Businessmirror january 16, 2018

Data-Protection Compliance: Failure will be costly

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By Henry J. Schumacher

A-PAPANTONIOU | DREAMSTIME.COM

ata protection is in the news daily. Reports on data breaches are common and the damages involved are substantial, in the Philippines, in the Eropean Union, the United States and in other important partner countries of the Philippines. In general, we are talking about a combination between data-privacy breach and cybersecurity breach. More specifically, let’s look at the incoming law in the EU, which is not far away from the data-privacy law of the Philippines, as you will see. Continued on A12

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Tuesday, January 16, 2018 Vol. 13 No. 97

Translating prognosis to reality Manny B. Villar

@joveemarie

embers of the majority in the House of Representatives only have themselves to blame should they fail to fast-track the approval of the administration’s priority measures, as the minority bloc has vowed to always raise the issue of quorum during plenary sessions.

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Lack of quorum delays approval of Con-ass 147 M By Jovee Marie N. dela Cruz

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THE ENTREPRENEUR

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The number of congressmen that should be present during the entire session to meet the quorum requirement This was already evident in Monday’s deliberations when House Concurrent Resolution 9, which seeks to convene

wo weeks ago I wrote about the promise of 2018 as another good year for the economy. This early, my assessment of the outlook is appearing to be a conservative one. This is because of recent revelations that confirm the prognosis for the economy as being very good. On top of that is the country’s political stability, a very important factor in attracting investments and encouraging more economic activities.

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Continued on A10

BMReports

Shopping mall fire:

When will we ever learn? By Manuel T. Cayon Mindanao Bureau Chief @awimailbox

ASH CLOUD In this image made from video, dark pyroclastic ash cloud rises from Mayon Volcano after its eruption, as seen from Legazpi City, Albay, on Monday. More than 9,000 people have evacuated the area around the Philippines’s most active volcano as lava flowed down its crater on Monday in a gentle eruption that scientists warned could turn explosive. AP Photo

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Part Two

AVAO CIT Y—Two days before Christmas, the city sidewalks here were busy: people passing, meeting smile after smile. At another sidewalk, along the Maa Highway, people were agape. Others were restless; still others asking why some firemen were not performing the tasks expected of them: put out a fire eating up the NCCC Mall and snuffing the

life of people inside. A call-center agent of a building almost across the mall claimed she only saw one fire truck hosing water, but only barely touching the square billboard that banners the name of the shopping center. That didn’t sit well with her. “We could not work well seeing that mall in fire because we know that inside, there are call-center agents like us. The smoke was still going out at the center tower above that billboard but the water could not go higher,” she told the BusinessMirror. “We prayed for rain as the fire spread to the back

portion. No one punched holes into the walls.” The call-center agent, who requested anonymity, pointed to the upper portion of the wall that has revealed the skeletons of closely spaced steel posts of the burning building. “It’s only about 4 p.m. that a lot of hosing was done,” she added. She walked away later to report for her assigned shift.

Popping out

THE closely spaced steel posts of the burning building became a

Reduction in corporate income tax to boost PHL’s competitiveness–TMAP BOI: Manufacturing, infra sectors By Rea Cu

@ReaCuBM

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he Tax Management Association of the Philippines (TMAP) has expressed its support for Package 2 of the government’s Comprehensive Tax Reform Program (CTRP), as the lowering of corporate income-tax (CIT) rates will enable the Philippines to become more competitive. According to TMAP Ex Officio Director Malou P. Lim, the organization is backing the proposal of the Department of Finance (DOF) to lower CIT

rates as it will allow the Philippines to go head to head with its neighbors in Southeast Asia. “We expressed our support to the DOF regarding the move to reduce corporate income tax to 25 percent to be more competitive with our Asean neighbors as, currently, the Philippines is the highest,” Lim told the B usiness M ir ror through electronic mail. Earlier, Finance Undersecretary Karl Kendrick T. Chua pointed out that, compared to other economies in the Asean, the Philippines is at the bottom in terms of collection effi-

PESO exchange rates n US 50.3010

ciency at 12 percent, despite having a CIT rate of 30 percent. This is higher than Thailand’s 20 percent, Vietnam’s 25 percent, Malaysia’s 24 percent, Indonesia’s 25 percent and Singapore’s 17 percent, according to the DOF. Under the Philippine National Internal Revenue Code, all corporations have to pay a regular CIT rate of 30 percent, or a minimum CIT rate of 2 percent of gross income, beginning the fourth taxable year immediately following the year in which a corporation started its operations, unless they are receiving fiscal incentives. See “Reduction,” A12

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to push 2018 approvals to ₧680B By Elijah Felice E. Rosales

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@alyasjah

he Board of Investments (BOI) is confident that it can hit its ambitious target of P680 billion worth of fresh investment approvals this year with the continuous robust growth of the manufacturing sector.

T he investment-promotion agency is coming off a record year with P617 billion in approved investment commitments in 2017. According to Trade Undersecretary and BOI Managing Head Ceferino S. Rodolfo Jr., manufacturing is expected to boost investments, as the sector continues to grow steadily in recent years, high-

lighted by a banner performance in the previous year. “Pr imar i ly, manufactur ing [will drive investments]. We really foresee a strong and continuous growth of the manufacturing sector,” Rodolfo said in a news briefing on Monday. New investments in the sector almost doubled

n japan 0.4528 n UK 69.1236 n HK 6.4305 n CHINA 7.7787 n singapore 38.0233 n australia 39.7680 n EU 61.3622 n SAUDI arabia 13.4129

See “BOI,” A2

Source: BSP (15 January 2018 )

BMReports BusinessMirror

A2 Tuesday, January 16, 2018

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Shopping mall fire:

When will we ever learn? Continued from A1

skeleton after people inside apparently tried to punch holes in the wall. That was what witnesses said they noticed around late morning, or nearly two hours after the fire broke out, estimated to be at 9:30 a.m. That area was where a chicken-food house was. A supervisor of a company supplying products to the NCCC Mall said she thinks she saw portions of the wall being chipped off from the inside. She added that belief was confirmed when heads popped out through the wall. “But they could not get out because of the steel posts. And there were no rescuers there,” she said. The woman said she went to the mall to supervise the “‘dizers”—short for merchandizers, or those in charge of placing and sorting merchandise on shelves. It was the dizers who informed her that “there is fire in the mall.”

lower floor. “Someone said he was already out of the fourth floor and onto safety, but some others also said they saw him go back,” the 21-year-old Sheila (not her real name) said. “I know he went back to save the others.” Latip also heard the same account. Melvin Gaa also did a Demafeliz. NCCC Mall Spokesman Thea Padua said Gaa was a member of the NCCC Emergency Action Team (NEAT) “who had helped bring down the 83 surviving SSI employees and an estimated 700 NCCC Mall personnel and visitors who were also brought out by NEAT and the mall’s emergency fire brigade.” “Gaa had already brought down several SSI employees and was already seen having safely exited the building at the ground floor,” Padua said. “But, instead of remaining downstairs, he went upstairs again to try to save more people.”

Heroes abound

Search for the trapped

HEROISM appears to be everywhere in lifeand-death situations, the NCCC Mall fire being one of them. Behind one story of heroism was Mikko Salazar Demafeliz. The 31-year-old Demafeliz was a man recognizable from a distance due to his towering 5’10” frame. He was everyone’s kuya (big brother), an employee of Research Now Survey Sampling International (RN SSI) said. Survivors like RN SSI employee Sheila felt distressed when they saw Demafeliz going back to the fourth floor when he was already seen with survivors at the

CHIEF Insp. Joycelun Grant, Davao City district deputy fire marshall, said the various comments against the firemen and BFP rescue personnel were disheartening and unkind to the men and women who responded to the NCCC fire. According to Grant, also spokesman for the Bureau of Fire Protection (BFP), BFP responders arrived at the scene by 10 a.m. Some of them had also entered the mall, she said. Firefighting is not only about hosing water alone, Grant said. She explained it would be difficult to decide which response mode would best be applied to a fire hap-

pening inside and away from any point of visual evaluation. Water, she said, is not appropriate for certain combustible materials, “as it might cause more damage and [cause the fire to] spread [rather] than suppress it.” In some cases, “we have to use foam.” Grant said she was inside the mall by 1 p.m., specifically at the Kadayawan Hall at the right side of the annex building’s ground floor. “The firemen and rescuers were there earlier than me,” she added. “The smoke was really overpowering, very hurting to the eyes.”

Zero chance

ACCORDING to Senior Supt. Wilberto Rico Neil A. Kwan Tiu, the smoke Grant was referring to is not the same as “the smoke that you [saw] coming out of the mall.” Tiu, the director of the Davao regional office of the BFP, said the smoke was the one formed by various superheated gases and melted materials, such as plastics that emit dangerous gases like cyanide. He explained the search for the trapped RN SSI employees began as soon as the survivors started to pinpoint where those trapped were believed to be located. According to Sheila, some of their fellow agents were last seen in the lockers and the rest room. Tiu said the intense heat, thick, black smoke and superheated gases were also too much for the rescuers. He said the heat alone could reach between 500 degrees and 700 degrees Celsius, more than enough to melt their hazmat suits, helmets and protective clothing.

By nightfall, as the search continued, authorities had the unenviable task of informing anxious families and relatives, including the surviving RN SSI employees, that the “situation inside would render zero chance of survival.”

Christmas Eve

THE following day, a Sunday and Christmas Eve, a festive day for Christians, one body was found at the locker and restroom area. None was to be found the rest of the day, as the RN SSI gave authorities the list of 37 names of their employees that were trapped in the fire, including the one who was first found. In his apparently carefully delivered narrative toward the end of a necrological Mass outside the mall, Tiu said the BFP personnel and other rescuers found “them, all 36 of them, near the stairwell and near the elevator.” The bodies were scattered in the lobby and, according to the account of Davao Mayor Sara Duterte-Carpio, “they were only about two feet from the stairs.” “My only failure in this situation is I failed to command and forcefully direct my men to penetrate the area where they are, despite the 500- to 700-degree heat enough to melt our coats; that I failed to command and forcefully direct my men to crawl their way in despite the superheated gases and thick smoke,” Tiu said. “Every time we go forward, we have to go back, driven away by the heat.” A groan of disbelief and sadness filled the atmosphere when Tiu finally confirmed the discovery of the bodies. To be continued

Lack of quorum delays approval of Con-ass Continued from A1

Congress into a constituent assembly (Conass) to amend the Charter, was supposed to have been approved, but the session was ended abruptly after Liberal Party Rep. Edgar Erice of Caloocan questioned the lack of quorum. This was apparently the minority bloc’s way getting back at Speaker Pantaleon D. Alvarez. “We have shown respect for the House leadership long enough that we never stood in the way of his legislative priorities. But what we got was utter disrespect,” said Erice, one of the 14 lawmakers who received zero infrastructure funding this year for being “critical of the Duterte administration.” Erice added he expects 13 other lawmakers to join him against the “plan” of the House leadership to railroad their Charter change (Cha-cha) proposal. Last week the Makabayan bloc in the House of Representatives also questioned before the Supreme Court the validity of the Tax Reform for Acceleration and Inclusion (TRAIN) Act. Party-list Rep. Carlo Isagani T. Zarate of Bayan Muna said the lower chamber ratified the congressional bicameral conference committee report of the TRAIN Package 1 last December 13 even without the required quorum. Rep. Antonio Tino of Act Teachers, a member of the Makabayan bloc, said he tried to question the ratification of the measure

last December 13, but he was just ignored by the deputy speaker and the deputy majority floor leader. Zarate and Tinio said the ratification of the tax measure is a violation of Rule 10 Section 63 of the rules of Congress, as it did not go through the voting process. They cited Rule X, Section 63, of the House on Conference Committee Reports, which states that: “xxx A conference committee report shall be ratified by a majority vote of the Members of the House present, there being a quorum.” However, during Monday’s session, Tinio—through viva voce—tried, but failed, to amend the December 13 Journal 48 when TRAIN was ratified in the lower house. Deputy Speaker Fredenil Castro of Capiz has expressed confidence that the petition filed by the Makabayan bloc against the implementation of TRAIN would be dismissed by the High Court. “Roll call and quorum was declared.In effect, there is a quorum, and quorum is continuing until after that the quorum is declared inexistent,” Castro said. Alvarez is now hoping that members of the so-called supermajority in the House would give their full support in the bid to convene Congress into a Con-ass to propose Cha-cha and pave the way for the shift federalism and easing of economic restrictions in the 1987 Constitution. “There’s nothing impossible if you work

hard for it,” Alvarez said on the passage of resolution calling for Con-ass. The supermajority should have no problem meeting the quorum requirement, as 255 of the 292 members of the House are on its roster. Only 147 congressmen need to be present during the entire session to meet the requirement. At a news conference earlier on Monday, House Committee on Constitutional Amendments Chairman Roger Mercado of Southern Leyte expressed confidence that the resolution that will transform Congress into a Con-ass would be approved on the same day. Mercado said he expects plenary debates to be completed on Monday night, with four more congressmen scheduled to interpellate him. “We intend to vote on the resolution tonight [Monday] after the interpellation. This will be a mere adoption, there will no longer be thirdreading voting,” he added. “House Resolution 9: We are in period of interpellation, and hopefully, of the nine interpellators, five have already finished their interpellation and four hopefully this afternoon, and if we can finish that today, we will vote and approve the House Resolution convening both Houses into a constituent assembly.” Records showed 233 representatives were present at the Monday session. However, after the privilege speech on the resolution was delivered, only less than 20 congressmen were at the floor around 5:30 p.m. This gave Erice the opportunity to question quorum, and succeed in halting the passage of the Con-ass measure. The lower chamber is expected to resume its discussion on House Resolution No. 9 today (Tuesday). Deputy Speaker Ferdinand Hernandez of South Cotabato, during the same news conference, said amending the 1987 Constitution is “timely and necessary” because the Charter does not address the present situation anymore. “It’s really important. It’s timely to amend the Constitution, and part of the program of the President, who won by overwhelming votes during last election, was his proposal to shift to federal system,” Hernandez said. “We’re not doing the amendment to the Constitution or shift from unitary to federal because we want a no-el [no election] scenario. It is important, the priority is really to amend the Constitution and shift to federal system, and there is nothing sinister in this process because, in the end, it is still the people who will decide whether they will accept this or not,” the deputy speaker added.

Alvarez said that, if the 17th Congress could convene into a Con-ass this month, the proposed new federal charter could be submitted for referendum simultaneously with the barangay elections on May 14. Under Con-ass, it’s the sitting lawmakers themselves—congressmen and senators— who will serve as the delegates. Should the lack of quorum continue, the passage of other House priority measures— including the proposed Bangsamoro basic law, the proposed Emergency Power Act, marriage dissolution bill and civil union bill—could also be delayed. Hernandez said the lower chamber is eyeing to approve these measures before the Congress adjourns on March 23. “Despite these two major challenges facing the House this year [on the proposal changing the form of government and the impeachment of Chief Justice Maria Lourdes A. Sereno], we share in the optimism of Speaker Pantaleon Alvarez that this will not hinder our other legislative works,” he added. “[With this], we have identified a number of priority measures that we strive to pass before we adjourn in March.”

PHL. . .

Continued from A12

The lack of government spending on national telecommunications networks, and on much needed housing and transport infrastructure, adds to the challenges of competing in the said industries. Commissioner Gamaliel Cordoba of the National Telecommunications Commission had earlier noted that all other Asean countries have telecoms networks that are wholly owned, partly financed or operated by their respective governments. It is only in the Philippines that entire broadband networks had to be constructed solely by private companies. The Department of Information and Communications Technology has recognized the need for government suppor t in telecommunications and is planning to put up 250,000 Wi-fi access points and 47,000 cell sites in the country before President Duterte’s six-year term ends in 2022. Infrastructure has become one of the top priorities of the current administration, as well, with public spending on infrastructure projects targeted to reach P9 trillion until 2022. Some of the planned projects include interisland bridges, railways and subways, disaster resiliency and flood control, airports and seaports.

BOI. . .

Continued from A1

last year to P96 billion from P49.26 billion in 2016, and was 256 percent higher than the P27 billion in 2016. Rodolfo said manufacturing will continue to grow along with the country’s GDP, especially with its enormous growth in the previous year. “[We foresee] t h is wou ld at t ract more investments—both foreign and loca l—to the manufactur ing sector given [the] strong growth of the domestic consumption,” the trade official said. “In particular, [those] sectors [that a re] i n f r a s t r u c t u re - re l at e d a nd construction-related.” The government is scheduled to fully roll out this year its infrastructure program—dubbed the “Build, Build, Build” program—and this is also expected to boost investments given that it will create more roads, bridges, mass transport and facilities in Metro Manila and other major urban centers. This, Rodolfo said, will contribute to the growth of those in the businesses related to infrastructure and construction. Aside from this, Rodolfo added foreign investors who have given their commitments to President Duterte during his trips abroad are expected to come in this year. He said these are the big industrial projects—mostly in steelmaking and shipbuilding—that have done feasibility and technical studies last year. Moreover, Rodolfo said the country will continue to gain the confidence of foreign investors with the looming discussion on the second package of the government’s Comprehensive Tax Reform Package (CTRP). He disclosed that, based on recent talks on the second tax-reform law between Trade Secretary Ramon M. Lopez and Finance Secretary Carlos G. Dominguez III, the government intends to grant more incentives to foreign direct investments. Investment approvals from last year reached an all-time high of P517 billion, outdoing the BOI’s target of P500 billion. It was the highest in the country’s record books, surpassing the P570.1 billion posted in 1997, which was mainly due to the privatization and liberalization of public utilities, such as water supply and telecommunications, in that year. A total of 426 projects, mainly in infrastructure and power, comprised last year’s investment pledges. According to the BOI, these projects are expected to generate more than 76,000 jobs once it swings into full operations. Power and energy projects registered the largest chunk of the pledges at P268.168 billion, with infrastructure and publicprivate partnership projects at P127.66 billion. On the other hand, real-estate and mass-housing projects posted P86 billion in contribution to investments, while transportation and logistics-related projects reached P15.91 billion. “This validates business confidence in President Duterte’s economic programs to ensure inclusive growth and shared prosperity for the country. The influx of investments is definitely steamrolling, as we are expecting sustained higher investments for the next five years,” Lopez said last December. The all-time record on investments was posted at a time the Duterte administration was facing left and right criticisms here and abroad for the thousands of deaths reported under the war on illegal drugs.

Gordon. . .

Continued from A12

be confiscated in favor of the state. in the case of associations, partnerships or corporations, the president and each of the directors in shall be responsible for the acts committed by such association, partnership or corporation. He added the bill also provides that “no person shall engage in the processing of minerals without first securing a minerals-processing permit from the secretary” of the Department of Environment and Natural Resources. Moreover, the Gordon bill provides that “minerals-processing permit shall be for a period of five years renewable for like periods, but not to exceed a total term of 25 years. In the case of mineral ores or minerals produced by the small-scale miners, the processing thereof, as well as the licensing of their custom mills or processing plants, shall continue to be governed by the provisions of R A 7076.”

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Solons eye Charter revision in asserting PHL sovereignty

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O strengthen the Philippines stand on the West Philippine Sea (South China Sea), the chairman of the House Committee on Constitutional Amendments on Monday said the proposal amending Article I of the 1987 Constitution defining the country’s territory will be considered. Southern Leyte Rep. Roger Mercado, the panel chairman, said the lawmakers will consider the United Nations’ Permanent Court of Arbitration favoring the Philippines’ claims on the West Philippine Sea during the Charter change procedure. “We shall retain the archipelagic theory, but we should now take note of the decision of the international tribunal—how we can implement it so that it will be respected by other countries,” Mercado said. “We will be touching on territory, but basically boundaries will be the same. However, we have to be clear on how we can protect the sovereign territory of our country,” the lawmaker added. In 2016, the international court favored the Philippines’ argument against China’s nine-dash line. The court also upheld the Philippines right to an exclusive economic zone in those areas claimed by China. The decision said the China’s “nine-dash” line has no legal basis to stand on. “It’s really about time that we have to put that in our Constitution, they should respect our rights,” Mercado said. Meanwhile, at a news conference, Mercado said his panel will convene on Tuesday to discuss consti-

tutional provisions that need to be amended, “so that we can already give the specific provisions that need to be properly ventilated to our people.” “The committee will meet [on Tuesday] to determine already the provisions that we need to further give more time and intelligent discussion during the convention of our constituent assembly proper, so we will already guide our members on which important provisions that need to be restudied and reread, and properly discuss and voted by the House,” he said. Mercado said the Preamble, bill of rights, state policies and principles, and constitutional bodies, including Commission on Elections (Comelec), Civil Service Commission (CSC) and Commission on Audit (COA), would still be included in the new Constitution. He said articles that will be subjected to amendments are those relating to agriculture, environment protection, legislative and executive departments. “All the recommendations, draft of the PDP-Laban, the House members who have submitted some reforms or amendments will be thoroughly discussed by our different committees based on our rules on the constituent assembly, [Con-ass]” Mercado added. Earlier, Mercado said liberalizing the restrictive economic provisions of the Constitution, and the possible removal or extension of term limits of government officials are also among the top issues that would be discussed by the Congress when it convenes into a constitutional assembly early this year. Jovee Marie N. dela Cruz

Tesda’s TVET ‘inadequate’ for aspiring BPO workers By Cai U. Ordinario

@cuo_bm

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he technical-vocational education and Training (TVET) offered by the Technical Education and Skills Development Authority (Tesda) are not enough to ensure that more Filipinos will be able to benefit from the fast-growing business-process outsourcing (BPO) sector. This was part of the findings of a study released by the Asian Institute of Management Rizalino S. Navarro Policy Center for Competitiveness (AIM RSN PCC), titled “TechnicalVocational Education and Training for Business Process Management: Challenges and Potential.” The AIM research team found that among the reasons for this is the lack of English proficiency and other competencies, such as critical thinking, among trainees. “This could and should change in the long term, however, once the average quality of English proficiency and other competencies, such as critical thinking improve,” the authors said. “In the immediate future, the government, IT-BPM [business-process management] firms and TVIs [technical-vocational institutions] can address short- or medium-term challenges by focusing on better coordination and communication, as well as improved monitoring and quality assurance,” they added.

The authors said the Tesda and other TVIs must ensure that they consult with industry players to ensure that the training are up-to-date and relevant to their work requirements. The researchers added Tesda and TVIs can also consider ramping up their efforts to improve trainees English proficiency by focusing on language courses and programs. They also urged Tesda to continue targeting overseas Filipino workers (OFWs) and other workers who are looking for new careers through the Training for Work Scholarship Program (TWSP). The government, the authors said, can also function as a facilitator to link good-performing TVIs with firms specializing in higher-value services, such as analytics, to help workers retool their skills. “Training and skills development, if done right and in partnership in industry, have the potential to improve employability of near-hires and career- changers. But with a long-term commitment to teaching soft skills and competencies, TVET can become an effective tool for achieving shared prosperity,” the authors said. The paper, authored by Nicholas Price and Christopher Caboverde of AIM RSN PCC, aimed to assess the effectiveness of TVET in teaching Filipino workers skills relevant to the IT- BPO sector.

Editor: Vittorio V. Vitug • Tuesday, January 16, 2018 A3

House panel lines up ‘shrinks’ in Sereno impeachment hearing By Jovee Marie N. dela Cruz @joveemarie & Joel R. San Juan @jrsanjuan1573

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he House Committee on Justice will invite in its impeachment hearings the psychiatrists who reportedly gave SC Chief Justice Maria Lourdes A. Sereno failing marks. Justice Committee Chairman Reynaldo V. Umali of Oriental Mindoro said the committee will invite the psychiatrists in support of allegations of betrayal of public trust lodged by complainant lawyer Larry Gadon. “The impeachment committee [likewise] intends to invite the psychiatrist who gave failing marks on the psychiatric or psychological makeup of the Chief Justice and who was allegedly fired or whose contract was not renewed upon the assumption [of office] of the Chief Justice,” Umali said. Reports earlier said two psychiatrists hired by the Judicial and Bar Council (JBC) gave Sereno a rating of “4” from a scale of 1 to 5, with “5” being the lowest. The report added that after the test results were revealed, Sereno, who was chairman of the JBC, refused to renew the contracts of the two psychiatrists and terminated them in 2013. Sereno’s camp, meanwhile, insisted that the impeachment case against the chief magisrate should now be elevated to the Senate following the admission of Umali that it is already considered a done deal.

Lawyer Josa Deinla, one of the spokesmen of Sereno, said the ongoing impeachment proceedings of the House Committee on Justice is a mere fishing expedition to boost the “baseless and malicious allegations” of Gadon, the impeachment complainant. “Chairman Umali has publicly announced that the Chief Justice’s impeachment is already a done deal. He publicly stated that the impeachment process is just a matter of formality because the Chief Justice is expected to be ousted, amid the strong belief of Speaker Pantaleon D. Alvarez that the issues raised against her stand on strong and solid ground,” Deinla said. “In view of this, the impeachment proceedings will be nothing but a charade and that the House Committee on Justice will just be resorting to a vilification campaign and fishing expedition to cover up for a fatally defective complaint against the Chief Justice,” Deinla said. Moreover, Umali said the panel would invite four other justices— namely, incumbent Supreme Court Justices Mariano del Castillo and Andres B. Reyes Jr., retired SC Justice Adolf S. Azcuna, Court of Appeals

Justice Remedios Salazar-Fernando, and other court officials. Likewise, he said, the committee will invite anew SC Justice Teresita Leonardo-de Castro, who had testified in the impeachment hearing. De Castro’s testimony buttressed the allegation that Sereno unilaterally issued a temporary restraining order (TRO) in violation of the collegial nature of the High Court. In Monday’s hearing, three incumbent SC justices, namely, Samuel R. Martires, Diosdado M. Peralta and Lucas P. Bersamin, appeared to testify before the justice committee on the issue of the delay in release of benefits for the surviving spouse of retired justices and judges who had died. In his complaint, Gadon alleged that before Sereno became Chief Justice, such benefits were regularly released by the SC. However, Gadon said, the releases of the benefits were delayed, for as long as two years, when Sereno assumed office and created a technical working group to handle the release of the benefits. The SC eventually decided, through a decision penned by Martires, to release the benefits. Peralta is expected to discuss Sereno’s alleged manipulation of the JBC and the rules and procedures of the Supreme Court. On the other hand, Bersamin is expected to answer questions on resolutions supposedly issued by Sereno without en banc approval. Meanwhile, Umali said, the panel is eyeing to finish its hearing by February, or first week of March at the latest. He added the panel would submit its recommendation for approval of the plenary before the House adjourns its session on March 23. The impeachment complaint filed

LTFRB set to lift TNVS moratorium this month By Lorenz S. Marasigan @lorenzmarasigan

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Sufficient staple food

A worker carries a sack of rice at a wholesale store in Makati City. According to the owner, they are no longer selling rice distributed by the National Food Authority (NFA), saying they can no longer afford the cost in transporting the food staple from the new NFA warehouse in Novaliches, Quezon City, to other points. Authorities recently announced that there is no price increase for NFA rice. ALYSA SALEN

BJMP starts drive to keep detention facilities drug-free By Rene Acosta @reneacostaBM

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he Bureau of Jail Management and Penology (BJMP) posted a record of 68 jails certified as drug-free facility by the Philippine Drug Enforcement Agency (PDEA). This came after the management review on the performance of regions in the antidrug campaigns. “Tuloy-tuloy ito, hindi kami titigil sa paglilinis ng mga jails na nasa am-

ing pamamahala [This will be a continuous drive until we accomplish a total cleanup],” said BJMP Chief Jail Director Deogracias Tapayan after commending the top-performing regions in the bureau’s campaign against illegal drugs. Topping the list is BJMP Regional Office 1 with 17 jails certified as drug-free during the Oplan Linis Piitan conducted in partnership with the PDEA and the Philippine National Police (PNP).

by Gadon contains four grounds, including corruption, culpable violation of the Constitution, betrayal of public trust and other high crimes. The complaint also alleged 27 acts constituting the offenses charged against the Chief Justice. The justice committee has already covered several allegations under the ground of culpable violation of the Constitution and these include: Falsifying the Resolution of the Supreme Court in Administrative Matter (AM) 12­11­9­SC, on the creation or revival of the Regional Court Administrative Office, or RCAO in Region 7; Falsifying, tampering or altering the temporary restraining order of the Supreme Court in the case of the Senior Citizen’s Party List v. Comelec in GR 206844­85; Falsifying or unilaterally issuing the Resolution of the Supreme Court in AM 16­0 8­0 4­SC, which supposedly directed the executive secretary to submit complaint ­a f f idav its against four judges allegedly involved in illegal drugs; Delaying action on the petitions for retirement benefits of justices and judges and their surviving spouses for more than two years; Manipulating and delaying the resolution of AM 17­06­02­SC on the request of the secretary of justice to transfer the Maute cases outside of Mindanao, after the Chief Justice allegedly realized that she had lost in the voting; Failing to truthfully disclose her Statement of Assets, Liabilities and Net worth (SALN); Manipulating the short list of the JBC to exclude former Solicitor General Francis Jardeleza for personal and political reasons, thereby curtailing the President’s power to appoint him.

The Drug-Free Certification Program is a pioneering project of the BJMP to counter illegal-drugs operations in jails with the support of friendly forces from the uniformed service and the PDEA as the certifying agency. “You can be certified as drug-free if no illegal drugs were found in your jails during series of Greyhound Operations and, of course, that has to be validated by members of the intelligence groups composed of the

PDEA, PNP and other allied forces,” Tapayan said. “If malinis ang jail mo [If a jail has been found drug-free] and the technical working groups are convinced based on records and intelligence reports, then that is the only time you will be certified by PDEA as drugfree,” Tapayan added. To be certified as drug-free, the jail must also show consistent efforts on anti-illegal-drugs campaigns in their respective communities, on top

of basic requirements that the facility is clean from any illegal drugs. Another requirement is the conduct of random drug testing among inmates and personnel, including the warden of the facility. “We have 481 facilities nationwide. It’s a long way to go…,” Tapayan said. DILG Officer-in-Charge Undersecretary Eduardo Año reiterated the antidrug campaign of the national government during his initial talks with BJMP top officials.

he moratorium on acceptance of new transportation network vehicle service (TNVS) operators is set to be lifted this month, a ranking official of the Land Transportation Franchising and Regulatory Board (LTFRB) said. Aileen Lizada, the agency’s spokesman, said her group will release a memorandum circular that will lift the 2016 directive that stopped the acceptance of new partner-drivers for transport network companies (TNCs), such as Uber and Grab. “This month we will release the memorandum circular for the common base supply,” she said in a mix of Filipino and English. She explained that the memo will allow the creation of a lone pool of drivers that will have the option whether to stay with their existing TNC or be accredited with another, while their franchises are “generic.” The idea there, Lizada explained, is that the TNCs can tap that pool to “serve the public easier.” “This common base—we agreed during our technical working group meeting—will be subject to review every three months because there is such a thing as churning rate,” she said. She explained that the regulator will put a cap on the number of vehicles that can apply for a franchise under the new scheme. Lizada declined to disclose it, saying that it will be part of the memo to be released this month, but noted that it will be higher than 40,000 vehicles.

Economy

A4 Tuesday, January 16, 2018 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

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Duterte expected to lead launch of P13-B air-traffic system today

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By Recto Mercene

@rectomercene

resident Duterte is expected to inaugurate on Tuesday the much-delayed Communication, Navigation, Surveillance/Air Traffic Management (CNS/ATM) system at the Civil Aviation Authority of the Philippines (Caap) compound in Pasay City. This P13-billion project is a muchtouted next-generation communication and air-traffic infrastructure that promises to end air-traffic congestion in Manila. Transportation Secretary Arthur P. Tugade, Caap Director General Capt. Jim Sydiongco and Manila International Airport Authority General Manager Ed Moreal would be on hand to present to the President the official imprimatur to put the system in operation. The state-of-the-art satellitelinked system took 10 years to build. It was first conceived and approved in 2007, under the stewardship of the late Capt. Jake Ortega, chief of the defunct Air Transportation Office, forerunner of Caap. Sydiongco earlier said the agency has trained hundreds of new airtraffic controllers to augment veteran air-traffic controllers to operate the new system. Attempts by the BusinessMirror to interview Caap officials to get more details on how the new system works proved futile although understandable. They are reportedly under strict orders not speak to the media so as not to overshadow Tugade and Sydiongco and other ranking officials until after the launch. The chief of Air Traffic Services, Antonio Gonzales, when asked to be interviewed, hem and hawed until he promised this reporter that he will provide a PowerPoint presentation stored on a flash drive. When this reporter came back at the ap-

pointed hour to retrieve the flash drive, I was told that the official was in a meeting. Indeed, officials of the Caap have been having constant dialogues with other officials involved in the projects, including those from the Japan International Cooperation Agency who provided the ¥22-million (P9.4million) initial capital. Caap officials are also in constant touch with officials from Thales Group, a French company that specializes and builds electrical systems and provides services for the aerospace, defense, transportation and security markets. Former Caap Deputy Director General Willy Borja, a 40-year veteran air-traffic controller, agreed to explain in layman’s language how the system works. Basically, two major components make up the structure, the talking part, or “communication,” and the other is managing the airplanes so they follow an orderly flow in the sky. For several decades since the advent of commercial aviation, pilots and controllers talk to one another on radio by means of very high frequency (VHF) band of the electronic spectrum. The frequencies assigned for commercial and military use, including air-traffic control (ATC), are high frequency, VHF and ultrahigh frequency. These frequencies, however, have limitations. The voice “deteriorate” over long-distances and

turns wavy and almost incomprehensible when the airplanes are beyond the horizon or out of the line of sight, usually beyond 250 miles, the maximum reach of long-range radar (Loran). This area is called the oceanic airspace. Think of the dying HAL, the talking computer in the sci-fi movie, 2001: A Space Odyssey. HAL’s voice sounds syrupy and garbled, as if coming out of a very long tube, until it fades completely as the “life” was snatched out of him (it?). Bad weather, such as thunderstorms and lightning, also disrupt their radio signals. For safety and security reasons, ATC must always know an airplane’s whereabouts and they are followed from takeoff to landing at their destination by various means of communication, Borja said. “Since CNS depends on satellite signals, voice communications are crisps and not subjected to the vagaries of weather or distance,” he said. It is when airplanes are beyond the horizon, or when more than 250 miles out from their point of origin that CNS employs the ControllerPilot Data Link. It is communication by digital means, performed through computers. Here, pilots communicate with the ATC by sending, no longer voice signals, but short messaging system (SMS) or “texting.” The pilot could either choose from a menu or ready-made conversations, request, emergency messages, or he could simply compose or “text” a new message. “This SMS could be effective as far as 1,400 kilometers away, up to the limits of our Flight Information Region [FIR], near Guam to the East,” according to Borja. He said the FIR is the area where the Philippines ATC exercises control over their specific air traffic. The country’s FIR is like a huge rectangle encompassing the whole Philippines. All countries with an active air-traffic control system have their own FIR provided un-

der the International Civil Aviation Organization. “FIR delineates the limits of our air-traffic control to the northeast adjacent to China’s FIR; to the north, adjacent to Japan; to the northeast, to Taiwan; to the west adjacent to Vietnam; to the southwest to Malaysia; to the south adjacent to Malaysia and Indonesia,” Borja said. How about navigation? Previously, airplanes follow tracks, which are invisible “highways” in the sky. These tracks are defined by navigational aids, such as the nondirectional beacon distancemeasuring equipment (VOR or DMC). Airplanes navigate by tracking from one navaid to another. However, these navaids also have limitation because they lose their signals over the horizon. The new system that will replace the VOR and other navigational aids is called Performance Based Navigation (PBN). It provides pilot their location in the sky by means of satellite, whose signals are received by means of a compatible equipment in the cockpit. “The pilot no longer relies on land-based navaids but by the coordinates given by satellite signals,” Borja said, adding the PBN is actually navigation by means of satellite. The signals are broadcasted by the World Geological Survey. The compatible equipment installed in modern cockpits is called RNAV, or Area Navigation, generally referring to navigation without the need for going from one navaid to another. GPS and Loran are two versions of RNAV, but the original was just a computer that used waypoints (distance and bearing offsets) from existing VORs and/ or DMEs. By international agreement, airports that are basically large and medium hubs, plus a few other busy facilities, will install the broadest range of PBN services. Ten radar sites have been constructed on top of existing ones to

complement the CNS/ATM’s coverage of the entire Philippine FIR. These radars are in Davao, Iloilo, Zamboanga, Cebu, Ninoy Aquino International Airport (Naia), Laoag, Clark, Subic, Pasuquin and maybe Kalibo. In all, they will provide about 98-percent coverage of the entire FIR. In a previous interview, Sydiongco said the CNS/ATM would “greatly enhance” the tracking and billing of all overflights, as well as international and domestic flights, from which the Caap derives its air-navigation charges (ANCs). About 85 percent to 90 percent of the Caap’s income is from the ANCs. The CNS/ATM would enhance safety in the sky because of the constant monitoring by ATC, but would it be the magic bullet to solve the congestion? “Since airplanes would no longer go from one navaid to another but directly fly from the point of departure to destination, it seems there would be faster ‘turnover’ at the airport of destination or at the Naia in our case,” Sydiongco said. Borja said it seems not to be the case. He added that at the moment, Naia has limited “absorptive” capacity of 40 events per hour. “No matter how fast aircraft are coming, they would still be separated by five minutes, not three minutes, because the Naia would not be able to clear landing aircraft as fast as needed, to enable the succeeding plane to land at once. Hence the 40 aircraft limitations per hour,” he said.

The solution is to finish the rapid exit taxiway (RET) that is now under construction. RET is constructed slightly angled to the runway, enabling landing planes to exit at a fast clip. Old taxiway designs are at 90 degree angle so that planes had to fully stop before turning to intercept it. Monreal said the new RET would be finish sometime this year. “In both instances, airtraffic controllers would be able to close the gap between take-off and land, thus reducing the time intervals, which would mean less air congestions.” He added two previous RET on runway 06-24 were designed for smaller airplanes, such as the A219 or A320 and B737. “The new RET is for larger aircraft, such as the A330, A340 and A350, including B777, B747, A380 and above,” Monreal said. But even if the high-speed ta xiway is in place, the Naia would still be hobbled by the need to extend the distance between airplanes on the runway and those on the taxiway. Since the Naia runways were designed in the 1960s, when there were no B747 or Airbus 380 planes on the horizon, so the distance between the runway and taxiway are narrower. Today, when an A380 takeoff or land at the Naia, all other airplanes are held on the ground. This is to prevent the wingtips of large taxiing aircraft from touching the A380.

No matter how fast aircraft are coming, they would still be separated by five minutes, not three minutes, because the Naia would not be able to clear landing aircraft as fast as needed, to enable the succeeding plane to land at once. Hence, the 40 aircraft limitations per hour.”—Borja

Farmer, labor groups air fears on tax-reform implementation By Jonathan L. Mayuga @jonlmayuga

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si de f rom f i sher men, farmers, especially those with small landholdings, will pay the price of the tax-reform measure introduced by the Duterte administration. The “burdensome” tax measure will severely affect rice farmers and threaten the country’s rice production and food security. “TRAIN [Tax Reform for Acceleration and Inclusion] will definitely wreck our livelihood and drive us into a state of hunger,” according to the group Kilusang Magbubukid ng Pilipinas (KMP). “The overall rice production and consumption will be affected by TRAIN. TRAIN will cause worsening hunger among the poorest of the poor. Whatever minimal gain that low to middle employees will get from TRAIN will be easily offset and swept by rising prices of commodities, services and public utilities,” said Danilo Ramos, KMP chairman. For one, KMP said the new excise tax on oil products will result to a minimum 20-percent additional cost in the use of fuel-run farm equipment. This means farmers will have to shel l out more money out of their pockets for the added cost on production brought about by TR A IN. In 2017 prices of diesel average at P33 per liter. Now, diesel prices have gone up to at least P40 per liter. Meanwhile, cost of fuel prices are higher in the provinces. In a sample case study by KMP, a rice farmer in Bulacan province

A family shops at a Makati supermarket over the weekend. Consumers are starting to worry about the possible effect of the Tax Reform for Acceleration and Inclusion law on the prices of fuel and, consequently, basic commodities. Nonie Reyes

tilling 1 hectare of rice land will have to shell out additional P294 per hectare per cropping for the use of mechanized hand tractor to pull and harrow rice lands during

land preparation. This does not include added cost for the use of water pump for irrigation, use of dryer, payment for rice milling, transportation of rice produce and

other daily expenses. A ccord i n g to go ve r n me nt data, the country has 4 million hectares of rice-harvested lands. This minimum sample computa-

tion would translate to a P1.176billion additional cost for land preparation alone. Other farm inputs, such as seedlings, fertilizer and pesticides are also expected to increase. Food prices and commodities will increase, too, under TRAIN. “ This situation will have a domino effect on rice prices. Rice marketers and retailers are also expected to pass on added cost to consumers, resulting in hike in rice prices. We see prices of commercial rice increasing up to as much as P58 to P60 per kilo at the minimum in the coming months,” Ramos said. The current average price of commercial rice per kilo in retailers is P50 to P55 per kilo. National Food Authority (NFA) rice price averages at P38 to P40 with reported increase in some areas. The National Economic and Development Authority has already rejected the NFA’s proposal to increase the buying price of rice from local farmers by P5 per kilo from P17 to P22. The NFA is also poised to import 250,000 metric tons of rice this year. “These factors will affect severely the livelihood and economic state of rice farmers, and TRAIN will make it worse,” Ramos said. The Associated Labor UnionsTrade Union Congress of the Philippines (ALU-TUCP), for its part, said the government has failed to put in place safety nets for the poor and adequate protection mechanism against profiteering activities in the light of the tax-reform measure’s implementation. “We are greatly concerned over the government’s inadequate response to provide social safety nets

to millions of poor Filipinos, who are about to fall into deeper poverty due to inflation brought about by the implementation of TRAIN’s excise tax on fuel and sweetened beverages,” ALU-TUCP Spokesman Alan Tanjusay said. The group is looking for the mechanics and the implementing rules and regulations of the TRAIN and plan a dole out of P200 a month to the poor and for those economically affected by an anticipated spike in inflation. “This TRAIN is a strategic project of the Duterte administration, yet it looks like the implementing rules are not ready and the government institution that would actualize the social safety net program for the poor is unprepared. Is TRAIN a big joke being played on poor Filipinos? Tanjusay said. The ALU-TUCP also criticized the Trade Secretary Ramon M. Lopez on his statement on profiteering in light of TRAIN’s implementation. “Stores and local markets have already irresponsibly increased the prices of basic and prime commodities, even before their old inventories are used up. The government must step in [and] impose the consumer-protection laws and regulations, but we don’t see them, we don’t feel the government is protecting us from profiteers and profiteering,’’ Tanjusay added. Ta nju s ay s a id m i l l ion s of Filipinos will fall further below deeper poverty if government safety nets are not ready and its institutions are ill-prepared to protect those affected by rising inflation caused by TRAIN excise tax.

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Banking&Finance BusinessMirror

Editor: Jun B. Vallecera • Tuesday, January 16, 2018

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Banner 2017 dividends made possible by Caap arrears

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By Rea Cu @ReaCuBM

he abrupt manner by which Malacañang asked those owing the various government-owned and -controlled corporations (GOCCs) dividends allowed the Bureau of the Treasury (BTr) to report yet another banner year in 2017.

This developed even though the Land Bank of the Philippines (LandBank) was allowed some leeway and excused from remitting the otherwise mandatory transfer of funds to the national k itt y. T he LandBank counts among the highest dividend contributor for many years now. As a result, the BTr told the Department of Finance (DOF) that the dividend

contributions of the various GOCCs rose 9.8 percent in 2017 to P30.45 billion. Such dividends amounted to only P27.73 billion in 2016. A c cord i n g to Fi n a nce S e c re t a r y C a rlos G. Dom ing uez III, t he ba nner dividend collection exceeded that remitted in 2016 no matter the exemption granted the LandBank that year, when it was allowed to plough

back P6 billion worth of earnings for recapitalization purposes. Dominguez said had LandBank actually remitted the P6 billion as dividends in 2017, the ag gregate contribution of GOCCs would have reached P36.45 billion last year. The banner dividend contribution was owed the Civil Aviation Authority of the Philippines (Caap) that for the past four years, it was noted, has not remitted anything to the BTr. Then in October last year, President Duterte himself noted with displeasure that the f lag carrier Philippine A irlines (PAL) still has outstanding dividend obligations of P6 billion. To the credit of airline executives, PAL quickly settled what it owed and wrote a check for the BTr. Dominguez commended the work done by the DOF, under the leadership of Finance Undersecretary Antonette C. Tionko of the Corporate Affairs Group (CAG), to aggressively promote financial discipline among the GOCCs. “For CAG, we are pleased to report that our dividend collection has hit P30.4 billion, up from last year’s P27.6

billion. And that is excluding the LandBank dividends of P6 billion,” Tionko told Dominguez at a recent DOF Executive Committee meeting. Tionko said the dividend collection came from 53 GOCCs that include the Caap, which had not remitted anything for the past four years but has emerged as one of the biggest dividend contributors in 2017. The Caap remitted a total P5.39 billion to the Treasury after collecting nearly P6 billion from PAL in October last year and after the President ordered the Department of Transportation (DOTr) not to extend the deadline it had given to the flag carrier to pay its long-overdue navigational fees and other charges. The other substantial dividend contributors were the Philippine Deposit Insurance Cor p. (PDIC) w it h P7.46 billion, the Development Bank of the Philippines at P2.51 billion, the Manila International Airport Authority (Miaa) with P2.22 billion, the Philippine Ports Authority with P1.95 billion, the Bangko Sentral ng Pilipinas with P1.84 billion, the National Power Corp.

(Napocor) with P1.39 billion, the Philippine Amusement and Gaming Corp. with P1.18 billion and the Subic Bay Metropolitan Authority (SBMA) with P923.60 million. Among the other GOCCs sending some of their earnings in 2017 to the National Treasury were the Philippine Economic Zone Authority with P622.91 million, the Philippine National Oil Co. Exploration Corp. with P519.42 million, Clark Development Corp. with P500 million, the National Development Co. with P428.19 million, the Philippine Reclamation Authority with P323.76 million, the Local Water Utilities Administration with P319.08 million, the Cebu Port Authority with P294.69 million, the Cagayan Economic Zone Authority with P240.59 million, the Metropolitan Waterworks and Sewerage System with P232.63 million, and the Philippine Leisure and Retirement Authority amounting to P210.44 million, among others. One-third of the 2017 remittances correspond to collection of dividends in arrears of some GOCCs, such as the PDIC, Caap, SBMA and Napocor, according to the DOF.

BSP notes moderate Market hungry for short-dated securities remittance growth T last November he Bureau of the Treasury (BTr) awarded in full all tenors on offer at the latest Treasury bills (T-bills) sale on Monday amounting to P20 billion on the back of strong market appetite for shorter-dated government securities. According to National Treasurer Rosalia V. de Leon, the BTr saw healthy market appetite in its first T-bills sale for this year, with total tenders amounting to P50.1 billion from an offering of only P20 billion. De Leon also said the yield for both the six-month and one-year T-bills fell at the maiden sale on account of a so-called base effect. “Basically, we see the yields coming down given the very strong appetite coming out of the market for short tenor,” de Leon told financial reporters at the conclusion of the auction sale. The 91-day tenor, while sold at the full amount of P9 billion, attracted tenders amounting to P22.835 billion. The auction committee rejected P13.835 billion worth of offers. As a result, the three-month

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tenor averaged 2.23 percent, higher by 8.5 basis points from only 2.14 percent at the previous auction. The 182-day tenor was similarly sold at the full amount of P6 billion after attracting tenders totaling P13.930 billion. The six-month tenor averaged 2.51 percent on Monday, higher by 4.4 basis points from 2.56 percent set at the previous auction. The 364-day tenor was also sold in full, with the auction committee receiving tenders amounting to P13.350 billion. The one-year IOUs averaged 2.84 percent, higher by 10.3 basis points from 2.95 percent at the previous auction. De Leon said the preference for shorter-dated tenors is fueled by expectations of an interest-rate hike by the US Federal Reserve system (the Fed), among other influences. “There are also speculations that the Bangko Sentral ng Pilipinas will tighten two to three [times this year]. At the same time, there’s much liquidity because they removed the 28-day [tenor] under the term

deposit facility [of the BSP] so there’s a huge appetite for short tenor maturities,” she quickly added. The BTr said the government anticipates selling ROPs, or dollar-denominated bonds, soon. ROP is shorthand for the sovereign, or the Republic of the Philippines. De Leon reiterated that the BTr is watching the global bond markets closely for opportunities to tap the potential for comparatively cheap foreign financing no matter that the economic managers would rather borrow from domestic creditors. A tenor of 10 to 25 years is being eyed for the global bond issuance with around six underwriters, according to de Leon. “The tenor we still have to finalize with our underwriters, with our syndicate team. It depends on how we see the market going for us, so if we see very good reception for the issuance, then we will pull the trigger. Otherwise, we’re still watching, particularly the news coming out in the US because of the movement coming out of US Treasuries also,” she said. Rea Cu

Singapore central bank sees sustainable growth at 2-4%

he money sent home by overseas Filipino workers (OFWs) continued to grow last November but at a rate the Bangko Sentral ng Pilipinas considers slow, the BSP said on Monday. The cash remittances of millions of OFWs in the various workplaces around the world proved lower than the year’s average in November last year as this expanded by only 2 percent to $2.26 billion, from $2.22 reported in the same month last year. The November cash-remittance tally was also lower than the $2.28 billion reported the previous month. The BSP said top countries that contributed the most to the growth in cash remittances for the period were the United States and Germany, with 1.1-percentage point and 0.9-percentage point contribution, respectively. Despite the slow growth of remittances, the aggregate sent by Filipino migrant workers back to the Philippines still hit $25.32 billion in the first 11 months last year, up 4 percent from $24.34 billion in the same period the previous year.

The government earlier projected cashremittance growth averaging 4 percent in 2017. Such remittances help support consumption activities in the country. Other foreign-currency receipts, such as those generated by the various business-process outsourcing firms, help beef up the country’s external position. Broken down, cash remittances from both land-based and sea-based workers recorded increments of 3.7 percent and 5.1 percent for January to November 2017, respectively. The bulk of cash remittances for the first 11 months of the year came from the US, the United Arab Emirates, Saudi Arabia, Singapore, Japan, United Kingdom, Qatar, Kuwait, Germany and Hong Kong. The combined remittances from these countries accounted for 80.2 percent of total cash remittances. Personal remittances, meanwhile, or the remittances that represent all current transfers in cash and in kind were 3.2 percent higher last November to reach $2.5 billion. Bianca Cuaresma

Case clippings

By Justice S J Ranada Jr.

CONSPIRACY–overt act required The fact that coaccused wife in a prosecution for possession of counterfeit dollars, accompanied her coaccused husband at a restaurant and allowed her husband to place the money inside her bag, is not sufficient to justify the conclusion that conspiracy exists. In order to hold an accused liable as a coprincipal by reason of conspiracy, he or she must be shown to have performed an overt act in pursuance or in furtherance of the conspiracy. Rimando v. People GR 229701 29 Nov. 2017 Velasco, J

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ingapore’s economic recovery is broadening out in the city state, but there are still “real challenges” in the labor market, central bank Managing Director Ravi Menon said. Sustainable economic growth is estimated at 2 percent to 4 percent, Menon told delegates at the UBS Wealth Insights Conference on Monday in Singapore. Manufacturing is resilient and financial services are “doing well,” he said.

The challenge on the labor supply side is whether Singapore can raise productivity, given that its work force is already well educated and skilled, Menon added. Earlier in a speech, Menon outlined risks to the global economy, using the analogy of the fable “Goldilocks and the Three Bears” to warn of possible risks. While he was optimistic about the outlook, with even a slowdown in China in

2018 not sharp enough to wreck the gains, he said “three grumpy bears” threaten to derail the positive momentum: inflation, trade protectionism and financial instability. A prolonged period of benign inflation has given global policy makers breathing room to tighten monetary policy only gradually, but it also could mean a dangerous misread of unemployment conditions. Bloomberg News

How to save and invest in 2018

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ome time ago, I received a tempting offer from an organization to talk about losers. At first, it seemed that the message made a lot of sense. After a short ponder, I changed my mind. It was because the message was that savers are losers. The first of a series of questions that popped out of my mind were: 1. Are savers really losers? Yes. 2. Can savers become winners? Definitely. The answers may seem incongruent, but with the discussion below, we will see there is no contradiction. As we all know, saving money is the hardest thing to do because our minds are conditioned to crave for instant gratification. A change of mind-set and a lot of discipline is a must for the quest to win. Study how the ants behave and apply it to the way you save. If you keep your money in a piggy bank or in your safe, then “savers as losers” is true. This is because money does not grow over time. Also, inflation eats up the purchasing power of the money saved. It would be logical to spend the money now than to save it since it will not have a higher value in the future to compensate for rising costs. So, how can savers become winners then? By saving the right way.

Edmund Lao

personal finance The only way to do that is to shift from being savers to becoming investors. Money saved should be put to work 24/7 through proper “investment.” Remember you cannot invest what you do not have. So by saving first, you can accumulate enough funds to start your investment. There are various ways and vehicles to create, invest and grow money. Start by: Investing in yourself. Be healthy so that you can continuously earn income actively and passively. By being healthy, you avoid monstrous medical costs. Investing in time. Time is money so it pays to start investing early on. Make use of the power of leverage and power of compounding interest. Time can be your best friend or you worst enemy. Make time work for you. Investing in education. Be up to date in financial information by attending seminars, reading books and the morning

papers. Surf the Internet for information. There are blogs full of information to help upgrade what you know. Go and network with people who share your passion and beliefs. If you want to be rich, look out for the righteously rich and make them your mentor. Investing in assets. Look for assets that can make your money work for you. Assets can be in the form of real estate, paper assets, your talent or craft, precious metals, etc. Just make sure you do not mistake an asset for liability. Investing in business. Put up a business you know. Not all business succeeds but with hard work, dedication and sacrifice, success is just nearby. Follow the guiding principle of taipans like Henry Sy, Lucio Tan and John Gokongwei who made it big by starting from scratch. If you have no savings, would the investments mentioned above be possible? A lot can be avoided by saving. Without savings, people would turn to debt to solve their financial problems with another problem.

Edmund Lao is registered financial planner of RFP Philippines. To learn more about personal-financial planning, attend the 67th RFP program this January 2018. To inquire, e-mail info@rfp.ph or text <name><e-mail> <RFP> at 0917-9689774.

A4 Tuesday, January 16, 2018 • Editor: Lyn Resurreccion A6

The World BusinessMirror

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Pope Chile visit seeks to turn ‘Hawaii lacked safeguards in mistaken missile alert’ tide of scandal-bruised church H

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ANTIAGO, Chile—Pope Francis’s visit to Chile was always going to be fraught, but it has taken on an unprecedented degree of opposition with the firebombings of Catholic churches ahead of his Monday arrival and protests by Chileans fed up with priest sex abuse and cover-up. Francis is coming to a country where around 60 percent of Chileans declare themselves to be Roman Catholics, but where the church has lost the influence and moral authority it once enjoyed, thanks to sex scandals, secularization and an out-of-touch clerical caste. The pope will try to reverse the trend during his three-day visit, which gets under way in earnest on Tuesday with a series of protocol visits for church and state, and will be followed by a three-day trip to neighboring Peru. In Chile he plans sessions with migrants, members of Chile’s Mapuche indigenous group and victims of the 1973-1990 military dictatorship. It remains to be seen if he will meet with sex-abuse survivors. A meeting isn’t on the agenda, but such encounters never are. Chile’s church earned wide respect during the regime of Gen. Augusto Pinochet because it spoke out

against the military’s human-rights abuses, but it began a downward spiral in 2010, when victims of a charismatic, politically connected priest came forward with allegations that he had kissed and fondled them. Local church leaders had ignored the complaints against the Rev. Fernando Karadima for years, but they were forced to open an official investigation after the victims went public and Chilean prosecutors started investigating. The Vatican in 2011 sentenced Karadima to a lifetime of “penance and prayer” for his crimes, but the church leadership hasn’t won back Chileans’ trust for having covered up Karadima’s crimes for so long. “The Karadima case created a ferocious wound,” said Chile’s ambassador to the Holy See, Mariano Fernandez Amunategui. He and others inside the Vatican speak openly of a Chilean church “in crisis” as a result, a remarkable admission of the

toll the scandal has had on a church that wielded such political clout that it helped stave off laws legalizing divorce and abortion until recently. Chileans’ disenchantment has even affected their views of the pope himself. A recent survey by Latinobarometro, a respected regional polling firm, found that Chile had the lowest esteem for history’s first Latin American pope than 18 other Central and South American countries. Even among Chilean Catholics, only 42 percent approve of the job Francis is doing, compared to a regional average of 68 percent. “The serious error of the Catholic Church in the Karadima case wasn’t that the case existed, which the church couldn’t avoid because it did happen, but rather the way in which the church reacted,” Latinobarometro’s Marta Lagos said. “The Chilean church leaders hoped that the Vatican would give its verdict— they didn’t want to be the ones to accuse Karadima. On the contrary, there was a sort of cover-up and a hiding of the case.” Francis, who has insisted he has “zero tolerance” for abuse, reopened the wounds of the scandal when in 2015 he named one of Karadima’s proteges as bishop of the southern diocese of Osorno. Karadima’s victims said Bishop Juan Barros knew about the abuse but did nothing, a charge Barros denies. Last week The Associated Press reported that Francis had told Chile’s bishops that the Vatican was so concerned about the Karadima

fallout that it had planned to ask Barros and two other Karadimatrained bishops to resign and take a year sabbatical. But the plan fell through, and Francis went through with the appointment of Barros to Osorno, where the controversy has badly divided the diocese. Several concerned Catholics from Osorno have traveled to Santiago where they have staged small protests in recent days. Separately, vandals firebombed a handful of Santiago churches and warned that Francis would be next. Never before has such violence and opposition greeted Francis ahead of a foreign visit. In fact, the last time in memory any serious opposition greeted a pope came during uneventful protests over the costs for Pope Benedict XVI’s 2010 trip to Britain. One of the leaflets left at the scene of a torched church exhorted the cause of the Mapuche, the indigenous group that fought Spanish colonizers for three centuries and today has radical factions demanding the return of ancient lands, among other things. Francis will travel to Mapuche territory on Wednesday to celebrate a Mass “for the progress of peoples” and lunch with Mapuche representatives. The Vatican secretary of state, Cardinal Pietro Parolin, said recently that the indigenous issue was particularly close to Francis’s heart. “I think it won’t be an easy trip, but it will truly be a passionate one,” Parolin said. AP

Plane dangles off cliff after skidding off runway in Turkey

A Boeing 737-800 of Turkey’s Pegasus Airlines after skidding off the runway downhill toward the sea at the airport in Trabzon, Turkey, last Sunday. Trabzon Gov. Yucel Yavuz said all 162 passengers and crew onboard were evacuated and safe early last Sunday. The cause of the accident was not yet known. DHA-Depo Photos via AP

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STANBUL—A commercial airplane that skidded off a runway after landing in northern Turkey dangled precariously last Sunday off a muddy cliff with its nose only a few

feet from the Black Sea. Some of the 168 people onboard the Boeing 737-800 described it as a “miracle” that everyone was evacuated safely from

the plane, which went off a runway at Trabzon Airport. Images show the aircraft on its belly and perched at an acute angle just above the water. If it had slid

any further along the slope, the plane would have likely plunged into the sea in the Turkish province of Trabzon. Pegasus Airlines said no one was injured during the incident late last Saturday, despite the panic among the 162 passengers onboard Flight PC8622. The six-member crew, including two pilots, was also evacuated. Flights were suspended at Trabzon Airport for several hours before resuming again last Sunday. Passenger Yuksel Gordu told Turkey’s official Anadolu news agency that words weren’t enough to describe the fear on the aircraft. “It’s a miracle we escaped. We could have burned, exploded, flown into the sea,” Gordu said. “Thank God for this. I feel like I’m going crazy when I think about it.” Another passenger, Fatma Gordu, told private Dogan news agency that there was a loud sound after landing. “We swerved all of a sudden,” she said. “The front of the plane crashed and the back was in the air. Everyone panicked.” Trabzon Gov. Yucel Yavuz said investigators were trying to determine why the plane had left the runway. The prosecutor’s office launched an investigation. The flight originated in the Turkish capital, Ankara. Airport officials would not discuss the status of plane last Sunday and whether it had been towed off the slope. AP

Saudi wealth fund weighing bank loans for investments

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audi Arabia’s sovereign wealth fund, which aims to become a $2-trillion investment giant, is considering borrowing from banks for the first time as it seeks investments in the kingdom and abroad, according to people familiar with the matter. The Public Investment Fund (PIF) has held talks with local and international banks and could raise about $5 billion this year, some of the people said, asking not to be identified because the information is private. No

final decisions on timing or size have been made and the PIF may instead turn to government financing, the people said. A spokesman for the PIF declined to comment. The fund is willing to borrow as it seeks to diversify the kingdom’s oil-dependent economy and boost returns from investments, Managing Director Yasir Al-Rumayyan said in a Bloomberg Television interview last October. Saudi Arabia is stepping up efforts to turn the PIF into a global giant by

giving it ownership of state-owned oil company Saudi Aramco, which is preparing for what could be the world’s biggest initial public offering. The sovereign fund has announced some large international deals, including a commitment to put $20 billion into a US infrastructure fund managed by Blackstone Group Lp., and as much as $45 billion in a technology investment fund managed by SoftBank Group Corp., as well as a $3.5-billion stake in Uber Technologies Inc.

The PIF is also behind several large real-estate developments in Saudi Arabia, including a new city called Neom that will be built on the Red Sea Coast, an entertainment city on the edge of Riyadh and another tourism project on the Red Sea. It has also finalized an accord to take over the management of Riyadh’s $10-billion unfinished financial hub as the government attempts to revive the project, people familiar with the matter said last year. Bloomberg News

awa i i ’ s e m e r g e n c y authorities lacked reasonable safeguards to prevent the kind of false alert that panicked residents last Saturday with a warning of an imminent ballistic missile attack, the head of the Federal Communications Commission (FCC) said. FCC Chairman Ajit Pai said in a statement last Sunday that an investigation into the incident is well under way with federal and state officials. “It appears that the government of Hawaii did not have reasonable safeguards or process controls in place to prevent the transmission of a false alert,” Pai said. In determining steps to prevent a rerun “we also must ensure that corrections are issued immediately in the event that a false alert does go out.” President Donald J. Trump told re por ters l a st Su nd ay evening that the false alarm “was a state thing, but we are now going to get involved with them.” He didn’t elaborate on what steps the federal government would take or refer to the existing FCC investigation. “We hope it won’t happen again,” Trump added. “Part of it is people are on edge, but maybe eventually we will solve the problem so they won’t have to be so on edge.” Hawaiian residents, already anxious about months of nuclear saber-rattling between Trump and North Korea’s Kim Jong Un, were sent into a panic last Saturday by the false missile alert. The message was sent when an employee at the Hawaii Emergency Management Agency (Hema) ushed the wrong button,” according to Gov. David Ige. Ige apologized last Saturday for the “pain and confusion” that resulted and said “everything” is being done to prevent a repeat. He elaborated last Sunday on steps that are being taken, and added in a series of Twitter posts that the US “must also do what we can to demand peace and a deescalation of tensions with North Korea.”

Rude awakening

Residents of the island state, as well as thousands of tourists, woke around 8:07 a.m. local time last Saturday to alerts lighting up their mobile phones about—in all capital letters—a “ballistic missile threat inbound to Hawaii” and a warning that “this is not a drill.” Television programming was interrupted with flashing red text: “A missile may impact on land or sea within minutes. This is not a drill. If you are indoors, stay indoors. If you are outdoors, seek immediate shelter in a building.” Residents were told that if indoors they should stay well away from windows. If driving, they should pull over and “seek shelter in a building or lay on the floor.” Aut hor it ies reversed t he warning with a second mobile alert sent 38 minutes later confirming “no missile threat or danger” and “false alarm.” That lengthy delay, and the processes behind it, have been criticized by Pai and others.

Trump briefed

Trump was briefed last Saturday on what the White House described in a statement as “the state of Hawaii’s emergency management exercise.” Department of Homeland Secur it y Secretar y K irst jen Nielsen said citizens shouldn’t lose trust in government warn-

ing systems. “We test them every day,” she said on Fox News Sunday. Hema Administrator Vern Miyagi said last Saturday that a two-person redundancy system is now in place to prevent this type of event—which he said was basically an errant mouse-click—from occurring again. Hawaii has been on high alert for months, given claims by North Korea that its newest intercontinental ballistic missile could fly 13,000 kilometers (8,000 miles). If true, that would put even the mainland US within range, and Honolulu is only about 7,400 kilometers from Pyongyang.

‘Much bigger’ button

The isolated nation conducted its sixth and most powerful nuclear test last September 3, and launched more than a dozen missiles in the past year. Trump and Kim have traded barbs for months. The president told North Korea’s Kim on Twitter on January 2 that he has a “much bigger & more powerful” nuclear button. Nikki Haley, the US ambassador to the United Nations, has warned that North Korea’s regime “will be utterly destroyed” in a war with the US. “At a time of heightened tensions, we need to make sure all information released to the community is accurate,” Sen. Mazie Hirono, a Democrat, said last Saturday on Twitter. “We need to get to the bottom of what happened and make sure it never happens again.” Rep. Tulsi Gabbard of Hawaii said last Sunday that “you can only imagine the panic, the terror, the chaos and confusion that ensued” across the state. “Taking this threat seriously, they’ve got minutes to say good-bye to their loved ones, to find their loved ones, to try to find some kind of shelter somewhere, which there are no designated nuclear-bomb shelters in Hawaii,” the Democrat and a member of the House Armed Ser vices Committee said on ABC’s “This Week.”

13-minute warning

Hema’s Miyagi said last Saturday that if there were a real missile headed to Hawaii from North Korea, “there will be 12 to 13 minutes” of warning. Given those risks, Gabbard said Trump “absolutely and immediately” should be talking to Kim. “I’ve been calling for President Trump to sit across the table from Kim Jong Un without preconditions, work out the differences, figure out a way to build this pathway tow a rd s denuc lea r i z at ion,” she said. Residents and tourists last Saturday reported pandemonium when the phone alert hit. One widely shared video showed children being lowered into a storm drain for safety; others showed people running toward buildings at the University of Hawaii. Suzanne Mulder, a Bloomberg employee from Princeton, New Jersey, is vacationing in Honolulu with her family. Her 10 -year-old son noticed the mobile alert. “We grabbed all the food and water we had, the kids grabbed their stuffed animals and we headed to the lobby,” Mulder said. “Kids crying everywhere, no one knew what was happening. We made our way to an internal bathroom and huddled there with some other people. It was probably 30 minutes between the alert and when we knew it was a false alarm.” Bloomberg News

The World BusinessMirror

www.businessmirror.com.ph

Official: Japan’s clean-energy goals lag world

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Tuesday, January 16, 2018 A7

If it wants to lead in globalization

IMF: China must fix shortcomings

apan’s plans to develop its renewableenergy (RE) industry are lagging much of the world, as the nation has “prioritized keeping the status quo for fear of change,” Foreign Minister Taro Kono said. Japan wants RE to account for 22 percent to 24 percent of its overall energy mix by 2030, while the global average today is already 24 percent, Kono said last Sunday at an International Renewable Energy Agency meeting in Abu Dhabi. “As Japanese foreign minister, I consider these circumstances lamentable.” Japan held its first-ever solar-power auction last November, with the aim of reducing costs in one of the most expensive countries to generate electricity from the sun. But the results showed “underwhelming demand,” according to Bloomberg New Energy Finance. Government incentives have been decreasing since their introduction in 2012 following the Fukushima earthquake and nuclear disaster. The support, known as feedin-tariff, cost the Japanese public up to $24 billion last year, and costs are expected to increase, Kono said. “We need bold investments and institutional reforms to enhance the transmission network and electric power exchange between regional utilities for the larger deployment of renewables,” he said. Kono’s comments came as the Ministry of Economy, Trade and Industry, which is in charge of setting Japan’s energy policy, is reviewing its overall policies. “The Japanese government’s basic stance to introduce as much clean energy as possible remains unchanged and we will move forward without being satisfied with status quo,” Takuya Yamazaki, director of the renewable energy division at the industry ministry, said by phone on Monday. Yamazaki said the cost of renewables in Japan is still twice as expensive as Europe and the United States. The target for clean energy to account for as much as 24 percent by 2030 is “pretty ambitious as we need to almost double the share of non-hydro renewables,” he added. Kono said there is some progress in Japan. The country is leading research and development for a new type of “printable” photovoltaic solar cell that may drive further cost reductions in the PV market, he said. A Japanese university has also developed an “all-solid-state battery” for the auto industry, and for the 2020 Tokyo Olympics, Japan plans use hydrogen to fuel passenger vehicles and buses for the event. Bloomberg News

We believe that effective and credible leadership in support of globalization also requires a willingness to recognize and address one’s own shortcomings.” —Lipton

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A worker works on an assembly line at a Beijing Hyundai Motor auto plant in Cangzhou in northern China’s Hebei province. Chinatopix via AP

hina should be willing to loosen trade and investment restrictions if it seeks to play a leading role in globalization, International Monetary Fund (IMF) First Deputy Managing Director David Lipton said. Speaking at the Asian Financial Forum in Hong Kong on Monday, Lipton acknowledged that China’s leadership has been a “voice of reason” in terms of preserving the current system of rules-based international trade, but the nation also had more to do. “We believe that effective and credible leadership in support of globalization also requires a willingness to recognize and address one’s own shortcomings,” Lipton said. That means “protecting intellectual-property rights and reducing the distortions of industrial policy, overcapacity and policies that favor state enterprises.” Lipton spoke just days after a United

States trade tribunal said in a preliminary ruling that imports of aluminum sheet from China are hurting American industry, setting the stage for the Trump administration to impose tariffs. Economists worry that heightened US-China trade tension remains one of the biggest threats facing global growth this year. President Donald J. Trump will travel to the World Economic Forum in Davos next week where he is expected to continue his trenchant criticism of globalization and multilateralism and to threaten new trade barriers to shrink America’s trade deficit with the world.

The aluminum case is one of several the US has launched to curb what Trump sees as China’s unfair trade practices. The White House is also weighing whether to slap tariffs on foreign shipments of the metal under the seldom-used section 232 of the Trade Expansion Act of 1962, which considers whether importation has implications for national security. China should also accelerate its efforts to bring its financial sector to a more stable footing, according to Lipton. “China has a window of opportunity to accelerate economic reforms that can secure sustainable and inclusive growth,” he said. “China has made considerable progress in this area, as our recent assessment of its financial sector shows. But it is essential to sustain this effort to ensure that financial instability does not undermine the country’s extraordinary economic and social progress.” China is on track to build up a debt-toGDP ratio of more than 320 percent by 2022, a level that would rival Japan’s, Bloomberg economists estimate. Lipton said during a separate interview

on Monday on Bloomberg Television that policy-makers are now “pointed in the right direction” on debt. “The Chinese have to bring credit growth down to grow less rapidly than the economy, or else credit will continue to be too big relative to the economy,” he said. Lipton sounded optimism about the current state of the global economy, in the context of next week’s publication of fresh IMF economic forecasts. “The signs point to faster growth across all regions,” he said in his prepared remarks. “We must also recognize that the global economy is in a late stage of the long and gradual recovery from the global financial crisis. With economic slack in advanced economies diminishing, it is not clear how long the good news will continue.” Lipton’s warning on the world economy echoes a view increasingly shared by investors and policy-makers that a growing list of worries from geopolitical tension to frothy markets could upend the world economy’s best performance in years. The IMF No. 2 highlighted a risk of unexpected monetary policy developments or exchange-rate fluctuations that could swing market sentiment and trigger a sudden reversal of capital flows. He also pointed to weak wage and productivity growth as among the concerns. “Our meaning is clear: Now is the time to address vulnerabilities and structural issues that could impede sustained growth, and to take steps to enable stronger growth once cyclical recovery is no longer driving the economy,” Lipton said in his speech. Bloomberg News

UK gets hope on financial services as EU members hone Brexit demands

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he United Kingdom shouldn’t give up hope of getting financial services included in a final trade agreement with the European Union (EU), with a Bloomberg survey of the EU’s 27 remaining governments revealing divergences of opinion. While nearly all of the EU’s capitals consider maintaining unity of the bloc their main priority, a few take a softer line on financial services than the one expressed by Michel Barnier, the EU’s chief Brexit negotiator. Barnier has said there can be no easy access to the bloc’s single market for United Kingdom financial companies because this has never been included in previous (European Union (EU) trade deals and would be tantamount to allowing the UK to “cherry pick” the best aspects of EU membership. “While I stick to the principle that there can be no cherry-picking, I still think that we should refrain from an orthodox or binary thinking,” Luxembourg Prime Minister Xavier Bettel told Bloomberg. “My top priority would be to limit the negative impact for both sides. Pragmatism will be needed in these negotiations on both sides.” Bettel’s comments are the softest of any EU leader yet. Financial services look set to be one of the most divisive areas in the negotiations, with the UK demanding a generous deal while the EU refuses to shift from its insistence that Britain’s red lines—such as ending the free movement of workers from the EU and resistance to European Court of Justice oversight—make it impossible.

Both sides

IN the past few days, however, German officials have raised the prospect of a more flexible approach, while Spanish and Dutch finance ministers are said to have agreed to support a Brexit deal that keeps Britain as close to the EU as possible. Still, with the UK having to get an agreement with the European Union as a whole, it’s crucial for both sides that the 27 nations have a unified position. The financial-services industry “is a legally and technically complex sector and exactly how it can be covered in a new relationship is difficult to say,” Sweden’s EU Minister Ann Linde said. “Given the stated intention of the UK government to leave the internal market, we wouldn’t expect a status quo situation” after Brexit, she added. Financial-services companies aren’t waiting around to see how the negotiations pan out and are pushing ahead with contingency plans. They want to have offices in the EU ready for when Britain leaves the bloc in March 2019. Much will depend on the future-relationship negotiations, which are scheduled to start in March and end in October. Work on the more detailed trade agreement is likely to continue once the United Kingdom has left the EU and throughout a transition period until the end of 2020, although some on the UK side want the whole deal to be concluded earlier. Negotiators will explore how much the UK will diverge from EU rules and standards in every sector. “From my point of view, and when I listen to our industry and business-

people, most would be happy to stick as close as possible to the current status quo,” Bettel said. “However, this will not be possible in all domains.”

Future relations

EU diplomats this month will begin preparing the groundwork for the contents of the agreement on future relations. A meeting on Tuesday to discuss cooperation in the fisheries and aviation industries follows talks last Thursday on how the overall agreement will be enforced. “The deeper the access of the UK to the single market, the closer the UK will get to the arbitration of the European Court of Justice,” Bettel said. “The dispute-settlement mechanisms will be key to an agreement in order to ensure a level playing field.” With much still to negotiate and some positions on both sides still unclear, here is a sampling of views from across the 27 remaining EU member states: GERMANY: Britain must accept the rights and duties of the internal market if it wants to benefit from it. This means accepting the jurisdiction of the European Court of Justice. A Canadian-style free-trade agreement without the UK making budget commitments cannot be accompanied with a separate agreement on financial services. SPAIN: Spain wants the closest possible economic and political relationship with the UK, but the priority is to make sure that Britain isn’t in a better situation outside the EU than it was inside and that it can’t have benefits if it doesn’t participate in

the bloc’s underlying principles such as the free movement of people. UK companies should have easy access to the EU financial-services market only if Britain accepts a model like Norway’s. ITALY: “It’s very difficult to see UK financial services being allowed to operate in the EU with the same access if the country leaves the single market,” said Sandro Gozi, Italy’s junior minister for European affairs. Regarding the future EU-UK trade agreement, “all sectors are important for us; we’re interested in exporting our products to the UK, including in the mechanical, mechatronics and agri-food sectors.” DENMARK: Denmark’s priority is “to have a good relationship and a free flow of products, primarily on agriculture and food,” Finance Minister Kristian Jensen said. “Let’s not kid ourselves. The first phase was difficult, but the next phase will be even more difficult and more technical and more troublesome to figure out.” POLAND: Poland wants more than a trade and economic relationship, but the final deal will depend on Britain’s position on regulatory cooperation and ECJ jurisdiction. “We should secure a unique formula of cooperation in areas including security, defense and foreign policy,” Deputy Foreign Minister for European Affairs Konrad Szymanski said. Poland’s trade priorities are electric machinery, agriculture products, furniture, textiles and chemicals, he added. SLOVAKIA: The automotive and electronics industries are the

most important for Slovakia, while it’s vital to reach “an end-agreement with the UK that would be fair to both sides,” according to Peter Susko, spokesman for the Foreign Ministry in Bratislava. “We want the UK to become the EU’s closest business partner, but also a partner in security, defense and foreign-policy cooperation,” he said. ROMANIA: Security and foreign relations are also priorities in Bucharest. Romania will push for the deal to include a strong defense element, EU Affairs Minister Victor Negrescu said. AUSTRIA: Failure to get a deal would be bad for both sides, Chancellor Sebastian Kurz has said. The UK must stay close on political and military issues. ESTONIA: Like most governments, Estonia puts the unity of the 27 remaining countries above all else. It echoes Barnier’s insistence that the UK can’t have the best of EU membership without signing up to its obligations, and trade cannot be “frictionless.” BULGARIA: The rights of Bulgarian citizens are crucial, as is settling Britain’s financial contributions. Any deal that goes further than a simple free-trade agreement must not undermine the EU’s principles of free movement and ECJ jurisdiction. LITHUANIA: Britain’s financial institutions won’t be able to operate in the EU market under the same conditions as they currently enjoy, Lithuania says. Nevertheless, the future relationship should include as wide a range of cooperation as pos-

sible with as little change as possible. SWEDEN: Sweden is interested in achieving the most positive future relationship possible between the EU and Britain. “We need to preserve as open and well-functioning trade in goods and services with the UK as is possible after Brexit,” EU Minister Ann Linde said. On the financialservices industry, “given the stated intention of the UK government to leave the internal market, we wouldn’t expect a status quo situation after the end of a transitional arrangement,” she said. PORTUGAL: Portugal wants “a close future relationship, not just in commercial areas,” but also in areas, such as tourism, customs and tariff quotas, the mobility of workers, security and defense, according to the Foreign Ministry in Lisbon. GREECE: The most important areas for Greece in terms of a future trade deal are the maritime and agricultural sectors. If the UK doesn’t opt for the Norwegian model, it is clear that access to single market is impossible, the Foreign Ministry in Athens says. CYPRUS: Cyprus’s top priority is to ensure an EU-UK relationship that is as close as possible in the areas of trade, finance, services, banking, security and defense. It is important to get clarifications from the British government on its intentions in these areas, according to government spokesman Nikos Christodoulides. Trade sectors especially important to Cyprus include banking, financial services and aviation. Bloomberg News

The Regions

Tuesday, January 16, 2018 • Editor: Efleda P. Campos

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BusinessMirror

www.businessmirror.com.ph

Aklan province has ₧2B to spend this year By Jun N. Aguirre

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Correspondent

ALIBO, Aklan—The Aklan provincial government has P2,011,016,309 to spend for this fiscal year. Vice Gov. Reynaldo Quimpo said this on Monday after the Sanguniang Panlalawigan of Aklan unanimously approved the budget for this year. “These will cover the various expenditures for the regular fund amounting to P1,151,016,309. The operation of the Economic Enterprise Development Department ( EEDD) was P841,800,000,”

Quimpo said. The Aklan provincial government—among the richest provinces in the country—has enough money to spend for the year because of its booming tourism industry. The EEDD covers funds for the health packages of the province’s indigent residents. Meanwhi le, the Phi lippine

Statistics Authority (PSA) said the province of Aklan has the fastestgrowing population in Western Visayas from year 2000 to 2015. This despite the province’s having the second lowest population in the region. The PSA report said Aklan’s population has grown by an average annual rate of 1.35 percent from 2010 to 2015, higher than Antique’s 1.22 percent, Capiz’s 1.08 percent, Iloilo’s 1.34 percent, Iloilo City’s 1.02 percent and Guimaras’s 1.33 percent. As of 2015 Aklan has a total population 575,000; Antique, 582,000; Capiz, 761,000; Iloilo, 1.936 million; Iloilo City, 448,000; and Guimaras, 175,000. Even when compared with Negros Occidental, excluding Bacolod City, Aklan comparatively

still has a higher population, growth rate. Negros Occidental has an annual average population-growth rate from 2010 to 2015 of 1.17 percent, 0.98 percent from 2000 to 2015 and 1.27 percent from 2000 to 2010. Reckoned from 2000 to 2010, A klan has an average annual population-growth rate of 1.73 percent; Antique, 1.45 percent; Capiz, 0.96 percent; Iloilo, 1.48 percent; Iloilo City, 1.49 percent; and Guimaras, 1.42 percent. From 2000 to 2015, Aklan has an average annual populationgrowth rate of 1.6 percent; Antique, 1.37 percent; Capiz, 1 percent; Iloilo, 1.43 percent; Iloilo City, 1.33 percent; and Guimaras, 1.39 percent. As to the most densely populated towns and cities in Region

6, Kalibo, Aklan’s capital town, is the third-most populated town, with 80,605 population next to Roxas City, Capiz and Oton, Iloilo. Being a highly urbanized city, Iloilo City is not included in the comparison. As to barangays regionwide, three Aklan barangays are included in the top 10 most populated barangays, with Barangay Manocmanoc in Boracay, Malay, in No. 2 with 14,810; Barangay Andagao in Kalibo in No. 3 with 12,703; and barangay New Buswang in No. 10 with 10,431. Three municipalities in Aklan are included in the top 10 least populated towns in the region with Lezo in No. 3 with only 15,224; Madalag in No. 7 with 18,389; and Buruanga in No. 8 with 19,003.

Pangasinan solon seeks to increase pensions for veterans of World War II By Orly Guirao Correspondent

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coconut enterprise

A coconut vendor chops off parts of the husk of a coconut purchased by a customer at the public market in Bayambang, Pangasinan, to make it lighter and easier to carry. LAILA AUSTRIA

With tourism now linked to good governance, ARMM expects more tourists in 2018 By Manuel T. Cayon |

@awimailbox Mindanao Bureau Chief

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AVAO CITY—The Autonomous Region in Muslim Mindanao (ARMM) hopes to attract more visitors into this region despite the five-month war to dislodge terrorist fighters from one of its erstwhile banner tourism areas in Lanao del Sur. The Department of Tourism in the ARMM (DOT-ARMM) said the recent move to make tourism efforts a criterion in the government’s Seal of Good Governance may remove the biases and fear against the region. “We have high hopes, since the tourism component is added to the core areas of Department of the Interior and Local Government’s Seal of Good Local Governance, and many local government units are now giving priority to tourism,” DOT-ARMM Secretary Ayesha Vanessa Hajar Dilangalen said. She added it has also sent out invitations to foreign groups to witness the seldom-demonstrated awe and grandeur of the onceflourishing tribal and Moro culture of the past. Dilangalen said domestic and foreign visitors have indicated participation in such activities as the Inaul Festival in Maguindanao in February; Kariyala Festival in Wao, Lanao del Sur, also in February; and Bud Bongao Day in Tawi-Tawi in March. T he reg ion’s fabr ics were

showcased last year, with the Sarimanok used at the Miss Universe concept in the first quarter of 2017. During last year’s State of the Nation Address of President Duterte, different indigenous textiles were used by the attendees as part of their attire. The Inaul Festival would include an international airsoft competition where foreign groups have been invited, Dilangalen said. She added the Maguindanao provincial government recently opened the Buluan Boulevard to serve as the venue to feature “an exquisite display of man-made lights in addition to a river cruise, as well as activities under the One Mindanao tourism campaign.” Up to last year before the terrorists’ occupation of Marawi City, Lanao del Sur was the top tourist destination, with a previous-year record in 2016 of close to 70,000 visitor arrivals. Marawi City, officially called the Islamic City of Marawi, is the seat of the province. “This number produced roughly P1.2 billion in tourism receipts. The 2017 data for Lanao del Sur, however, are expected to slide due to the Marawi crisis that started in May,” the DOT-ARMM said. Last year Lanao del Sur’s visitors were limited to government troops, members of the media and representatives from civil-society groups. Visitors to the province spent their cash in nearby Lanao del Norte, not in Lanao del Sur

where economic activities were almost stagnant. “The effect of the Marawi siege in terms of tourist arrivals is evident,” Dilangalen said. However, the tourism department said it would rely on the performance of the sector in the four other provinces in the region “especially in Maguindanao, where it could compensate Lanao del Sur’s decline in tourism receipts.” In 2017 Mount Minandar in Maguindanao and Bud Bongao in Tawi-Tawi were introduced as new tourist destinations in the region. “Mount Maluso in Basilan was also quickly catching up in terms of tourist arrivals,” Dilangalen said. She added her office remained linked to the national government and with other partners. An event showcasing tourist attractions in the region was set to be held last April in the walled city of Intramuros in Manila where ARMM products would also be exhibited. Also scheduled this year, Dilangalen said, is the Tourism Crisis Symposium, “which will help ARMM communities learn about proper response in times of need and to capacitate them as well. Among DOT-ARMM’s plans is to reinforce efforts in community-based tourism.” “We have to strengthen the preparation of our communities in order to have sustainable tourism. Through this,wegettoworkwiththecommunities in giving our tourists an exquisite experience,” she said.

INGAYEN, Pangasinan— Pensions for veterans of World War II, currently at P5,000 a month, will be increased to P20,000 with the approval of a bill to be filed shortly in the House of Representatives during the 16th Congress. The legislative measure to be introduced by Rep. Leopoldo N. Bataoil of the Second District of Pangasinan, who chairs the House Committee on Veterans Affairs and Welfare, also seeks to provide free healthcare services to guerilla soldiers who fought against the Japanese invaders from 1942 to 1945. Bataoil bared the pensionhike measure during the recent celebration of the 73rd Lingayen Gulf Landing and 11th Pangasinan Veterans Day when he was guest of honor and speaker. Some 200 veterans on wheelchairs were among the crowd of 2,000 veterans who attended the event.

He said, once approved into law, the bill will compensate for the various needs of the elderly heroes now in their sunset years. Bataoil also announced a parallel bill he will file to seek the construction of a Veterans Medical Center in the provinces to spare the veterans from the burden of traveling to Metro Manila to be treated at the Veterans Memorial Hospital in Quezon City. Health-care benefits under the bill will also be extended to dependents of veterans. The Pangasinan Veterans Rep. Amado T. Espino Jr. of the Fifth District of Pangasinan to coincide with the Lingayen Gulf Landings celebration, began with a wreath-laying ceremony and a 21-gun salute honoring the veterans. Last year Gov. Amado Espino III offered livelihood and educational assistance to the veterans’ families, in addition to the free hospitalization in provincial government hospitals.

China to help build P350-M mega rehab in Sarangani

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AVAO CITY—Chinese and Philippine officials last Friday attended the groundbreaking ceremony of one of two mega-sized rehabilitation centers in Mindanao in Sarangani province. Jin Yuan, the economic and commercial counselor of the Embassy of China, led the team to officially start the construction of the Dangerous Drug Abuse Treatment and Rehabilitation Center (DDATRC). The center has a floor area of 6,707.56 square meters, including admission and administration building and clinic, visitors’ pavilion, transition villa, staff house, motorpool building, male and female dormitory building and multipurpose covered court. The facility sprawls on a hill in Barangay Kawas overlooking the Sarangani Bay and General Santos City, the province’s information office said. China has funded this facility with P350 million. Yuan said Sarangani is one of the recipients of the “China-Aid Philippines,” an offshoot of President Duterte’s state visit to China in October 2016. The other province is Agusan del Sur, he said. Both provinces would each host a 150-bed capacity regional rehabilitation center, “one among the consensus reached during the talks between President Duterte and Chinese President Xi Jinping in Beijing,” the information office said. Yuan said the agreement between the two governments would allow 21 months to finish the facility. The contractor is China State Construction Engineering Corp. Ltd., which Yuan said was rated among the “World’s Most Admired Companies” by Fortune magazine. He added the company is also the largest construction, buildingwork contractor and real-estate conglomerate in China. Yuan, Gov. Steve Chiongbian Solon and other officials showed the now-symbolic clenched fist of Duterte during the groundbreaking ceremony as he also acknowledged that “China is the Philippines’s largest trading partner.” Manuel T. Cayon

DavNor farmer wins DA award for high-yield rice harvest

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EW COR ELL A , Davao del Norte—When he harvested 10.2 metric tons (MT) per hectare average yield in his 2.3 hectares here in October last year, William Ticar Dedoroy knew another episode of highyielding varieties has come anew, since he started farming during the Masagana 99 time of the 1970s. He remembers the IR36 of that time, when the country attained self-sufficiency for a brief period, even exporting rice for the first time. That variety yielded 140 cavans, or 140 bags, equivalent to 7 MT per hectare, a phenomenal yield, when the other common varieties many still in use today would yield 100 cavans a hectare, or 5 MT. After that brief period of high yield, and until now, the country’s rice farms went back to the low-yield regime averaging on 6 to 7 MT a hectare. Dedoroy was impressed by his first harvest of the US-88 hybrid variety in the last cropping season ending in October. “It is soft, and it smells good,” Dedoroy said, comparing it to the other varieties that he described as good tasting. Besides, the US-88 variety has long grains, which he believes should persuade traders and commercial sellers to buy them at a higher farm-gate price than what they used to buy the other hybrid rice grains. “They are really attractive because of the long grain and the crystal-like appearance.” “This hybrid rice is really sweet tasting, comparable to the tonner and the V160,” he said. The trader he used to sell his pa-

AWARD-WINNING Davao del Norte farmer William Ticar Dedoroy shows off his US-88 highyield rice variety. lay to bought his first harvest of Agriculture announced a package of supthe US-88 at P21 a kilo, close to P2 port to farmers if they shifted to hybrid. higher than the buying price of other Gov. Anthony del Rosario said the hybrid rice harvests. province would provide free the seeds “The farmers here would rather use and the farm input and the Department the inbred than the hybrid. He said the of Agriculture (DA) would provide the other hybrid varieties only have the free technical assistance through the reputation of high yield, but the taste rice crop manager (RCM), who would has not been attractive to ordinary Filimentor farmers on soil preparation, pino consumers. planting and onto the harvest of the crop. Since 1975 when he started farmThe RCM system would do the anaing here, Dedoroy has been using lyzing of the soil, the seed-bed prepainbred varieties and, in some occaration, transplanting, application of sions, would also plant the rice varietfertilizers and the harvesting practice. ies being hyped on certain occasions The package of support to farmas having high yield. ers came after the administration of Although an inbred-variety user for President Duterte embarked on a fresh a long time, he said he has also longed attempt at rice self-sufficiency, adaptto shift to the hybrid variety of the ing a strategy of providing full support reputable kind. to farmers. The DA also chose the hyLast year turned providential for brid-rice varieties to offset the lack of him. The provincial government and additional lands to be opened for rice the regional office of the Department of production.

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Tuesday, January 16, 2018 A9

The mysterious Twitter user drawing a swarm of powerful Japanese traders

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By Shoko Oda | Bloomberg

N a day when billions in profits and losses would be determined by split-second trades, the salaried professionals of Japan’s financial markets were glued to their news terminals. Another group was staring at the feed of an anonymous Twitter account.

It was shortly after noon on January 29, 2016, and people with money at stake were waiting for the Bank of Japan (BOJ) to announce its monetary policy. While the decision’s date is set in advance, nobody knows its timing. “It’s a negative interest rate bazooka!” the Twitter user who goes by the handle Okasanman wrote, attaching a screenshot of an article just published on a local news website, showing the BOJ was discussing introducing minus rates as its latest shock-and-awe stimulus weapon. As stock futures jumped and the yen tumbled, some traders expressed gratitude for the warning. About 15 minutes later, the bank said it was taking borrowing costs below zero. “This post saved my life,” one user gushed in reply. “The profits I made are thanks to it.”

‘Locust Lord’

Okasanman has been dubbed a “Locust Lord” because the account attracts a swarm of traders who seek to profit from the prolific tweets on everything from global economic data releases to the latest twists in developing political situations. While the account only points to already available information, the speed at which it does—and the breadth of

its coverage—has built a following that’s larger than that of the BOJ. “How is it so fast?” asked Hajime Sakai, chief fund manager at Mito Securities Co. in Tokyo, where he helps oversee $594 million. “I’m very curious to know.” Okasanman’s identity and motivation for spending hours every day providing information to more than 146,000 followers—as of the time of publication—for free are a mystery. The person or people behind the handle didn’t respond to multiple requests for comment. But the account is another example of how microbloggers—from anonymous short sellers to market commentators, such as Zerohedge—are becoming a feature of how information is transmitted through modern financial markets.

Vast coverage

The Okasanman account scavenges through a huge range of sources, at all hours, to find potentially marketmoving news. That includes newspapers and magazines, financial data providers, disclosures to the stock exchange and tweets on accidents or fires. Many appear to be automated, though manually written commentary shows a love of groan-worthy puns and occasionally crude content.

The Twitter account of the anonymous Twitter user who goes by the handle Okasanman is seen on an Apple Inc. iPhone and iPad in an arranged photograph taken in Hong Kong, China, on January 7. When the salaried pros of Japans financial markets were glued to their news terminal, another group was watching the locust lord. Bloomberg

Last August the account was among the first to tweet an exclusive report by a local magazine, not normally known for its market-moving scoops, that pharmaceuticals giant AstraZeneca Plc. had made an unsuccessful takeover bid for Japanese drug company Daiichi Sankyo Co.— and that a purchase was still possible. Daiichi Sankyo shares surged the most in nine years. “His tweets are absolutely crucial,” said Naoki Murakami, a prominent day trader with more than 38,000 followers himself. On any given day, the tweeting is relentless. Last December 20 the account sent 111 tweets, starting 12:44 a.m. and ending at 11:46 p.m. Cryptocurrencies: 33 tweets. The US

Profiting from the next market crash won’t be easy for investors

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By Satyajit Das | Bloomberg View

urrent debates about stock valuations resemble the arcane meditations of medieval monks. But the real drivers are more mundane. Traders, weaned on tales of financial derringdo like “The Big Short,” want to be the ones who profit from the next crash. The problem is that it may be easier to predict the crash than to profit from it. To make money from a decline in prices, you can sell short, buy put options or switch from risky to defensive assets. Success requires an accurate estimation of the timing and amplitude of any shift in valuations. You need to forecast the asset classes and markets that will be affected, as well as vectors of contagion. You must anticipate whether the adjustment is in prices or in second-order elements, such as volatility or correlation. To make large returns, the market move must be amplified by leverage. George Soros’s Quantum Fund made $1 billion in 1992 by shorting the British pound, using leveraged trading to augment the rate of return. In 2008 the funds that made stellar returns from subprime losses used derivatives, primarily credit-default swaps. The payoff relative to the premium or cost of the derivatives enhanced the gains in percentage terms. Multiple layers of leverage within the securities themselves further increased returns. But leverage makes it harder to maintain a position designed to take advantage of anticipated market changes. An inability to meet margin calls or exposure could result in premature closeout. Counterparties may be unable to meet their obligations. Many of the traders who anticipated the 2008 crisis early weren’t able to benefit because they were forced to close out positions prematurely due to margin calls. Others benefited only because policy makers bailed out too-big-to-fail counterparties. Even if the forecast is correct, moreover, the outcome depends on the starting position. If a position is taken against existing risky assets, it can only preserve the value of the portfolio if the hedges work as intended. Leaving aside the pleasure of outperform-

ing competitors, there’s no accretion to value, which must also be adjusted for the costs of these hedges. Selling risky assets and investing defensively comes with challenges, too. It entails purchasing “safe” assets, non-market correlated hedge funds promising protection against a downturn, or valuebased investments with a large margin of safety. In 2008 investors gained from holdings of government bonds, but primarily from appreciation due to central bank buying. In a future crisis, government bonds may not be a risk-free haven if the credit quality of sovereigns deteriorates. There is also a risk of loss from interest-rate and credit-margin changes where the security must be sold before final maturity. Some funds avoided large losses in 2008 by lowering net exposure via hedges, but few provided large returns. Berkshire Hathaway Inc., a talismanic value investor, lost about 50 percent of its value between December 2007 and early-2009. The long-term success of moving to safe assets relies on any downturn being temporary. It assumes that prices will ultimately revert to true values. This allows purchases of distressed assets, exploitation of mispriced individual assets, or providing liquidity or capital on advantageous terms during periods of market disruption. Berkshire eventually benefited from the crisis by using its ample liquidity to purchase assets at attractive valuations and provide capital to vulnerable entities (including Goldman Sachs Group Inc.), while selling long-dated equity options when market values were low. The difficulty of capturing gains from a crash highlights a paradox. No money is ever really made in financial markets. As each gain must be offset by a loss, money is merely transferred between participants or, as Michael Douglas’s character in Wall Street suggests, from “one perception to another.” The only true profits come from the cash earnings of operating enterprises rather than increases or decreases in the value of financial claims on these profits. But real businesses are less exciting than financial trading—and therefore misunderstood in times that value high drama over real returns.

Senate vote on the tax bill: three. Other topics included a disgraced sumo wrestler, a report on North Korean ICBM tests and the latest Pokémon movie. Okasanman “must have researched what sources have been fastest over the years” for given topics, said Katsuhiro Yoneshige, founder and CEO of JX Press Corp., which develops apps that source breaking news from social media posts. “It’s probably not something you can build in a day.” Little is known about Okasanman. There’s the profile picture: a cartoon man in a yellow safety helmet. There’s the profile description. Work: IT-related, investor, day trader. Interests: music

(Japanese singers and bands), movies (cult and science fiction), psychology and languages (English and Finnish). “Live market commentary from 12:30 p.m. to 3:10 p.m. every weekday,” it says. “A pretext for a gag-fest.” And that’s it, apart from the occasional hint among the tweets. Okasanman seems to live in an unfashionable residential area just outside Tokyo and appears to own a cat. But is it a man or woman? And is it run by a single person, or multiple Okasanmen?

Dad jokes

“I think he might be a bit older,” says Yoneshige, who at 29 says some of Okasanman’s cultural references

are from before his time. The language used, as well as a taste for dad jokes and an obsession with Ivanka Trump, would seem to point to a middle-aged man, but Bloomberg News was unable to speak with anyone who could confirm who Okasanman is. The first autocomplete suggestion in a Google search for Okasanman is “identity.” The only interaction Bloomberg News was able to secure with him for this article was when it was published. Following its release, he retweeted the story in typical dissembling style. “Even if you follow this account, only your puns will improve,” he joked, referring to his own account. Okasan Securities Group Inc., a mid-tier Japanese brokerage house, says it has nothing to do with the account. The motives are also unclear: Why go to so much effort to provide the information for free? There seems to be no attempt to monetize the feed, or tweets that might be supplied by sponsors. Not everyone is that impressed. “I’ve never really imagined what he could be like,” says perhaps Japan’s most-famous tweeting day trader, who goes by the handle Cis. “He tweets news really fast. That’s my only impression.” But one thing is certain: Okasanman’s influence has grown so much that the account can cause confusion when it indulges in the occasional prank, such as a tweet in November 2016. “Kuroda to hold emergency press conference on resignation,” it said. Coming after almost a year of criticism of the Bank of Japan’s negative rate policy, many followers took this to be a reference to BOJ Governor Haruhiko Kuroda. Two minutes later, Okasanman clarified: It was Hiroki Kuroda, former pitcher for the baseball team Hiroshima Carp.

A $300-billion reason India’s drug price cap will stay By Andy Mukherjee | Bloomberg

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lobal pharmaceutical companies have bemoaned for years India’s capricious policies on prices and patents. Now the government needs billions of dollars for its “Make in India” program, why can’t the industry get a fairer deal? When it comes to intellectual property, it’s now understood—and grudgingly accepted—that India’s use of compulsory licensing won’t go away. Ever since New Delhi used this tool to force Bayer AG to allow a low-priced local copy of its expensive cancer treatment, there’s been popular support for the idea of banning profiteering at the expense of lives. As long as that nuclear option was used rarely, and only to address real public-health concerns, Big Pharma could live with it. But pricing problems go beyond patents. In 2013 the list of essential medicines where the regulator has the right to cap prices was expanded fivefold. That led to some weird situations. Condoms were set at a maximum of 6.56 rupees apiece, 11 US cents at the time, and raised a year later to 13 cents. Reckitt Benckiser Group Plc.’s legal challenge—that its Durex contraceptives are devices, not drugs—is being heard by India’s Supreme Court. Meanwhile, the National Pharmaceutical Pricing Authority, the regulator, has been advised by an expert committee that “exotic” condoms—fruit-flavored ones, for example—could be priced above the regular variety, according to a Livemint report last month. If that seems frivolous, the regulator’s bruising attempts last year to curb prices of heart stents and knee implants have graver implications. After India moved to cut the price of such implants by as much as 70 percent last August, Johnson & Johnson’s non-US revenue

Prescribed medicines sit on a table as a patient waits during a free door-to-door screening program conducted by Public Health Foundation of India and funded by Eli Lilly & Co. at a home in the farming village of Thana kalan, Haryana, India, on July 13, 2017. Global pharmaceutical companies, from Indianapolis-based Eli Lilly to Switzerland’s Novartis AG, are heading into smaller cities and rural areas to learn about the healthcare needs of about 70 percent of the population. These remote regions of the developing world are the final frontier for the international drug industry. Bloomberg

growth from knee devices declined 9.5 percent in constant-currency terms in the third quarter, according to the data compiled by Bloomberg Intelligence. All this suggests the industry would have welcomed a new pharmaceuticals policy, especially one that reined in the powerful and largely independent regulator. That body invoked emergency powers to lower knee-implant prices when the product wasn’t even on the list of essential medicine. A draft policy circulated last summer sought to curb this special power, requiring the authority to obtain government permission. Yet, as Bloomberg reporters Ari Altstedter and Abhit Roy Chowdhury noted last Friday, the draft policy has gone back to the drawing board. No action is expected before the general election in 2019. Chalk up the delay as a success for the domestic drugmakers’ lobby. To make common medicines more affordable in a country where most drugs are bought out of patients’ pockets, the new policy would have disallowed branded generics. The manufacturer would have stamped its name on the packaging for

identification, but otherwise a strip of amoxicillin tablets would say just that. But being able to brand a generic drug makes it possible to charge 96 percent more than for no-name formulations. That premium lets firms maintain an army of medical representatives who can persuade doctors to prescribe their pills. It’s a minefield of unethical practices, but giving it up would be expensive.

Average markup for branded generics: 96%

Indian drugmakers, such as Cipla Ltd., Cadila Healthcare Ltd. and Torrent Pharmaceuticals Ltd. rely heavily on branded formulations, and would have been among the firms most at risk from regulatory changes, JPMorgan Chase & Co. says. Even Sun Pharmaceutical Industries Ltd., India’s biggest drugmaker, is betting on increased use of branded generics in emerging markets. By 2021, it estimates such products will account for one-fifth of the $1.5 trillion a year spent on medicines worldwide. That’s $300 billion—or almost $100 billion more than at present.

A10 Tuesday, January 16, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

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editorial

Consumer protection vs regulatory capture

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ast December the Office of the Ombudsman ordered the one-year suspension of four commissioners of the Energy Regulatory Commission (ERC) for, among other offenses, failing to implement the government’s policy against anticompetitive behavior in the electricity market.

Deputy Ombudsman for Luzon Gerald Mosquera wrote the decision. In a separate yet related order, he also recommended the criminal prosecution of the four erring commissioners, Gloria Victoria Yap-Taruc, Alfredo Non, Josefina Patricia MagpalaAsirit and Geronimo Sta. Ana, together with dismissed ERC Chairman Jose Vicente Salazar. (As he can no longer be suspended following his ouster, Salazar was ordered to pay a fine equivalent to six months of his salary.) Mosquera’s orders, released on December 11, 2017, sends a strong, scathing message against regulatory capture, a type of government failure where a regulator fails to protect the interests of the consumers and the public and, instead, supports the behavior of the firms and the industry it is supposed to regulate. The suspension basically covers the entire ERC board except its chairman, Agnes Devanadera, who was not included in the Ombudsman’s censure, since she had only been appointed by President Duterte last November. With said suspension and possible criminal prosecution, the Ombudsman is essentially telling the ERC board: Do not be a rubber-stamp body for the industry you are supposed to regulate. We do agree. While the country needs more power plants to supply electricity to a rapidly developing economy, all energy contracts and infrastructure must be made in a transparent and accountable process. It is the ERC’s duty to stop the monopolistic schemes of power players and big business groups that lead to self-dealing contracts; or, in Sen. Ralph G. Recto’s words, “to be the ombudsman and anti-cartel police of the power industry.” The Ombudsman has, in effect, castigated the ERC for failing to be that powerindustry ombudsman. The penalized ERC officials who composed the agency’s five-man en banc body had been setting the stage to approve power-supply agreement (PSA) applications that they earlier accepted under questionable circumstances, in violation of the ERC’s own competitive selection process (CSP), the Ombudsman’s decision said. According to Mosquera’s orders, the ERC executives should not have accepted the PSAs, unless they undergo a CSP. Considered a flagship program of the ERC that took years to prepare, the CSP is designed to get the least cost of electricity for consumers by forcing a distribution utility (DU) firm, like Meralco, to receive at least two qualified offers from generation company, with which the DU is not prohibited from entering into a power-supply contract. The Ombudsman stressed that the CSP should have taken effect on November 7, 2015, when the ERC en banc passed Resolution 13, Series of 2015 (or the 2015 CSP Resolution). But, on March 15, 2016, or months after the CSP took effect, the ERC came out with Resolution 1, Series of 2016 (2016 CSP Resolution), modifying the CSP’s effectivity to April 30, 2016, thereby extending the deadline that effectively led to the accommodation of PSAs that the consumer group Alyansa Para Sa Bagong Pilipinas Inc. questioned in their complaint before the Ombudsman. The Ombudsman concluded that there is sufficient evidence that the suspended ERC commissioners gave unwarranted benefits to Meralco and other companies by exempting them from the coverage of the CSP requirement, which was already in effect after November 6, 2015. “Their [the ERC officials’] gross inexcusable negligence led to the circumvention of the government policy requiring CSP and denied the consumers the ‘opportunities to elicit the best price offers and other PSA terms and conditions from suppliers.’” Mosquera knows whereof he speaks. The Deputy Ombudsman for Luzon has earned over the years a reputation as an anticorruption advocate, having served as a United Nations adviser for anticorruption and as chief of party of an anticorruption project funded by the United States Agency for International Development before his ERC appointment. Devanadera is waiting for Malacañang’s guidance on how to proceed dispensing the ERC’s duties without the rest of her board, while Energy Secretary Alfonso G. Cusi has asked Duterte to consider appointing temporary commissioners to keep the regulatory body functioning. If the President does appoint interim officials, he should make sure they are independent, honest and fully competent, and capable of exercising the ERC’s mandate as a regulatory body.

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Translating prognosis to reality Manny B. Villar

THE Entrepreneur Continued A1

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ast week, the World Bank said it expected the Philippines to continue to be the fastest-growing economy in the Association of Southeast Asian Nations. In its January 2018 Global Economic Prospects report, the international lender also projected that the Philippines would sustain robust economic growth in the next three years.

The World Bank, which last December raised its 2017 growth forecast to 6.7 percent (from the previous forecast of 6.6 percent) following the stronger-than-expected 6.9 percent in the third quarter of last year, expects the Philippine economy to sustain a 6.7-percent growth in terms of GDP in 2018 and 2019. The conservative lender’s 2017 growth forecast is within the government’s target range of 6.5 percent to 7.5 percent, while the projections for 2018 and 2019 were lower than the official goal of 7 percent to 8 percent for the next two years. Recent developments, specifically on the exchange rate, are also disproving negative speculations. In December 2016 investment

banks monitoring the peso projected that the peso could weaken to P51 to a dollar in 2017 and further down to P55 in 2018 as a result of tightening policies in the United States. According to news reports, the exchange rate hit the P50-per-dollar level in October and November 2017. Contrary to speculations, the peso ended 2017 with a 5-centavo gain against the US currency, which limited the full-year depreciation against the dollar to just 0.42 percent. The peso closed at a fresh sixmonth high of P49.93 to $1 last December 29 from the previous day’s P49.98 to $1. The exchange rate is back to the P50 to $1 range, but it now appears that the speculation that it will sink

to P52 is unlikely. The grim forecast for the peso accompanied projections that GDP growth would slow down to 5.6 percent in 2017 because of the absence of an election-spending boost. As the World Bank’s latest assessment shows, the economy’s performance in the first three quarters of 2017 shows the economy’s strength to offset the traditional postelection blues. I mentioned earlier the country’s political stability, a noneconomic factor that is nonetheless very important in boosting investments and growth. I’m referring to the continuing popularity of President Duterte, as results of independent opinion surveys show. The Fourth Quarter 2017 Social Weather Survey, conducted by the Social Weather Station (SWS) from December 8 to 16, 2017, found 83 percent of adult Filipinos with much trust. Ten percent of the respondents were undecided, and only 7 percent had little trust, giving the President a net trust rating of +75, which is classified by the SWS as “excellent.” The SWS noted that, except in September 2017, Duterte’s net trust rating had been “excellent” since he became the country’s Chief Executive. The President also received an excellent satisfaction rating of +71 percent during the same survey. Satisfaction rating refers to public satisfaction with an individual’s

performance on the job, while trust rating refers to public trust in a personality as a whole. In a separate survey conducted from December 10 to 15, 2017, Pulse Asia found that most Filipinos (80 percent) remained appreciative of the President’s performance in office. Only 7 percent disapproved of his performance. In the same survey, Duterte also received “big trust” (82 percent), with only 6 percent expressing small or no trust in him. I think that one development that affirms the very good prognosis for the economy is the continuing acceleration in inflows of foreign direct investments (FDI). According to the Bangko Sentral ng Pilipinas (BSP), net FDI inflows grew threefold to $2 billion in October 2017, from $670 million in the same month in 2016, which brought the 10-month total to $7.9 billion, up 20.5 percent from a year ago. The upswing in FDI, according to the BSP, reflects continued investor confidence in the country’s strong macroeconomic fundamentals and growth prospects. The task now for the government is to continue its reform program, as well as the massive infrastructure development, in order to translate the prognosis into reality. For comments, e-mail mbv.secretariat@gmail. com or visit www.mannyvillar.com.ph.

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The need to ‘Build, Build, Build’ OUTSIDE THE BOX

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ur perception is that the government, as a financial entity, is just like you and me, at the least, or like some huge corporation at the most. That is totally inaccurate.

Basic financial responsibility and prudence—according to the financial-literacy gurus—is that personal debt is not necessarily a good thing. They are right. If you have ever paid off a home mortgage, you know the satisfaction that comes from finally owning your house free and clear of debt. Likewise, if you fail to keep up with your car payments, usually, a couple of nasty looking men will come and take the car away. If you fail to pay your credit-card bill, the bank will not loan even one centavo more. None of that applies to government. In the entire history of the modern world, no government has ever actually paid off its debt. When a

government, like Greece or Argentina, goes into default and cannot pay on the debt, the debt is “restructured” in one way or another. Try telling the bank you really need your car and promise on the heads of your children to continue payments in a few years. The lender—public or private— may take over an airport or other revenue-generating asset. But it is not like the German banks now own a few Greek tourist islands. While a state-owned Chinese company took control of Sri Lanka’s Hambantota maritime port, it is not like they moved it to Shanghai and sold it to someone else like the bank will do with your car.

We are all supposed to live within our means, trying not to spend more than we make. That does not apply to the government. Of the 175 governments measured in 2017, only 10 could be considered to have not spent more than they took in. The reason that governments can easily spend more than they make—unlike you or me—is that it is only under the most extreme circumstances that a government borrows more. A bank decides first if you or I are going to be able to pay our debt based on both current and future income. Further, the bank looks at your assets and collateral for the loan. Those issues are more fluid for governments. Lenders to governments are actually only concerned about the interest rate the government will pay and if that government can pay the amortization, since they know the loan will never be paid off. A government usually pays off one loan by borrowing new money. Granted, nations like the Philippines that have good economic growth over a few years can reduce their overall debt. However, they usually reduce foreign debt—as the Philippines has done—and borrow

domestically, which is better for the economy. In addition, domestic borrowing protects against a currency problem, like the one that started the 1997 Asian financial crisis. Through 25 years, the Philippine government went on a spending and borrowing spree like a drunken sailor and had nothing to show for it except an economic hangover. With the financial restraint of the Arroyo and Aquino administrations, government finances are healthy. Now is the time for the government to loosen up with an increase in prudent borrowing and efficient spending. The one similarity that should be made with the government and private business is that, when conditions are good, that is when you take more risks, expand and push for wealth creation. “Build, Build, Build” is not a cute slogan. It is a vital economic policy to move the Philippines into another level of economic growth. E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

Opinion BusinessMirror

www.businessmirror.com.ph

Government must honor its obligations

Qaddafi called for peace and unity in Mindanao Cecilio T. Arillo

database

Ernesto M. Hilario

ABOUT TOWN

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ill 2018 bring a closer working relationship between the government and the two private concessionaires in charge of supplying potable water to Metro Manila and surrounding provinces? T he t wo conce s s ion a i re s, Maynilad and Manila Water, are hoping that the Metropolitan Waterworks and Sewerage System (MWSS) now headed by Administrator Reynaldo Velasco would be able to resolve the longstanding arbitration issue that had soured relations in the past. The International Chamber of Commerce’s (ICC) arbitral tribunal in Singapore has ruled that Maynilad is entitled to just compensation from the Philippine government for its multibillion-peso foregone revenues, resulting from the refusal of MWSS in the past administration to grant its periodic rate adjustments as so provided in the 1997 concession agreement. Manila Water also filed a separate arbitration case against the government before the same tribunal for the same reason. The settlement of both these cases stands to benefit over 15 million water consumers in the west and east zones as this would allow the concessionaires to carry out their respective expansion plans to further improve water supply and wastewater-management services in Metro Manila. Maynilad has allocated P35 billion in the next five years for its capex program, shifting its focus to wastewater-treatment services. Last November the company announced that it would allocate over P10 billion to expand sewer lines in its West Zone concession area within the next five years. Late last year, Maynilad also announced a P239-million budget for pipe-laying projects in Cavite that would connect some 23,000 new customers. Maynilad’s sister company— Metro Pacific Water Investments Corp.—is eyeing 26 projects outside Metro Manila, in partnership with local water districts. Maynilad has spent over P47 billion thus far to improve and expand its water services since DMCIMPIC Water Co., a joint venture between Metro Pacific Investments Corp. and DMCI Holdings Inc., took over Maynilad and launched a five-year investment program to rehabilitate the company and its operations. As a result, over 9 million people in the West Zone—from Valenzuela City in Bulacan to Cavite City—now enjoy safe, reliable water supply. The MWSS has commended Maynilad for the vast improvement in overall service and efficiency levels in Metro Manila’s West Zone. Velasco noted that Maynilad’s customer base in Metro Manila’s West Zone rose 94 percent from 678,000

Metro Manila’s water-supply services has vastly improved since the 1997 takeover by Maynilad and Manila Water, and the World Bank even cited the restructuring and privatization of operations as a model of a successful publicprivate sector partnership. to 1.3 million within a 10-year period, covering 94 percent of its service area. Before the privatization of the water-distribution service in Metro Manila, according to the MWSS, water service was erratic, limited and consumers often experienced low water pressure. Sewerage coverage was also minimal and the implementation of projects was often delayed. With privatization, Velasco said water-service delivery expanded to 96 percent in terms of population coverage and water availability. Metro Manila’s water-supply services has vastly improved since the 1997 takeover by Maynilad and Manila Water, and the World Bank even cited the restructuring and privatization of operations as a model of a successful public-private sector partnership. Economist Raul Fabella even described the turnover of MWSS operations to the two concessionaires as “a singularly successful structural reform in the annals of Philippine political economy” as the private sector has proven to be more competent in the delivery of water and sewerage services than the state. Maynilad and Manila Water are hoping that the Duterte administration would protect MWSS from the mistakes of the past administration by honoring the Singapore court ruling on the arbitral award long due them. Up before the Supreme Court are petitions by the two water concessionaires for the High Tribunal to rule on whether they are entitled to recover from consumers their corporate income taxes, whether the performance undertakings issued by the government are valid, and whether the two firms’ claims are covered by the undertakings. On the part of Maynilad, it wants the Philippine government to honor the decision of the international tribunal to pay them P3.42 billion as compensation for revenue losses from the unimplemented water-rate adjustments.

E-mail: ernhil@yahoo.com.

Tuesday, January 16, 2018 A11

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S if the Tripoli Agreement reached under his auspices on December 23, 1976, were not enough, President Muammar Qaddafi sounded a call to other Arab countries “to give peace and unity to our brother Filipinos in Mindanao.” Reactions to his call rippled across Arab lands, from as far southwest as Algeria, Africa and to as far northeast as Pakistan in the Indian subcontinent. Dr. Amadou Karim-Gaye, then secretary-general of the powerful Islamic Conference, in his office in Jeddah, Saudi Arabia, said: “Today, we are burning the old pages of our books and we are opening new pages for peace in southern Philippines.” Lt. Gen. Afaab Ahmad Khan, Pakistan ambassador to Libya, said in an interview: “The peace agreement is an outstanding achievement of President Qaddafi and the Islamic Conference.” Ban Mohamad Sufi, ambassador of Somalia to Libya, said, “We have been waiting for this moment to end the bloodshed in your country.” Sufi is a member of the Committee of Four of the Islamic Conference, which observed the peace talks in Tripoli. Abdullah Al-Fadul, Saudi Arabia’s ambassador to Libya, said: “We

give credit to President Qaddafi for the agreement for peace in Mindanao.” Al-Fadul was an observer of the talks. M. Aboubacar Sy, Senegal official representative to Libya, said in French: “President Qaddafi’s determination to end the trouble in southern Philippines finally paid off. But let’s also give credit to the Islamic Conference.” Bu lgar ian President Todor Zhivkov who was in Tripoli during the peace talks as a state visitor praised Qaddafi for “hosting the talks between the Philippine panel and the representatives of the rebel group.” The Libyan newspaper, Al-Fajr AlJadid, headlined the peace agreement on its Sunday, December 26 issue. It read: “The Philippine-Moro Peace Agreement Reverberates Widely in the World.” The Libya Press Review quoted the Arab and World Information Media, saying: “Lauds Colonel

Qaddafi’s efforts in realizing conciliation and autonomous rule for Muslims in the Philippines.” Dr. Ali A. Treki, Libyan minister of state for foreign affairs, said: “We give credit to Mrs. Marcos, President Marcos, President Qaddafi and Dr. Gaye for the brilliant handling of the talks.” Then he said: “Thanks to Allah for leading us to the right path. We would like to assure everyone that we will keep our word.” For his part, Defense Undersecretary Carmelo Z. Barbero, head of the Philippine delegation, said: “We have achieved in a few days what you have failed to get in three years.” Barbero was referring to the Islamic Conference. Then Gaye, Treki, the members of the Committee of Four and those who witnessed the initialing of the peace agreement applauded Barbero. It was the Libyan Ambassador to Rome, Abuagela M. Huegi, who gave the members of the Philippine panels hint on Qaddafi’s sincerity to help end the conflict in Mindanao last December 4 at 11 a.m. (Rome time). After honoring the Philippine delegation with a party at the posh Libyan embassy in downtown Rome, Huegi told Barbero and members of his party: “The representatives of my government upon the instructions of President Qaddafi are waiting for you in Tripoli to start the talks.” At 6 p.m., that same day, the delegation left for Tripoli aboard a Libyan Airlines jetliner. Huegi said in an interview at Rome’s airport:

Bloomberg

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he world-beating rally in Nigerian stocks may not be over yet. The main equity index in Africa’s biggest economy has surged 12 percent this year in dollar terms, the most among 96 major bourses tracked by Bloomberg, pushing it to the highest level since 2008. Dangote Cement Plc., controlled by Africa’s richest man, Aliko Dangote, and the largest company on the exchange, has climbed to a record high. The advance will probably be sustained, thanks to rising prices for oil,

Nigeria’s main export, and as investors look to increase their holdings of what remain among the cheapest stocks in Africa, according to the asset management arm of South African lender FirstRand Ltd. “For investors wanting more exposure to consumers in Africa and Nigeria, in particular, the outlook is good,” said Paul Clark, a money manager in Johannesburg at Ashburton Investments, which owns Nigerian stocks, including Seplat Petroleum Development Co. “The banking sector is probably the most attractive at the moment, especially the tier-2 lenders.” Foreign investors have been crucial in driving the market higher.

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

Trump, meet a hero whom you maligned Nicholas Kristof

new york times

I

N 1885 a poor, uneducated 16-year-old boy arrived in our country from Germany at a time when immigrants were often looked down on by affluent Americans.

This boy was ambitious and entrepreneurial and, despite language problems, he earned some money and then traveled up to the Klondike during the gold rush to operate a hotel that became notorious for prostitution. He prospered, and today his grandson is President Donald J. Trump. After Germany became an enemy in World War I, the Trump family was embarrassed enough about its heritage that it claimed to be from Sweden instead. President Trump himself repeated this lie in his 1987 book, The Art of the Deal. Yet, Trump hypocritically joined the modern Know-Nothings by reportedly railing against immigrants from “shithole countries” like Haiti and those in Africa. He favored admitting white people over black people—which is just the latest incident in a four-decade record of his racial epithets and discrimination. During the 2016 presidential campaign, I carefully reviewed Trump’s race-related history, including the

1,021 pages of legal documents from racial discrimination suits against him, and the evidence is devastating. We should be careful about tossing around the word “racist,” and any one incident can be misconstrued. But in Trump’s case, we have a consistent, 40-year pattern of insults and discrimination, and I don’t see what else we can call him but a racist. It’s true, of course, that some African countries are in wretched shape and that some immigrants from poor countries arrive uneducated and end up, along with homegrown Americans, in dubious trades. But careful, Mr. President, given your own grandfather’s history. More important, the toxic disparagement of immigrants tarnishes heroes like Emmanuel Mensah, 28, a New Yorker who came from the West African country of Ghana and joined the Army National Guard. Then a couple of weeks ago, when he was back from training, a fire broke out in Mensah’s Bronx building. Mensah easily saved

himself, but then rushed back into the burning building to rescue others. Three times he rushed in and out, bringing out four people. Then Mensah dashed toward the flames again and reached the fourth floor in a desperate effort to save a fifth person. This brave soul from what Trump would describe as an s-hole country, the kind of person Trump was insulting, never made it out. Mensah’s body was found high in the building’s wreckage. A few days ago, the Army posthumously awarded Mensah the Soldier’s Medal, its highest award for heroism outside of combat, and New York State awarded him its Medal for Valor. The citation on the state medal reads: “His courageous and selfless act in the face of unimaginable conditions are consistent with the highest traditions of uniformed service.” Who better embodies our nation’s values? A politician with a history of racist comments who took five deferments to escape military duty in the Vietnam War, including one for heel spurs? Or a heroic Ghanaian immigrant and soldier who dies in a fire while rescuing others? Most of us recognize that immigration is complex and that we cannot throw open our borders, but also that newcomers enrich us. That is true not only of Norwegians but also of penniless refugees from impoverished, war-torn countries, such as my father—a Polish-Armenian fleeing Eastern Europe, whose first purchase in the United States was a Sunday New York Times to

Nigeria’s world-beating stocks ride on oil to power gains By Paul Wallace & Tope Alake

“President Qaddafi will see you personally in Tripoli.” It was not until December 20 that Barbero and a select group, this writer included, finally saw President Qaddafi. After handing over former President Ferdinand E. Marcos’s letter to Qaddafi, Barbero talked with the Libyan leader and told him the Philippine position on the Mindanao problem. Qaddafi, Barbero observed, understood the position with a favorable comment. Qaddafi also told Barbero that, “we are complying with our promise to Mrs. Marcos to host the talks.” His stance, however, was not clearly understood at the conference table. From December 15 to 20, the talks teetered. Barbero sensed this and arranged for a second talk with President Qaddafi. While in Qaddafi’s office, Barbero called up President Marcos and for 45 minutes, the Libyan leader was on the phone with President Marcos. A series of conversations between the two heads of state followed until a few hours after the agreement was finally reached. After Treki delivered his closing speech at the conference hall of the Ministry of Foreign Affairs where the signing took place, Barbero approached him and relayed my request for an interview with Qaddafi. “Sure. No problem. Libya is also your country now,” Treki said.

The New York-based Global X MSCI Nigeria ETF attracted record weekly net inflows through Thursday. That helped to increase the exchangetraded fund’s market capitalization to almost $90 million, double the level in May last year. Even after the gains, Nigerian valuations are the cheapest among the major African equity indexes. Nigerian stocks trade at a forward price-to-earnings ratio of 10.2, while South Africa’s are at 14 and the MSCI Emerging Market Index is at 13. That suggests there’s further upside, according to Cape Town-based fund Allan Gray. While foreign investors turned negative on Nigeria after following the 2014 oil crash

Even after the gains, Nigerian valuations are the cheapest among the major African equity indexes. Nigerian stocks trade at a forward price-to-earnings ratio of 10.2, while South Africa’s are at 14 and the MSCI Emerging Market Index is at 13. That suggests there’s further upside, according to Cape Townbased fund Allan Gray.

and subsequent recession, the economy picked up last year and growth is forecast by the International Monetary Fund to accelerate to 2.1 percent in 2019. “For long-ter m investors,

Nigerian equities were a screaming bargain,” said Nick Ndiritu, comanager of Allan Gray’s $389 million Africa equity fund, which doesn’t include South Africa. “Investor sentiment has turned more bullish on Nigeria and a re-rating of the Nigerian stock market is now under way.” Still, there are some warning signs. The 120-day correlation between Nigerian stocks and Brent crude is now around the highest in two years. If oil prices reverse their 45-percent climb since June, Nigerian assets could take a hit. That’s one reason HSBC Holdings Plc., has a negative outlook on the stocks. The UK bank also says Nigeria will have to free its currency

teach himself English. Trump once showed a willingness to be big-hearted to immigrants who break the rules: He married Melania, a Slovenian who came to the US on a visitor visa and then earned money as a model before she was authorized to work, according to an investigation by The Associated Press. If only Trump could show a similar compassion to unauthorized immigrants who don’t look like Melania. In particular, his decision to send Salvadorans back, in the face of murderous gang violence in that country, and his rejection of a bipartisan deal to protect Daca “Dreamers,” simply seem cruel. So what can we do? Obviously, we need to stand up to racist xenophobia even when it emanates from the White House— particularly when it emanates from the White House—and in addition, if Americans are looking for a constructive way to respond, here’s a suggestion: Donate to an immigrant rights organization like the National Immigration Law Center, or to an aid group that works with people whom our president just insulted. I’ve seen firsthand and admired the work of two US aid organizations that save lives in Haiti from tuberculosis, cervical cancer and more. They are Partners in Health and Innovating Health International. Both are working heroically on the front lines to save the lives of ordinary Haitians, particularly women. It seems to me that a fine, practical response to racism is to help save a life.

further if it wants to attract more investment. While the central bank eased some capital controls last year and opened a trading window for foreign portfolio traders, it continues to operate several exchange rates. Volume on the foreign-exchange window for investors and importers, known as Nafex, reached $26.2 billion since its introduction last April, Lagos-based FMDQ OTC Securities Exchange said last week in a report. “Nigeria’s multiple exchange-rate system is likely to remain a key drag, keeping long-term investors on the side lines,” HSBC analysts David Faulkner, John Lomax and Kishore Muktinutalapati said in a note on January 11.

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A12 Tuesday, January 16, 2018

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Gordon seeks tighter rules on shipment of minerals A SB 1634 14.42% S By Butch Fernandez

@butchfBM

en. Richard J. Gordon on Monday moved to tighten the Philippine Mining Act of 1995 through provisions mandating stricter screening of mineral ores for export to ensure the country will not be shortchanged in the exploitation of its resources.

In filing Senate Bill (SB) 1634, Gordon sought to enact remedial legislation requiring “mandatory domestic processing of all mineral ores before exportation,” as well as a “certification showing presence or lack of rare earth elements.” The senator pointed out that rare ear t h meta ls, inc lud ing “other elements more expensive than gold,” are found in mineral raw materials that, he learned, were “being exported without our knowledge.” Gordon’s bill proposed that before minerals, ores and other elements are shipped to other countries, “there must first be a required inspection by the Mines and Geosciences Bureau to determine whether more valuable and more expensive elements are present, i.e., vanadium, cobalt, scandium and /or other rare earth elements.” Asserting the need to “know what we are selling to avoid being shortchanged,” the senator said the “principle of Caveat Venditor [let the seller beware] must be emphasized, hence, this bill provides for the mandatory domestic processing of all mineral ore.”

SB 1634 was prompted by findings of the Gordon-chaired Senate Committee on Accountability of Public Officers and Investigations (Blue Ribbon), which rendered a report after conducting an inquiry into the reported destructive mining operations or illegal excavations in Zambales. Gordon said the following sections of Republic Act (RA) 7942 need to be amended to read as follows: ■ “Section 3[y]. Mineral processing means the milling, beneficiation or upgrading of ores or minerals and rocks or by similar means to convert the same into marketable products, and/or the process of separating commercially valuable minerals from their mineral ores; ■ Section 53. Ore Transport Permit. A permit specifying the origin and destination and quantity of nonprocessed mineral ores or minerals shall be required for their transport. Transport permits shall be issued by the mines regional director who has jurisdiction over the area where the ores were extracted. In the case of mineral ores or minerals being

Reduction. . .

Continued from A1

The government is currently reforming the country’s outdated tax system to further boost Philippine growth and encourage more investments via competitive corporate taxes. According to the DOF, there are 360 laws that grant businesses tax breaks and other perks under the current setting. Lim added that the TMAP also supports the proposal

The Senate bill that seeks to amend the Mining Act, following the probe of the Blue Ribbon Committee on destructive mining operations

transported from the small-scale mining areas to the custom mills or processing plants, the Provincial Mining Regulatory Board concerned shall formulate their own policies to govern such transport of ores produced by small-scale

miners. The absence of a permit shall be considered as prima facie evidence of illegal mining and shall be sufficient cause for the Government to confiscate the ores or minerals being transported, the tools and equipment utilized, and the vehicle containing the same. Ore samples not exceeding 2 metric tons (MT) to be used exclusively for assay or pilot-test purposes shall be exempted from such requirement; and ■ Section 55. Minerals Processing and Minerals Processing Permit. Any mineral ores extracted under the provisions of this Act shall be processed within the country. No person granted with permit for

purposes of mining operation shall be allowed to export the unprocessed mineral ores to other country for purposes of trading mineral products without a certification of compliance showing presence or lack of rare earth elements or other valuable minerals. any person exporting the unprocessed mineral ores without the aforementioned certificate of compliance shall, upon conviction, be imprisoned from six years and one day to 12 years and pay the fine amounting to twice the value of the seized mineral ores. In addition, the cargo containing the unprocessed mineral ores shall See “Gordon,” A2

INSTANT PASSPORT Sen. Cynthia A. Villar (right) commends the Department of Foreign Affairs for coming out with the “Passport On Wheels,” a project that will make passport application more accessible to Filipinos. Passport On Wheels was initiated by Foreign Secretary Alan Peter S. Cayetano (second from right), who launched it on Monday with Assistant Secretary Frank R. Cimafranca of the Office of Consular Affairs, in Las Piñas City, where about 1,500 applicants were served. ROY DOMINGO

to revisit tax exemptions given to certain entities to allow for a more targeted system, as well as a proposal for the DOF to revisit the 10-percent improperly accumulated earnings tax (IAET). “There is presumption of improperly accumulated income when retained earnings [RE] exceeds capital of the company. Instead of allowing investors to accumulate income, which can be reinvested in the Philippines that would generate economic activity, they need to dividend out the RE lest be assessed of the 10-percent IAET,” she said.

The IAET is a penalty tax, which aims to compel corporations to distribute its earnings so that the earnings of its shareholders could be taxed. The tax applies to corporations formed for the purpose of avoiding the imposition of income tax on the income received by its shareholders, by permitting its profits to accumulate, instead of being distributed. According to an article from PricewaterhouseCoopers (PwC) Network, surplus profits or retained earnings are expected to be declared as dividends and distributed to a company’s shareholders.

PHL F&B, retail sectors more profitable than telco, property

The DOF disclosed that it will to submit to Congress the second package of the CTRP on Monday when the House of Representatives resume session. “Yeah, we should be ready by that [January] 15, because that’s when they open,” Finance Secretary Carlos G. Dominguez III told reporters. Under Package 2 of the CTRP, the DOF aims to lower the CIT rate to 25 percent and rationalize incentives for companies to make it performance-based, targeted, time-bound and transparent. The package is seen to be revenue neutral. According to Chua, the government will be able to ensure

comparative outlook at profitability indicators since 1997 shows that retail, and food-and-beverage companies have averaged higher rates of return than some of the top telecommunications and real-estate companies in the Philippines.

The return on assets of department store chain SM, according to a University of the Philippines research

These points to the capital-intensive nature of telco and realestate industries, which contribute significantly to national infrastructure and development. An academic research paper by University of the Philippines (UP) Professor Emeritus Epictetus Patalinghug, PhD, shows that over a longer time horizon, PLDT and Globe Telecom, as well as real-estate companies, such as SM Prime and Ayala Land, are earning below the average rate of returns attained by top Philippine firms in other industries. Department store chain SM, for instance, had a return on assets (ROA) of 14.42 percent, while the ROA of a beer company, such as Asia Brewery, reached 12.13 percent. PLDT and SM Prime, on the other hand, recorded ROAs of only 9.18 percent and 8.49 percent, respectively. Globe and Ayala Land were even lower in rank with 6.7 percent and 5.96 percent. Data show that as telcos and developers aggressively embark on increasing capital expenditures, they must be able to generate enough cash flow to sustain the needed investments in capital-intensive industries. More significantly, high capitalintensive industries evidently require high margins to be viable. See “PHL,” A2

that incentives granted to businesses generate jobs, stimulate the economy in the countryside and promote research and development; contain sunset provisions so that tax perks do not last forever; and are reported so the government can determine the magnitude of their costs and benefits to the economy. “We officially transmit to the Speaker of the House because it’s a tax bill. Usually, the committee will review it first and then endorse it to the chair[man]. The chair[man] will file it, then it will have a house number, and then it will be read again in the plenary and referred to the committee. There’s a process,” Chua told reporters.

Data-Protection Compliance: Failure will be costly Continued from A1

The General Data Protection Regulation (GDPR) in the European Union is a sweeping new law that applies to all companies that collect and process data belonging to EU citizens, even if this is done outside of the EU. This includes companies with operations in the European Union and/or a web site or app that collects and processes EU citizen data. Key areas of the legislation cover privacy rights, data security, data control and governance. The good news is the law will be pretty much identical in all 28 EU memberstates, meaning they only have to comply with one standard. However, the bar is set high and wide—forcing most companies to invest considerable resources to becoming compliant. Failure to comply with GDPR could result in a hefty fine. If a company is found guilty of a breach that compromises an EU citizen’s data, the penalty could be up to €20 million or 4 percent of an enterprise’s worldwide revenue, whichever is larger. Putting that in perspective: A large enterprise could be fined hundreds of millions of euros for a

single breach. In addition, two pain points are conspicuous: a requirement to notify EU authorities within 72 hours of a breach, and another to prove your company’s security approach is state of the art. It is important to note in this context that the Philippine Data Privacy Act is imposing similar pressure/regulation on local companies! Are you ready? What is mandated?

Data control

To preserve subjects’ privacy, organizations must: ■ Only process data for authorized purposes; ■ Ensure data accuracy and integrity; minimize the exposure of subject identities; and ■ Implement data security measures.

Data security

Data security goes hand-in-hand with data control. The regulation puts security at the service of privacy. To preserve subjects’ privacy, organizations must implement:

■ Safeguards to keep data for additional processing; and ■ Data-protection measures, by default security as a contractual requirement, based on risk assessment and encryption.

■ Implement measures to ensure and demonstrate compliance; ■ P ro a c t i v e l y he lp t h i rd - p a r t y customers and partners to comply; and ■ Prove full data control.

Right to erasure

Breach notification

Subject data cannot be kept indefinitely. The regulation requires organizations to completely erase data from all repositories when: ■ Data subjects revoke their consent; ■ A partner organization requests data deletion; or ■ A service or agreement comes to an end. It is worth noting, however, that subjects do not enjoy a carte blanche right for their data to be erased. If there are legal reasons —specified in the regulation—an organization can retain and process a subject’s data. Exceptions are few, however.

Risk mitigation and due diligence

Organizations must assess the risks to privacy and security, and demonstrate that they’re mitigating them. This requires that they: ■ Conduct a full risk assessment;

When a security breach threatens the rights and privacy of a data subject or subjects, organizations must: ■ Notify authorities within 72 hours; ■ Describe the consequences of the breach; and ■ Communicate the breach directly to all affected subjects. Six steps to data-protection compliance: 1. Understand the law—Know your obligations under GDPR as it relates to collecting, processing and storing data, including the legislation’s many special categories. 2. Create a road map—Perform data discovery and document everything—research, findings, decisions, actions and the risks to data. 3. Know which data is regulated— First, determine if data falls under a GDPR

special category. Then, classify who has access to different types of data, who shares the data and what applications process that data. 4. Begin with critical data and procedures—Assess the risks to all private data, and review policies and procedures. Apply security measures to production data containing core assets, and then extend those measures to back-ups and other repositories. 5. Assess and document other risks— Investigate any other risks to data not included in previous assessments. 6. R e v i se a nd repeat —R e peat steps four to six, and adjust findings where necessary. For chief security officers, the GDPR and the Philippine Data Privacy Act impose an upgrade on the organization’s security capabilities to both meet the regulation’s requirements and improve overall security vis-á-vis data confidentiality and privacy. If companies need assistance, we have a compliance team in place to assist in data-privacy protection and in cybersecurity/cybercrime— please contact Schumacher@eitsc.com.