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MINDANAO ECOZONES Colorful fishing boats with nets and gear are docked in a port in Oroquieta City, Misamis Occidental. With the push to lure in more Middle Eastern investors, the government hopes to speed up the development of new economic zones in Mindanao and transform specific areas into “halal hubs”. Story on A4. Hugo Maes |

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Wednesday, January 11, 2017 Vol. 12 No. 91

DENR chief toughens up on issuance of ECC


By Jonathan L. Mayuga


he government will no longer issue environmental compliance certificates (ECCs) to companies that have yet to fully comply with all the specific measures, conditions and qualifications set by the Department of Environment and Natural Resources (DENR).

800 The number of ECCs currently being reviewed by the DENR for possible cancellation

This is the new direction set by Environment Secretary Regina Paz L. Lopez, although she assured that the current DENR review on existing ECCs Continued on A2


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Legislative ‘lechon’ Teddy Locsin Jr.

free fire


HERE is an ignorant proposal to amend the Central Bank (CB) Act in order to remove the governor of the Central Bank as the chairman of the Anti-money Laundering Council (Amlac) in charge of initiating and supervising its investigations. But the CB governor does not initiate and supervise the investigations of Amlac. The CB governor sits as chairman, and that is all. Should he sit as chairman? Yes. Why? Continued on A11


PHL ups game to police private sector P By VG Cabuag




HE Philippines was never a darling among the regional organizations that rank and review corporate governance practice among listed firms. It never regained confidence years after the Best World Resources Inc.’s insider-trading scandal that happened way back during the Estrada administration. A CG Watch publication of the Asian Corporate Governance Association (Acga) in 2014, for instance, ranked the Philippines at the near-bottom of its 11-nation ranking, along with Indonesia. At some point, it told the market

that the country’s “impetus for CG reform there has been quite weak over the past two years.” But when the Philippines scored well during the 2014 Asean Corp or ate G o ve r n a nce S core c a rd (ACGS)—released in 2016—eyebrows were raised. “The scorecard is a corporate governance initiative of the Association of Southeast Asian Nations [Asean], under the Asean Capital Markets Forum [ACMF] implementation plan for the development of an integrated capital market,” the ACMF said on its web site. The group said the plan also aims “to complement other ACMF initiatives and promote Asean as an asset class.”

PESO exchange rates n US 49.6160

Continued on A2

This file photo shows stock prices per share reflected in a mirror of the trading floor in the Philippine Stock Exchange on November 17, 2016, in Makati City. On November 22 that year, the Securities and Exchange Commission issued Memorandum Circular 19 on the new corporate governance code for publicly listed companies containing 16 principles. NONIE REYES

resident Duterte has approved a pension hike for Social Security System (SSS) members, along with a corresponding increase in contributions, Palace and SSS officials said on Tuesday. In a press briefing in Malacañang, Presidential Spokesman Ernesto C. Abella said the President has approved a P1,000 increase for SSS pensioners starting this month. Duterte also approved a 1.5-percent increase in SSS contributions to be implemented starting May 2017 and an increase in monthly salary credit to P20,000, from P16,000. “The contribution increase would raise the contribution rate to 12.5 percent, from the current 11 percent, bringing the contribution range from P15 to P740,” Abella said. The Palace official Duterte approved the measures as he seeks to fulfill a social contract with the Filipino people, especially the elderly and the poor, who gave the best years of their lives in service, “while exercising fiscal responsibility to sustain the economic sustainability and protect the gains made by those who have prudently invested in the nation’s future.” “As the President has emphasized, he is the President of an entire nation and not just a particular social class. In this regard, the funds covering the increase will be through current contributions and investment reserved fund,” he said. “The President is not amenable to using taxpayers’ money to fund pension increase, since the SSS is a private pension fund,” Abella said. See “Pension,” A2

n japan 0.4276 n UK 60.3529 n HK 6.3970 n CHINA 7.1565 n singapore 34.5612 n australia 36.4926 n EU 52.4491 n SAUDI arabia 13.2330

Source: BSP (10 January 2017 )

BMReports BusinessMirror

A2 Wednesday, January 11, 2017

PHL ups game to police private sector Continued from A1

The brows that arched the highest came from Acga, which alleged the Philippines as having “gamed” the corporate governance rankings. The Acga then had to spend time explaining itself to many Philippine stakeholders as a result of that statement, but the damage has already been done.


INSTITUTE of Corporate Directors (ICD) Chairman Francis Estrada said there was a general perception of corruption in the Philippines. Estrada said such perception also included its regional peers. “There is usually a Western perception that Asian standards are not up to [their standards]. First, we do not believe that,” Estrada said. “We believe that the attitudes are different, the practices are different.” Estrada added that “corruption is not a monopoly of anyone.” “But one of the reasons that we are anxious to promote international standards is to prove precisely that [that] is not the case,” he said. “Asia has been improving the fastest in all of these areas [of corporate governance principles].” The ICD is one of the staunchest advocates of corporate governance in the Philippines. It is a domestic ranking body of the Asean’s scorecard corporate governance initiative among publicly listed companies. It has counterparts in the region that ranks their own listed firms based on the general corporate governance principles based on OECD (Organisation for Economic Cooperation and Development). For years domestic raters were used in the ACGS. However, last year a peer evaluation was implemented such that the result of the Philippines ranking will be evaluated by its

Pension. . .

Continued from A1

But even with the thousand-peso increase, Abella said the Fund life will continue until 2040 by May 2017 when the contribution rate and increase in monthly salary credit is implemented. In the meantime, SSS Chairman Amado D. Valdez said that, while only P1,000 pension hike was approved for this month, half of the P2,000 package being asked would be given by 2022 at the latest. He also clarified that the 1.5-percent hike in contributions would be on a yearly basis until the contribution rate reaches the threshold of 17 percent, which was the rate approved by the country’s economic managers. Valdez said the 17-percent rate contribution could also be lessened once internal reforms are successful. “Depending on the results of the internal reforms that are being presently instituted, we can give the remaining P1,000 as early as

counterpart in the region and vice versa.


THE same ACGS report, however, even made scathing remarks on the Philippines, citing independent directors in boards of companies spend more than nine years in the same position. The report also cited other transparency issues. “Part of the reason for the relatively low scores of PLCs [publicly listed companies] is the lack of adequate disclosures compared to their counterparts in other Asean countries, particularly on company web sites,” the 2014 ACGS report said. “There is a perception that potential investors have difficulty navigating mainly due to the variety of formats and content employed from company to company.” The said scorecard is being published as part of the Asean’s thrust of unifying its market. Institutional investors, hence, can go into the regional market as Asean applies the same standards for all listed firms in the regional bloc. Meanwhile, part of ICD’s regional peers doubts in the ability of Philippine listed firms to climb up the ladder of corporate governance rankings was based on the lack of cases of insider trading that were successfully won by regulators.

breakthrough, when it penalized businessman Roberto Ongpin P174 million for insider trading. The case is still up for appeal. “I don’t think there’s anybody put to jail [as a result of insider trading in the Philippines],” Estrada said. He added, however, that such is the case in other countries, including in the United States, whose banks caused the 2008 financial crisis that sent shockwaves all over the world. Estrada said corporate governance tries to address the discontent from the public on the system by requiring transparency, by requiring very high standards of probity and ethics, among others. That, however, is easier said than done.


AFTER the BW Resources scandal in the late1990s through early 2000s, which tarnished the Philippine Stock Exchange’s credibility, only a few were penalized and no known person was jailed. Today BW Resources still operates under Suntrust Home Developers Inc. with a different set of owners and an entirely different kind of business. It was only last year when the Securities and Exchange Commission finally had a

THE comply-or-explain scheme of the new edition of the Code of Corporate Governance for Publicly Listed Firms is fairly new principle to everybody in the region and this will be the first year to test its effect. “But we really shouldn’t treat your public companies like children,” Estrada said. There are cases, however, that it is difficult to implement in real life, such as the separation of the chairman and chief executive officer positions. Estrada admits that some of the institutional investors are comfortable when it talks to the chairman and the CEO at the same time, but became nervous when they talk to different persons for the two positions. He believes, however, that the principle of separating governance and management of the business is correct. “Publicly listed companies are not hedge funds. They must exist, they must be sustainable, competitive in the long term and must benefit the stakeholders. That, to me, is very fundamental,” Estrada said. “Board directors, transparency and all others are consequences of the principles.”

2018 and we could also stop the 1.5-percent yearly contribution hike below the threshold,” he said. Among the reforms being instituted to ensure sustainability of the Fund include legal action plans to reduce contribution delinquency, and Executive interventions needed to improve collections through the issuance of an executive order (EO). The legal action plans include the intensified legal collection on referred delinquent and noncompliant employers; aggressive prosecution, settlement facilitation and speedy disposition of cases; close coordination with the Department of Justice; and the creation of additional branch legal departments, among others. “You will see in the following days cases to be filed against erring employers. There will be some contempt charges against employers who do not respond to the summons of the court because the Fund is a social protection,” he said. “This [SSS contribution remittance] is an obligation under the law. Actually, it’s not

just an obligation under the law; it is a moral obligation because you are building social protection,” Valdez said. Meanwhile, SSS President Emmanuel F. Dooc clarified that pensioners will have to wait until at least February to receive the increase. “A slight delay is expected as we only learned of the approved hike on Monday night and there will be some recomputations,” he said. He said they are also appealing to President Duterte to issue an EO that will mandate all business entities doing business with the government to produce an SSS clearance before a contract would be awarded to them. An SSS clearance should also be required for those who are applying for and renewing a business permit, as well as those who would be renewing their Professional Regulatory Commission (PRC) licenses, among others. “This would ensure that businesses and businessmen are regularly remitting the SSS contributions of their employees. This would also ensure the sustainability of the Fund,” Dooc said. PNA


DENR chief toughens up on issuance of ECC Continued from A1

will be decided based on previously set parameters. “If any ECC is canceled now, it has to be withdrawn in the legal parameters at that time. But for the future, we are saying that if any ECC is given, it should not be given unless all the conditions are first met,” Lopez said in a statement. In announcing her new policy, Lopez also issued show-cause orders to about 10 more companies, including Benguet Corp., putting them at risk of also losing their ECCs. She said the new policy on ECC issuance was an offshoot of the initial findings of a team that conducted ECC audit last December. The team found out that the previous administrations were too lax in granting ECCs. Companies were given ECCs even if their projects are not qualified.

Make it clear

George T. Barcelon, president of the Philippine Chamber of Commerce and Industry, expressed reservations on Lopez’s new policy. “Our position is, as long as the process of securing the ECC is clear, then it should be given straightforwardly. The policy should also make sure it is within the capability of the mining companies to comply. If they’re going to make it stricter, beyond the bounds of what they’re able to do, what’s the point?” he said. Barcelon added: “What will happen to those that have already gotten the ECC? Will they again be subjected to new guidelines and rules? My concern is that businesses may again be set back in pursuing their interest in mining. This could further discourage them. I hope the DENR can issue some clarification on this.”

Recidoro scratches head

Ronald S. Recidoro, vice president for legal of the Chamber of Mines of the Philippines, is puzzled by the new DENR policy. A lawyer, Recidoro said he has not yet seen an order coming from the DENR secretary. But he said an ECC is a guideline document, which guide companies on what to do to ensure minimal environmental impact in doing business. “If they are not going to issue an ECC, how can a company operate?  An ECC is a guideline document. It is supposed to guide companies on what environmental measures it needs to undertake.  It is not like a permit to operate,” Recidoro said.

ECC audit

The DENR is in the process of conducting an industry-wide audit covering 800 ECCs issued for various development projects that have potential significant impact to the environment. Last December the DENR canceled the ECCs of six mining projects and a housing project within the La Mesa Watershed for failing to comply with certain conditions. Before, the DENR issues ECCs even before compliance by project proponents. The DENR also issued show-cause orders against 12 development projects. The order to cancel the ECC issued to Century Communities Corp. for its Nova housing project, which is within the La Mesa Watershed, aims to prevent adverse environmental impact, particu-

Sea piracy. . .

Continued from A12

In the last quarter alone, the bureau said 12 crew were kidnapped from two cargo vessels that were underway and from an anchored fishing vessel in the Sulu Sea. In November, a bulk carrier was fired upon but pirates were not able to board the vessel. Earlier in 2016, crewmembers were kidnapped in three attacks on vulnerable slow-moving tugs and barges, it said. The bureau, whose piracy reporting center is based in Kuala Lumpur, urged

larly to the reservoir that serves 12 million people in Metro Manila. “As a matter of principle, that’s the watershed of 12 million people, and I cannot see the possibility where a business interest is more important than the water that our people drink,” Lopez said. The DENR also canceled the ECCs given to Palawan-based mining firms Ipilan Nickel Corp. and Lebach Mining Corp., as well as Davao-based Core Mining Corp. and Austral-Asia Link Mining Corp., and Donggwang Clark Corp. in Pampanga. Lawyer Maria Paz Luna, the designated DENR undersecretary for legal affairs, said that contrary to its claim, Austral-Asia’s mining site is only 5 kilometers away from a habitat of the endangered Philippine eagle. “This is a signal that the DENR [will no] longer…[wait]…for conditions to be fulfilled until we issue adverse findings,” Luna said.

More show-cause orders

Meanwhile, the DENR has directed Benguet Corp. to explain why its ECC should not be canceled for its Antamok open-pit mine in Itogon, Benguet, for its “failure to rehabilitate the open-pit site for 25 years” and “negligence leading to a toxic spill to a 1.8-kilometer river in Cordillera.” The agency also issued show-cause orders to Sinophil Mining and Trading Corp., LaFarge Mindanao (formerly Mindanao Portland Cement Corp.), Philippine Sinter Cor p., Centur y Peak Corp. (on two projects), Filipinas Systems Inc., Ore Asia Mining and Development Corp., Wan Chiong Steel Corp., Wellex Mining Corp., PhiGold Metallic Ore Inc. and Hantex Manufacturing Corp. At the same time, the DENR denied the ECC application of Egerton Gold Philippines for its project in Lobo, Batangas, due to incompatibility of its operations with the Verde Island Passage, which is considered the “global center of the center of the marine biodiversity of the planet.” According to Lopez, the DENR’s decision to cancel, deny or grant an ECC is “based on social justice”. “Social justice, in the context of the DENR, means that the use of the land benefits the greater majority, benefits the common good. But, when the environment is destroyed, it is the poor people around the area who suffer,” the DENR chief said. ECC is a certificate issued by the DENR’s Environmental Management Bureau following a positive review of the ECC application. This certifies that based on the application of the proponent, the proposed project or undertaking will not cause a significant negative impact on the environment. The certificate contains specific measures and conditions that must be met by the proponent before and during the operation of the project. In some cases, conditions are listed to be performed during the project’s abandonment phase to lessen identified potential environmental impacts. “Yearly, hundreds of new marine species are found in the Verde Passage. Any kind of mining or coal plant would adversely affect the area, which, if maneuvered well, could bring on the uplift of the entire area and be a gift to humanity,” Lopez concludes. ship owners to consider avoiding the Sulu Sea. It called on governments to investigate and identify the kidnappers and punish them under the law. It urged ships to be vigilant in the Gulf of Guinea, which remained a high-risk kidnapping hotspot with 34 seized from vessels in nine incidents. Worldwide, Indonesia remained the top hotspot for piracy with 49 incidents, mostly low-level thefts, but this was sharply down from 108 in 2015. Attacks surged off Nigeria, which accounted for 36 incidents, up from 14 in 2015. India accounted for 14 incidents, Peru reported 11 and the Philippines 10. AP

Gunmen kill 8 fishermen in Zamboanga attack


IGHT crewmen of a fishing boat were killed on Monday night when they were attacked by armed men on the waters off Laud Siromon, Barangay Dita, Zamboanga City. But the Armed Forces Western Mindanao Command spokesman, Maj. Filemon Tan Jr., said the attack was not terrorism related. Tan said FB NR, owned by a certain Mumar from Barangay Sangali, Zamboanga City, was on the waters off Laud Siromon with its 15 crewmen when armed men fired at it. As a result, eight of the boat’s crewmen were killed, while the rest jumped into the water and survived. They are currently on Siromon Island. “Motive of the gunmen was said to be personal grudge between two fishing groups and another angle [being] considered is extortion,” Tan said. The incident, which occurred at past 7 p.m. on Monday, was reported on Tuesday by Daud Bakil, barangay chairman of Sangali, Zamboanga City, to the Sangali police station. Bakil was accompanied by Kervin Banahan, a resident of Sangali. “The Joint Task Force Zamboanga is now closely looking and monitoring the developments in the area. The Marine Battalion Landing Team-11 is also currently in the area to assist the police as investigations are ongoing,” Tan said. The Zamboanga City Police Office, meanwhile, said a seaborne team has been sent to track down the gunmen. The police said the fishing boat manned by 15 crewmen was on the way home to Sangali from Sibuktuk Island when five gunmen aboard two motorboats, locally known as jungkung, accosted them. The gunmen divested the fishing-boat crewmen of cash and valuables, including cellular telephones, and then opened fire, killing eight instantaneously. Personnel from the Zamboanga police were sent to Siromon Island to fetch the survivors. Rene Acosta with PNA

The Nation BusinessMirror

Editor: Dionisio L. Pelayo • Wednesday, January 11, 2017 A3

forces ready DENR’s Lopez in trouble Security for Asean summit, Miss U show in Davao over air-quality monitors D


By Jovee Marie N. dela Cruz


NVIRONMENTAL groups on Tuesday filed a complaint before the Ombudsman against Environment Secretary Regina Paz L. Lopez and three others in connection with the anomalous purchase of air-quality monitors.

In their complaint, United Filipino Consumers and Commuters President Rodolfo Javellana Jr. and Manuel Galvez of Air Board Co., said Lopez, together with DENR consultants Leo Jasareno and Jean Rosete, and Teresita Peralta of the Environmental Management Bureau should face charges for not investigating the questionable purchase of the airquality monitors in 2003 and 2010. Javellana and Galvez said the purchase was disadvantageous to the government, as “a scientific and educated

check shall certainly bear out reports that this monitor or report it projects cannot be trusted.” “The matter had been addressed to respondent honorable Secretary Lopez, but her action, at commending the very nominal respondents— Rosete and Peralta—speaks of her [Lopez’s] already joining the bandwagon of men and women who thrive at the business,” the complaint said. “If we look at the Clean Air Act as business opportunity for suppliers, as well as an opportunity to really

have clean air for the country and the people, it is clear that the way the Clean Air Act is being implemented…what is being served is the business purposes, and not the purposes that will uplift the health of Filipinos, and by the prosperity of the business side is being aided and abetted by the very acts constituting the act/s complained of in this complaint,” it added. The complainants added Lopez and the three respondents shall also be investigated for possible violations of the Government Procurement Reform Act and the Clean Air Act. The complaint also asked the Ombudsman to file administrative complaint and criminal information against the respondents after the investigation. “[We also] prayed [for] a review on the implementation of the Procurement Act, how it is being implemented in the procurement of machines and equipment and the implementation of Clean Air Act, by the respondents, be immediately ordered,” it said. “With end view, that the collusion, participated in by the herein respondents Rosete and Peralta, at tailor-fitting the terms of reference and other bidding materials, to suit a favored supplier, the Electrobytes, and the cycle of corruption attendant thereto to be immediately checked and stopped,” it added.

AVAO CITY—Authorities here firmed up the security blanket for two international events next week, as they appealed to residents to help through vigilance in their communities. “Just like when we have special visitors that we clean our surroundings, fix our homes and sweep the must we also show to the Asean [Association of Southeast Asian Nations] delegates and the Miss Universe candidates the warm hospitality of Filipinos,” said Chief Supt. Manuel Gaerlan, Davao region police commander. The National Police, as well as the Armed Forces’s Task Force Davao and the Task Force Haribon, would form a tight security blanket for the two events, heightening the alert level in all parts of the Davao region and sending crack teams along the routes and venues. The security would involve 3,000 personnel, three times the total strength of the Davao City police. Asean delegates are expected to arrive ahead of the January 15 meeting here and the Miss Universe candidates would fly in on January 19 for a photo session, visits to the Philippine Eagle Foundation center in Malagos, Calinan, and the Eden Nature Park in Toril, then a fashion show at the SMX Convention Center. They would fly out on the same day. Gaerlan said some policewomen have been tasked to provide close-in security to the Miss Universe candidates. Manuel T. Cayon


A4 Wednesday, January 11, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon


Warming ties with Russia, China boon to PHL exportsPernia


By Cai U. Ordinario


he country’s renewed ties with China and newfound trade partner Russia are seen boosting the Philippines’s export and import performance this year, according to the National Economic and Development Authority (Neda). Socioeconomic Planning Secretary Ernesto M. Pernia told reporters increased trade with China and Russia will allow the country’s exports to post a positive growth this year. The country’s export performance has been in the doldrums, and posted a contraction of 5.2 percent this year. This caused the country’s trade deficit to further widen in 2016. “It’s [export growth] that’s going to pick up and, hopefully, go beyond zero to positive,” Pernia said. “Exports, especially in terms of agriculture goods and food, fruits are going to be more welcome in China, and also in Russia.” Pernia added that Russia is also a good market for handicrafts, as well as herbal or alternative medicine products.

$73.724B The country’s current trade deficit, which is around 13.7 percent higher than the $64.822 billion posted in the same period of last year

The Neda secretary also said the visit of Chinese and Russian nationals are also expected to boost the country’s tourism, which is considered a “service export”. While exports recovery will be good for the economy, in general, the impact may be less pronounced on the country’s trade deficit. Pernia said the trade deficit could increase due to the construction

projects that will be implemented this year. These projects will require the import of construction materials and machinery. The country’s trade deficit increased to $73.724 billion, around 13.7 percent higher than the $64.822 billion posted in the same period of last year. “We might have a lot of imports, too, especially with a lot of construction going to be in effect this year,” Pernia said. Former Tariff Commissioner George Manzano told the BusinessMirror that, while Philippine exports will get a boost from increased trade with China and Russia, it may not boost overall trade performance. Manzano, however, agreed with Pernia, saying trade relations with China and Russia augur well for increasing agriculture exports, particularly fruits and vegetables. He added that minerals exports could also see an increase, especially if China will decide to invest more on infrastructure this year. The Chinese Communist Party, Manzano said, has yet to decide on the economic direction of the country. “This will help, but you cannot rely on it to boost the whole trade performance. Nonetheless, it helps in diversifying the country’s export markets,” Manzano said. Ateneo EagleWatch senior fellow Alvin Ang, meanwhile, said

he was not that optimistic about the impact of trade relations with China and Russia on the country’s trade performance. Ang said that in order for these trade relations to have significant impact on trade performance, particularly in narrowing the trade deficit, may take years. “It takes time to build demand,” Ang said. "We could even expect more imports, since they are capital-goods sources rather than them buying from us.” Pernia said the positive global growth outlook paired with the upcoming Asean integration is the perfect opportunity to expand the Philippines’s exports portfolio. Import payments grew to $7.3 billion due to the swell in demand for capital goods (29.7 percent), consumer goods (32.6 percent), raw materials and intermediate goods (11.1 percent), and mineral fuels and lubricants (1.3 percent). Conversely, export earnings dropped to $4.7 billion due to the 10.6-percent decrease in the value of manufactured goods, mostly electronics that declined by 7.9 percent. “While we are expanding our trade relations with potential markets, we need to further harness our existing free-trade agreements and continue to push for reforms. This will improve our business environment and increase our attractiveness to foreign investors,” Pernia said.

House bill seeks to boost PHL innovations, inventions, R&D


lbay Rep. Joey S. Salceda has filed in Congress House Bill 4581, which aims to boost the country’s scientific innovations and inventions, research and development (R&D) toward social progress and global competitiveness. The measure projects a budget that could reach P672 billion by 2022. Salceda said the measure, titled Science for Change Program (S4CP) Act, gives special focus on “scienceand-technology education, training, and services,” and supports “indigenous, appropriate and selfreliant scientific and technological capabilities, and their application to the country’s productive systems and national life.” S4CP is Salceda’s fourth bill that seeks to pursue a strong science and technology (S&T) drive in the country, as an “essential tool for national development and progress”. The three other bills involve the creation of a nuclear commission, revival of the Balik Scientist Program and the creation of metrology institute, to modernizes and standardize the country’s measurement system. He had also filed an earlier bill that seeks to create the country’s space agency. Salceda said S4CP seeks to enhance and achieve a higher standard of S&T in the country to “contribute to the development of the economy and society and toward the improvement of the nation’s welfare by prescribing the basic policy requirements for the promotion of S&T, and comprehensively and systematically promoting policies for progress.” He said S4CP consists of four components: Program Expansion in seven areas; New Programs in six areas; Grand Plan for Science and Technology; Human Resource Development; and Accelerated R&D Program for Capacity Building of Research and

Peza scouts for Middle East investors ahead of Duterte visit By Catherine N. Pillas @c_pillas29


he Philippine Economic Zone Authority (Peza) is grooming Mindanao as a premier investment destination of Middle Eastern countries via an investment road show to that oil-rich region next month. The road show will also serve as a precursor to a major investmentpromotion tour-cum-state visit of President Duterte there in February. Learning and training sessions for key Mindanao developers and local government officials are under way as Peza Director General Charito B. Plaza bared the upcoming investment road show in the Middle East. “Peza, the Department of Trade and Industry, the Department of Foreign Affairs, the Philippine Chamber of Commerce and Industry, and the owners of identified economic zones, such as some governors and mayors, are going on an investment road show in Riyadh, Qatar, and Dubai, to be followed by Kuwait, Bahrain, Oman,” Plaza told reporters early this week. T he investment-promotion agency is currently conducting seminars for the participants in doing business in the Middle East, and using sukuk bonds, or Islamic Treasury bonds. Plaza disclosed that the road show/seminar, to be conducted in three ME cities (February 11 and 12 in Riyadh, February 13 and 14 in Dubai, February 15 and 16 in Qatar) will be to negotiate the possible investments to come into Mindanao, in time for the Chief Executive’s state visit in the week to follow. “Peza was asked to be in the frontline in formalizing the possible investments to the Philippines prior to the state visit of President Duterte. He’s tentatively eyeing a state visit to the ME on February 26 onward to March 3 for Saudi Arabia, Dubai and Qatar; Part two is Bahrain, Oman and Kuwait,” Plaza said. Learning sessions on using sukuk bonds will be significant for enticing Islamic investors who will prefer to do business with their own banks, she added. “We are also inviting the Islamic banks to locate in the Philippines so they can provide the financial facilities to the Middle East investors,” Plaza said. With the push to lure more Middle Eastern investors, the Peza hopes to also speed up the development of new economic zones in Mindanao, and transform specific areas into so-called halal hubs.

“We want to attract all industries that are manufacturing halal products from halal cosmetics to food, we will be inviting them to locate in the Philippines, especially in Mindanao economic zones. From our initial talks, the investors from the Middle East are interested in tourism, agricultural economic zones, and putting up halal hubs,” Plaza said. In tandem with the road show, the Peza is also conducting learning sessions with local government officials and private developers in Mindanao, so new economic zones can be built in the underdeveloped region. Plaza also said the Peza is on track to finish this month its geo mapping of new and existing economic zones all over the country, as it embarks on an aggressive ecozone-development program this year. This will be done in tandem with the Peza’s aggressive push to develop more economic zones to reach a “quadrupled” investmentapproval level in 2017. The map will serve as a guidance tool for new investors on where to locate their businesses, and will contain the raw materials and facilities in transportation and logistics found in every region. T he investment-promotion agency is keen to fast-track this initiative, as investors are said to be waiting on the wings to come in. “Maraming naghihintay, and they’re just looking where to locate their industries. We will complete the location map of the economic zones,” Peza Director General Charito B. Plaza said. The demand for locations has been so great that the Peza is looking to convert numerous other lands for economic-development use this year, Plaza added. Rather than just focus on privately owned land, the Peza is already seeking to sign memorandums of agreement with other government agencies, such as the Philippine Reclamation Authority and the National Development Council, for local and national public lands that are at least 25 hectares, with the intent to declare them as ecozones. Pending these agreements, however, Plaza said her first move is to look at military-reservation areas to be converted to economic zones. With the Peza having successfully secured an exemption from the Department of Agrarian Reform’s proposed ban on conversion of agricultural lands, the agency can proceed with its development on idle and viable land.

Graft-ridden LTO cracks down on ‘fixers’, again By Lorenz S. Marasigan @lorenzmarasigan

Cock-a-doodle-doo A lady stall owner in Manila’s Binondo District presents her collection of lucky charms, foremost of which is the figurine of a crowing rooster she’s holding, ahead of the Chinese New Year celebrations on January 28. The date ushers in the beginning of the Year of the Rooster on the Chinese lunar calendar. Roy Domingo

Development Institutions and Industrial Competitiveness. The projected total R&D budget for 2017 is P5.8 billion. The bill proposes and estimates the R&D budget starting at P21 billion this year, doubling yearly over the five-year period, and will reach P672 billion in 2022. In the last six years, Salceda pointed out, the Philippines’s scientific and technological indicators have improved significantly, based on the benchmark of the United Nations Educational, Scientific and Cultural Organization (Unesco). The Unesco prescribes that for a developing country, there should be 380 researchers, scientists and engineers (RSEs) per million population, and the percentage of the GDP expenditure on research and development (GERD) should be 1 percent at least. The number of RSEs in the country has increased from 180 in 2009 to 270 in 2013,

while the budget of the Department of Science and Technology (DOST) has increased from P5.7 billion in 2009 to P20.8 billion in 2017, with R&D budget allocation increasing from P1 billion in 2009 to P5.8 billion in 2017. Salceda noted that for the DOST HRD, the Philippine Science High School (PSHS) and the Science Education Institute (SEI) have significantly contributed to the RSEs. The PSHS increased the number of regional campuses from 11 in 2010 to 16 in 2016, with now one PSHS campus per region. The number of students in PSHS has increased from 1,840 in 2009 to 8,083 in 2017, and is projected to hit 9,500 in 2021. The SEIs have, likewise, increased its freshman scholars intake, from 1,250 in 2010 to 5,590 in 2015. It has crafted the Grand Plan for S&T Human Resource Develop-

ment that aims to enable the Philippines to achieve 380 RSEs by 2022, he added. The DOST, Salceda said, must endeavor to significantly accelerate S&T and Innovation in the country through massive increase in investment on S&T HRD and R&D through the S4CP. The program, he stressed, must be provided sufficient budget to underwrite all R&D efforts for the five-year period, as follows: 1) Niche Centers in the Regions for R&D (NICER), P3.2 billion; 2) R&D Leadership Program (RDLead), P6 billion; 3) Collaborative R&D to Leverage PH Economy (CRADLE) for RDIs and Industry, P3.2 billion; 4) Business Innovation through S&T (BIST) for Industry, P14.25 billion (25 industry sectors, at P50 million to P100 million per sector x 75); and 5) S&T HRD (STRAND, STAR, SRCUR). PNA


he new management of the Land Transportation Office (LTO) is wasting no time in changing the image of the agency after being branded as one of the most corrupt government agencies in the Philippines. To demonstrate this, the agency launched a zero-tolerance campaign against fixers, which recently yielded charges against three persons for violating the antired-tape law and estafa. LTO Director Clarence Guinto identified them as Rhoda N. Antonio of Valenzuela City, who demanded P20,000 as additional payment for the processing and release of an impounded van, operating as a colorum public-utility vehicle; Eleanor A. Manalili of San Juan del Monte, Bulacan, who defrauded a complainant of P2,300 by claiming she could facilitate the renewal of the victim’s driver’s license; and Dexter P. Laggui of Pinyahan, Quezon City, who secured P900 from a complainant who was seeking to redeem his confiscated driver’s license. Guinto said the three under

false pretenses, demanded money from certain complainants for speedy processing and release of LTO documents. Galvante warned that fixers and unauthorized persons are absolutely prohibited in all premises of the LTO and its branches nationwide, and any person facilitating documents for a fee shall be arrested. He added that the LTO is adopting a mailed-fist policy against fixers, and employees caught conniving with them shall be liable for violating civil-service regulations and shall be immediately suspended. “No officer or employee shall ask, explicitly or impliedly, any money, gift or favor from our public clientele,” Galvante said. He noted that any office head who tolerates or fails to curtail the practice shall be held administratively liable. “The LTO has been cited as one among the graft-filled and corrupt agencies, and we fully intend to change that,” Galvante added. He urged the public to report all questionable transactions and activities in LTO offices to regional directors for investigation and appropriate action.

Agriculture/Commodities BusinessMirror

Editor: Jennifer A. Ng • Wednesday, January 11, 2017 A5

Govt targets 2.5%-3.5% agri growth until 2022


By Cai Ordinario |


he Duterte administration has set a more modest production target for the agriculture and fisheries sector as indicated in the draft Philippine Development Plan (PDP) chapter of the Department of Agriculture (DA).

A mother and her child wait for a ride to bring home their rice in Nueva Ecija. The Philippine Statistics Authority said rice inventory as of December 1, 2016, was lower at 3.34 million metric tons. NONIE REYES

PHL rice supply down 2.98% in December–PSA By Jasper Emmanuel Y. Arcalas | @jearcalas


he country’s rice inventory as of December 1 last year reached 3.34 million metric tons (MMT), 2.98 percent lower than the 3.4 MMT recorded in 2015, according to data from the Philippine Statistics Authority (PSA). In its monthly report, titled “Rice and Corn Stocks Inventory”, the PSA said the December figure was 1.11 percent higher than the November inventory of 3.3 MMT. “The total rice inventory for [December 2016] would be adequate for 98 days,” the PSA report read. “Stocks in the households would be good for 49 days, those in commercial warehouses for 32 days, and those in NFA [National Food Authority] depositories for 17 days,” it added. Of the rice inventory as of December 1, the PSA said 50.25 percent were with the households; 32.85 percent were in commercial warehouses; and 16.90 percent were in NFA depositories. The majority, or 79.35 percent, of NFA stocks consisted of imported rice. PSA data showed that NFA stocks during the period reached 564,180 metric tons (MT), while commercial warehouses accounted for 1.096 MMT. Rice in households reached 1.67 MMT. “Compared with 2015, rice

stocks in the households and in commercial warehouses increased by 2.01 percent and 12.40 percent, respectively,” the report read. “On the other hand, stocks in NFA depositories decreased by 31.25 percent,” the report added. On a monthly basis, rice stocks in all sectors were higher compared to their levels last November. The PSA said stocks in the households expanded 0.04 percent, while those in commercial warehouses grew by 1.66 percent. Stocks in NFA depositories declined by 3.33 percent. Philippine rice inventory is expected to be boosted by the arrival of rice imported under the minimum access volume (MAV) scheme. The NFA said qualified rice traders have purchased 53,044 MT of imported rice. The figure accounts for 7.66 percent of the 692,340 MT approved rice volume to be imported by the private sector under the 2016 MAV Rice Importation Program. The NFA said 20 farmers’ organizations and private firms brought the imported rice into the country. More than three quarters, or 78.17 percent of the 53,044 MT, were bought from Thailand, the NFA report showed. The remaining volume, which amounted to 11,580 MT, came from Vietnam. The government allows rice imports within the MAV scheme to enter the country at a lower tariff

of 35 percent. Imports in excess of the MAV are slapped a higher tariff of 50 percent. The PSA data also showed that the country’s corn inventory last December rose by more than a quarter, or by 38.83 percent, to 369,980 MT, from 265,200 MT recorded a year ago. However, the December cornstock inventory is 39.51 percent lower than the November inventory of 604,790 MT. The PSA said more than half of the total corn-stock inventory, or 69.73 percent, last December were in commercial warehouses, while 40.68 percent were held by households. Corn in commercial warehouses reached 218,430 MT, stocks in households accounted for 150,520 MT of the total inventory, while corn stored in NFA warehouses amounted to only 1,030 MT. “Year-on-year, corn stocks in the households and in commercial warehouses grew by 55.34 percent and 30.83 percent, respectively. However, stocks in NFA depositories dropped by 23.71 percent,” the report read. “Compared with last month, stocks in commercial warehouses and in NFA depositories grew by 69.41 percent and 190.40 percent, respectively. However, stocks in the households dropped by 38.12 percent,” the report added.

The national government is keen on growing farm production by 2.5 percent to 3.5 percent annually starting this year until 2022, when the President steps down from office. The previous administration had initially targeted to increase annual agriculture and fisheries output by 3 percent to 5 percent. However, the latest target is higher than the 1-percent average growth posted in the 2013 to 2015 period. In 2014 and 2015, the baseline growth was only at 0.1 percent. “The sector has yet to overcome recurring challenges related to productivity, competitiveness, climate and disaster risks, and resource degradation and depletion,”

the draft chapter read. “Greater trade liberalization, e.g., implementation of the Asean Economic Comnunity [AEC] and free-trade agreements, and lifting of quantitative restrictions [QR] on rice in 2017 provides opportunities to the sector, as well as poses risks to small farmers and fishermen who remain uncompetitive,” it added. The draft economic blueprint noted that population growth and aging farmers pose a threat to the local agriculture sector. As the country’s population rises, more resources are needed to produce food, and as farmers and fishermen age, there could be a drop in production.

“The average age of palay, corn, bangus and tilapia farm operators range from 48 to 55. While the sector’s work force gets older, the younger population finds more attractive employment opportunities outside the agriculture sector. If this situation persists, food production may be threatened,” the document read. For the crops subsector, which accounts for nearly half of agriculture and fisheries output, the government is targeting to hike production by 2 percent to 3 percent annually from 2017 to 2022. To hit these goals, the draft PDP indicated that paddy-rice output should grow by 3.95 percent this year, 4.2 percent in 2018, 4.32 percent in 2019, 4.36 percent in 2020, 4.41 percent in 2021 and 4.45 percent in 2022. Livestock and poultry production should also grow by 3 percent to 4 percent annually and forestry by 2 percent to 3 percent. The government is also targeting to increase commercial fishing production by 2.5 percent and municipal fishing by 1 percent annually between 2017 and 2022. Aquaculture-production growth target was set by the government at 5 percent every year.

Jobless youth urged to pin hope on agri

By Jovee Marie N. dela Cruz @joveemarie


arming may not be an attractive venture for many young Filipinos, but not for Jonathan Domingo and Ralph Julius Paje. Doming, 30, and Paje, 28, were both recognized as outstanding young farmers for 2016 by Tofarm, a search and awards program launched by the junior Chamber International Philippines and Universal Harvester Inc. (UHI). Domingo said he was forced to stop schooling and to go into farming because his parents could no longer afford his expenses. “I think I was born to become a farmer. When I was asked to stop schooling, I decided to help my father plant vegetables.” “Eventually, my efforts were recognized and I was able to go to Japan for an agricultural training. That training gave me the inspiration to do better,” he added. According to Domingo, he is currently conducting a free training for all young farmers in his province, Ilocos Norte, to help and encourage them to join the agriculture sector. “Farming is enjoyable, especially if you’re already earning. I encourage the youth go into agriculture

because there is money here. Young Filipinos should not be ashamed to become farmers as they are considered the backbone of our country,” Domingo said. Unlike Domingo, Paje had a degree in business management. Despite this, he said he had a difficult time landing a full-time job. “I graduated with a degree in business management in 2009. At the time, there was a crisis, so it was difficult to find a job, so I decided to try farming,” Paje said. Paje added this proved to be a good decision as he was able to earn more than what he would have been given if he was hired as a factory worker. “Farming is a very bright spot. I remember, my capital back then was only P100,000 and I had to borrow that money. I planted watermelon and other fruits and the return on investment was 6,000 percent. I encourage the youth to try agriculture,” he said. Domingo and Paje were only two of several farmers who received plaques and cash incentives from Tofarm during the awards night last November. Tofarm is the brainchild of Dr. Milagros How, executive vice president of UHI. “Our kababayan in the field

exemplify passion and dedication that I haven’t seen in so many industries. They till the lands, risk their lives in reaping resources from the waters of our island, invest their skills in producing poultry, not just for livelihood, but to also provide a feast for the whole country,” How said. “So we thought, why not celebrate this through a simple awards night to tell them, and remind them, that the fruits of their labor are much appreciated. This is the heart of Tofarm,” she added. The program, How said, aims to inspire people to not just notice, but also to understand the ins and outs of the industry—patronize local produce, promote responsible food consumption, including minimizing food wastage and getting the young ones involved in this most important sector of the country. “Recruitment of people and boosting interest in agricultural adventure is what Tofarm also aims to spread to the public. Enlightening everyone to see beyond what people think they know about agriculture, turning it around to open the public’s eyes in how hard and exciting agricultural talk and business could be is something that the team is also working on,” she added.

Too much of weed that feeds forcing wheat farmers to plant other crops


heat is the weed that feeds. The grain-yielding grass is such a hearty plant that it is grown on more land than any other crop in the world. After four straight seasons of record harvests, bins are bulging from Kansas to Queensland and prices are near the lowest in a decade. But there are signs the glut may not last much longer, or at least that supplies may tighten enough to halt the four-year slump in wheat futures. Farmers are planting less because many are losing money. At the same time, global consumption is at an all-time high. And the risk of cropdamaging weather lingers over key exporting countries this year. “It’s difficult to be overly bullish,” said Benjamin Bodart, a director at adviser CRM AgriCommodities in Newmarket, England. “The world is still awash with wheat. You cannot deny it. But when you dig a bit further, the downside now is fairly limited.” While many money managers remain bearish—they’ve bet on lower prices for 17 months straight— wheat is expected to gain in 2017 for the first time in five years, according

to a Bloomberg survey of 13 analysts. Rabobank says there is a “real possibility” of a supply shock in the US and Europe if farmers shift to more profitable crops, and JPMorgan Chase & Co. predicts a stockpile drop this year of 8.4 percent. It’s not difficult to see why the market slumped for so long. Wheat used in everything from bread to cakes and noodles thrives in all sorts of climates, and every few months there are crops being harvested somewhere in the world. Global production will reach an all-time high of 751.3 million metric tons once the current Southern Hemisphere harvest is complete, leaving stockpiles at 252.1 million tons, the most ever, US Department of Agriculture (USDA) data show. Prices tumbled 13 percent last year to $4.08 a bushel on the Chicago Board of Trade, touching a 10-year low of $3.86 3/4 last August 31 and extending the longest stretch of annual losses since 1999. The grain was one of the biggest commodity losers of 2016 and is down by more than half from its high in 2012. Milling wheat in France dropped 3.2 percent

cludes fewer acres for top consumer China and declines for major exporters, including the US, Canada, Australia and Kazakhstan.

Century low

Bloomberg Photo

to €168 a ton, capping a four-year slide of 32 percent.

Shipping more

Russia, the world’s top exporter, said on December 28 that its 2016 wheat harvest jumped 19 percent, more than analysts forecast. Farmers in Argentina are harvesting what will probably be their biggest crop since 2012, according to CRM AgriCommodities. And because wheat is sold in dollars on global markets, the currency’s strength is boosting the incentive for growers outside the US

to ship more, even with lower prices. “For prices to move substantially higher from here, we need to see some signs of supply being restricted, either by a weather event or by the fact that production levels are curtailed,” said Fiona Boal, director of commodity research at London-based Fulcrum Asset Management Llp., which oversees about $5.2 billion. Already the prolonged slump in prices has discouraged farmers. The London-based International Grains Council last November predicted a decline in global planting. That in-

IN the US the No. 2 exporter, growers probably seeded the fewest acres of winter wheat in at least 104 years, according to the average estimate of 25 analysts surveyed by Bloomberg before a January 12 USDA report. Winter wheat, the most-common variety grown in the country, is sown in the fall, goes dormant during the coldest months of the year, and is harvested in the spring. Some farmers in Kansas, the largest US producer of winter wheat, could lose money on every bushel, according to data from Kansas State University in Manhattan. The crop cost about $5.04 a bushel to grow in the state’s south-central areas, including land and labor expenses. That’s below the average national cash price for hard red wheat of $3.38 as of January 6. A big reason for the wheat glut in recent years was mostly beneficial weather, which allowed crops to flourish and yields to

improve. That may not last, Tracey Allen, an agricultural commodities analyst at JPMorgan in London, said in a November 23 report. Last December the condition of dormant US wheat crops declined, including in Kansas, Oklahoma and Colorado, the USDA reported on January 3. Parts of those states have received less than half of normal precipitation since early-October, according to US Drought Monitor. Through March 31, drought is likely to persist in western Kansas, eastern Colorado and most of Oklahoma, according a seasonal outlook from National Weather Service.

Deep freeze

IN parts of Ukraine, the fifth-largest exporter, the layer of snow that protects plants from freeze damage may be insufficient to shield some crops during a cold snap, researcher UkrAgroConsult said on January 5. The country has since been hit by snow blizzards and storms with temperatures of minus 25 degrees Celsius (minus 13° Fahrenheit) in western regions, broker Veles-Agro said on January 9. Bloomberg News


Wednesday, January 11, 2017

The World BusinessMirror

Editor: Lyn Resurreccion •

Son-in-law to be Trump’s key adviser


ASHINGTON—Jared Kushner will become a senior White House adviser to his father-in-law Donald J. Trump, cementing the New York real-estate executive’s role as a powerful and, at times, decisive influence on the president-elect.

Kushner, 35, who mar r ied Trump’s daughter Ivanka in 2009, is closer to Trump than any other adviser, a steady and stabilizing presence inside an often chaotic transition team who has provided input on most of his father-inlaw’s most consequential hiring and firing decisions. Trump described Kushner as “a tremendous asset and trusted adv iser throughout the campaign and transition” in a statement issued early on Monday evening announcing an appointment that perhaps more than any other defines the way the incoming president will govern.

Ethics questions

Kushner plans to sell some of his rea-estate holdings and other assets, his lawyer said. Some ethics experts have questioned whether the appointment will be legal under federal antinepotism laws designed to prevent family ties from influencing the functioning of the US government. Other presidents configured their White House hierarchies to mirror experiences in statehouses, on campaigns or at the heads of armies. Trump intends to adopt the management style of a New York real-estate empire, with family at the pinnacle and staff members, however trusted or talented, somewhere below. Ivanka Trump, who also participated in her father’s campaign decisions, has no immediate plans to enter the administration and will restructure her portfolio of holdings. But

she plans to step down from the management of the Trump Organization and the Ivanka Trump fashion brand, said Jamie S. Gorelick, Kushner’s lawyer. Kushner’s plan is to sell assets to his brother and to a trust overseen by his mother, said Gorelick, who added that she had been consulting with federal ethics officials in an attempt to minimize opposition to Kushner’s appointment. Under the arrangement, Kushner will divest his holdings in his family real-estate firm’s flagship property at 666 Fifth Avenue; sell his stake in the New York Observer newspaper; divest his interest in his brother’s firm, Thrive Capital; and restructure other investments. He will also divest of all foreign investments, Gorelick said. He will have to recuse himself on matters that could relate to his wife’s businesses and his remaining holdings, Gorelick added.

First among equals

Kushner has been described by numerous transition staff members as the first among equals in Donald J. Trump’s high command. His new title belies the sweeping inf luence he will have behind the scenes. The soft-spoken Kushner has often been described as having a calming effect on Trump, who is notorious for yelling at staff members dur ing moments of tension. Kushner became the defacto campaign manager in the spring, and his inf luence with

Kushner w ill divest of his holdings in The Observer and has stepped down as its publisher; his brother-in-law, the newspaper’s chairman, will assume that role. Trump is scheduled to hold a news conference on Wednesday to discuss his plans for dealing with myriad conflicts of interest raised by his sprawling international development, hotel, branding and entertainment empire.

Legal challenge

Jared Kushner and his wife Ivanka Trump in the lobby of Trump Tower on Fifth Avenue in Manhattan on November 18, 2016. Kushner, President-elect Donald J. Trump’s son-in-law, is to be named senior adviser to the president. Sam Hodgson/The New York Times

Trump has expanded rapidly. He is expected to play the same role in the White House, while the chief strategist, Stephen K. Bannon, provides the president-elect with strategic, messaging and communications advice, and Reince Priebus, the chairman of the Republican National Committee and the incoming chief of staff, runs day-to-day operations in the West Wing. Trump’s counselor, Kellyanne Conway, will have a direct line to the president on a range of issues. Despite his lack of hands-on political experience before the 2016 campaign, Kushner earned the trust of his mercurial fatherin-law during the campaign’s most turbulent moments, joining his wife and Trump’s adult sons, Eric and Donald Jr., in ousting Corey Lewandowski, then the campaign manager, in the heat of the primary season. Kushner was among those who pushed, campaign officials said, for the removal of Gov. Chris Christie of New Jersey as the head of Trump’s transition team, and pressed for his father-in-law to appoint David

M. Fr ied ma n, a L ong Isl a nd law yer, as ambassador to Israel. Kushner, an Orthodox Jew, has also made an unlikely ally of Bannon, an icon of the closed-borders nationa list movement. W hen Bannon, a former Breitbart executive, came under attack from Democrats after he was appointed to a White House role, Kushner assured allies that he had complete faith in Bannon and described him as a man of character.

Will not take a salary

Kushner will not take a salary and plans to work on issues involving the Middle East and Israel; try to forge government partnerships with the private sector; and collaborate with Trump’s choice for commerce secretary, Wilbur Ross, on matters involving free trade, Gorelick said. T he sc ion of a prom i nent Democ rat ic fa m i ly ac t ive i n New Jersey politics, Kushner showed few early sig ns that he wou ld become a nationa l politica l power player. A Har vard graduate, he is a lifelong Democrat, libera l on socia l issues. Like his ideolog ica l ly limber

father-in-law, he has donated to Democratic candidates. Kushner’s appointment was greeted with relief by some liberals, including Mayor Bill de Blasio of New York, who views him as moderating inf luence in a Trump West Wing dominated by hard-line conservatives. “I respect him a lot,” de Blasio said when asked about Kushner on Monday. “I’ve known him for years and find him to be a very reasonable person.”

Political transformation

Still, it remains unclear if Kushner is inclined to prod the president-elect to the left. By his own account he underwent something of a personal political transformation during the campaign, embracing Trump’s fiery and conservative economic message after spending months crisscrossing red and swing-state America. Kushner’s new role became public a day after the disclosure that he would resign as chief executive of Kushner Cos., his family’s real-estate firm, and divest himself of “substantial assets,” including 666 Fifth Avenue.

Gorelick said she was confident Kushner’s appointment would survive any legal challenge, and said Trump would seek an advisory opinion from the Department of Justice’s Office of Legal Counsel. “I am not saying there’s no legal argument on the other side,” she added. “I’m just saying we have the better argument and will prevail.” Trump made it clear since he was elected that he wanted Kushner in his W hite House. Since December, Kushner and Gorelick ’s team have consulted with the Office of Government Ethics to create a plan that would satisfy the legal requirements needed for him to serve. Kushner’s father, Charles Kushner, a real-estate developer who was once imprisoned for tax evasion, will take an increased role in the family company. Norman L. Eisen, who was the chief White House ethics lawyer under President Barack Obama, said he thought Kushner’s decision to divest holdings raised pressure on Trump to follow suit, something the president-elect has been reluctant to do. “W hat we are seeing now is, after the initial chaos of the Trump transition, that his nominees are now complying with the requirements of the law,” he said. “Rex Tillerson has retired from Ex xon, and now Kushner is doing the same,” he added, referring to Trump’s nominee for secretar y of state. “So it’s going to be hard for Trump to ignore 40 years of precedent and not do the same.”

New York Times News Service

Xi to lead delegation of China’s wealthiest executives to Davos Florida has most dangerous cities for US pedestrians


resident Xi Jinping will become the first Chinese head of state to address the World Economic Forum (WEF), leading an entourage of business executives to Switzerland next week as the country seeks a larger role in shaping the global economic order. Xi will speak at the opening session on January 17 of the annual gathering of billionaires and political elites in the Alpine resort town of Davos, the WEF’s chief China representative, David Aikman, said at a briefing on Tuesday in Beijing. Xi was expected to hold conversations with global leaders among more than 3,000 attendees, who will include UK Prime Minister

Theresa May, outgoing US Vice President Joe Biden and South African President Jacob Zuma, Aikman said. Executives accompanying Xi to the meeting include Alibaba Group Holding Ltd. founder Jack Ma, Dalian Wanda Group Co. Chairman Wang Jianlin and Baidu Inc. President Zhang Yaqin. Huawei Technologies Co. Chairwoman Sun Yafang, China Telecom Corp. Chairman Yang Jie and China Poly Group Corp. Chairman Xu Niansha will also attend. Ma and Wang are China’s two richest people, with net worths of $34.5 billion and $30.5 billion, respectively, according to the Bloomberg Billionaires Index. They rank 15th and 21st globally.

“This year, because of the size and scale of the China delegation, we have Chinese voices in most of the global discussions,” Aikman said. Participants want “to know China’s view on global and regional issues,” he said. The trip comes as China casts itself as an advocate of globalization in the wake of Donald J. Trump’s election as US president on an “America First” platform that was critical of free-trade deals. Trump is scheduled to be inaugurated in Washington on the final day of the meeting. The event will provide a forum for Xi to tout China’s role in the global economy, as he prepares for a key Communist Party gathering this year expected to give

British firms face skill squeeze before Brexit negotiations begin


he supply of potential new workers in the United Kingdom is softening, leaving the labor market on fragile footing before potential restrictions on migration are introduced as the country leaves the European Union (EU). Availability of both permanent and temporary staff fell last December, the Recruitment and Employment Confederation (REC) said in a report on Tuesday. Prime Minister Theresa May signaled on Sunday that regaining control of immigration and lawmaking are her priorities in the Brexit process, which may

mean quitting Europe’s single market. That could result in recruiters, who are already seeing shortages in accounting, engineering, nursing and other skills, facing even more difficulty in the coming year. The jobless rate is currently at its lowest level in over a decade. “The big question for 2017 is about how employers will fill vacancies,” REC Chief Executive Kevin Green said. “There is an urgent need for people to fill roles in catering, care and food manufacturing—in these sectors, especially employers, rely heavily on workers from the EU.” Bloomberg News

Pedestrians walk with the London Bridge at the background. Bloomberg

him a second term as leader. He will likely highlight signature projects, such as the Asian Infrastructure Investment Bank and the One Belt, One Road trade-andinfrastructure initiative, which help leverage Chinese economic might into geopolitical clout. Chinese Premier Li Keqiang used the Davos meeting in 2015 to reassure the international business community about the country’s “new normal ” of slower economic growth. His predecessor, Wen Jiabao, attended in 2009, weeks after unveiling a $586 -billion stimulus package amid the financial crisis. Last year the Chinese delegation was led by Vice President Li Yuanchao. Bloomberg News


s the recession took hold, fewer Americans had jobs to drive to, and others saved gas money and took the bus. Fewer drivers on the road meant fewer pedestrian deaths.


The number of US pedestrians who were killed in 2014

As the economy recovered, A mer icans spent more time on the road, and motor ists started killing pedestrians at a prerecession pace. That simplified, gruesome summary reflects a new study from Smart Growth America, a Washington, D.C.-based organization that promotes walkable cities, which reports that 4,884 US pedestrians were killed in 2014, the last year for which data are available. That’s the highest number since 2005 and a 19-percent increase from 2009, when the recession ended. Among the report’s other alarming findings: The elderly, the poor and nonwhite pedestrians are disproportionately likely to be killed in a traffic accident.

Eight of the 10 cities where pedestrians are at the greatest peril are in Florida, according to Smart Growth America’s Pedestrian  Danger Index, which compares the number of traffic fatalities with census data on the number of people in each metropolitan area who walk to work. They include Tampa, Orlando and Jacksonville, the second-, third- and fourth-biggest cities in the state. Miami, Florida’s largest city by population, was the 11th most dangerous among the 104 biggest metros. Why are Florida’s metropolitan areas the most dangerous? It doesn’t help that the state’s population growth took off in the post-World War II boom, when planners high on the fumes of unleaded gasoline dreamed up urban places that prioritized cars over people. But cities in all parts of the country have wide roads without enough safe places to cross. Part of the answer is demographics, said Emiko Atherton, director of the National Complete Streets Coalition. “In a city like Seattle, highincome people are out on the streets, and walking is almost looked at as a luxury activity,” she said, adding that wealthier pedestrians have been more successful at advocating for safer streets. Bloomberg News

Editor: Lyn Resurreccion •

The World BusinessMirror

Wednesday, January 11, 2017


Carmakers change focus to US after threats by Trump

Prime Minister Theresa May Bloomberg

May seeks new trade ties with EU as pound slides


he United Kingdom will need a completely new trading relationship with the European Union (EU) after its withdrawal, Prime Minister Theresa May said, as the pound fell on concern she’s planning to pull the country out of the continent’s single market. “It will be a new relationship because we won’t be members of the EU any longer,” May told reporters on Monday after a speech in London. “We will be outside the European Union and, therefore, we will be negotiating a new relationship across not just trading, but other areas with the European Union.” As May’s self-imposed March 31 deadline for triggering Brexit approaches, markets are following her every word for signals of the shape the divorce will take.  Sterling slid on Monday to its lowest against the dollar since lateOctober 2016 after the premier told Sky News the previous day that Brexit isn’t “about keeping bits of membership” of the EU. The pound was 1 percent lower at $1.2168 at 4:52 p.m. in London. May sought to blame the currency’s decline on the media’s efforts to interpret her thinking, saying her comments on Sunday were “what I’ve been saying for the past few months.”

‘Provide clarity’

“I’m tempted to say that the people who are getting it wrong are those who print things saying ‘I am talking about a hard Brexit; it’s absolutely inevitable that it’s a hard Brexit.’ I don’t accept the terms hard and soft Brexit,” the prime minister said on Monday. “What we are doing is going to get an ambitious, good, best possible deal in terms of trading with and operating within the single European market.” May was told by senior Conservative lawmaker Andrew Tyrie that the government should soon “provide clarity” about its intentions, “given the need to build a broadbased support for its position at home and abroad.” Any blueprint should detail what the government hopes to achieve regarding the single market, customs union and any transitional deal, Tyrie, who heads Parliament’s Treasury Committee, was due to say in a speech in London, according to extracts released by his office. Chancellor of the Exchequer Philip Hammond later insisted no decision has yet been taken on Britain’s trading relationship with the EU. The negotiations may need to include discussion of “what the interim period should look like between Britain leaving the European Union and delivering those long term arrangements,” if a deal can’t be reached by the end of the two-year exit period allowed by EU rules in 2019, he said. “We haven’t made any decision about which structures would best support our aspirations, whether it’s being in or out of the customs union, in or out of the single market,” Hammond told Ireland’s RTE television on Monday after meeting Irish Finance Minister Michael Noonan. “We think it’s much better to start with the objectives, what we want to achieve at the end, recognize there are political red lines on both sides and look at

how we can best structure a solution that delivers those objectives within the political red lines that both sides face.” In a sign of the UK’s shifting priorities, Foreign Secretary Boris Johnson was in Washington on Monday for meetings with Republican House Speaker Paul Ryan and a trio of senators, a day after becoming the first cabinet minister to meet with members of President-elect Donald J. Trump’s incoming administration.

US meetings

Johnson met with Trump’s chief strategist, Steve Bannon, and the president-elect’s son-in-law, Jared Kushner, in New York on Sunday. The talks were “positive and frank” and covered relations with Syria, Russia and China, the BBC reported, citing unidentified aides. As well as meeting Ryan on Monday, the foreign secretary was due to have discussions with Majority Leader Mitch McConnell of Kentucky and Bob Corker of Tennessee, both Republicans, and Democratic Sen. Ben Cardin of Maryland. He won’t meet with Rex Tillerson, Trump’s nominee for secretary of state, because the protocol is to wait until after the confirmation process. May has said she wants to strengthen trade ties with other parts of the world after Brexit and has sought to build a relationship with Trump after a frosty start. “The single market is a component part of the European Union, and it’s been a bad deal for the United Kingdom in the last 12 years,” Richard Tice, cochairman of Leave Means Leave, a group campaigning for a clean break with the EU, told the BBC on Monday. “The sooner we leave it, the better and the sooner we can do our own trade deals with countries around the world—and it’s really good to hear that Boris Johnson is in America—then the better.” Liberal Democrat leader Tim Farron, whose party is seeking to avert Brexit and has called for a referendum on the deal that May negotiates, warned that the prime minister risks damaging the economy with its divorce strategy.

‘Hurt jobs’

“Every time Theresa May opens her mouth on Brexit the pound falls further,” Farron said in a statement. “It’s clear this government is taking us toward a destructive hard Brexit that would hurt jobs, increase prices and blow a hole in the budget.” If she does favor closing borders, May’s priorities may also be those of voters. A poll released by ORB International found 46 percent of respondents viewed greater control of immigration as more important than free trade with the EU. Continued access to the single market will only be possible if the UK continues to accept freedom of movement for labor, German Chancellor Angela Merkel said in a speech in Cologne on Monday. Picking and choosing aspects of EU membership “would have fatal consequences for the other 27 member states—and we can’t accept such consequences,” she said. Bloomberg News


ETROIT—President-elect Donald J. Trump is not attending the country’s premier auto show here. But his vow to impose tariffs on imports from Mexico has changed the focus of the show from what new vehicles are on display, to where they are made. More than anything, said Sergio Marchionne, the chief executive of Fiat Chrysler, the industry needed to know what was going to happen with the North American Free Trade Agreement (Nafta), which allows for a free flow of trade between the United States and Mexico. “We need a clear indication of how the US administration plans to deal with Nafta,” Marchionne said at the auto show. “We’re just waiting for clarity.” Trump has made the auto industry a frequent target, attacking automakers for selling Mexicanmade vehicles in the US. In response, some automakers h ave some wh at c h a nged their strateg y.

Ford and Fiat Chrysler’s response

Ford said on Monday it would produce a new pickup and sportutility vehicle (SUV) in a factory that is losing car production to Mexico. Fiat Chr ysler announced on Sunday it would invest $1 billion and create 2,000 jobs in the US. A f ter t he a n nou nceme nt s from Fiat Chr ysler and Ford during the auto show, Trump reversed course. He thanked the companies for commitments to add jobs and products at plants in Michigan and Ohio, and took credit for the decisions. “It’s finally happening,” Trump wrote on Twitter in reference to the job growth, adding, “Thank you Ford & Fiat C!”

Where the auto industry will head

W hat is unclear, though, is where the auto industr y w ill head from this point. And that was a running discussion in the first two days of the sprawling Detroit auto show, which opened on Sunday and is usually known far more for talk about engines than economic policy. Marchionne, for example, said that although Fiat Chrysler was eager to add jobs and production in the United States, the company was less certain about further in-

vestments in Mexico. “The reality of the Mexican auto industry has been tooled up to try and meet demand in the US market,” he said. “If the US market is not there, its reason for existence is on the line.” Most major automakers have sizable manufacturing operations in Mexico that export to the US and elsewhere. Factories in Mexico are considered an integral part of global business strategies. But Trump has zeroed in on how investment in Mexico may be hurting the chances for US job growth. Ford, for example, recently canceled plans to build a factory in Mexico, a proposal that had been repeatedly criticized by Trump. The president-elect also scolded GM for importing small Chevrolet Cr uze hatchbacks from Mexico to augment its production of similar vehicles in the US. But Mary Barra, the company’s chief executive, said it was too late to turn back on that decision. “This is a long-lead business with high capital investments, decisions that were made two, three and four years ago,” Barra said at an auto show event promoting a new GM SUV. However, Barra said GM was eager to work with the incoming Trump administration on issues related to manufacturing and job growth. She said she had spoken with Trump last week after his Twitter post about the Mexican-made Cruze and that she expected that dialogue to continue. “There’s a lot of work to do,” Barra said. “W hen you really look at some of the things the president-elect has said, we have much more in common than we have different.”

Toyota to invest $10B in US in 5 yrs

Toyota Motor Cor p., whose i nvest ments i n Me x ico h ave drawn criticism from Trump, said it plans to invest $10 billion in the US over the next five years, maintaining the pace of

Akio Toyoda, president of Toyota Motor Corp., announces the auto manufacturer’s eighth generation of the Camry at the North American International Auto Show in Detroit on January 9. Brett Carlsen/The New York Times

spending it established during the last half decade. Jim Lentz, Toyota’s CEO for Nor th A mer ica, out lined the company’s intentions during an interview with Bloomberg Television at the North American International Auto Show in Detroit. The Japanese corporation’s president, Akio Toyoda, also made careful mention of its American investments and employment as he introduced the eighth generation of the Camry, the best-selling US car for 15 years running. At the show this week, the company is emphasizing the American character of its new cars. The automaker unveiled a new version of its Camry sedan, which is built at a factory in Georgetown, Kentucky, that employs 7,000 workers. The 2018 model that Toyota showed was sportier looking than previous versions and came with a suite of new safety features designed to stop the car and prevent accidents. William D. Fay, general manager of t he Toyot a d iv ision, said the new Camr y il lustrated how much of an A mer ican company Toyota had become. Over the last three decades, it has built 10 assembly plants in the United States and has added eng ineer ing operations that develop many of the cars and tr ucks it sel ls here. T he company’s US work force totals 136,000 people. The Camry, the top-selling passenger car in the country, “spearheaded our Americanization story,” Fay said. “It is built for Americans by Americans.” While executives are busy defending their companies’ manufacturing plans in the US and elsewhere, industry analysts are trying to forecast what effect tariffs or curtailed Mexican production could have on the booming US market. “Any policy that leads to closing well-functioning plants would be

a waste of resources,” said Xavier Mosquet, an analyst with Boston Consulting Group. “Everybody is at full capacity.” Questions are also being raised about imports into the US from countries other than Mexico, and whether Trump will consider tariffs on vehicles built in Europe or Asia.

Debate unsettling to carmakers

The entire debate is unsettling to automakers, some of which nearly collapsed in the last recession and are now enjoying strong comebacks. They worry that policies enacted by the Trump administration could put the brakes on the US market, which last year set a second consecutive annual sales record, with 17.55 million vehicles sold. But despite the presidentelect’s disdain for some imported vehicles, some foreign automakers remain keenly interested in breaking into the US market. At the show on Monday, Guangzhou Automobile Group, one of the largest automakers in China, displayed an SUV that the company hopes to sell in America one day. The company’s president, Qiujing Wang, said in an interview that its current plans were to enter the US market in 2019. “We believe the American consumer will be interested in this car because of the styling and driving experience,” he said, adding that the company needed to thoroughly prepare its vehicles to meet US safety regulations. He expressed more concern that a Chinese-made vehicle would meet quality standards expected by American consumers than that tariffs could penalize imports. “We believe the trade door will be open to Chinese products,” he said. “And the only condition to entering the US market will be quality.” New York Times News Service and Bloomberg News

China factory prices rising fastest in 5 yrs


hina’s producer price index (PPI) rose at the fastest pace in more than five years in December as the factory to the world swings from being a drag on global inflation to another potential force pushing prices higher. PPI jumped 5.5 percent last month from a year earlier, compared to the median estimate of 4.6 percent in a Bloomberg survey and the 3.3- percent gain last November. Consumer price index (CPI) rose 2.1 percent, versus 2.2-percent gain forecast by analysts Only four months out of a multiyear factory deflation, the world’s second-largest economy is poised to export inflation to nations around the globe through its supply chains as manufacturers squeezed by higher input costs raise asking prices. W hether that rebound will

be sustained hinges on how the global economy fares under a Donald J. Trump presidency and whether trade tensions f lare between the US and China. “Ref l at ion cont inues in the factor y sector,” said Ju lia Wang, an economist at HSBC Holdings Plc. in Hong Kong. “ T he stable CPI sug gests that the ref lation is confined mostly in the industr ia l sector and h a sn’t f i ltered i nto t he rea l economy. So the PBOC [People’s Bank of China] wou ld possibly not respond to it until inf lation ex pands to the rea l economy.” “Factory reflation is a positive for China’s economy—real borrowing costs are now negative,” Bloomberg Intel ligence Chief Asia Economist Tom Orlik wrote in a note. “Rate hikes are part of the policy debate again,

especially given the need to support a weak yuan.” “Producer prices rose faster than we expected in the last quarter, but that may have overstated the strength,” said Harrison Hu, chief greater China economist at NatWest Markets, a unit of Royal Bank of Scotland Group Plc. Hu expects PPI to peak this quarter, while consumer inf lation w il l quicken slightly this year. “ The PBOC would like to see subdued inf lation with PPI stronger than the CPI so that companies are more able to pay off debts.” “High commodity prices will delay the government effort to deal with overcapacity,” R aymond Yeung, chief greater China economist at Australia & New Zea land Bank ing Group Ltd. in Hong Kong. “Producers are

tempted to fire the engine again.” Among producer prices, those for mining surged 21.1 percent last December from a year earlier while raw materials increased 9.8 percent PPI rose faster as a weaker currency lifted imported commodity prices, demand for industrial products recovered and the effect of overcapacity reduction kicked in, the National Bureau of Statistics (NBS) said in a statement released w ith the data. Purchasing pr ices c limbed 6.3 percent from a year earlier, led by fuel and metals. Consumer prices of food climbed 2.4 percent, while nonfood prices increased 2 percent. Subdued consumer inf lation was due to a high base and slower vegetable price increases, according to the NBS. Bloomberg News


Wednesday, January 11, 2017

The World

Syria’s Assad ready to ‘negotiate everything’ in talks with rebels


EIRUT—Syrian President Bashar al-Assad said in remarks published on Monday that he was prepared “to negotiate everything” at planned talks later this month in Kazakhstan, seeking to cast himself as a peacemaker after his forces’ recapture of Aleppo last month. However, the upcoming talks, brokered by Ankara and Moscow, are still in doubt as Syrian opposition groups have yet to confirm their participation. Syrian activists, meanwhile, reported what appeared to be a US-led specialforces raid on Islamic State (IS) militants in eastern Syria. Omar Abou Leila, who runs Deir Ezzor 24, said four helicopters landed in the desert between the IS-held cities of Deir elZour and Raqqa on Sunday. Commandos set up checkpoints and intercepted a vehicle carrying several IS militants, killing all of them and flying off with the bodies, he said. “It’s an operation that apparently targeted an important figure,” Abou Leila told The Associated Press from Germany, where he is based. Deir Ezzor 24 is one of several locally staffed underground groups reporting from IS-held territory. The Britain-based Syrian Observatory for Human Rights, another activist-run group, said 25 militants were killed in the ambush. Local witnesses said at least some of the commandos spoke Arabic. There was no immediate comment from the US-led coalition. In the northeastern province of Hassakeh, a car bomb exploded on Monday night in the predominantly Kurdish town of Qamishli, wounding several people, including the driver of the vehicle, state

TV, the Observatory and a local official said. Jwan Mohammed, a Kurdish official in Qamishli, said security forces detained the driver of the car, who lost his legs in the blast. He said the car blew up in a main square that is home to several security offices. No one immediately claimed responsibility for the bombing, but IS had carried out suicide attacks in Kurdish areas in the past. Speaking to French reporters at his Damascus palace, Assad defended his troops’ deadly bombardment of eastern Aleppo, saying the alternative would have been to leave the city’s civilians to the mercy of “terrorists”—a term the government uses for all rebels. Assad questioned the credibility of Syrian opposition groups backed by the West and Saudi Arabia, which make up the bulk of the armed and political opposition to his rule. “There’s no limit to negotiations,” Assad said, in remarks carried by Syrian state media. “But who is going to be there from the other side, we don’t know yet.... The viability of the conference depends on that.” Past Syrian peace talks have run aground on the question of Assad’s future and whether he is to continue as president, with the opposition insisting his departure is a precondition for any reforms. Assad said the matter could only be resolved through a constitutional referendum. “If they want to discuss this point, they need to discuss the Constitution. You need a referendum for every [constitutional amendment]. This is one of the points that could be discussed in the meeting” in Kazakhstan, he said. AP


Editor: Lyn Resurreccion •

Europe freeze brings deaths, power outages and closures


ELGRADE, Serbia—Heavy snow and frigid temperatures have gripped large parts of Europe, leading to dozens of deaths, freezing rivers, the grounding of planes and traffic accidents: Albania

Frigid weather has caused at least four deaths in the last three days in Albania. Snow stopped falling on Monday, but freezing temperatures continue to engulf the whole country. A 52-year-old Albanian man on Monday died in the town of Golem, 80 kilometers west of Tirana. On Sunday a 53-year-old street beggar was found dead in the city of Sarande, south of the capital Tirana. A day earlier, another 38-yearold homeless person was found dead in the port city of Durres, west of the capital. A 62-year-old man died after sliding from a roof where he was trying to remove ice. Scores of villages mainly in the north and northeast have been isolated and power and water cuts have been introduced, including the

capital. The health and education ministry decided to keep classes suspended for students.


The situation in northeastern Bulgaria remains critical with heavy snow drifts on the roads, freezing temperatures and power outages that have affected some 2,000 households. Emergency teams trying to clear the roads to remote villages were hindered by strong winds. Authorities issued a Yellow Code alert for low temperatures across Bulgaria on Monday. The cold spell was expected to continue until the end of the week. Schools across the country remained closed on Monday.


Fr eezing temperatures and strong winds have created havoc along Croatia’s Adriatic coast, which isn’t used to such cold winters. Even the sea froze in shallow bays, trapping fishermen’s boats to the amazement of locals who haven’t seen anything like this in decades. The temperatures in Croatia’s tourist centers of Dubrovnik and Split dropped to minus 7˚Celsius (19˚Farenheit) and strong winds blew off ancient pine and olive trees on the coast. Ferries and planes were grounded, and traffic over bridges banned. Water pipes, which are dug just below the surface as is the case in warm climates, have frozen, leaving thousands without running water as authorities tried to figure out ways to cope.

Czech republic

According to Czech public radio on Monday, six people are believed to have died of exposure during the latest cold snap, including in the capital, Prague. Meteorologists forecast freezing temperatures to continue in the coming days.


Swathes of Greece have been covered by snow, including several islands, some of which have seen more than a meter (more than 3 feet) of snow. Temperatures in some parts of northern Greece have plunged to as low as minus 18˚C (0˚F). A state of emergency was declared in the municipality of Kymi on the island of Evia, Greece’s second-largest island after Crete, where the snow in some areas reached 2 meters (6.5 feet), leading to cuts to electricity and water supplies. The small eastern Aegean island of Oinousses reported severe problems from the heavy snowfall, with the local mayor telling Greek media the island had been without landline telephone connections for four days. On the island of Lesbos, drivers needed snow chains to drive just outside the main port town of Mytilene, while heavy snowfall also hit Chios and parts of the southern island of Crete, from where some flights to Athens were canceled. Chios and Lesbos are home to thousands of refugees, many living in precarious conditions in severely overcrowded camps. Many are still living in tents despite the severe weather. Rights groups have slammed the conditions and called on the Greek government to act quickly to reduce overcrowding.

Airport workers try to clean snow on and around a Turkish Airlines aircraft at Ataturk International Airport in Istanbul on January 8. More snow fell in Istanbul on Sunday, causing chaos among airline passengers with hundreds of international and domestic flights to and from the city grounded. Heavy snow also clogged roads, and halted shipping traffic in Bosphorus in the Turkish metropolis. İbrahim Yildlz/DHA-Depo Photos via AP


Schools were closed in a handful of southern Italy cities not accustomed to such heavy snowfa l l. Ind iv idu a l sc hool s a l so closed in Rome and Bologna because heaters weren’t working, news reports said. T he subf reez i ng temperatures have been blamed for the deaths of at least eight people and have disrupted road, rail, air and ferr y travel.


In Kosovo snow continued to blanket the whole country and left many areas without power. Police blamed the weather for the death on Monday of an ethnic Albanian man whose body was found on a forest road. Though all national roads were open, the police advised careful driving and low speeds. Rural roads are either blocked or hard to drive. Power has been cut in many areas around the country.


The government says 10 people died in the cold on Sunday as Poland has been gripped by low temperatures. The deaths bring to 65 the number of weather-related fatalities since November 1, when temperatures started falling to freezing, especially at night. The spokesman for the Government Center for Security, Anna Adamkiewicz, said on Monday that the latest deaths occurred across the country, either outdoors or in unheated summer cottages and abandoned houses. The victims were nine men between the ages of 32 and 69, and a 52-year-old woman.


Buch a r est Mayor Gabr iela Firea said inmates from two prisons would be put to work clearing snow  alongside anti-riot police in the Romanian capital. The inmates working on snow removal are doing so voluntarily, Firea said. She said the initiative would help clean up the capital’s iceclogged streets, which are only partially cleared. Romania’s Energ y Minister Toma Petcu said neighboring Bulgaria had urgently asked for extra electricity, but the request was declined since the cold weather has stretched Romania’s power grid. Petcu said natural gas consumption in Romania could reach an all-time high on Monday due to the frigid temperatures.


In Moscow t wo people have died and 190 people w ith hypother mia have sought medica l help in the Russian capita l bet ween New Year’s Eve and Januar y 8, the last day of the holiday per iod in Russia, according to Russian news agencies quoting emergency medical officia l Sergei Gumeny uk.

T he Ru ssi a n Meteorolog ical Service said the Orthodox Christmas Eve on January 6 was the coldest in Moscow since 1987 when temperatures plunged below minus 31˚C (minus 24˚F). Moscow schools, however, opened on Monday after the holiday recess. In Russia’s Urals, schools remained closed in the Tyumen, Khanty-Mansiysky, Sverdlovsk a nd Ya m a lo -Nenet s reg ion s, where temperatures of minus 35˚C (minus 31˚F) were recorded.


Serbian authorities have declared emergency measures in 11 municipalities in central and southern parts of the country as fresh snow  and extremely low temperatures have blocked roads and cut off villages. Despite minus 28˚C (minus 18˚F), residents in remote villages on the rough Golija mountain have refused offers from authorities to evacuate their homes during the deep freeze because they won’t abandon their animals. The mostly elderly villagers said they’d rather freeze than abandon their sheep, goats, cows and chickens. “We have wood and food for the animals,” says Dragomir, one elderly resident. “We’ll wait.”


THE Police in the southern Swiss region of Valais say a Russian couple were killed and their two children, aged 11 and 15, were gravely injured over the weekend after the vehicle they were travelling in tumbled about 225 meters along a snow-covered Alpine road. Officials said the driver had been trying to park on the roadside, and snowy conditions appeared to have led to the deadly plunge into a pile of rocks. The two children were taken to a local hospital before being flown by helicopter to another in the capital, Bern. They were expected to survive, officials said.


Turk ish A irlines on Monday canceled 277 domestic and international f lights to and from Istanbul ’s two air ports due to heav y snow. Sc hool s a rou nd Istanbul also were closed and the Istanbul governor’s office said civil ser vants in the city would be able to leave work at 3:30 p.m. local time. Ist a nbu l sc hools w i l l st ay closed on Tuesday as snow continues to buffet the cit y, ha lti ng fer r ies on t he Bospor u s Strait that prov ide transportation for many commuters in the cit y stradd ling the nar row gap bet ween A sia and Europe. Television news showed cars slithering along slippery roads and students who had been given the day off staging snowball fights and tobogganing in parks blanketed in deep snow. AP

ExportUnlimited BusinessMirror

Editor: Efleda P. Campos • Wednesday, January 11, 2017 A9

DTI to pilot-run PRRD’s microfund program


OLLOWING President Duterte’s directive to replace the usurious “56” money-lending system prevalent in the country and provide an affordable microfinancing for the country’s micro, small and medium enterprises (MSMEs), the government’s Pondo sa Pagbabago at Pag-asenso (P3) Program pilots this month in Mindoro, Sarangani and Leyte, among the top 30 poorest provinces, to represent Luzon, the Visayas and Mindanao, the country’s trade chief said.

“The P3 is designed to bring down the interest rate at which microfinance is made available to micro enterprises,” Trade Secretary Ramon M. Lopez said. The 2017 General Appropriations Act has included an initial funding of P1 billion for financial assistance, a part of the planned P19-billion financing initiative for micro and small businesses in the next five years. The program’s fund will be lent out in the business centers of the poorest provinces (based on poverty incidence), where the participating microfinance institutions (MFIs) and the Small Business Corp. (SB Corp.) can operate.

An attached agency of the Department of Trade and Industry, SB Corp. shall administer the P3 Program, including the creation of a Program Management Office, which will open a separate back account for the P3 Program, to oversee the management and monitoring of fund. “Fund delivery to microenterprises shall be carried out either by wholesale lending to nonbank financial institutions, like MFI-NGOs; and cooperatives, which shall on-lend the fund to beneficiaries, or by direct lending by SB Corp,” Lopez said. Priority beneficiaries include microenterprises and entrepreneurs that do not have easy access

¡Salud!: Export opportunities in the Mexican alcohol market By Vichael Angelo Roaring

Trade Service Officer Philippine Trade and Investment Center-Mexico Foreign Trade Service Corps




HAT’S not to say Filipinos haven’t been making a splash in the region. Global liquor company Emperador Inc., owned by Filipino tycoon Dr. Andrew Tan, purchased through its Spanish subisidiary major Mexican brands, such as Presidente (Mexico’s No. 1 selling brandy), Azteca de Oro and Don Pedro. Not only does this make Emperador the largest brandy producer in the world, it also paves the way for Filipino exporters to possibly tap the Mexican and Latin American market.

Our exchanges in the alcoholic sector go beyond the present. In the state of Colima, located in the middle of Mexico’s Pacific Coast, a fermented coconut drink called tuba (pronounced too-bah, like the musical instrument), continues to be produced and drunk by locals as a potent libation. Filipino sailors are said to have taught locals how to ferment the coconut drink, a gift of the Filipinos to the people of Mexico—a product of the commercial and cultural exchanges made during the days of the Manila Galleon Trade. Fast-forward to 2016. The Department of Trade and Industry (DTI) has recognized the importance of Mexico as its strategic gate-

way to opportunities in Latin America. The DTI has recently opened its trade office in Mexico City, its first in Latin America, and has assigned Trade Service Officer Vichael Angelo Roaring as commercial counselor to facilitate and develop trade and investment opportunities for the Philippines in the region. The Philippine Trade and Investment Center (PTIC) in Mexico City, in partnership with the Export Marketing Bureau, can assist would-be exporters who want to take a look at Mexico as an export market. For more information, you can contact PTIC Mexico at or +52-55-5280-4072, or the Export Marketing Bureau at EMBinfo@dti. or +63-2-465-3380.

to credit, or are accessing credit at very high cost, such as microentrepreneurs, market vendors, agri-businessmen and members of cooperatives, industry associations and cooperators. Loanable amount per end-borrower can range from P5,000 for start-ups to P300,000, with maximum interest rate of 26 percent per annum with no collateral requirement. This rate is significantly below the 20 percent per day, week or month charged by 5-6 lenders. It is also lower than what is charged by most MFIs. MFIs may opt for portfolio-guarantee cover of up to 15 percent of their P3 loan portfolio from SB Corp at a guarantee fee of 0.4 percent. The guarantee feature is seen to help MFIs address the P3 Program’s inherent risk. The guarantee fund will be sourced from the P3 fund. P3 allocates P100 million for direct lending by SB Corp. Target loan beneficiaries are the small enterprises in priority and emerging industries, start-up businesses and technology innovators. Minimum loan amount will be P300,000, with interest rate capped at 10 percent per annum, with or without collateral cover. “This alternative funding dedicated for micro and small enterprises is meant to discourage the 5-6 money-lending system in our country,” said Lopez, adding through the established MFIs, the government will reach even the smallest of entrepreneurs in the country.

DBFTA CONFERENCE Fe L. del Rosario (left), officer in charge of the Investments Policy and Planning Service of the Board of

Investments; and Director Senen M. Perlada, director of the Department of Trade and Industry’s Export Marketing Bureau and executive director of the Export Development Council, confer during the “Doing Business in Free Trade Areas” (DBFTA) Conference held on December 20, 2016, at Novotel Manila, Cubao, Quezon City. NONOY LACZA

5 global packaging trends in 2017 A

N international market intelligence agency has listed five key packaging developments for next year that can help Philippine enterprises leverage their brands and products in the global market. In a newly released study entitled “Global Packaging Trends 2017,” UK-based Mintel enumerates five emerging and mainstreaming packaging trends that will affect brands, consumers, retailers and packaging designers in the coming year. “The majority of consumers are paying attention to package format and design, and purchase drivers are either being directly related to or being communicated through packaging,” the report said. For a start, the report sees a current and continued emphasis on package functionality designed to improve consumer use while reinforcing branding. Consumers are looking for unique packaging structures that not only differentiate on the shelf, but also help form and support brand identity, the report said. Examples of functionality are resealable or recloseable packaging in order to reduce waste, a pinch-waist container for an integrated ergonomic grip, and an inverted dispenser structure for liquid products. E-commerce is another significant development expected to impact on packaging. In 2017 the online experience and the shift from in-store to inhome will become a core part of packaging design. Mintel said: “Looking ahead, brands must explore both the opportunities and threats that online shopping can bring, while considering the implications for packaging to remain an integral piece of the purchasing decision.” Some of the changes being made to cater to online shoppers include clean labeling and a decluttered look, achieved by

removing detailed imagery that fails to work at the small thumbnail size and making the brand logo the main image. For instance, to grab shoppers’ attention, one firm selling coffee focused on clean packaging of green and white, with clear color indicators for flavor or variety. A simple image of a cup of coffee with creamer being added communicates product use. In choosing a packaging format that works for e-commerce, the study suggests removing obstacles to delivery. Packaging that comes in a compact shape for shipping is robust and unbreakable, and can handle fluctuating temperatures that will suit well the e-commerce environment. Smart, active and intelligent packaging is another notable trend, the paper said. This is in response to increasing demands for food safety, the call for waste reduction and the removal of consumers’ exposure to hazardous or fraudulent products. Some smart packaging ideas that have come out include intuitive labels with a colorchanging dot design to indicate on-pack freshness messaging. “It is extremely simple, but highly effective for consumers. It eliminates the need to interpret otherwise confusing ‘sell by’ or ‘use by’ date codes,” Mintel said. Similarly, mobile-enabled technologies, such as smart labels positioned directly on packaging, aids consumers to easily access product information and make purchase decisions more confidently. At the same time, pack ag ing w il l increasingly

become a key component in creating memorable consumer ex per iences, building on the concepts of f un, communit y, or authenticit y to motivate purchase. “The next generation of branded products, particularly those aimed at difficult-toengage younger consumers, or the more cynical, such as the aging hipsters of Gen X, are looking at design as a bigger part of the brand, not just to create connections, but to drive experiences,” it said. Recent innovations in this area include a sports drink that uses pods containing both dry and liquid ingredients to be mixed with water to enable portability and customization, and a facial wash that comes encased with dry mud to encourage the user to engage in a ritual of focus and relaxation. Another new packaging concept features a wine bottle that comes with a blank label and pencil and featuring Instagram, Facebook, Twitter and Pinterest logos to encourage consumers to share their personalized label messages on social media. Finally, Mintel sees packaging performing a more pivotal role in helping brands successfully enter new categories: “Brands can leverage that familiarity to create loyalty and extend a product portfolio well beyond traditional categories.” The paper pointed out how Campbell’s has been able to branch out into ethniccuisine soups, cooking sauces and meal preparation by using a distinctive look that differentiated the product from the existing range, while still leveraging the brand name. Carlsberg, meanwhile, has crossed over into premium hair care for men, touting the “beautifying properties” of their beer’s main ingredients, along with a packaging lineup that tied directly to their famous green beer bottle and logo.

Improved packaging, product quality keys to global competitiveness


OCAL food processors are urged to make the packaging of their products conform to legislations and laws of other countries in order to be acceptable and competitive in the global arena. “The future of processed-food packaging shall still be influenced by the needs of product manufacturers and retailers as they try to meet consumer needs for low price and high-quality products,” said Ana Ma. Veronica A. Solano, faculty at De La Salle-College of Saint Benilde. Solano said the packaging industry needs to be proactive to catch up with the fast-changing global packaging technologies and regulations. She said the Philippine government is assisting food processors, particularly the small and medium enterprises (SMEs), to improve product quality, as well as their packaging. It is implementing packaging information dissemination and other programs and activities to help SMEs to “survive in this jungle market called globalization,” she added. Solano also identified various factors influencing the packaging of processed food in the new millennium in the Philippines amid increasing globalization and changing trade environment. These are consumer behavior, environmental issues and changes in distribution. “The cyber consumer will be discriminating, experimental, mobile and more concerned with the environment,” Solano said. She said processors need to offer their products in economic flexible packs, more microwavable packaging materials, and sell more health food snacks and juice drink and concentrates. “[The] main issues affecting packaging are depletion of resources, waste management and pollution,” Solano said, underscoring emphasis on the 3Rs environmental criteria: reduce, reuse and recycle.

A10 Wednesday, January 11, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror


Of lawmakers and troublemakers


EGISLATORS are all supposed to be good at making laws. But some of them appear better at making trouble, not necessarily by being rowdy or boisterous, although they are perfectly capable of being so at times. What is meant here is that they are capable of fomenting trouble in the guise of doing good for the people. They espouse causes or programs that benefit their constituents, regardless of whether these would adversely affect countless others. Their ultimate aim, of course, is to earn brownie points (we call them pogi points), which the dictionary defines as an imaginary award given to those for an attempt to please. To many of these legislators, the award is not imaginary and it is usually collected come election time. This is why most of the populist causes they espouse surface when election talk begins to fill the air, which is usually several months before the polls. Some legislators of this breed are early birds though; they raise their populist causes long, long before.

Take the case of the proposal to increase by P2,000 the Social Security System (SSS) pension for retired workers. This issue was raised many months before the 2016 elections by some keen-nosed populist members of the House of Representatives and it promptly caught fire, especially with the elderly whose power as a voting bloc is beginning to be felt only now. The proponents made so much noise about it that its effect on the populace was electric and, in no time, the whole country was talking about it. Voting-age citizens with an elderly pensioner in their family were soon saying they would vote only for those who would help push the bill to Malacañang. Soon, the talk took a more serious turn, as other supporters of other populist causes started spreading the word that they would junk anybody who did not share their passion for the proposed SSS pension increase. Soon, even the lawmakers who had initially balked at supporting the proposal for one reason or another gave in. And presto, Congress passed the bill by an overwhelming majority. So when the bill was finally sent to then-President Benigno S. Aquino III for signature, many people were shocked when he vetoed it? Is he out of his mind? Many cursed him to high heavens, saying this was the proverbial last nail to the political coffin of his chosen candidate—former Local Government Secretary Manuel “Mar” A. Roxas. It was only after Aquino and his economic advisers finally opened up and explained the presidential veto that the public, including the supposed beneficiaries, became aware of the financial havoc that the pension increase would have wreaked on the SSS fund had Aquino signed the bill into law. President Duterte’s own economic managers also believe so: that implementing the pension hike without increasing member-contributions would run the SSS to the ground. But the question foremost in the minds of the people is: If this were so, why did Aquino’s economic managers allow the bill to pass through three readings in both chambers of Congress without as much as a peep from them? That question remains unanswered. And our populist legislators—and their supporters in the media, mainstream and social—continue to rant and rave about the issue. Now, it’s Duterte’s turn to face it. No amount of explanation from his economic managers seems sufficient enough to mollify the intended beneficiaries, as militants of various persuasions—and colors (red and yellow mostly)—have joined in. And simply because candidate Duterte said in one of his campaign speeches that he would look into the matter if and when he is elected. Unfortunately, for him, he won; now, he has to answer. Budget Secretary Benjamin E. Diokno, when pressed recently to comment on his boss’s campaign statement, said Candidate Duterte was “different” from President Duterte, explaining that, “there are promises you make that turn out can’t be fulfilled once you look at the data.” Diokno was promptly hooted down in the mainstream media. The President is no stranger to situations like this one. Since he took over, he has been taken to task almost every day for his “brutal” war on drugs and his manner of speaking, among many other things. But he remained steadfast. And he has been richly rewarded by unprecedented popularity ratings. Perhaps, it is time the President faced the people and told them the real score on the SSS issue. There is confidence among many that whatever he says, the people will agree. So how about it, Mr. President?

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Will cutting operating expenses raise more funds for the SSS pension hike? Susie G. Bugante

All About Social Security


N the midst of the discussions concerning the proposal to increase the Social Security System (SSS) pensions by P2,000 is the issue on the agency’s operating expenses (opex). Allegedly, the pension fund’s operating expenses are high due to excessive salaries and benefits. But are the compensation and benefits of the agency employees really beyond the standard?

Under Republic Act 8282 (Social Security Act of 1997), Section 25 provides “...that not more than 12 percent of the total yearly contributions plus 3 percent of other revenues shall be disbursed for administrative and operational expenses, such as salaries and wages, supplies and materials, depreciation, and the maintenance of offices of the SSS: Provided, further, that if the expenses in any year are less than the maximum amount permissible, the difference shall not be availed of as additional expenses in the following years.” For instance, in 2015, the agency collected more than P132.6 billion in contributions and earned more than P29.4 billion in investment and

other income, with Charter limits of P15.9 billion and P884.6 million, respectively. Operating expenses for the year amounted to P8.8 billion, or 52.6 percent of what is allowed under the law. According to Social Security Commission Chairman Dean Amado D. Valdez, cost-efficiency measures have greatly reduced expenditures from years 2010 to 2016, which contributed to the SSS’s profitability. Thus, the challenge to SSS is to be more cost-efficient and, for this reason, the SSC reduced the agency’s  2017 proposed budget of P13.22 billion by P1 billion to P12.21 billion, which is 54 percent of the Charter limit, or 5.7

percent of total revenues. Relatedly, SSS President and CEO Emmanuel F. Dooc assured the public of the SSS’s strict attention to its duties, particularly the prudent allocation of SSS funds for expenditure. He explained that the SSS costs of operating activities had remained below its allowed Charter limit at an average ratio of 59 percent over the past seven years, or at 5.9 percent of total revenue. Despite an annual average increase of 8 percent in volume of transactions processed by the agency, it has run the cost of its operations with a moderate increase in opex by 6 percent every year. This rate increase in opex is effectively at 3 percent only, if the 3-percent average inflation for the same period is taken out. He noted that the continued prudence was achieved amid branch expansion activities and system-wide upgrades that paved the way for growth in membership and collections across the region. He added that the SSS will determine how low operating expenses could be further reduced without compromising its operations. Latest data from the agency showed that the SSS has posted P10 billion in total expenses last year, comprised of payments made for the salaries, wages and bonus-

Trump and the tainted presidency


By Charles M. Blow | New York Times News Service

he more we learn about Russia’s hacking and the release of its electronic loot during our presidential election, the more it becomes clear that Donald J. Trump’s victory and his imminent presidency are already tainted beyond redemption.

While Russian hacks “were not involved in vote tallying,” the publishing of pilfered e-mails and promulgation of fake news altered the zeitgeist, poisoned the political environment and shifted public opinion, all of which redounded to Trump’s benefit. Trump is as much Russia’s appointment as our elected executive. The legacy of his political ascendance will be written in Cyrillic and affixed with an asterisk. Do not let this be buried in the pundits’ blathering: A hostile foreign power stole confidential correspondence from US citizens—this is no different from physically breaking into a US office and carting off boxes of written letters—and funneled that stolen material to a willing conspirator, Julian Assange. The foreign power then had its desired result achieved on our Election Day. This was an act of war and our presidency was the spoil. This is not to say that some of what was revealed about the Democrats in the hacked e-mails wasn’t disturbing. It was, although most of the e-mails simply showed the unappetizing process by which the sausage is made. What made the leaks feel fishy was the absolute

asymmetry of the targeting—it was Democratic only. Putin helped to defeat a woman, Hillary Clinton, who promised to be a staunch adversary and helped elevate in her stead a Troglodytic lout who somehow believes that the snake that coils itself around you is just giving you a hug, and who sounded so pro-Vladimir Putin that he did everything but blow kisses at the Kremlin. Last Friday intelligence officials released a damning report on the Russian hacking that read: “We assess Russian President Vladimir Putin ordered an influence campaign in 2016 aimed at the US presidential election. Russia’s goals were to undermine public faith in the US democratic process, denigrate Secretary Clinton, and harm her electability and potential presidency. We further assess Putin and the Russian government developed a clear preference for President-elect Trump.” On the same day, Trump was briefed on the hacking by intelligence officials, after which he released an incredulous statement claiming “there was absolutely no effect on the outcome of the election.” (Ironically, that also happened to

be the same day that a joint session of Congress performed its perfunctory duty of counting the Electoral College votes and verifying Trump’s victory.) No sir, Trump, as is your wont, your assertions stretch well beyond your proof. An impact that cannot be measured is not the same as an impact that does not exist. The question isn’t “if” but “how much”; not the existence of impact but the degree to which that impact was dispositive. The intelligence community did not say the Russian hacking had “no effect on the outcome of the election,” but rather stated quite clearly: “We did not make an assessment of the impact that Russian activities had on the outcome of the 2016 election. The US Intelligence Community is charged with monitoring and assessing the intentions, capabilities, and actions of foreign actors; it does not analyze US political processes or US public opinion.” You twist the truth like a string of yarn caught in a fan. But eventually, you and every citizen of this country must face the fact that you were not only elected but also installed, that your victory will be forever tangled up in the yellow tape of an international crime scene. No wonder then that you have systematically sought to denigrate all inquiry into this act of cyber warfare that the intelligence report called “unprecedented”. You have scorned our intelligence agencies—you tweet “intelligence” in quotes the same way that we

es of employees and for maintenance of branches, rent and other operating costs. The salaries and bonuses of 6,000 SSS officials and employees deployed across its 296 branches nationwide and abroad have been the subject of criticisms leveled at the SSS in debates around the pension hike issue. The SSS, in its previous statements, clarified that these have been capped not only for the SSS, but across all government-owned and controlled corporation (GOCCs) with the enactment of the GOCC Governance Act and Executive Order 24 in 2011. The SSS management asserts that, in fact, among the government financial institutions, the SSS has the lowest compensation. Will cutting down SSS’s opex to the barest minimum help raise the annual requirement of at least P64 billion to pay the P2,000 increase of some 2.2 million pensioners? Yes, in a very, very small way. For more details on SSS programs, members can drop by the nearest SSS branch, visit the SSS web site (, or contact the SSS call center at 920-6446 to 55, which accepts calls from 7 a.m. on Monday all the way to 7 a.m. on Saturday. Susie G. Bugante is the vice president for public affairs and special events of the SSS. Send comments about this column to

should eventually use quotes around the word “president” when it precedes your name—and you have continued your assault on the press. Last Friday Trump told my colleague Michael Shear that the focus on the hacking amounted to “a political witch hunt.” Wrong again. It’s a truth hunt. Furthermore, the only person subjected to a witch hunt in this election was named Hillary. Yes, as you repeatedly exclaimed before the votes were cast, the election was rigged, not by widespread voter fraud, as you falsely suggested, but rather by widespread dissemination of fraudulently obtained information. It is no coincidence that WikiLeaks began to release John Podesta’s e-mails just an hour after Trump’s disgusting “grab them by the [expletive]” Access Hollywood tape surfaced. Mr. Trump, your victory is tainted; your legitimacy is rightly in question. The American people cast their ballots in the fog of fake news and under influence of stolen property weaponized as a tool of propaganda. Some may hesitate to say the US presidency was stolen, but it is irrefutable that the integrity of our democratic process was injured when the sanctity of what we considered u ncor r upted sel f - deter m inat ion was assaulted. Donald Trump is Vladimir Putin’s American “president”—clearly his preference and possibly his product.

Opinion BusinessMirror

Wednesday, January 11, 2017 A11

PNP can reduce crime, Capital Market Development Council “The ultimate stakeholder of corruption thru technologies capital-market development Atty. Dennis B. Funa


Michael Makabenta Alunan

on the contrary


resident Duterte, who fancies himself more as a law-enforcing “mayor” of the Philippines and less of a statesman also in charge of economic governance and other affairs, focuses more on crime-busting, starting with his anti-drug war to be followed with his anticorruption drive starting this year. n Don’t run after criminals first? One can’t question Duterte’s sincerity and empathy for the downtrodden, which the masses or hoi polloi have felt and reciprocated by catapulting him to the presidency through a landslide victory. However, he must take caution or maybe cushion, as they say, the bumpy “road to perdition or hell is paved with good intentions.” It is worth learning from advanced countries, particularly Japan, on how they handle criminality. Their ironic advice is do not run after the criminals yet, but clean up the police force first. As experience shows, you cannot clean it up simply by replacing erring rogue cops with fresh young ideal graduates from the Philippine Military Academy (PMA) or the Philippine National Police Academy (PNPA). In fact, this is already being done every year, but, in no time, the system eats them up and corrupts almost everybody. Of course, leadership is critical, starting with the President followed by PNP Chief Ronald de la Rosa, who must immediately institute radical reforms with the support of Congress, lest the system corrupts and eats them up, as well. Duterte promises a “clean government”, while PNP chief de la Rosa declares he would “rather be accused of murder than of corruption.” Numerous reforms can be done, but they can start with the adoption of many high-end forensic technologies that we see on many TV series. We need to upgrade our Firearms Identification System (FIS), as the technology available is already capable of identifying any registered gun used in crimes from a mere bullet shrapnel or from spent bullet shells found in crime scenes. In short, every gun or rifle and the bullets fired from them have particular distinct markings similar to one’s fingerprints. So cases of casualties from stray bullets during New Year revelries can easily be solved as it is now possible to identify with precision the gun source. n Anomaly tracks over “Trax”? We have always been the dumping ground of old technologies from the West, which are not only expensive, but extremely inefficient against more innovative technologies. Let’s take the case of the three Canadian “IBIS TRAX” Firearms Identification System (FIS) worth P300 million that were purchased over two years ago, and found to be allegedly over 50 percent more expensive and performs only 11 percent to 20 percent of more advanced technologies. Combining both nominal costs on capital outlays alone and actual performance efficiency, this makes the IBIS TRAX system effectively more expensive by 19 times, or by 1,900 percent. Conversely, the competing technologies are therefore only 5 percent of this favored FIS “TRAX” brand. Worse, this computation is based only on the initial capital outlay, and excludes the high yearly maintenance costs, in contrast to competing technologies that offer no perpetual management costs. Worst, this technology dumped into the Philippines has already been junked in many countries for being obsolete. Whether we were deceived into accepting these technologies or whether there are tracks of some anomaly somewhere is up to the Duterte administration to investigate. n Lease fees or leash fees? Specifically, one IBIS TRAX system costs over P90 million, but can process only two to four bullet slugs an hour, compared to 18 to 20 slugs produced by

modern technologies in the market. Worse, IBIS TR A X requires a yearly management fee of P18 million, unlike the more modern and yet still cheaper systems, which have no perpetual management fees paid to foreigners as access to PNP’s own databank is handed over along with the operational know-how, on a turn key basis. The TRAX system ties down the PNP to perpetual total dependence, as it could not even access its own data unless it pays the yearly management fees. So even if the PNP has fully purchased a system, it becomes useless as IBIS TRAX keeps sole rights to all database information generated from the inclusively PNP-procured cartridges and bullet scanners. When the PNP tried a year ago to stop paying the management fees, the entire PNP Crime Lab had to halt operations. IBIS TRAX cut off the access codes to PNP’s own databank stored in servers located abroad. This has likened the PNP to a docile dog collared into total dependence on a leash. So the LEASE fees PNP pays for the use of its own databank, must be called appropriately LEASH fees. n Trapped into obsolescence. Worst, is that old technologies have an inherent way of trapping you into obsolescence as you cannot interface with other technologies. The trend now among competing modern technologies is the harmonization of standards, thus, electric batteries, plugs, USB flash disks, electronic spare parts, etc., are designed to interface with each other, regardless of their brand names. In IBIS TRAX’s case, which is trapped in its proprietary design, is not capable of interfacing with other forensic laboratories and technologies. Thus, on the fear all its investments of just over two years may go to waste, the PNP was forced stupidly to rig the new bidding criteria and terms of reference (TOR), stating that the new purchases estimated at P460 million must be compatible with the old IBIS TRAX, which is tantamount to saying buy the same technology, stock, lock and barrel, meaning the same compatible model design, warts and all. Perhaps, what the PNP must do is to conduct an open vendors technology challenge, this time inviting not only the Americans and Europeans, but also Duterte’s newfound friends—China, Russia, Japan and any other technology provider. n Technological eyes and ears. Instead of hiring more law enforcers, similar to hiring more elevator boys and girls and various other nonproductive service workers, who do not contribute to physical wealth creation, government must make use of technologies. Closed-circuit television, for instance, which is increasingly getting cheaper, can be installed all over, so you won’t need too many cops, security guards, barangay tanod, etc., to achieve security. They can serve as the PNP’s technological eyes and ears. And for those displaced, mobilize and train them into new jobs designed to build the numerous infrastructure and livelihood projects being planned for agriculture and manufacturing all over the country. In the drive to bust criminality, the Philippines must keep up with its neighbors and keep in step with the advances in technology as the smartest and most effective way to reduce crime and corruption.



he Capital Market Development Council (CMDC) is a public-private initiative with the objective of recommending policy and legislative reforms for the development of the Philippine capital market. It therefore seeks “to identify impediments to the growth of the capital market”. Capital market has been defined as that “segment of the financial system that mobilizes and intermediates long-term funding without delimiting the sources of these funds.” It is also described as “the part of a financial system concerned with raising capital by dealing in shares, bonds and other long-term investments”. The CMDC was established in 1992 after a joint manifesto (Joint Manifesto Towards the Development of the Philippine Capital Market) was signed on November 15, 1991, by financial sector regulators, specifically the Securities and Exchange Commission (SEC) and the Central Bank, the Department of Finance and private-sector organizations, specifically the Bankers Association of the Philippines (BAP), Financial Executives of the Philippines (Finex), Investment House Association of the Philippines and the Manila and Makati stock exchanges. The insurance and preneed sectors would join later. It received funding from the United States Agency for International Development (USAID) from 1994 to 2000. As of 2016, the council has three cochairmen: Eduardo V. Francisco, president of BDO Capital & Investment Corp.; Finance Secretary Carlos G. Dominguez; and SEC Chairman Teresita J. Herbosa. There are 12 institutional members represented by their respective heads. In addition to the DOF and the SEC, the members are the Bangko Sentral ng Pilipinas (Governor Amando M. Tetangco Jr.); BAP (Nestor V. Tan); Philippine Stock Exchange (PSE, Hans B. Sicat,

president); Investment House Association of the Philippines (Manuel M. Tordesillas, president); the Philippine Life Insurance Association; the Philippine Federation of Pre-Need Companies; Philippine Insurers and Reinsurers Association (Augusto P. Hidalgo, chairman); Philippine Dealing System Holdings Corp. (Cesar B. Crisol, president); Philippine Association of Securities Brokers and Dealers Inc. (Ismael G. Cruz, president); and the Insurance Commission (Atty. Dennis B. Funa, commissioner). Its everyday affairs is run by an executive director.

Capital-market development

The importance of the capital market was explained by BSP Governor Rafael Buenaventura when he stated: “The ultimate stakeholder of capital-market development is, of course our economy. The economic literature has always emphasized that limited access to capital presents a critical challenge to economic growth and stability. It is therefore imperative to establish a well-functioning domestic capital market to ensure that corporations efficiently mobilize capital for economic growth.” This echoes the first preamble of the CMDC joint manifesto that

Legislative ‘lechon’ Teddy Locsin Jr.

Free fire Continued from A1


ecause after people like me passed the law one president after another refused to give an adequate budget to the Amlac, because of which we faced sanctions despite having enacted the most sophisticated anti-money-laundering law in the world. So said a US Treasury official who was here to advise and threaten us. So the Central Bank had to finance the Amlac with cash advances. One president after another wanted to keep the Amlac weak and unable to check her or his suspicious transactions—or use the Amlac for private vendettas. The CB governor is also the chairman because the CB governor is vetted for impartiality, intelligence, learning in an erudite discipline, and integrity—such as no other official in the land is vetted; certainly more than a merely elected one. Therefore, only one such as he can be trusted to chair it. The idea of taking out the CB governor and substituting him with a lackey of the administration staggers the imagination. It will destroy all faith and confidence in our financial system here and abroad. A system that passed with flying colors three global financial crises already will be, as it should be, under suspicion. It is not the CB governor who orders—but the Anti-Money Laundering Council that initiates and investigates possible money laundering. This is to make sure that no mere agent of the Amlac does it on his own initiative for purposes of blackmailing bank depositors. It is also to ensure that Amlac is not politicized. We who wrote the law made sure that only mem-

bers of the Central Bank who have served it for five years straight can serve in Amlac. This was precisely to exclude political scum from, say, the Department of Justice, like one then beholden to GMA. We believed that only a five-year stint in the humdrum and rigorous work of central banking can develop the circumspection and the knowledge to examine bank transactions—and shut up about it. If the present Amlac showed bias in the previous administration, then the government today must prove it in court. There are severe punishments for leakage under the Amlac. Including publication by media of anything leaked to it. The punishment for media, as far as I remember putting it in the law, is close to confiscatory. A sound and confidence-building financial system must always trump mere freedom of the press. That media is not above blackmail or kidnapping is the understatement of the century. Now it seems that what govern-

is, of course, our economy. The economic literature has always emphasized that limited access to capital presents a critical challenge to economic growth and stability. It is, therefore, imperative to establish a well-functioning domestic capital market to ensure that corporations efficiently mobilize capital for economic growth.” “the development of our economy requires readily available and more stable medium and long term funds to finance the capital requirements of productive enterprises which provide goods for local and export markets, create jobs and increase incomes.” The Philippine capital-market development has been assisted by three international funding agencies, namely: the Asian Development Bank (ADB), the World Bank and the USAID. The programs of these three were eventually coordinated with the Philippine government. The USAID funded a study of the Philippine capital market as early as 1985. In 1987 it designed a $13.6-million Financial Resources Mobilization Project for the capital market. In 1993 the USAID started the five-year $13.5-million Capital Market Development project. Its support for the public sector centered on the improvement of the SEC, while the support for the private sector was coursed through the Finex. The need for capital-market reforms was realized when “other regional stock exchanges were overtaking the Philippines in turnover volume, market capitalization and quality standards”. The restructuring and regulatory improvement of the SEC was

We will not allow anyone to shake one of the most solid central banks in the world— run the most ably of any central bank today. We will not allow it to be shaken and cracked with the prospect of legislative amendments that may weaken its independence, water down its professionalism and erode its integrity, thereby paving the way for the Central Bank to become somebody’s private bank. ment cannot prove in court it will legislate in Congress. Well, that’s not allowed. Legislation is not adjudication but its constitutional opposite. Hence the prohibition against bills of attainder in letter or intent. While media gleefully spread rumors that the Amlac collaborated with Noynoy in his persecution of Chief Justice Corona. In fact, no proof of Amlac collaboration or its fruits ever surfaced. And none were used in the unconstitutional impeachment of the Chief Justice. That a corrupted and infatuated media had hinted of Amlac collusion should be the subject of a law on media, but not on central banking. The fact that the Amlac did not leak any information on former President Arroyo’s bank accounts or those of her husband proves the professionalism of the Amlac. And the perfection of the institutional arrangements that legislators like Lopez, the principal drafter, Lobregat, Lapus and Locsin devised. In spite of GMA and her husband being targets of Noynoy’s vicious mediafriendly campaign of vilification, nothing came from the Amlac to

a major goal toward improving the capital market. A revision of its approach to regulation led to the abandonment of the “merit regulation” and the adoption of the disclosure-based regulation, where “an issuer of securities is required to make certain specific public disclosures before selling its securities”. The SEC was also revamped and its filing system computerized. In the private sector, the Finex projects that gained support were the establishment of a privately owned investor information service, the creation of a financial training institution and the creation of the Philippine Central Depository Inc. Eventually, a public-private committee, led by Finex and the DOF, was created to oversee the restructuring and the management of the country’s financial market— the Capital Market Development Committee. Among the achievements in the development of the capital market is the consolidation of the Manila and the Makati stock exchanges, leading to the creation of the Philippine Stock Exchange (PSE) in December 23, 1992. The Manila Stock Exchange, established in August 12, 1927, dominated by trading in gold and copper mining stocks. The Makati Stock Exchange was established in May 15, 1963. Both traded the same stocks of the same companies. In June 1998 the SEC granted the PSE a “self-regulatory organization” status, allowing the PSE to regulate its own members under the oversight authority of the SEC. The PSE maintains two trading floors. Other legislations for capitalmarket development were passed into laws, among these were the Securities Regulation Code, the Personal Equity Retirement Account law, the Credit Information System Act, and the passage of the Financial Rehabilitation and Insolvency Act.

prove the government’s case against her. This proves conclusively one of two things. One, the professionalism and discretion of the Amlac or, Two, it was paid off. She must take her pick. If the Amlac deliberately refused to divulge the contents of then-candidate Duterte’s bank accounts so he could clear his name, that may have been as much to protect the confidentiality of his accounts from the political pressures of a campaign— as to leave him looking guilty. But that must be proved in court under the remedies the authors generously provided in the anti-money laundering law. Above all, we legislated that the law shall never be used for political persecution. Comes now the case of Senator de Lima. The government has deployed the testimonies of every crook in and out of jail against her. If that is not enough to convict her in court, then the witnesses are not convincing truth-tellers. Or convincing liars. But we will not allow anyone to shake one of the most solid central banks in the world—run the most ably of any central bank today. We will not allow it to be shaken and cracked with the prospect of legislative amendments that may weaken its independence, water down its professionalism and erode its integrity, thereby paving the way for the Central Bank to become somebody’s private bank. We all want to get de Lima, not least for her lousy taste in men and her partiality for certain postures. But it will not do, and we will not allow, the country’s noble house of finance to be burned to the ground just to roast a pig. Anyone who tries to monkey with a perfect law must expect the most savage reaction from those who surely know better how to cook lechon.

2nd Front Page BusinessMirror


Wednesday, January 11, 2017

Manufacturing likely pushed Q4 GDP growth to 7.4%, Pernia says F By Cai U. Ordinario


ourth-quarter growth likely outpaced forecast anew, with the National Economic and Development Authority (Neda) seeing a GDP expansion of up to 7.4 percent for the period, driven by the manufacturing sector. Neda Director General PERNIA: “Looking and Socioeconomic Planahead, we see the ning Secretary Ernesto M. [manufacturing] Pernia told reporters on sector benefiting Tuesday  that GDP probfrom strong ably grew in the range of private and public 6.8 percent to 7.4 percent in investments.” the October-to-December period last year.  Pernia said the growth was driven by the manufacturing sector and strong consumption usually associated with the holiday season.  “[We will see] the usual drivers—manufacturing, consumption, and domestic and foreign investment,” Pernia said.  The government pegged the 2016 GDP growth at 6 percent to 7 percent. Philippine Statistics Authority (PSA) data showed the country’s manufacturing output posted a double-digit growth in November 2016. Based on the Monthly Integrated Survey of Selected Industries (Missi), the Volume of Production grew 14.6 percent in November 2016, from 4.6 percent in November 2015. The Value of Production Index for manufacturing also grew by 10.6 percent, a significant rebound from the 2.2-percent decline last year. “The manufacturing sector is expected to exhibit even stronger growth in December 2016 because of increased consumer demand during the Christmas season of 2016 compared to 2015. Looking ahead, we see the sector benefiting from strong private and public investments,” Pernia said. “Low inflation, low unemployment and strong remittances will also continue to drive domestic demand, and will boost manufacturing in the Philippines,” he added. However, Pernia said the government cannot rest on its laurels and must continue to pursue efforts that will boost the country’s growing manufacturing sector and provide quality jobs. Pernia said this can be done by encouraging innovation in manufacturing to remain competitive in the international market and minimize bureaucratic procedures.  He added that the government must also work toward removing regulatory barriers and reduce the cost of doing business. Pernia also encouraged the expansion of production capacity.  “Last, we must make sure that the technical skills of our labor force are in line with industry needs, and that opportunities to enhance technical competencies are available to people in the low-income and far-flung areas of our country,” Pernia added. The Missi provides timely flash indicators that monitor the performance of growth-oriented industries in the manufacturing sector. The earliest version of the Missi is the Survey of Key Enterprises in Manufacturing, which was created in 1981 as a project of the Neda.

Sea piracy plunges to 18-year low, but kidnapping on the rise


ea piracy plunged to its lowest levels in 18 years in 2016, but kidnappings of crew members for ransom is escalating off west Africa and in the Sulu Seas near the Philippines, a global maritime watchdog said on Tuesday. The International Maritime Bureau said in its annual report that 191 piracy incidents were recorded worldwide, down from 246 in 2015 and the lowest level since 1998. It said pirates hijacked seven vessels and held 151 hostages, down from 15 ships and 271 hostages in 2015. However, it said maritime kidnappings surged by threefold to 62 people, from just 19 people in 2015. It said 34 were captured off west Africa, while 28 were taken from tugs, barges, fishing boats and, more recent, merchant ships in waters around Malaysia and Indonesia and believed transferred to southern Philippines. “The continued fall in piracy is good news, but certain shipping routes remain dangerous, and the escalation of crew kidnapping is a worrying trend in some emerging areas. The kidnappings in the Sulu Seas between eastern Malaysia and the Philippines are a particular concern,” Bureau Director Pottengal Mukundan said in a statement. See “Sea piracy,” A2

Businessmirror january 11, 2017  
Businessmirror january 11, 2017