price tag—and political skepticism about the practicality of a shorter workday—was likely to discourage widespread support for taking the concept nationwide. “The government is avoiding talking about the issue,” Bernmar said. “They’re not interested in looking at the bigger picture.” While a growing number of countries and companies are studying the concept of employee happiness, the idea of improving it through shorter work hours has not gained broad traction. In Gothenburg the City Council’s conservative opposition parties derided the experiment as a utopian folly and sought to kill it, citing high costs for taxpayers and arguments that the government should not intrude in the workplace. The government is also not backing a shorter workweek. Even the handful of progressive political groups aligned with Bernmar’s Left party have not made a sixhour workday in Sweden a priority in their platforms. Nor have large Swedish companies, including multinationals active around the world, embraced the idea. Other Swedish towns that previously conducted limited experiments with a shorter public-sector workweek eventually abandoned the concept, citing high costs and flawed implementation. A similar model in France has been controversial for more than 15 years, ever since a Socialist government made a 35-hour workweek mandatory. François Fillon, a conservative politician who is considered the front-runner to become France’s president in elections in May, has vowed to kill it if he wins.

Companies of all sizes in France have complained repeatedly that the short workweek requirement has damaged competitiveness and generated billions in additional costs. French unions defend the measure as protecting workers from employers who might otherwise return to more onerous workplace conditions. Still, some large companies are beginning to explore the argument that happy workers may make better, more productive employees. Amazon, Google and Deloitte recently began experiments to compress the 40-hour week into four days for some employees. Amazon, which has come under fire for encouraging employees to work long hours, announced in the summer that it would test a 30-hour workweek for a small group of employees and managers, giving them 75 percent of their current pay but leaving them with the same benefits as other workers. In the experiment at the Gothenburg retirement home, employees reported working with greater efficiency and energy when their hours were cut to six from eight a day. They called in sick 15 percent less than before and perceived their health to have improved at least 20 percent, according to a preliminary review issued last year. At a nearby municipal retirement home, where a control trial left working conditions unchanged, employees reported increased blood pressure and said they perceived no improvement in their health, peace of mind or alertness, the review showed. A final report is to be released in March. The program increased Gothenburg’s costs 22 percent, mostly to pay for new employees. But around 10 percent was offset by reduced costs to the state from people being taken off the unemployment rolls and paying taxes into the system, rather than receiving state subsidies, Bernmar said. Modest experiments are moving ahead in a handful of small towns in Sweden, mostly in the public healthcare sector, to see if the results from Gothenburg can be duplicated. This year, four additional Swedish municipalities are expected to start research programs. A small but growing number of private Swedish companies, mainly technology start-ups, are also dabbling with the concept, following the lead of some established companies, including a Toyota service center in Gothenburg that has successfully operated on a six-hour day for more than a decade. The bigger issue, Bernmar argues, is whether policy-makers are willing to explore a connection between human happiness and health and productivity. Despite arguments that governments have no business in setting happiness as a public policy goal, leaders in several countries, including Italy, Japan and Qatar, are increasingly paying attention to the concept. The question, Bernmar added, was “should we work to live, not live to work?” New York Times News Service

Monday, January 9, 2017 A9

US recovery finally aiding workers through pay hike

President Barack Obama holds a town-hall meeting after a brutal jobs report, the first issued during his administration, in Elkhart, Indiana, on February 9, 2009. The Obama years have been a gloomier period for American workers than the those of Ronald Reagan or Bill Clinton, but Obama’s record looks much better if you make adjustment for the fact that he took office in the middle of an economic free fall, or if you compare him with either President Bush. Ruth Fremson/The New York Times

t has been a long time coming— eight years, in fact—but the economic recovery is finally showing up in the average US worker’s paycheck in a big way. There have been plenty of winners in the recovery, which began in mid-2009: companies, homeowners, investors and, especially, households at the apex of the economic pyramid. But the paucity of gains in take-home pay has stoked anxiety and frustration for many others, a factor in the wave of discontent that Presidentelect Donald J. Trump rode to victory last November. But even as Trump prepares to succeed President Barack Obama in two weeks, the Labor Department reported on Friday that average hourly earnings rose by 2.9 percent last year, the best annual performance since the recovery began. And many economists expect the trend to gain momentum this year, as a tighter labor market forces employers to pay more to hire and retain workers. “This is a turning point for the overall economy,” said Diane Swonk, a veteran independent economist in Chicago. While wage growth was robust last year, government data for December showed a more tepid increase in employment, with 156,000 jobs added during the month, and a slight uptick in the unemployment rate to 4.7 percent. Until recently, a rise in salaries one month would peter out the next, but the upward trajectory in 2016 reflects wage gains even for Americans at the low end of the pay scale, Swonk said. Leisure and hospitality workers, for example, saw hourly earnings jump 4.4 percent from a year earlier, equal to the increase enjoyed by employees in the surging technology sector. To be sure, a number of the economic problems cited by Trump

2.9%

The rate of increase of average hourly earnings last year according to the Labor Department during the campaign remain: millions of former workers not even looking for jobs, ebbing factory positions and fewer opportunities for the 55 percent of Americans without college degrees or other post-highschool credentials. “Strong economic growth doesn’t really matter if it’s not widely distributed,” Swonk said. “You can have a better economy but still not good enough for people who aren’t participating at all.” A more comprehensive government barometer of unemployment— which includes workers forced to take part-time jobs because full-time positions were not available—stood at 9.2 percent last December, a much higher level than at this point in past recoveries. But rising wages should counter the economic undertow, especially if the gains remain broadbased. And while a 2.9-percent increase may not sound like much, it goes much further because inflation is about 1.7 percent. Economists expect wages to rise by up to 3.5 percent in 2017—still below the gains many workers saw in the recovery of the mid-2000s, and in the tech-fueled boom of the late-1990s.

Although not reflected in the December figures, many low-wage workers are getting raises this year because of state increases in the local minimum wage. Some of the increases were substantial, with Arizona, Maine and Washington each raising the floor by $1.50 or more an hour. Even in California, where, at 50 cents an hour, the wage gain is not as steep, one in 10 workers has gotten a raise. And minimum-wage gains can have a spillover effect, pushing up pay for workers just above the bottom salary tier. For all his criticism during the campaign of Obama’s economic stewardship, Trump will inherit an economy that is fundamentally solid. Consumer sentiment, corporate profits and the stock market are all at or near multiyear highs. On Friday Wall Street embraced the not-too-hot, not-too-cold labor market figures, lifting the Dow Jones industrial average close to 20,000 and a new nominal record. Investors and traders are watching the jobs data closely for clues about when the Federal Reserve (the Fed) Board may next raise interest rates. Last month the Fed increased interest rates for only the second time in a decade, and policy-makers signaled that three more increases could come this year. The wage gains are among the reasons the Fed is likely to stick to that plan, Swonk, the Chicago economist, said. Monthly job creation last year was well below the 236,000 average for hiring in 2014 and 2015. But with the economy close to what Fed policy-makers and other experts consider full employment, employers are increasing wages, to retain workers and to attract new ones. While the minimum-wage increases provide a floor when it comes to pay, the ceiling continues to rise in fields like financial services, sales and technology, said Tom Gimbel, chief executive of LaSalle Network, a Chicago staffing company.

“Across the board, I see more aggressive salaries being offered by corporations than at any time in the last 10 years,” Gimbel said. Seasoned sales representatives are drawing base salaries of $150,000 a year, compared with $125,000 two years ago, according to Gimbel. Entry-level software developers who once started at around $50,000 a year can now command $70,000. Other executives in the Midwest also report upward pressure on wages, including in grittier settings than the white-collar fields where engineers and financial professionals cluster. At Lou Malnati’s Pizzeria, which has 46 restaurants in the Chicago area and one in Phoenix, entry-level pay in hourly positions like server, cook and dishwasher is about $11.50 an hour, compared with $10 an hour three years ago. Mark Agnew, the chain’s president, said most of the increase was a result of the steady rise in Chicago’s minimum wage, which has gone from $8.25 in 2014 to $10.50 now. It is set to hit $13 by summer 2019. “We want to stay ahead of the minimum wage because we want to attract the best talent,” Agnew said. A substantial portion of the chain’s 3,000 workers have been with the company for more than 10 years, a rarity in the high-turnover restaurant industry that is another benefit of the slightly higher wages. Economists and politicians have long debated whether raising the minimum wage ultimately hurts workers, as companies cut positions or leave them unfilled in the face of rising labor costs. So far, that has not been the case at Lou Malnati’s, Agnew said. The chain has opened about a dozen new locations in the past three years, adding about 600 workers to its payroll overall. “It’s very tricky, and I know the minimum wage may erode job creation in some industries,” he said. “But in my own company, it hasn’t hurt hiring.” New York Times News Service

Russia bans downloads of LinkedIn phone app

Gabriele Tikman, a nurse who credits her six-hour workdays with helping her job performance, prepares for a surgery at a hospital in Gothenburg, Sweden, on November 5, 2015. While a growing number of countries and companies are studying the concept of employee happiness, the idea of improving it through shorter work hours has failed to gain much traction. Magnus Laupa/The New York Times

ASHINGTON—Smartphone users in Russia can no longer download the LinkedIn app on iPhone or Android devices, following a similar move in China to block The New York Times app on iPhones. The demand by Russian authorities to remove LinkedIn in Apple and Google app stores comes weeks after a court blocked

the professional networking service for flouting local laws that require Internet firms to store data on Russian citizens within the nation’s borders. The action is the equivalent of a nation banning Catcher in the Rye and then forcing booksellers to remove the title from their shelves. It puts Apple and Google in a difficult position. The companies are strong pro-

ponents of open Internet policies and free speech but are now being asked to be agents for governments that censor its citizens. When LinkedIn’s web site was blocked, the apps stopped functioning properly. Removing them from the Google Play store and Apple’s App Store may not have cut off access to content, but it sent a signal that countries can push the tech

giants to remove the apps. Direct blocking of web sites has been done by China, Russia, Turkey and several other nations for years, usually through their state-run Internet service providers. But civil-rights groups say the pressure authoritarian governments are placing on Apple and Google is a new wrinkle.

New York Times News Service

A10 Monday, January 9, 2017

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Gunman in Florida airport faces death penalty

ORT LAUDERDALE, Florida— While investigators try to figure out the motive of an Iraq war veteran accused of killing five travelers and wounding six others at a busy international airport in Florida, the suspected gunman was charged and could face the death penalty if convicted. Esteban Santiago, 26, was charged with an act of violence at an international airport resulting in death—which carries a maximum punishment of execution— and weapons charges. Santiago told investigators that he planned the attack, buying a one-way ticket to the Fort Lauderdale airport, a federal complaint said. Authorities don’t know why he chose his target and have not ruled out terrorism. “Today’s charges represent the gravity of the situation and reflect the commitment of federal, state and local law-enforcement personnel to continually protect the community and prosecute those who target our residents and visitors,” US lawyer Wifredo Ferrer said. Authorities said during a news conference they had interviewed roughly 175 people, including a lengthy interrogation with a cooperative Santiago, who is a former National Guard soldier from Alaska. Flights had resumed at the Fort Lauderdale airport after the bloodshed, though the terminal where the shooting happened remained closed. Federal Bureau of Investigation (FBI) agent George Piro said Santiago spoke to investigators for several hours after he opened fire with a 9mm semi-automatic handgun that he appears to have legally checked on a flight from Alaska.

175

The number of people interviewed by authorities

“Indications are that he came here to carry out this horrific attack,” Piro said. “We have not identified any triggers that would have caused this attack. We’re pursuing all angles on what prompted him to carry out this horrific attack.” Invest igators a re combing through social media and other information to determine Santiago’s motive, and it’s too early to say whether terrorism played a role, Piro said. Last November Santiago had walked into an FBI field office in Alaska, saying the US government was controlling his mind and forcing him to watch Islamic State group videos, authorities said. “He was a walk-in complaint. This is something that happens at FBI offices around the country every day,” FBI agent Marlin Ritzman said. Santiago had a loaded magazine on him, but had left a gun in his

Baggage-claim area of Terminal 1 at Fort Lauderdale-Hollywood International Airport on Saturday, the day after multiple people were shot at the airport. Al Diaz/Miami Herald via AP

vehicle, along with his newborn child, authorities said. Officers seized the weapon and local officers took him to get a mentalhealth evaluation. His girlfriend picked up the child. Last December 8 the gun was returned to Santiago. Authorities wouldn’t say if it was the same gun used in the airport attack. US lawyer Karen Loeffler said Santiago would have been able to legally possess a gun because he had not been judged mentally ill, which is a higher standard than having an evaluation. Santiago had not been placed on the US no-fly list and appears to have acted alone, authorities said.

The attack sent panicked witnesses running out of the terminal and spilling onto the tarmac, baggage in hand. Others hid in bathroom stalls or crouched behind cars or anything else they could find as the police and paramedics rushed in to help the wounded and establish whether there were any other gunmen. Mark Lea, 53, had just flown in from Minnesota with his wife for a cruise when he heard three quick cracks, like a firecracker. Then came more cracks, and “I knew it was more than just a firecracker,” he said. Making sure his wife was outside, Lea helped evacuate some older women who had fallen, he

said. Then he saw the shooter. “He was just kind of randomly shooting people,” he said. “If you were in his path, you were going to get shot. He was walking and shooting.” Over the course of about 45 seconds, the shooter reloaded twice, he said. When he was out of bullets, he walked away, dropped the gun and lay face down, spread eagle on the floor, Lea said. By that time, a deputy had arrived and grabbed the shooter. Lea put his foot on the gun to secure it. Lea went to help the injured and a woman from Iowa asked about her husband, who she described. Lea saw a man who fit his description behind a row of chairs,

motionless, shot in the head and lying in a pool of blood, he said. The man, Michael Oehme, was identified as one of the dead victims on Saturday. Santiago had been discharged from the National Guard last year after being demoted for unsatisfactory performance. Bryan Santiago said on Saturday his brother had requested psychological help but received little assistance. Esteban Santiago said last August that he was hearing voices. “How is it possible that the federal government knows, they hospitalize him for only four days, and then give him his weapon back?” Bryan Santiago said. AP

Mexicans march N. Korea low key on Kim Jong Un’s birthday against gas-price P hike, little looting M EXICO CITY—A protest against Mexico’s 20-percent gasolineprice hike turned violent on Saturday after a lone protester drove his truck into a line of police guarding a fuel distribution terminal in Baja California. Federal police said seven officers were injured in the incident in Rosarito, near the border city of Tijuana. Video showed the small pickup driving straight into the line of riot police, then backing up and speeding off. Largely peaceful protests against the fuel-price increases continued elsewhere in Mexico on Saturday, and looting seen earlier in the week largely subsided. But nervousness remained. Officials in Veracruz, one of the states hardest-hit by the looting on Wednesday and Thursday, said some neighborhood groups had begun to form patrols of residents armed with staves or machetes to ward off looters. Veracruz Gov. Miguel Angel Yunes Linares said 532 people had been detained in his state alone and that social rumors of further looting—apparently unfounded—had caused “an artificial psychosis.” He said that in the northern part of the state, given this psy-

chosis, “the neighbors decided to arm themselves with staves, machetes, creating the impression that there were armed groups of criminals.” Yunes Linares said the government was trying to convince residents to stop such patrolling. The Interior Department reported a total of more than 1,500 people have been detained for looting or disturbances nationwide since protests began early in the week. It is unclear how many have been charged. Hundreds of stores were looted, mainly on Wednesday and Thursday. The police protection of stores has been stepped up since. The federal police reported continued protests, and some highway blockages, on Saturday. Thousands of people marched down main avenues in the western city of Guadalajara on Saturday to protest the increases, which are part of a government effort to deregulate fuel prices. Despite persistent rumors that political interests might have egged on the looters to smear the gas-hike protesters, Yunes Linares said there was “no evidence that political parties were involved.” He said authorities were investigating whether criminal gangs had taken part. AP

YONGYA NG, Nor t h Ko rea—North Korea marked Kim Jong Un’s birthday on Sunday in a decidedly low-key manner. T hough the young leader’s birthday is well-known throughout the country, it has yet to be celebrated with the kind of adulatory festivities that accompany the birthdays of his late grandfather and father. P y o n g y a n g r e s i d e nt s d i d what they do every second Sunday of the new year—joined in sports events. Kim Jong Un, who is believed to be 33 or 34 and the world’s youngest head of state, assumed power after the death of his father, Kim Jong Il, in late-2011. With the official period of

mourning his father’s death over and his own powerbase apparently solid, Kim presided over a once-in-a-generation party congress last May that was seen by many as something of a coronation and the beginning of the Kim Jong Un era. But he has continued to keep a step or two behind his predecessors in the country’s intense cult of personality. Kim’s grandfather, “eternal president” Kim Il Sung, and Kim Jong Il statues and portraits are found in virtually every public space or home. Their pins are worn over the hearts of every adult man and woman. Rumors were rife that a new pin featuring Kim Jong Un would be issued during the May party con-

gress, but they proved to be unfounded. Calendars for this year don’t denote January 8 as anything other than a normal Sunday, and there was no mention of the birthday in Rodong Sinmun, the ruling party newspaper. The only time Kim has been honored in public on his birthday was in 2014, when former US National Basketball Association star Dennis Rodman sang “Happy Birthday” to him before an exhibition basketball game in Pyongyang. North Korean officials say the low-key approach—and the very little information made public about his wife and family—reflects Kim’s “humble” nature and respect for his forbearers. Kim seemed to amplify that image in

his annual New Year’s address, when he closed with remarks about his desire to be a better leader. Even so, 2017 could turn out to be a bigger than normal year in North Korea for Kim-related events. State media have suggested Kim Jong Il’s birthday in February, and especially Kim Il Sung’s birthday in April, will be celebrated in a more lavish-than-usual manner, though exactly what’s in store is not known. Kim Jong Un has already had something of a big New Year’s event—days after his address, tens of thousands of North Koreans rallied in Pyongyang in the customary show of support for their leader. AP

Blast in Syria-Turkey border kills nearly 50

EIRUT—A car bomb ripped through a busy commercial district in a rebel-held Syrian town along the Turkish border on Saturday, killing nearly 50 in a huge explosion that damaged buildings and left rescuers scrambling to find survivors amid the wreckage, opposition activists said. Rescuers and doctors said the explosion was so large there were nearly 100 wounded and burned. Over 50 wounded were transported to the Turkish border town of Kilis for treatment, as local hospitals couldn’t cope. There was no immediate claim of responsibility. Locals said a rigged tanker caused the explo-

sion and blamed Islamic State (IS) militants, who have carried out attacks in the town before. The militant group has been increasingly pressed in Syria and Iraq, and has escalated its attacks against Turkey—which backs Syrian opposition fighters in a campaign against the group in northern Syria. Azaz, only a couple of miles from the Turkish border, is a key town on a route used by opposition fighters moving between Syria and Turkey, and is a hub for antigovernment activists, as well as many displaced from the recent fighting in Aleppo city. Activists say its prewar population of 30,000 has swelled.

It is also sandwiched between rival groups, including Kurdish fighters to the west and Turkeybacked opposition groups to the east. IS militants, who have tried to advance on the key border town before have been pushed back farther east in recent months in the Turkey-backed offensive. The bomb went off early on Saturday afternoon outside a local courthouse and security headquarters operated by the opposition fighters who control the town, resident and activist Saif Alnajdi told The Associated Press from Azaz. “It hit the busiest part of the town,” Alnajdi said, referring to the administrative part of town.

A medical worker speaking to a local media outfit, al-Jisr, said many charred bodies, and body parts mixed with bones and mud, were piled up in local hospitals. Rami Abdurrahman, the head of the Syrian Observatory for Human Rights monitoring group, said at least 48 people were killed, including 14 fighters and guards to the local courthouse. He said the explosion was caused by a rigged water or fuel tanker, which explained the large blast and high death toll. The activistoperated local Azaz Media center and Shabha Press put the death toll at 60, adding that search and rescue operations continued for hours after the explosion. AP

news@businessmirror.com.ph

The World BusinessMirror

Monday, January 9, 2017 A11

Trump backs health repeal, replacement–Speaker Paul

$3T The annual value of US health-care system

Vice President-elect Mike Pence joins House Speaker Paul Ryan of Wisconsin and other House Republican leaders at a news conference on Capitol Hill in Washington, on January 4, following a closed-door meeting with the GOP caucus to discuss repeal of President Obama’s health-care law now that the GOP is in charge of White House and Congress. From left are Rep. Cathy McMorris Rodgers of Washington, chair of the House Republican Conference; Pence; Ryan; and House Majority Leader Kevin McCarthy of California. AP/J. Scott Applewhite

ASHINGTON—A Republican senator who challenged Donald J. Trump for the White House nomination says the presidentelect “fully supports” repealing President Barack Obama’s health law only when there’s a viable alternative to replace it.

Republican leaders in the GOPcontrolled Congress are moving toward a vote on repeal legislation in coming weeks, but they anticipate a transition period of months or years to a replacement. Some Republican lawmakers are expressing reservations about scrapping the law, which now covers 20 million people, without a nearterm replacement. Kentucky Sen. Rand Paul, who

clashed with Trump during the GOP primary, said in a tweet late on Friday the two had a conversation and that Trump agreed with Paul’s approach. “I just spoke to @realDonaldTrump and he fully supports my plan to replace Obamacare the same day we repeal it,” Paul tweeted. "The time to act is now." Trump aides did not immediately respond questions about the conversation and how it had come about.

Nothing about revamping the nation’s $3 trillion-a-year healthcare system will come easy, but GOP leaders want congressional committees to have legislation dismantling much of Obama’s overhaul ready by late-January. They’re hoping Congress can quickly send a measure to the incoming president that would phase out the law, perhaps a couple of months later. Crafting a GOP replacement probably will take more time, thanks to Republican divisions and solid Democratic opposition. It would be a political nightmare for Republicans to repeal the Affordable Care Act and then fail to pass a new version of the law. Sen. Bob Corker, RepublicanTennessee, told reporters on Friday that Republicans might find themselves in a “ box canyon” if they erase the law without a substitute in hand. One part of Obama’s law Republicans are eager to repeal is its tax increases on higher-earning people and segments of the healthcare industry that help finance expanded coverage. Corker said that if those taxes are voided but Republicans temporarily continue subsidies to help people buy coverage, “that means Republicans would have to vote for a tax increase” to pay for them—usually a nonstarter for the GOP. Sen. Ron Johnson, RepublicanWisconsin, said on Friday that if he

had his way, “I would start bringing up those elements that start repairing the damage and I would start taking votes on those right now.” Johnson also expressed concern that Democratic opposition could scuttle the effort. Senate Minority Leader Chuck Schumer, Democrat-New York, has said if Republicans void Obama’s bill, Democrats won’t help them pass alternative legislation. Republicans probably will need just a simple Senate majority to approve their repeal bill, but for procedural reasons, later replacement legislation likely will need 60 votes. Republicans now hold a 52-48 edge in the Senate. That means a need for at least eight Democratic votes, though there will be pressure on 10 Democrats facing reelection next year from states Trump won last November. “I take Minority Leader Schumer at his word that if we do this we’re not going to get any Democratic support. In order to actually pass a replacement, we need Democratic support,” Johnson told reporters. After repeatedly trying to repeal Obama’s law since its 2010 enactment, Republicans are under tremendous pressure from their voters to annul it swiftly. But GOP leaders have talked about their repeal not taking effect for, perhaps, two or three years. They’re discussing providing some type of revenue during that period to maintain coverage for people and, perhaps, for insurers so they won’t immediately abandon markets. Sen. Tom Cotton, Republican-Arkansas, also called this week for a simultaneous effort to erase the healthcare law and rewrite it. “I don’t think we can just repeal Obamacare and say we’re going to get an answer two years from now,” Cotton said on Thursday on MSNBC. AP

Choked by smog, Beijing creates new ecological police

EIJING—Officials in Beijing have announced a new environmental police squad to root out illegal burning, the latest government response to the widespread public anger over China’s persistent problems with smog. Beijing’s acting mayor, Cai Qi, said at a meeting on Saturday that the force would target open-air barbecues, garbage incineration and the burning of wood and other biomass, according to the state-run Xinhua News Agency. Cai announced several other measures on Saturday, including a target of cutting the use of coal by 30 percent in 2017 to shutting down 500 higher-polluting factories and upgrading 2,500 more. About 300,000 high-pollution vehicles will also be restricted from entering the city starting next month, he said. Beijing and dozens of cities in China spend many winter days under a thick, gray haze, with air-pollution levels that routinely exceed World Health Organization guidelines. Beijing spent part of last week under an “orange alert”, the second-highest level in China’s four-tiered air alert system. More than 20 cities were on the highest “red alert”. Smog is an acutely felt issue in China’s cities, where a “red alert” can lead to the closure of schools and businesses, flight cancellations, and shutdowns of highways to

Heavy snow, icy weather grip Italy, Greece and Turkey

OPENHAGEN, Denmark— Heavy snowfall and belowfreezing temperatures continued to sweep the European continent on Saturday, causing more than a dozen deaths, grounding airplanes and crippling ferries in Italy and Turkey. At least 10 people have died in the cold that has gripped Poland in recent days, included seven men aged 41 and 66 who died on Friday, authorities said. A 51-year-old died of asphyxiation with carbon monoxide from a malfunctioning heater. Te m p e r a t u r e s i n Po l a n d dropped below minus 20 degrees Celsius (minus 4oF) on Saturday, and weather forecasts said they would sink more overnight. A man died also died on Saturday in Belgium when his truck slid off a highway. In Italy subfreezing temperatures were blamed for the deaths of a half-dozen homeless people. Heavy snow and high winds resu lted in rerouted f l ights, delayed ferries, canceled trains and closed roads, media reported. With no indications of a letup, some schools in southern Italy were ordered not to open on Monday because a meter-high snow already had buried some areas, the Ansa news agency reported. The chill didn’t spare sunny Rome. The fountains in Saint Peter’s Square froze overnight and dripped icicles instead. Temperatures dropped to minus 7oC (19oF) in Greece’s second-largest city of Thessaloniki, and minus 10oC (14oF) was expected on Sunday, according to the Norwegian Meteorological Institute. Several Greek islands, otherwise known for their sunny and warm weather, were blanketed in snow. Roads were closed temporarily across large swathes of northern

keep cars off the roads. During a red alert in Beijing last month, authorities banned construction crews from spray-painting and even seized the charcoal grills from some restaurants. But enforcement remains an issue. China’s environmental ministr y said during last week ’s red alert that its inspection teams found companies resuming production despite a government ban. Many factories remain under severe pressure to meet production targets regardless of air pollution. Cai on Saturday blamed polluting activities, like burning garbage or wood, on “the result of lax supervision and weak law enforcement.” But China’s pollution is caused chiefly by its thousands of coal-burning factories and a surplus of older, inefficient vehicles. While it tries to answer the loud public calls to tamp down on pollution, China’s Communist government is also grappling with an economic slowdown and the challenge of maintaining growth. China is also the world’s largest producer and consumer of coal, and measures, like capping production days or shutting down older coal mines, run the risk of driving up energy prices and further slowing the economy. AP

Trump to meet UK’s PM, reaffirm ties

A man shovels snow off the sidewalk in an upscale neighborhood of Istanbul, during snowfall on Saturday. Heavy snow clogged roads, shipping traffic in Bosphorus and forced hundreds of flight cancellations in the Turkish metropolis. AP/Mike Gorder

Greece due to snow and ice. Heav y snow a l so c r ippled Istanbul, and national carrier Turkish Airlines canceled more than 650 flights. The state-run Anadolu news agency reported that even the Bosporus Strait— which runs through Istanbul and is one of Europe’s busiest ship-

ping lanes—was closed and ferry service halted. Turkey’s private Dogan news agency reported that one of the main highways in Istanbul practically turned into a parking lot after drivers deserted their cars Friday night to walk home rather than battle the gusting snow and

slippery roads. A pair of delivery men whose truck was parked on a side street made the best of the situation, engaging in a snowball fight in between pushing their loads through mounds of snow that built up at the roadside. In northern Europe, where resi-

dents are accustomed to subzero temperatures and snowy winters, the police in Denmark warned about icy and slippery roads after dozens of minor traffic accidents. Temperatures in Latvia were forecast to drop to minus 30oC (minus 22oF) late Saturday, the Baltic News Agency said. AP

resident-elect Donald J. Trump says he will meet with UK Prime Minister Theresa May in spring as the British leader tries to ease a frosty start to their relationship and expand trade with the US after her country withdraws from the European Union (EU). “I look very much forward to meeting Prime Minister Theresa May in Washington in the spring. Britain, a longtime US ally, is very special!” Trump said on Twitter. May has started a behind-thescenes charm offensive to build bridges with the incoming president. She plans to travel to Washington in the spring, her office said in an e-mailed statement late on Thursday, though no firm timing had been agreed. In an effort to improve her links with Trump, May sent her two most senior aides, Nick Timothy and Fiona Hill, on a secret trip to the US last mid-December to meet members of his team, her office said. The premier’s joint chiefs of staff, Hill and Timothy, are regarded in London as May’s most powerful advisers, holding huge influence over the government of the UK. That May chose to send them both together to meet Trump’s team demonstrates the importance she places on building links with the new White House as the UK looks to expand trade with the US after it withdraws from the EU. May is attempting to recover lost ground. The prime minister suffered the personal embarrassment of being outflanked by her political rival Nigel Farage, the former UK Independence Party leader, who met Trump within days of his victory last November. She was then forced to reject Trump’s controversial suggestion that Farage—who is close to key members of the president-elect’s team—should be made UK ambassador in Washington. Bloomberg News

Science Monday

A12 Monday, January 9, 2017

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

Pisay students top biotech tilt

Meghu Tanti (left), a health assistant, collects blood samples of an elderly woman worker suspected to have malaria on the outskirts of Gauhati, India. The World Health Organization is aiming to reduce malaria cases by 90 percent by 2030, despite repeatedly missing numerous goals to wipe out the killer disease, a significant lack of money, resources and a flawed vaccine. AP/Anupam Nath

Genetically weakened malaria parasites tested for vaccine

ASHINGTON—Researchers infected lab mosquitoes with genetically weakened malaria parasites, and then recruited volunteers willing to be bitten—a lot—to test a possible new strategy for a vaccine.

The idea: Vaccinate using living malaria parasites that are too weak to make people sick. It’s a huge challenge, and while Wednesday’s study is a small step, it illustrates the urgent quest for a powerful malaria vaccine. Mosquito-borne malaria infects more than 200 mil lion people worldwide every year, and kills about half a million, most of them children in Africa. Bed netting and insecticides are the chief protection. The most advanced malaria vaccine candidate, made with pieces of the parasite, protects

200M

The number of people infected with malaria worldwide every year

only about a third of children. Still, the World Health Organization plans pilot projects in Africa in 2018 to test whether the partial protection offers enough benefit for widespread use. Hoping for better protection, a

Seattle team is creating a vaccine with whole living, but weakened, parasites, an approach that has long worked with viruses. First, researchers at the Fred Hutchinson Cancer Researcher Center and the Center for Infectious Disease Research removed three genes from malaria parasites that are critical to human infection. They grew the “genetically attenuated parasites” in mosquitoes, and vaccinated 10 healthy volunteers not with a needle but with the captive insects: For about 10 minutes, each volunteer held out an arm for roughly 150 to 200 bites. Why? Scientists don’t know how to grow malaria parasites outside a mosquito’s salivary glands, explained lead author Dr. James Kublin, a Fred Hutchinson researcher. If the approach pans out, one hurdle will be getting those parasites into a traditional shot. None of the volunteers became sick with malaria, researchers reported in the journal Science Translational Medicine—although the bites caused swelling and itching.

Missing key genes, the parasites couldn’t multiply in the liver in order to spread. But they did spark immune-system defenses capable of completely protecting mice from malaria. Later this year, the Seattle team will test whether a small number of people given the genetically attenuated parasites really are protected when bitten by mosquitoes carrying regular malaria. It’s too soon to know whether genetically engineered parasites are a feasible approach, cautioned Dr. Ashley Birkett, director of Program for Appropriate Technology in Health’s (PATH) Malaria Vaccine Initiative, who wasn’t involved in the work. PATH is an international, nonprofit global health organization based in Seattle. But it’s not the only live parasite attempt. Biotechnology company Sanaria has reported promising early results with a different way of weakening malaria, irradiating thousands of infected mosquitoes and gathering the weakened parasites out of their salivary glands. AP

PHL Global Technology Search team visits Japan institutions

T Schoolchildren gather string beans and radish for the cooking contest.

Growing minds nourished with school-garden recipes

ealthy recipes for children that use produce from school gardens in Laguna elementary schools will soon be published by the Philippine governmenthosted, Los Baños-based Southeast Asian Regional Center for Graduate Study and Research in Agriculture (Searca). The recipes were gathered from cooking contests in five elementary schools in Laguna that serve as pilot sites of a school- and homegardens program led by Searca in cooperation with the Department of Education (DepEd)Laguna and the University of the Philippines Los Baños (UPLB). Participants in the cooking contests were tandems of parents and pupils in planning, marketing, preparing and presenting nutritious, tasty and affordable recipes. The recipe book will feature local recipes that are vegetable-based but more palatable to young people. It is expected to

supplement DepEd’s recipe books used in its school-based feeding program. Searca Director Gil C. Saguiguit Jr. notes the importance of the school gardens in providing an alternative source of nutritious food for schoolchildren, as well as cultivating interest in agriculture among the youth. The pilot elementary schools of the Searca-led school-gardens program are Majayjay Elementary School, Cabuyao Central School, Labuin Elementary School in Pila; Crisanto Guysayko Memorial Elementary School in Nagcarlan; and San Andres Elementary School in Alaminos. Pedro Guevarra Memorial National High School in Santa Cruz is also a pilot school of the Searca-DepEd-UPLB Participatory Action Research on School- and Communitybased Food and Nutrition Program for Literacy, Poverty Reduction and Sustainable Development program.

he Globa l Tec h nolog y Search (GTS) team from two of the Philippines’s top agricultural research institutions visited Japan recently to acquire knowledge on the use of probiotics and prebiotics in aquaculture. The GTS team members are from the Philippine Council for Agriculture, Aquatic and Natural Resources Research and Development of the Department of Science and Technology (DOSTPCAARRD) and the Central Luzon State University (CLSU). Dr. Dalisay D.G. Fernandez, director of the Inland Aquatic Resources Research DivisionPC A ARRD and Dr. Rosalie R. Rafael of the Freshwater Aquaculture Center of CLSU (CLSU) visited Kagoshima University, Nagasaki University and Mie University in Japan. Rafael is the project leader of the DOSTPCA ARRD-funded project, Advances on the Fermentation Process and Application of Probiotics and Prebiotics in Aquaculture. During the visit, the GTS team interviewed Dean Shunsuke Koshio of the Faculty of Fisheries of Kagoshima University as well as other professors and students on the use of probiotics and prebiotics as functional feed additives. The Faculty of Fisheries of Kagoshima University conduct research on the topic.

The incorporation of probiotics in feeds yields better growth and improves health. The GTS team also identified Dean K atsuyasu Tachibana of the Faculty of Fisheries of Nagasaki University and other professors as key informants. The university conducts studies on settlement mechanism of marine invertebrates, biofuelers, dietar y effect of dried algae in short-necked clam and lar val settlement of oysters. The team also inter viewed Dean Takao Yoshimatsu of the Graduate School of Bioresources of Mie Unviersity, as well as PhD candidates and professors from the university. The university conducts studies on dairy fermentation technology used in the formulation of fish feed. Results of these studies showed that solid or liquid probiotics have positive effect on the growth of fingerlings. The visit equipped the team with knowledge on the production, feed formulation, sources and application of probiotics and prebiotics for aquaculture application in the Philippine setting. Results of the interviews will be used to further improve the PCAARRD-CLSU project on probiotics and prebiotics for the benefit of research’s end-users, particularly tilapia farmers. S&T Media Service

eonide s B abanto of Philippine Science High S c h o o l ( P S H S ) - C e nt r a l Mindanao Campus emerged as the grand-prize winner in the recent National Biotechology Quiz Contest for High School. Three other PSHS students also made it to the winners’ circle. They are Eugene Toribio of PSHS Bicol who tied with another competitor for second spot; Erwin Awitan of PSHS Main Campus in Quezon City who bagged third place; and Ed Christian Tudela, also of PSHSCentral Mindanao, who placed fifth. PSHS, popularly called as Pisay, is under the Department of Science and Technology (DOST). The winners were announced during the closing ceremony of the weeklong 12th National Biotechnology Week (NBW) at the Bureau of Soils and Water Management Convention Hall. Organized by the National Institute of Molecular Biology and Biotechnology-Diliman (NIMBBDiliman), the contest aimed to instill in the youth the pivotal role of biotechnology in national development and encourage them to take up science and technology courses in college and become the Philippines’s next wave of scientists. The contest also served as a

hub of interaction between the students and biotechnology specialists in the Philippines. Merriam Webster defines biotechnology as the manipulation through genetic engineering of living organisms and their components to produce useful commercial products, such as pest resistant crops, new bacterial strains, pharmaceutical products and others. Biotechnology also has applications in protection of water quality, conservation of topsoil, improvement of waste-management techniques, production of renewable energy, improvement of manufacturing processes, forensic DNA analysis and similar DNA technologies. The National Biotechology Quiz Contest for High School was held in conjunction with the 12th NBW, which highlighted the different programs and outputs of the government and its partners in the field of biotechnology through exhibits, contests and various forums. Government agencies involved in NBW are NIMBB, DOST, the departments of Environment and Natural Resources, Agriculture, Health, Trade and Investment, Interior and Local Governments and Education; and Commission on Higher Education. S&T Media Service

Tech-support helps sell healthy sugar substitute

aura de Leon was in Grade 6 when she would tag along with her aunt to Divisoria for the latter’s banana business. “Very early in the morning I would go with my aunt to Divisoria, where she would buy bananas. I would be sleeping on top of the pile of bananas we bought. Of the 10 piles of bananas, she would ask me to sell eight and I get the two piles [as my share in the business]. Perhaps, that’s why I was drawn to business because I was exposed to it at a young age,” de Leon said in Filipino. The little girl would later find herself in various businesses, from garments to chemicals, and the latest as the country’s pioneer in healthy sugar—stevia. She’s the president of the Glorious Industrial and Development Corp., the maker of powdered stevia sold in leading supermarket and drugstores.

Of ventures and losses

De Leon’s first venture started when she was 25. She got into the embroidery business for 17 years, until the industry’s downturn due to influx of garments from China. She incurred debts and eventually folded up. The turn of events did not deter her, though. She ventured into chemicals. “I felt like I’d get sick if I would not get into business,” de Leon said. She studied how chemical products are done. A leading grocery store took her as the supplier of the store’s house brand. She began with her production of soap, powder detergent, toilet bowl cleaner, fabric softener, liquid dishwashing and more. However, that ceased when her chemical warehouse was destroyed by fire. Despite her loss, she ploughed on. This time venturing into an unchartered territory: stevia. One of de Leon’s children was taking up medicine when she stumbled on her child’s book and read about diabetes and the rising cases of the disease. Coincidentally, de Leon’s sister suffered a stroke, as a complication of diabetes. Little did she knew that these events would lead her to another enterprise. A doctor told her about stevia, a plant that serves as sugar substitute but is grown only in Paraguay. She became hopeful when she heard the word “plant”. She was reminded of the time when her family was into farming.

She had a child in Europe who was able to send her the seeds of the plant, which would be the core of her business. They struggled for three years to make stevia adaptable to the Philippine soil.

Of pains, triumphs and government’s help

In the early stages while her company was developing possible commercial products, she tried to make use of stevia as feeds to chickens and hogs. She noticed that chickens, which normally laid 12 eggs, were producing 24 eggs when fed with stevia, while the pigs fed with the plant were more meaty and did not smell even without bathing for several months. When a family member suggested approaching the Department of Science and Technology (DOST) for assistance, the family discovered the many services a government office can offer. “When we started inquiring from the DOST, we gained hope. As I said, if entrepreneurs would know DOST’s assistance, it would help them get started,” de Leon said. The DOST-National Capital Region assisted her business in 2010. Among the DOST ’s technology interventions were the cabinet type dryer, form fill and seal machine, calamansi juice extractor, shrink tunnel, bench top pH meter, ref ractometer and digital incubator. The company also availed itself of other DOST services— such as Technology Needs Assessment; Technical Assistance on Food Safety, seminar on Good Agricultural Practices and consultancy for Agricultural and Manufacturing Productivity Improvement. The interventions led to the company’s increased gross sales by 40 percent, improved product quality and safety, and enhanced packaging. It also stopped outsourcing its packaging. The company, Glorious Industrial and Development Corp., is the maker of Sweet and Fit stevia, the first organically grown stevia in the country. The company has been in the business of food and nonfood products for six years now. Before DOST’s assistance, the company had over 30 employees. It has since grown to over a hundred, including stevia growers. Since partnering with the DOST, Glorious has become more proud of its product. S&T Media Service

Green Monday BusinessMirror

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

Monday, January 9, 2016 A13

Cuba has coral and crocodiles, too

Children look at Cuban anoles and other lizards at the Cuba! exhibit at the American Museum of Natural History in New York on November 21, 2016. The museum’s first fully bilingual exhibit aims to honor the country in its entirety, including its history, culture, politics and natural environment. Mark Kauzlarich/The New York Times

n the American imagination, Cuba evokes a scant handful of trademark sights and sounds: sugarcane, rum, 1950s Fords and Chevys, the Buena Vista Social Club. Cigars, of course. And for the last half-century and more, Fidel Castro. But the island—or islands, more than 4,000 of them—is also a great natural theater. Extending nearly 800 miles, greater than the distance between New York and Atlanta, it embraces mangrove swamps, scrubland, savannas, forests and spectacular coral reefs, habitats for the world’s smallest bird (the bee hummingbird), an alarming leaping crocodile and the ultra-elusive ivory-billed woodpecker. In Cuba!, a boutique-size exhibition that opened last November 21, the American Museum of Natural History tries to do honor to all of the above, from the cars and cigars to Santeria rites, rice and beans, the Cienfuegos Elephants baseball team and—live and in changing color—the chameleon-like Allison’s anole lizard. If that sounds like a lot, it is. The show’s curators, Ana Luz Porzecanski of the museum’s Center for Biodiversity and Conservation, and Chris Raxworthy, the curator in charge of its department of herpetology, have worked with a team at the Cuban National Museum of Natural History to deliver Cuba whole—its history, culture, politics and natural environment in the museum’s first fully bilingual exhibition. This is an overly ambitious assignment that delivers less by trying to do more and takes away from the museum’s strong suit, its unparalleled expertise in presenting, and explaining, in a visually arresting way, the wonders of the natural world.

A nation frozen in time

Cuba! starts off with a bang. Just inside the entrance, as improbable and nearly as imposing as a brontosaurus, squats a four-door, two-tone 1955 Chevy Bel Air, headlights and taillights shining, Cuban music wafting from the radio. It opens up pertinent topics: the US embargo, the rickety Cuban economy, the sense of a nation frozen in time. But first and foremost, it is a marvelous piece of sculpture, so dazzling that it would be churlish to point out that no one goes to a natural-history museum to see a car. The exhibition is laid out like a Cuban street, with colonnaded shops on one side. It’s an invitation to saunter, with random sights arranged along the central walkway. There’s a market stall heaped with fruit; a towering, Gumby-like carnival figure in a sparkly, sequined outfit; and a bicitaxi, Cuba’s pedicab, ubiquitous after the collapse of the Soviet Union led to a shortage of fuel. The bicitaxi is a solid-looking piece of work—a 1955 Chevy in its own way—with streamers on the handlebars; a tiny, very painful-looking saddle; and an upholstered seat for two passengers. Any driver who can move it from a position of rest deserves a large tip. Off to the right, beneath a colonnade, a window opens into a cigar-rolling factory, with bundled leaves hanging from the rafters. By flipping aside a metal lid atop a silver canister, you can inhale the heady aroma of a fine Cuban cigar. Next door, a facsimile of a shop celebrates the Cuban national drink, guarapo, made with juice pressed from freshly cut sugarcane stalks. There’s a little of this, a little of that. An old-fashioned Zenith radio, of the kind Ernest Hemingway listened to when he lived outside Havana in the 1940s and 1950s, sits on a stand, broadcasting different types of music as you twist the dial. In one room, the organizers have lovingly recreated shrines to two orishas, or spirits, central to the Afro-Cuban Santeria religion: Ogun, ruler of iron and war, and the ocean goddess Yemaya. Near a café table arrayed with domino tiles, another national religion, baseball,

gets its own display. A series of flippable plastic display cards shows Cuba’s baseball teams—the Tobacco Farmers of Pinar del Río, the Oranges of Villa Clara, the Crocodiles of Matanzas—with a few entertaining facts about each. The Cienfuegos Elephants once intimidated opposing fans with the slogan “The pace of the elephant is slow but crushing.” (Something might have been lost in translation.)

Natural world

The natural world, parked off to one side, offers unexpected thrills. The sheer variety of the Cuban landscape comes as a surprise, erasing the image of the hinterland as an endless vista of sugarcane and tobacco fields. Large dioramas dramatize three of the country’s principal ecosystems: the forests of Alejandro de Humboldt National Park in the extreme southeast; the wetlands of the Zapata Peninsula on the southern coast of northwestern Cuba; and the coral reefs of the Gardens of the Queen, an archipelago off the southcentral coast. This is what we have been waiting for. Although the Cuban giant owl, an awesome predator nearly 4 feet tall, no longer terrorizes rodents, having died out some 12,000 years ago, and sloths the size of Saint Bernards no longer creep through the forest, the park harbors Demarest’s hutia, a brown-furred rodent weighing up to 20 pounds, and the solenodon, an insectivore with a pointy snout and weak, beady eyes that secretes venom through a groove in its front teeth. All are represented and posed, taxidermically, with the flair that you expect from the museum.

Undersea fantasia

The coral reef, flickering with simulated sunlight, plunges the viewer into an undersea fantasia. An enormous black eagle ray, patterned in circles and dashes like a 1950s Formica dinette table, appears to be cruising the sea floor, as striped red lionfish and benign-looking hawksbill turtles wend their way through coral stalagmites. A flatscreen display off to the side brings the reef action to life in an endless film that bears endless watching. Horror lurks. In the Zapata wetlands, Cuban parakeets and spoonbills luxuriate in the tropical humidity, at peace with the world, as an explosion of violence takes place a few steps away. Frozen in midair, a Cuban crocodile, has just pushed off from the sand-bottomed shallows with its powerful tail, whipping the turbid water into a froth, ready to snatch a spoonbill in flight.

Crocodile ‘Fidel’

In a display case nearby is a curiosity: the skull of a Cuban crocodile that died in 2005 after spending most of its life at the Bronx Zoo. After Castro visited the zoo in 1959, visitors began calling the crocodile Fidel. He was a feisty individual. For the annual weighing and measuring of the reptiles in 1967, it took five zookeepers nearly an hour to tape Fidel’s jaws shut and bind him with 100 feet of rope. Across from the dioramas, several display cases contain anole lizards, experts at disguise and masters of the mannequin challenge. A demure Cuban tree frog, intensely green, clings to a branch. All blink mildly when observed, clinging with sensitive fingers to their chosen twigs. There’s another reptile with a temper, the Cuban boa, tightly coiled in the shade of a small tree trunk. “I’ve handled these in the field and thought that they were rather sweet and gentle,” said Raxworthy, the herpetologist, in a walk-through of the exhibition before it opened. “But this one is vicious. It’s actually bitten people and drawn blood.” (He was referring to staff members, not visitors.) New York Times News Service

People stand near electric pylons, watching flow of water discharged through the Three Gorges Dam in Yichang in central China’s Hubei province. Three Gorges Group is spending heavily to buy or build hydro, wind and solar projects at a time when Western utility investors are pulling back and US President-elect Donald J. Trump’s pledge to revive coal use has raised doubt about US support for renewables. Chinatopix via AP

Chinese renewable-power giant builds global empire

EIJING—Other investors are wary of Brazil, but when Duke Energy wanted to sell 10 hydroelectric dams there, a Chinese utility shrugged off the country’s economic turmoil and paid $1.2 billion to add them to an energy empire that stretches from Malaysia to Germany to the Amazon.

State-owned China Three Gorges (CTG) Group is spending heavily to buy or build hydro, wind and solar projects at a time when Western utility investors are pulling back and President-elect Donald J. Trump’s pledge to revive coal use has raised doubt about US support for renewables. “They’re happy to invest wherever they see value or they can gain a foothold,” said Andrew Shepherd, who follows the global utility industry for BMI Research. Flush with cash and willing to tolerate risks that put off older rivals, CTG and other state-owned utilities, including State Grid Corp., the world’s biggest power supplier, are expanding abroad in search of new revenue sources as economic growth and electricity demand at home cool. A decade ago, they built dams and power plants in Asia and Africa. Now, they also are taking on a longer-term role as operators of power companies in Europe and Australia and are looking at the US market. They are providing welcome investment in troubled markets, such as Brazil and southern Europe. Set up in 1993 to r un the vast T hree Gorges Dam in centra l China, CTG is unusua l in its status as a nationa l-level Chinese power company w ith globa l ambitions but a reliance

$10B

The estimated amount China Three Gorges Group spent on hydro and wind assets in Brazil, Germany, Italy, Poland and Portugal

on nonfossil-f uels sources. The company still gets most of its 60 gigawatts of generating capacity from dams. Its namesake 46-gigawatt facility on the Yangtze River competes with Brazil’s Itaipu Dam for the title of world’s biggest hydropower facility. Suc h projects face a bac kl ash over env ironmenta l d a mage a nd forced relocat ion of loca l commu nit ies. In August Brazil ’s environmental agency rejected a proposal by CTG and Portugal’s national power company, Energias de Portugal, to build the 8-gigawatt São Luis do Tapajos Dam on the Amazon. The dam would have flooded land belonging to Munduruku Indians. CTG, which says it is active in 40 countries, starting investing in wind power in 2007 and solar in 2011—projects that are easier and

more politically attractive. In June it bought a wind farm in Germany from Blackstone Energy Partners. A CTG-built dam in Malaysia started commercial generation in May. CTG has a joint venture with Australian start-up RayGen Resources to set up solar projects in China. In the past five years, CTG has spent more than $10 billion on hydro and wind assets in Brazil, Germany, Italy, Poland and Portugal, according to Dealogic, a financial-data provider. It also has built a dam in neighboring Laos and a wind farm in Pakistan. “ Three Gorges Group takes building an international firstrate clean-energ y group as a strateg ic goa l,” the company said in a written response to questions. It said its European presence is a “development platform” for North America. The ruling Communist Party is spending heavily on renewable energy to curb reliance on imported oil and gas and on coal, reduce eyesearing smog and create profitable technologies. Not including large-scale hydroelectric dams, China invested $103 billion last year in wind, solar and other renewable sources, according to the UN Environment Program. The US spent $44 billion. Beijing’s spending is nurturing Chinese export industries. The country’s solar-panel makers are global-industry leaders and its wind turbine manufacturers are stepping up exports. In the United States CTG and other Chinese investors may face tougher scrutiny under Trump, who castigated Beijing during his campaign and has appointed advisers favoring a more antagonistic stance on trade. And when it comes to acquiring US assets, that market is crowded with experienced, deeppocketed potential rivals, such as Duke, Southern Co. and Dominion Resources.

“Chinese power companies may be interested to look at opportunities in North America. However, so far there have been few,” said Daniel Qiu, a managing director in Credit Suisse’s Asia-Pacific investment banking group. As a springboard to new markets, CTG paid $3.5 billion in 2011 for 21 percent of Energias de Portugal, one of the biggest global investors in wind energy. Their tie-up might help ease CTG’s entry into the US since EdP’s Houston-based US arm owns wind farms in New York, Iowa, Texas and other states. “ This is an interesting way for Three Gorges to essentially get access to US renewable projects through the back door,” Shepherd said. The two companies are building two hydropower projects in Brazil in addition to the dams CTG is buying from Duke Energy. C TG has a mple resou rces, with 563.7 billion yuan ($82.8 billion) in assets including 18.7 billion y uan ($2.7 billion) in cash—more t ha n double t he price of Duke Energy’s Brazilian dams. The company earned 28.8 billion yuan ($4.2 billion) in profit in 2015 on revenue of 63.5 billion yuan ($9.3 billion). Industrywide, China’s stateowned utilities have spent more than $30 billion to buy all or parts of power suppliers in Brazil, Germany, New Zealand and other countries over the past five years, according to Dealogic. The bulk of that came from State Grid, which has spent $22 billion in Brazil, Australia, Italy, Greece and Portugal. In 2013 it made China’s biggest utility acquisition in a developed country, paying $6.7 billion for 60 percent of Australia’s SGSP (Australia) Assets Pty. Ltd., an operator of gas and electric distribution networks. “They are much more aggressive and are more willing to take on risk,” Shepherd said. AP

A14 Monday, January 9, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

No free lunch from the government

isattributed from Thomas Jefferson to former US President Gerald Ford is the anonymous quote, “A government big enough to give you everything you want is a government big enough to take from you everything you have.” But people are still convinced that the ultimate source of a “free lunch” is the government. The politicians spend their time and effort persuading people that the government has the wisdom and, therefore, should be given ultimate power over a nation and its people. But it has always been that way. The concept of the “Divine Right of Kings” asserted that a monarch is subject to no earthly authority, deriving the right to rule directly from the will of God. Chinese emperors operated and gained their legitimacy from the “Mandate of Heaven”. But their mandate had an impeachment clause. The mandate was only bestowed on those whose actions were worthy. So a famine or lost war canceled the imperial contract. Now we hold to the divine right of the government as bestowed by the mandate of the voters. In the 1917 Constitution of Mexico, Article 27 reads: “The property of all land and water within national territory is originally owned by the nation, who has the right to transfer this ownership to particulars. Hence, private property is a privilege created by the nation.” The exact same idea was embodied in the medieval idea of “Crown land,” also known as royal domain. Mexico nationalized its petroleum resources in 1938 with the creation of Petróleos Mexicanos or Pemex, owned by the Mexican government. And as with most government-owned corporations, one industry analyst wrote, “The lack of competition in such a strategic sector allowed decades of operational inefficiency, phantom contracts, institutional nepotism, millionaire retirements and a myriad of irregularities. Pemex represented the triumph of the state over ‘the oligarchy and the evil Yankee empire.’” Pemex has also been a cash cow for the government, generating 30 percent of all tax revenues. Forty-four percent of the pump price of Mexican gasoline is government tax, one of the highest in the world. And while Mexico is a net oil exporter, a pump price of Mxn14 is high by global standards, primarily due to production and distribution inefficiencies. But the government has been subsidizing the gasoline price by nearly 40 percent. That is coming to an end and Mexicans are rioting and looting. Prices were raised by 20 percent this week with another increase due in February. But why the need to eliminate these wonderful price subsides that have kept gasoline nearly 50 percent below true market price? Pemex’s net profit margin is 0.33 percent, which is so low a real company would be out of business. Its refineries are running at 60-percent capacity because of a complete lack of capital investment. The money that the government should have spent maintaining and improving Pemex has been used to “help the poor”. Had the poor been helped a little less, Pemex would probably be able to produce gasoline at a price suitable for a major oil-producing country. A “free government lunch” is always the most expensive possible. Since 2005

BusinessMirror A broader look at today’s business

Viva Señor Jesus Nazareno! Atty. Jose Ferdinand M. Rojas II

RISING SUN

oday we celebrate the annual feast day of the Black Nazarene, a miraculous statue of Jesus Christ carrying his cross. Millions of Filipino Catholics are devoted to the Nuestro Señor Jesus de Nazareno, and they gather every year on this day to celebrate the feast.

The Black Nazarene represents Christ’s passion and suffering, and through the centuries it has become the Filipino people’s symbol of struggle and faith. Devotees have experienced numerous instances of answered prayers and miracles, making the devotion to the Black Nazarene one of the strongest spiritual and religious phenomena in the country. It is said that a Mexican sculptor created the Black Nazarene in the 1600s. It was placed in a ship bound for Manila in the year 1606, but according to stories, a fire that broke out inside the ship reached the statue and blackened the image. It was brought to our shores by

a group of Augustinian Recollect missionaries who brought it to the Church of San Juan Bautista in Bagumbayan (Saint John the Baptist Church at Luneta). After a couple of years, the Black Nazarene was moved to a bigger church near the area. On January 9, 1767, the image of the Black Nazarene was transferred to Quiapo Church (Minor Basilica of the Black Nazarene) whose patron is also John the Baptist. Since that time, the annual feast day has been celebrated by millions of devotees. According to history, Pope Innocent X established the Confradia de Jesus Nazareno in 1650 to encourage devotion to the Black Nazarene.

Who is buying the euro

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Paul Donovan

Jun B. Vallecera

ith the US Federal Reserve raising interest rates, and President Mario Draghi of the European Central Bank seemingly unable to escape his addiction to quantitative policy easing, many investors are questioning who wants to buy the euro. The answer is simple. The whole world is eager to buy the euro. The problem in 2017 is more likely to be finding anyone who wants to buy the US dollar. The Middle East is a good example of a region of avid euro buyers. Even with the recent rally in the oil price, most Middle Eastern countries are expected to run sizable fiscal deficits. The International Monetary Fund expects Saudi Arabia to run a fiscal deficit of almost 10 percent of GDP next year. To fund their budget deficits, the Gulf countries are selling central bank reserves and pools of assets held by their sovereign wealth funds. Imagine Saudi Arabia selling US Treasuries, and uses the dollars it receives to pay its civil servants. Then imagine that a Saudi Arabian civil servant takes their pay and uses the money to buy a BMW car in euros. What is happening? Saudi Arabia is selling dollars and buying euros.

It does not matter that there is an asset on one side of the transaction and a BMW on the other side of the transaction—the foreign-exchange market implication is the same whether it is bonds or BMWs that are bought. If the Middle East buys assets, they like their assets to be made in America (central banks buy roughly twice as many US assets as other assets). If the Middle East buys products and services, they like their products and services to be made in Europe (the Middle East buys twice as much from Europe as from the US). Thus, if the Middle East is selling assets to buy goods, it sells dollars to buy euros. So why is the euro not stronger with all this enthusiastic buying of

The devotion to the Black Nazarene is so strong because Filipinos recognize the spiritual benefits it brings into their lives. Attending the Traslación is a deep spiritual experience for the millions of devotees. It brings a profound change in them, awakens their hope and strengthens their faith. And in 1880 Pope Pius VII blessed the Black Nazarene, granting plenary indulgence to those who pray before the statue. The life-size statue of Jesus survived fires that destroyed the church twice, two earthquakes, floods and bombings during World War II. Today we are witnessing the “Traslación,” the popular barefoot procession during which devotees carry a replica of the Black Nazarene through the streets of Manila. Traslación means the transfer of the image of the Black Nazarene. This procession reminds the faithful of the sacrifice and suffering of Jesus Christ as he walked barefoot carrying his cross to Mount Calvary. As devotees participate in the

If the Middle East buys assets, they like their assets to be made in America (central banks buy roughly twice as many US assets as other assets). If the Middle East buys products and services, they like their products and services to be made in Europe (the Middle East buys twice as much from Europe as from the US). Thus, if the Middle East is selling assets to buy goods, it sells dollars to buy euros. So why is the euro not stronger with all this enthusiastic buying of BMWs and other euro area goods? BMWs and other euro area goods? In 2016 the US basically pleaded with the rest of the world to lend it money. US interest rates are above those of the euro area (euro-area interest rates are negative). US bond yields are above those of the euro area (many euro-area bond yields are negative). US equities have outperformed those of the euro area (by about 15 percent, and euro-area equity performance is negative this year). The US basically did everything that it could to persuade investors to buy dollars—and at the end of all of that effort the euro still trades within 4 percent of where it traded against the dollar at the start of the year.

procession, they are in a way sharing in the sacrifices of Christ. It is as much a show of faith as it is a gesture of gratitude for everything that the Lord has given, especially for the sacrifices He endured for the salvation of our souls. The Traslación is a journey of about 2 kilometers, which starts at the Luneta Grandstand and passes through the city’s small streets and roads. After hours of walking and prayer, it makes its final stop at the Quiapo Church. During the many hours that the Poong Nazareno is brought outside the church, devotees struggle to touch the image, throw pieces of cloth to wipe the image with and wait for these cloths to be thrown back to them. There are many stories of faith and miracles attributed to the Black Nazarene. In the church itself, people line up for hours just to be able to touch the holy image. The devotion to the Black Nazarene is so strong because Filipinos recognize the spiritual benefits it brings into their lives. Attending the Traslación is a deep spiritual experience for the millions of devotees. It brings a profound change in them, awakens their hope and strengthens their faith.

The challenge for the US is that it needs foreigners to buy dollars every day to stop the dollar from falling. In the first nine months of 2016, foreigners had to purchase $2.7 billion every day. That is more than the daily GDP of the Netherlands. Any day that foreigners were not inclined to buy $2.7 billion, the dollar would weaken. This is important—if foreigners decide that they want to “wait and see” what Trump’s policies are like before committing to buying more dollars, then the dollar will fall. “Wait and see” is not good enough for the US. Therefore, the question is not who wants to buy euros—the whole world wants to buy euros because the whole world wants to buy euro area products. The question for 2017 is in the new abnormal of the US who can be persuaded to buy dollars? Paul Donovan’s latest book The Truth About Inflation was published by Routledge in April 2015. Visit www.ubs.com/pauldonovan for more research. Paul’s commentaries in the UBS series of documentaries on Nobel Laureates in economics is available at www.ubs.com/nobel Donovan is the managing director and deputy head of global economics of Zurich-headquartered UBS. He is responsible for formulating and presenting the UBS Investment Research global economic view, drawing on the bank’s worldwide resources. Donovan took up philosophy, politics and economics at Oxford University. He holds an MSC in financial economics from the University of London. In the Philippines his column will appear exclusively once a month in the BusinessMirror.

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Tax planning tips and reminders for 2017

PPP calls for innovation: Are we ready? By Alberto Agra

PPP Lead

Jeffrey G. Salazar

DEBIT CREDIT

he start of a new year is the perfect time to review your company’s tax compliance and be reminded of the volume of submittals to various government agencies.

With the upcoming revision of the Tax Code due to talks of tax reform and legislation, the tax professionals must have a new and improved outlook to ensure, not only 100-percent compliance, but also to minimize or even eliminate the risks associated with poor tax planning. Here are some tips and reminders that may assist every business to start the New Year right. Create a tax calendar—With the various submittals and due dates, it is somewhat easy to overlook things that might lead to tax exposures. A tax calendar, tailored for the nature and line of industry of the company, is one of the simple, yet effective, means to monitor tax deadlines. Be specific on tax submittals by indicating if the report requires a summary (alpha list) and/ or validation report. It also aids in the proper budgeting or funding of tax liabilities, especially if the amounts are material like income tax and real property tax. Be updated—Seminars and trainings are not the only way where you can gain new knowledge and be updated on new rules and regulations. We are now in the information age and at the tip of your fingertips is access to information related to tax compliance. All the latest regulations, memoranda and circulars are posted on the web site of Bureau of Internal Revenue (BIR), Securities Exchange Commission (SEC), Philippine Economic Zone Authority (Peza) and other government agencies. Give time to visit these sites to check if there are new regulations that are relevant to the company. Automation is the key—Accounting processes involve repetitive and clerical tasks. Carefully study the process flow of these various practices and come up with the automation plan to reduce or eliminate manual processes. Automation also resolves human-related issues and provides consistency on processing transactions. Since automation project may require time and resources, the company may also consider drafting templates through macroprogram in excel as an alternative. Observe cost behavior—Review the costs being incurred by the company. Are we expecting if these costs consistently behave the same way? If the answer is yes, you can plan if the company should use the itemized deduction or the optional standard deduction for the determination of taxable income the year 2017. For the Peza-registered entities and other enterprises covered by the gross income-tax regime, you should review if there are operating expenses that can be treated as part of costs of goods sold to reduce

the income-tax base, or if there are costs of goods sold items that should be treated as operating expenses to lessen the risks of BIR assessment arising from the disallowance of deductions. Regularly update master file—Ensure that any changes in the organizational structure and nature of business of your suppliers are documented and updated in the company’s master file. Always require value-added tax (VAT) zero-rated certification or exemption certification before subjecting these to the preferential VAT treatment form. Require your regular suppliers to submit every year a copy of their latest business permit to ensure that your company is transacting only with legitimate and genuine enterprises. Avail of tax-compliance services—Consult your auditor if they are offering services of verification of tax compliance. Although the external audit includes test and review of tax liabilities, a tax-compliance audit, being more in-depth and focused on tax matters, may uncover possible tax exposures or issues that may not be detected by a regular financial statements audit. What’s ahead—Part of tax planning exercise is to foresee the future and prepare for what is coming in terms of tax compliance. Be vigilant and know what are the tax bills in Congress and check if what are the possible impacts of these pending bills to the organization. Unite with fellow professionals—You might be good on your own but you can be better if you collaborate with other tax professionals and fellow accountants. Join and be active with such organizations as the Philippine Institute of Certified Public Accountants and the Association of Certified Public Accountants in Commerce and Industry. Establishing linkages with the members of these organizations can be a gateway for the adoption of best practices through benchmarking or sharing professional experiences. Tax is the lifeblood of the state and we, as tax professionals, have the duty to protect the interest of our business through adherence to statutes. Happy tax planning to all; and have a bright and fruitful future ahead of us. Jeffrey Galang Salazar is a Certified Public Accountant and a Master in Business Administration degree holder. He is currently connected with Tong Hsing Electronics Phils Inc. and Pamantasan ng Cabuyao. This column accepts contributions from accountants, especially articles that are of interest to the accountancy profession, in particular, and to the business community, in general. These can be e-mailed to boa.secretariat.@gmail.com

The condom conundrum By Miguel J. Pa-it

hould they or should they not? Distr ibute condoms in schools, that is. Since the Department of Health (DOH) announced its plan to give away condoms to students beginning this year, debates on the “soundness” of such an unusual scheme has been boiling in social media and other informal fora. Education Secretary Leonor M. Briones, prudent as she is, has yet to give her nod to the plan. Her hesitance is expected, given the fact that the government, until now, has not

broached such an audacious ploy to curb HIV infections and prevent teen pregnancy. “While we recognize the need to promptly address the surging spread of HIV/AIDS among the youth, we will have to hold thorough and careful discussions with the DOH regarding the agency’s plan to distribute condoms in schools next year,” Briones said last week. Since the AIDS virus burst into the scene in the 1980s, the government, through the health department, has followed traditional methods in its campaign against this deadly disease. It has mounted information campaigns to warn the public about this

Monday, January 9, 2017 A15

Continued from A1

orrowing from Moore and Hartley, PPPs transform “what gets produced, how the new products and services get distributed, how the burden of producing the services is borne and what happens to the material conditions in society.” The outcome and impact, and the manner by which the result is achieved are equally important. PPPs are reform initiatives. PPPs are innovation exemplified. Innovation is needed. A PPP is in itself an innovation. Innovation here does not simply mean being new, radical, unique, creative or different. According to my professor on innovation, Dr. Edna Franco citing West and Farr, there must be

“intentional introduction and application within a role, group or organization of ideas, processes or procedures, new to the relevant unit of adoption, designed to significantly benefit the individual, group, organization or society.”

Innovation must have a purpose and for PPPs, that purpose should be deep and real, as well as practical and tangible. The true north of PPPs is the people and their welfare. Bound by a contract, the government and the PSP become mutually responsible and accountable for delivering a service that will make the lives of Filipinos better. Institutionally, PPPs call for innovation in four levels. When the government adopts PPP as a policy and actively pursues PPPs, it innovates. This is Level 1 innovation and is foundational. This paves the way for three other innovations. Level 2 innovation is that innovation which the PSP must undertake as agent, funder, proponent, concessionaire, service provider, manager, contractor and operator. Level 3 innovation pertains to the reform jointly undertaken by government and the PSP. Level 4 innovation involves nonparties to the PPP contract. These are the general public, civil-society organizations and regulatory agencies. They, too, must innovate.

Demystifying contractualization

In 1997 Department of Labor and

Employment (DOLE) Department Order (DO) 10-97 was issued, amending the Implementing Rules of Books II and VI of the Labor Code. It prohibited labor only contracting but allowed subcontracting, provided that the contractor or subcontractor carried on a distinct and independent business and had substantial capital, and the agreement between them and the principal assured the contractual employees’ right and benefits. Four years later, in 2001, the said department order was modified by DO 3-01, which added the element of a direct business relation, such that employees recruited, supplied or placed by such contractor or subcontractor must not be performing activities which are directly related to the main business of the principal, otherwise, the scheme would be deemed labor-only contracting, which the same issuance still prohibited. In 2002 the DOLE again exercised the power granted to it under Article 106 of the Labor Code by issuing DO 18-02, which interpreted Articles 106 to 109 of the Labor Code. It provided for a trilateral relationship in contracting arrangements, with the principal, contractor or subcontractor, and the workers as parties thereto. DO 18-02 declared the practice of contractualization as legal for as long as it did not fall within the category of “labor-only contracting”, which is measured by the amount of capital and control of the supposed employer. It also equated security of tenure with having a definite contract, instead of the regular and permanent status previously enjoyed by workers who have worked for more than six months. DO 18-A-11, the latest interpretation to Article 106, superseded DO 18-02 but did not propose substantial changes. It merely added more prohibitions under

labor-only contracting. A standard (traditional) type of employment relationship has for many years, been that of full-time work, under a contract of employment for unlimited duration, with a single employer and protected against unjustified dismissal. But of late, starting in the 1980s, new patterns of employment have emerged. Internationally, these forms of employment are known as precarious work. “Precarious works as those who fill permanent job needs but are denied permanent employee rights. Globally, these workers are subject to unstable employment, lower wage and more dangerous working conditions. They rarely receive social benefits and are often denied the right to join a union.” (International Labor Rights Forum at http: www.laborrights. org/issue/precarious work). “Of late, precarious employment is the term used to describe employment condition that is not standard or nonregular. Precarious employment includes: outsourcing, contracting-out or subcontracting; casualization, contractualization or fixed-term contracts; use of labor agencies or labor only hiring; hiring of temporary or contingent workers; abusive use of seasonal and probationary employment and independent contractors.” It has been argued by certain sectors that the Philippines has adopted a neoliberal mode of globalization, a regime of precarious employment through contractualization that was implemented by replacing regular workers with temporary ones who would not be entitled to benefits and seniority rights, and could easily be terminated. This practice is known as casualization, flexilization or informalization of labor (see Center for Women’s Resources, Asia Pacific Research Network official web

site available at http:www.aprnet.org/ conferences-a-workshop). Contractual employment has been called several names—“contractualization”, “casualization”, endo or “5-5-5”. The misconception is that contractual employment is illegal per se. No! Contractualization that involves contracting out work to independent contractors is founded in law and practice (Article 106 Labor Code; Section 4, DO 18-A). It is an exercise of management prerogative and business judgment. Such prerogative is not only acknowledged by the Labor Code, but is anchored on the constitutional right of employers to property (San Miguel Corp. Employees Union-PTGWO v. Bersamin, et al. 186 SCRA 495-505) It must be underscored, however, that “the employer is motivated by good faith, and the contracting out must not have been resorted to circumvent the law or must not have been the result of malicious or arbitrary action” (Temic Automotive Philippines Inc. v. Temic Automotive Philippines Inc. Employers Union—FFW, GR. 186965, December 23, 2009. Generally, the function being contracted should be noncore to the business. For instance, my law firm outsources our janitorial services to a janitorial services company that specializes in this type of work since it is not integral nor strategic to law practice. In this case, the contractor is the janitorial company while the janitors are the employees not of my law firm but of the janitorial company. By law and regulations of the DOLE, contracting out creates a trilateral relationship by and between the employer and the principal, the contractor and the latter’s employees in relation to the principal (Section 3(m), DO 18-A, Series of 2011). The trilateral relationship becomes operative when the contractor fails to pay wages of his employees in accordance with law by making the principal jointly and severally liable with the contractor (Art. 106 Labor Code; Section 5, DO 18-17). It is significant to note that the DOLE secretary on March 17, 2012, issued Department Circular 01, Series of 2012, excluding business-process outsourcings and the construction industry from coverage of DO 18-A. Contracting out (globally referred to as outsourcing) is understood as contracting another company or person to do a particular function, process or service which is typically noncore to the business. “Outsourcing is done to save money, improve quality, or free company

health threat, and years ago, launched a condom-distribution program to curb the rise in infections. Sadly, these efforts to stem the surge of HIV infection failed. While most countries have reported a decline of AIDS cases and HIV infection, a surge of cases have been reported in the Philippines, with 25 new HIV infections being documented every day. In its report released last week, New York-based Human Rights Watch said the country has “one of the fastestgrowing epidemics of HIV in the Asia Pacific because successive governments have failed to promote contraceptives and give sex education to gay

or bisexual men.” This crushing report is enough reason for the government to try novel schemes and reboot its program to control the spread of HIV. Briones is right in consulting the DOH to find out the finer details of the program. She also should consult parents’ and teachers’ groups to gather their opinions and insights on the implementation of the plan, if the education department will allow it. But with the rate that the HIV virus is rampaging in the country, there’s not much choice for the government but carry out nontraditional programs to save the youth. As in other countries, Filipinos

today start having sex at such a young age. This is the reality we have to face. This explains why the Philippines is also up there when it comes to statistics on teen pregnancies. So, in implementing the DOH plan, brash as it may be, the government will be shooting two concerns with one stone—the HIV scourge and the problem on teen pregnancies. Parents do have the first responsibility to educate their children about sex. They are the very first recipients of queries, such as “how are babies made?” Schools, on the other hand, have the responsibility to teach and to guide students that they may have a better future.

Atty. Lorna Patajo-Kapunan

legally speaking

N 1974 the Labor Code of the Philippines (Presidential Decree 442, as amended, promulgated on May 1, 1974), defined workers simply as “any member of the labor force, whether employed or unemployed” (Book One, Article 12(a)). Book Two, Title II, provided for different kinds of special workers: apprentices, learners and probationary employees.

The outcome of Level 1 innovation serves as the platform, catalyst, vehicle and means to achieve the other innovation levels. In quantifiable terms, the evidence of the four-level innovation is the achievement of the key performance indicators during the whole life of the PPP arrangement and even beyond. Meaningful change cannot be brought about by one person. Innovation is not a one-person show. All persons in the four levels of innovation must be involved and be part of the process. Per Franco, innovation is an “interindividual social process.” The whole organization must be flexible and must engage the external stakeholders. The leaders must be strategic, encourage out-of-the-box thinking and not be risk-averse. Authorities must be decentralized. Accountabilities must be strengthened. All stakeholders must go through a cycle of learn-unlearnrelearn. Incentivizing innovation should be a norm. PPPs and other innovative practices should be the road frequently traveled.

resources for other activities. Outsourcing was first done in the data-processing industry and has spread to areas, including messaging and call centers” (2008 ASPBI Business Process Outsourcing Activities, NSO). Oftentimes, contractual employment is just being used as disguise for laboronly contracting. Labor-only contracting is prohibited under the law. Labor-only contracting is the condition of employment under the following circumstances: The contractor or subcontractor does not have substantial capital or investment to actually perform the job, work or service under its own account and responsibility. The employees recruited, supplied or placed by such contractor or subcontractor are performing activities that are directly related to the main business of the principal but not performing activities of the main business. An in-house agency is present. Inhouse agency refers to a contractor or subcontractor engaged in the supply of labor which is owned, managed or controlled by the principal; and operates solely for the principal owning, managing or controlling it. Militant and labor groups have marched recently to Mendiola to ask President Duterte to fulfill his campaign promise to end all forms of contractualization. On December 28, 2016, Labor Secretary Silvestre H. Bello signed DO 168 (allegedly only a draft for comments), which replaces DO 18-A and puts heavy regulations on laborcontracting practices. These protesting groups are asking the President to set aside the new DO and instead issue an executive order that will ban fixed employment contracts. “The solution is to prohibit not to simply regulate”, according to the protesters (http:/news. abs.cbn.com/business/01/04/17). My view is that we cannot solve this problem of contractualization with “Band-aid” solutions. As the confusion seems to be in the lack of a clear definition and parameters on what is allowed and not allowed by our labor laws, there is need to amend our existing laws, specifically Articles 106 and Articles 270 to 281 of the Labor Code. Existing law does not even have a penal sanction for contractualization. Bottomline, all types of employment under contractualization and casualization cannot be terminated except for just or authorized cause, or disease, and only after due process is observed. For indeed, security of tenure is a basic right guaranteed by our Constitution.

With the sword that’s HIV hanging over the heads of children, maybe it is time for authorities to take a new path to defend the young from a killer disease. Those whose eyes are open to day-to-day realities will surely see the wisdom and importance of equipping students with the tool that may save their lives. If condoms will help save the youth from the rampaging AIDS virus, then by all means let’s arm them with rubber. But before doing so, let’s make sure that they know the pitfalls of having early and unprotected sex. The author is Teacher III of C. Dela Cruz Elementary School in Gonzaga, Cagayan.

2nd Front Page BusinessMirror

A16 Monday, January 9, 2017

House eyes salary hike of government workers

By Jovee Marie N. dela Cruz

@joveemarie

HE leadership of the House of Representatives is planning to file a measure increasing the salary of government employees.

Majority Leader and PDP-Laban Rep. Rodolfo C. Fariñas of Ilocos Norte and House Committee on Appropriation Chairman and National Unity Party Rep. Karlo Alexei B. Nograles of Davao City said the lower chamber will work on the proposal when session resumes on January 16. The lawmakers said the proposal seeks to raise the pay of government personnel to be competitive with market rates. “[Budget] Secretar y [Benjamin] Diokno is right that a government salary hike needs legislation. In the previous Congress, the HOR [House of Representatives] and the Senate passed con-

₧57.9B The amount allotted for the pay increase of govt employees

flicting versions [of the proposed S a l a r y St a nd a rd i z at ion L aw (SSL)] that were not successfully resolved in the bicameral conference committee. P-Noy [former President Benigno Aquino III] issued an EO [excutive order], but as correctly pointed out by Secretary Diokno, such needs a

law,” said Fariñas in a text message to the BusinessMirror. Last year the lower chamber approved House Bill 11, or the proposed Salary Standardization Act, which seeks to increase the pay of government personnel, strengthen the link between pay and performance through an enhanced performance-based bonus system, temper the cost of benefit while maximizing the benefits of employees, and allow higher takehome pay, particularly for government personnel belonging to lower salary grades. But former President Aquino signed an EO to implement the first tranche of the SSL, which lawmakers failed to pass during the 16th Congress, as the first tranche was given in Republic Act 10717, or the 2016 General Appropriations Act, which provided a budget of P57.9 billion. The 2017 budget, meanwhile, already covered the second of four phases of the SSL for 1.3 million civil servants. Moreover, Fariñas said, “I will

request it to be included as one of our agenda in the Ledac [Legislative-Executive Development Advisory Council].” Lawmakers and members of the Executive branch draw up a list of priority measures in Congress during the Ledac meetings. The council is chaired by the President. To make the salary adjustment of government workers permanent, Liberal Party Rep. Feliciano R. Belmonte Jr. of Quezon City, former speaker, has already filed a measure modifying the compensation and position classification of civilian-government personnel and the base pay schedule of military and uniformed personnel in the government or the proposed SSL. For his part, Nograles vowed to prioritize the proposal in his committee.“Yes [we will do the salary increase] either through law or through joint resolution of both Houses of Congress. We will work on this immediately when we resume on January 16,” Nograles said, also in a text message to the BusinessMirror.

TRUMP SAYS ONLY ‘FOOLS’ SEE GOOD TIES WITH RUSSIA AS BAD

acing calls to strike back at Russia for what US intelligence agencies have termed Moscow’s interference with the 2016 US presidential election campaign, Donald J. Trump instead suggested warmer relations between the two countries. The president-elect took to Twitter on Saturday to discuss the potential US-Russia relationship under his administration, a day after US spy chiefs briefed him on the Russian measures they said were directed by President Vladimir Putin. “Having a good relationship with Russia is a good thing, not a bad thing,” Trump said in a series of three tweets. “Only ‘stupid’ people, or fools, would think it is bad! We have enough problems around the world without yet another one.” “When I am President, Russia will respect us far more than they do now,” Trump assured his 19 million Twitter followers. On Friday top US intelligence officials met with the presidentelect at Trump Tower in New York to present evidence that Putin personally ordered cyber and disinformation attacks on the US campaign. Putin developed “a clear preference” for Trump to win, the agencies said in a declassified summary of their findings. The agencies said they “assess Putin and the Russian government aspired to help President-elect Trump’s election chances when possible by discrediting Secretary Clinton and publicly contrasting her unfavorably to him,” according to the report.

‘High confidence’

“All three agencies agree with this judgment. CIA and FBI have high confidence in this judgment; NSA has moderate confidence,” the report said. “Moscow will apply lessons learned from its Putin-ordered campaign aimed at the US presidential election to fu-

www.businessmirror.com.ph

DTI sees more gains from reinstatement of death penalty By Catherine N. Pillas

@c_pillas29

he Department of Trade and Industry (DTI) said it is backing the government’s push to reinstate the death penalty despite the possibility that this would cause the country to lose its special trade privileges from the European Union (EU). In an interview, Trade Secretary Ramon M. Lopez said the benefits of the reimposition of the death penalty outweighs the advantages of the zero-tariff privilege provided by the EU-Generalized System of Preferences Plus (EU-GSP+). “I would go with what is good for the country. In other words, if bringing back the death penalty is the solution to maintain peace and order and improve security conditions in the country, then I would go with it,” Lopez said. “With that, I would then justify and maybe request those partnercountries giving GSP+ to give us the flexibility if this is what is needed in the country,” he added. The DTI chief similarly expressed his disagreement with the conditional support provided by the EU and the hurdles the Philippines should meet, saying that this goes against the true intent of the GSP+, which is to help struggling nations. “That’s the history of GSP+, that’s support for developing countries. What we’re saying to the EU is, ‘Help us so we can fight crime, so we can fight drugs. Give us that support.’ But what happens is the opposite, they’re saying: ‘Don’t do this, or, otherwise, we’re not going to help you.’ That doesn’t seem right,” Lopez said. The EU-GSP+ is a preferential trade treatment given to select developing countries to expand the market access of their goods to the EU via significant tariff cuts. The EU-GSP+ slashed the tariff rates on some 6,200 tariff lines of

LOPEZ: “If bringing back the death penalty is the solution to maintain peace and order and improve security conditions in the country, then I would go with it.”

Philippine products to zero. The Philippines was granted this privilege in December 2014. However, continued enjoyment of the EU-GSP+ is hinged on the observance of “core” international conventions relating to human and labor rights, environment and good governance—areas which critics say the present administration has been failing at. This precarious balance has been especially underscored with House Committee on Justice’s approval of its report on a substitute bill seeking to reimpose the death penalty as punishment for heinous crimes. Whereas the Philippines’s exports to most countries have gone down in 2015, shipments of local goods to the EU grew by over 19 percent in the months of January to September 2015, compared to the same period in 2014. Philippine exports that were covered by the EU-GSP+ saw a 27-percent increase in revenues, from €584 million to €743 million. While he has informed the Economic Cabinet Cluster of the impact of the possible revocation of the EU-GSP+, Lopez said he will not stand in the way should the Executive and Legislative departments decide to reinstate the death penalty. “If the President, the Cabinet cluster, and maybe the legislators would, in the end, bring that back, after a thorough deliberation of pros and cons, then I won’t argue. In other words, I’d take it despite saying the economic impact,” he said.

PHL aerospace industry expects 10% hike in exports this year

T Vladimir Putin Natalia Kolesnikova/AFP via Getty Images

ture influence efforts worldwide, including against US allies and their election processes.” Requests for comment last Friday to the Russian Embassy in Washington were not returned. On Saturday posts from the Twitter account of the Russian Embassy in the UK dismissed the report, calling it “a pathetic attempt at tainting Americans’ vote by innuendo couched in Intel new-speak.” “All accusations against Russia are based on ‘confidence’ and assumptions,” Alexey Pushkov, a member of the Russian Parliament’s upper house, said on Twitter. As Trump’s transition team did in a statement last December, Pushkov drew a parallel with the US intelligence finding of the early 2000s that Iraq’s Saddam Hussein had weapons of mass destruction. The report was released shortly after intelligence chiefs briefed Trump on their findings that Russia was responsible for the hacking of Democratic Party com-

puters and the leaking of e-mails damaging to Democratic presidential nominee Hillary Clinton. Russia has repeatedly denied the accusations.

‘Poorly defended’

Trump said negligence by the DNC had allowed the hacking to go ahead. “Only reason the hacking of the poorly defended DNC is discussed is that the loss by the Dems was so big that they are totally embarrassed!” Trump tweeted on Saturday. By contrast, “the Republican National Committee had strong defense!” he said—although the intelligence report said that Russia had targeted both major parties. In a statement after Friday’s meeting, the president-elect didn’t explicitly endorse the intelligence officials’ conclusions, but said he has “tremendous respect for the work and service done by the men and women of this community to our great nation.”

“While Russia, China, other countries, outside groups and people are consistently trying to break through the cyber infrastructure of our governmental institutions, businesses and organizations, including the Democrat National Committee, there was absolutely no effect on the outcome of the election, including the fact that there was no tampering whatsoever with voting machines,” Trump said in the statement. T he intelligence agencies agreed there was no evidence of ballots being hacked but said in the report that, “we did not make an assessment of the impact that Russian activities had on the outcome of the 2016 election.”

Cyber team coming

Trump said last Friday he will appoint a team to develop a plan “to aggressively combat and stop cyber attacks” within 90 days of taking office. See “Trump,” A2

he Philippine aerospace industry has projected export receipts to grow by 10 percent this year on the back of higher parts production. John Lee, outgoing head of the Aerospace Industries Association of the Philippines (AIAP), said the group is optimistic of expanding revenues from this year. “While aircraft interiors are the main driver, the growth of flight controls and other components is increasing. Additional capacity is being eyed by most manufacturers since the trade promotion done last year to France, the US, Singapore, Malaysia and Japan are beginning to bear fruit,” Lee said in an e-mail interview with the BusinessMirror. “The current Philippine aerospace suppliers will be ramping up their production to support the aircraft assemblers. The 10 percent is very conservative,” he added. Lee said the maintenance, repair and overhaul (MRO) sub-industry in aerospace has been included in the industry road map it is crafting with the Department of Trade and Industry (DTI) to scale up local capability in this area. “Currently, we have also included MRO targets and supply chain development in order to entice and create a viable supply chain for the

$1.5B The projected revenue of the aerospace industry in the next 10 years

MRO segment of the industry. Education and Training is also being given light since the industry’s demand is quite significant and there is a need for the next generation of mechanics and pilots for the new composite aircraft,” he said. The Aerospace Industry Roadmap has projected export revenues of up to $1.5 billion in the next 10 years, according to the DTI. The local industry recently participated in the Aeromart Exhibition in Toulouse, France, last December, the last of several promotional tours for the industry last year. Aéromart Toulouse is an international aerospace business convention where representatives from the industry gather to network and promote new and emerging opportunities in the aerospace supply chains and production networks. Catherine N. Pillas