BMReports
Govt addresses major problems in Boracay By Jun N. Aguirre
Special to the BusinessMirror
Part One
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ORACAY Island—Just give us the order and we’ll “fix” things. That was what the Department of Environment and Natural Resources (DENR) and the Department of Tourism (DoT) have promised to President Duterte, but only if the recommendations they submitted to Duterte would lead to an executive order that would allow these
This undated photo shows a panoramic view of Boracay Island. The tourist destination, one of the world’s best, is facing challenges like flooding and human congestion. wikimedia commons
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Continued on A2
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A broader look at today’s business Monday, January 29, 2018 Vol. 13 No. 110
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Naia to remain as PHL’s main gateway–Dominguez
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By Cai U. Ordinario @cuo_bm & Rea Cu @ReaCuBM
he Department of Finance (DOF) revealed that the New Manila International Airport (NMIA) proposed by San Miguel Corp. (SMC) will not replace the Ninoy Aquino International Airport (Naia) as the main gateway to the country.
According to Finance Secretary Carlos G. Dominguez III, a number of big cities around the world have more than one airport to accommodate the influx of individuals
entering and exiting specific areas. “Well, at this point in time, there are no plans of shutting Naia down. That was the original idea [under SMC’s proposal], but it
₧735.63B The cost of constructing the New Manila International Airport
seems that they have withdrawn that particular condition. A lot of big cities have more than one airport around it,” Dominguez told reporters in an interview. T he P735.63-billion NMI A project, an unsolicited proposal from SMC, is still being evaluated by the interagency Investment See “Naia,” A2
House to pass bill classifying ATM hacking as heinous crime By Jovee Marie N. dela Cruz @joveemarie
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for the wetlands Sen. Cynthia A. Villar leads the clean-up activity sponsored by the Manila Bay Sunset Partnership Program Inc. to help protect Manila Bay. Villar, chairman of the Senate environment committee, joined the cleaning of coastal areas along that stretch of Manila Bay from the Las Piñas-Paranaque Wetlands Park. The activity was in celebration of January as Zero Waste Month. The senator is an advocate for the preservation and rehabilitation of the Las Piñas-Parañaque Critical Habitat and Ecotourism Area, which forms part of the Ramsar List of Wetlands of International Importance. ROY DOMINGO
‘Reverse bidding’ for spectrum sale? By Lorenz S. Marasigan @lorenzmarasigan
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government agencies to fix all the problems in this resort island. The majority of these problems are flooding and over-population; tricky issues arising despite the local government’s plan to lure more tourists coming to Boracay. While waiting for the Chief Executive’s signaling, Tourism Secretary Wanda Corazon T. Teo said she has instructed the Tourism Infrastructure Economic Zone Authority (Tieza) to fast-track the construction of drainage problem in this
HILE President Duterte signals further opening the telecommunications industry, a lobby group is urging the government to go slow. Mary Grace Mirandilla-Santos of Better Broadband Alliance said policies on the equitable assignment
of radio frequencies to telecommunications companies operators should be in place before a new core player enters the market. Santos said doing so would ensure it can survive in the sector that is dominated by only two telcos. “If we expect the third telco to effectively compete with the two dominant players, then the only way is to do a comprehensive
PESO exchange rates n US 50.8190
spectrum review and put in place a policy to ensure equitable distribution of spectrum,” she said when asked how a new comer can effectively compete with a duopoly. Spectrum is the real estate on which telecommunication operators develop their respective network to deliver services to customers. See “Reverse bidding,” A2
measure declaring hacking of bank systems and the theft of 50 or more automated teller machines (ATM) or credit card-details as economic sabotage is expected to be approved by the House of Representatives this week. House Bill 6710, which was already approved on second reading last week, seeks to further avert losses in the financial and trade sector due to illegal use of electronic access devices. The measure also seeks to strengthen public trust on the electronic financial and trade and sectors. Under the bill, unauthorized access through hacking or planting of a virus in a bank’s computer system resulting in corruption or theft of data is defined as economic sabotage, a non-bailable criminal offense carrying penalties of life in jail and fines of P1 million to P5 million. It added the same penalties are to be imposed on card skimming/data theft that will affect 50 or more ATM-based accounts, credit cards or online bank accounts. The bill said mere possession of a card-skimming device or any similar gadget used for unauthorized harvest of account data—even if no actual theft takes placE—is also punishable with imprisonment of six to 12 See “ATM,” A2
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‘Infra program of govt to usher in golden age of entrepreneurship’ By Elijah Felice E. Rosales
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SIBAL-Limjoco: “With the ‘Build, Build, Build’ is the ‘golden age of infrastructure,’ and with the golden age of infrastructure will come also the golden age of MSMEs.”
@alyasjah
he Philippine Chamber of Commerce and Industry (PCCI) is urging small businesses to take advantage of the government’s infrastructure program, as it will give them the access to a wider market that was formerly unavailable to them. In an interview with the BusinessMirror, PCCI President Maria Alegria Sibal-Limjoco said micro, small and medium enterprises have a golden opportunity to expand their reach under the “Build, Build, Build” (BBB) program. She said the transportation and connectivity projects to be built by the government will significantly boost MSMEs’ market access, especially those based in far-flung areas. “With the Build, Build, Build is the ‘golden age of infrastructure,’ and with the golden age of infrastructure will come also the golden age of MSMEs. It is the golden age of entrepreneurship,” Sibal-Limjoco said. She also said the country will have a more conducive environment for small businesses once the infrastructure projects are completed. “We expect it will be
more inviting for Filipinos to become entrepreneurs if it is easier to transport products, which will only be available thanks to the government’s plan to build more and more public infrastructure.” Under the BBB program, the government is keen on completing dozens of infrastructure projects, such as the North Luzon Expressway Harbor Link, Luzon Spine Expressway, Philippine National Railway North and South Rails and the Metro Manila Subway. It aims to achieve this plan by accelerating the country’s infrastructure-toGDP ratio by 7.4 percent, which is expected to amount to as much as P9 trillion by the end of President Duterte’s term. The government has, so far, allocated P3.6 trillion for its infrastructure program, most of which will be spent for roads, bridges and facilities in Metro Manila and other See “Infra,” A2
Japan foreign minister hopes for improved ties with China
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EIJING—Japanese Foreign Minister Taro Kono expressed hopes for improved relations with China during talks last Sunday in Beijing that also touched on joint efforts to counter North Korea’s nuclear program. In opening remarks to his Chinese counterpart, Wang Yi, Kono said that as the world’s second- and third-largest economies, China and Japan “have a major responsibility in safeguarding the stability and prosperity of Asia and the world at large.” Wang said China had noted positive remarks about the relationship from Japanese Prime Minister Shinzo Abe, but that difficulties still remain. “At present, the Sino-Japanese relations are at a crucial stage. There is positive progress, but many disturbances and obstacles remain,” Wang said. Japan has pushed for stricter
measures against North Korea, which fired a ballistic missile over the Japanese island of Hokkaido last August, and in his remarks, Kono stressed the need for a united front against Pyongyang. “Not only do we need to manage our bilateral relations but we also need to work together to deal with issues facing the entire globe, in particular the issue of North Korea, which is the matter at hand for the international community as a whole,” Kono said. Kono was also expected to discuss possible arrangements for a trilateral summit this spring in Tokyo between leaders from China, South Korea and Japan. Following the talks, Kono was due to meet with Senior Foreign Policy Adviser State Councilor Yang Jiechi and visit top leaders, possibly including President Xi Jinping. Continued on A16
n japan 0.4651 n UK 71.8784 n HK 6.5010 n CHINA 8.0264 n singapore 38.8287 n australia 40.8127 n EU 63.0562 n SAUDI arabia 13.5518
Source: BSP (26 January 2018 )
BMReports BusinessMirror
A2 Monday, January 29, 2018
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Govt addresses major problems in Boracay Continued from A1
resort island. The construction of drainage is being seen solving flood problems in this resort island. The Tieza has reportedly allocated some P1.6 billion for fast-tracking construction projects on this resort island. The construction of drainage started way back in 2014. “We in the DoT are working night and day to solve the problems of Boracay in the Duterte administration,” Teo said. “For this year, we are expecting a triple number of Chinese tourists coming to Boracay.”
Flooding, congestion
IN December 2016 this resort island saw the impact of climate change after around 98 percent was flooded due to high volume of rainwater brought about by Tropical Storm Urduja (Kai-tak). Last year the national government reportedly earned at least P56 billion generated from it 2.1 million tourist arrivals. The said amount was based on the tourism receipts. In a forum last year, Overall Deputy Ombudsman/Investment Ombudsman Melchor Arthur Carandang mentioned that too many national government agencies are dipping their hands with the development of Boracay.
Naia. . .
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Coordination Committee (ICC). The project was pitched by SMC to the Department of Transportation (DOTr). It involves the construction of an airport spanning 1,168 hectares and a city complex to be built on a 2,500-hectare property along Manila Bay. It also includes building an expressway that would link its airport to the North Luzon Expressway in Bulacan. Dominguez said another meeting will be held by the ICC to further thresh out the details of the
Business views
WHILE these issues are being discussed, both the Boracay Foundation Inc. (BFI) and the Philippine Chamber of Commerce and Industry (PCCI)-Boracay are restless, saying that they wanted to see “real action” from the government. “Several presidents had already visited Boracay and they all both promise to fix the problems of Boracay. Now the administration of Duterte is showing the same thing,” BFI President Nenette Aguirre Graf has said. “We want real action now; no more press release!”
project in the coming weeks, before it comes out with a decision. “Actually, we want to take a look at what the breakeven point is, what level of passengers will be the breakeven point to determine whether it’s viable and if those assumptions are reasonable,” he added. Socioeconomic Planning Secretary Ernesto M. Pernia said the ICC has not approved the project because of issues surrounding the Financial Internal Rate of Return (FIRR) of the NMIA. Determining the FIRR is a key component in approving projects especially those financed through public-private partnership (PPP).
Reverse bidding. . . The amount of spectrum assigned to a telco has an impact on the cost the build capacity, overall network performance, ability to offer new multimedia services and general customer experience of wireless services. Data from the National Telecommunications Commission (NTC) showed that existing telcos hold majority of the said real estate to date. PLDT Inc. holds 400 megahertz (MHz) of the total holdings, while Globe Telecom Inc. has rights to 325 MHz. “The remaining frequencies that we [civil society groups] are aware of comprise of 3G and 4G only,” Santos said. “There is no 2G frequencies, which means the new player can’t offer mobile voice calls and SMS.” What remains for budding telecom players is a mere 140 MHz of frequencies
“Yet, when problem rises, nobody seems are in charge,” Carandang said. Environment Secretary Roy A. Cimatu has also said the DENR will spearhead this year’s action to decongest the overpopulation problems in Boracay. “We conducted an aerial inspection and we found out several structures in no build zone areas. We will be conducting an inventory for all the structures and will ask those violators to explain why,” Cimatu said. “If they are on business and they do not have necessary permits, we will be penalizing them.” If these actions materialize, the penalty generated will serve as additional sources of revenue for the national coffers of the government, according to local officials.
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in the 700 MHz, 850 MHz, 2100 MHz, 2500 MHz and 3500 MHz spectra. This means that there are no more 2G frequencies—used for text and calls— available in the market, hence newcomers will have to make do with offering voice and text services via 3G, according to the NTC. “So, if the new player would like to offer mobile services, it will have to invest, develop its business model and build its network around 3G and 4G frequencies,” Santos added. Services offer via the 3G and 4G frequencies revolve around mobile data of varying speeds. However, Department of Information and Communications Technology (DICT) Officer in Charge Eliseo M. Rio said the frequencies left are “enough” for a third player to compete with the existing operators, as text and calls are
PCCI-Boracay Founding Member Elena T. Brugger added that investors in this resort island have poured billions of pesos to ensure investments and lure more tourists. “The government is earning billions of pesos,” Brugger said. “The government must also invest and spend for the welfare of Boracay.” It was gathered that the national government is only giving the local government of Malay, a first-class municipality in the province of Aklan, less than 10 percent of the generated revenues annually as Internal Revenue Allotment (IRA). According to Brugger, Boracay could have been okay now if only the local government of Malay previously heeded the recommendation of the University of the Philippines’s (UP) National Committee on Marine Sciences (NCMS) outreach marine program in 2008. The NCMS has undertaken several environmental studies in this resort island for several years and gave a copy to the local government, she added. Headed by UP Marine Scientist Miguel Fortes, the group strongly recommended enhancing what remains of the seagrass at Boracay’s western part, just fronting White Beach. This will reportedly help protect the coast from further erosion and at the same time improve biodiversity.
Tourist hub
JIMMY Maming, spokesman of incumbent Boracay Mayor Ciceron Cawaling, said the local government of Malay is trying to fix the mistakes of the previous administration. For this year, the local government of Malay is targeting at least 2.2 million tourists. The target was based on the 16-percent increase in tourist arrival to this resort island for 2017. The DoT also expects more cruise ships coming to Boracay, which had already started in previous years. In January last year Aklan Gov. Florencio Miraflores, together with several DoT officials, went to the United States to meet with the executives of the international cruise line Royal Caribbean Cruises Inc. Miraflores justified the trip as leading to a memorandum of understanding (MOU) toward making Boracay an international cruise- ship hub destination. Niven Maquirang, jetty port Administrator, said the MOU eyes a three-year to four-year process to be funded through the private-public partnership scheme. Maquirang said Royal Caribbean will fund the development, which will include a berthing and terminal facility, eyed to support the growing number of cruise arrivals in the island. With the hub development, Maquirang said that a cruise-and-fly concept is also
It measures the financial return on investment of a project. “That [FIRR] has implications on the fiscal and the financial aspects of the project, especially fiscal, which is a concern of the Department of Finance,” Pernia recently told reporters. “It’s just that more definite information is needed to arrive at a conclusive FIRR.” National Economic and Development Authority Undersecretary Rolando G. Tungpalan earlier said the FIRR, in this case, also serves as the “parameter for [the] Swiss Challenge.” In the SMC proposal, a key component of the FIRR is the passenger estimate. Documents
obtained by the BusinessMirror previously stated the PPP Center’s views on this. The PPP Center expressed its reservations concerning SMC’s passenger forecast for the NMIA, saying that the estimates assume a 100-percent transfer of Naia’s passengers to the new airport. This, the agency noted, would necessitate the closure of the Naia. The PPP Center said, however, that the Naia’s closure remains a policy decision of the government. The agency stated that this could cause “potential economic harm,” given that the financial assumptions for the NMIA are hinged on the shutdown of the Naia.
expected to be a thing of the past in the next half a decade. “But we have to qualify that they’re enough for a new player to start offering 3G and 4G,” Santos emphasized. “However, this is based on what’s available now.” The government has plans to reform and reallocate frequencies that are unused in certain areas. Both existing players have noted that they have been using the frequencies allocated to them “thoroughly and actively. ” “For the new telco to grow its network and build its subscriber base, there needs to be a more equitable assignment of spectrum among the market players,” Santos said. Rio noted the DICT is “suggesting a new concept of awarding frequencies other than beauty contest or auction.” “We call it reverse bidding,” Rio said. “The contender must be a consortium of small telcos with franchises and local investors that will support them, with
a foreign telco partner that will bring in 40-percent investment and that can commit the highest five-year financial investment shall be the third major player in the telecommunications industry.”The committed investment shall be indicated on a yearly basis starting this year. “The investment shall be those directly related to the installation, operation and maintenance of fixed—wired and wireless—networks, mobile networks and national and international telecommunications services,” Rio added. The new player will be required to deposit with the designated bank specified by the Department of Finance (or bank guarantee) the committed investment of the first year within 30 days from the award, Rio explained. Thereafter, the newcomer shall deposit the succeeding year’s committed investment within the same period from the anniversary date until the fifth year, he added. The company shall then be permitted to draw from the deposit for payments through letters of credit mechanisms to implement its rollout only for capital and operational expenses directly related to the installation, operation and maintenance of fixed networks, mobile networks and national and international telecommunications services. “Any unused deposits at the end of the fifth year shall be forfeited in favor of the national government,” Rio said. In a regular auction, the frequencies are awarded to the highest bidder. “The winner has to cough up cash to the government up front that has nothing to do with its rollout plan,” Rio explained. “In this reverse bidding or auction, the highest bidder commits the amount to his rollout plan, and after five years whatever balance that will remain goes to the government.” This, he said, will prevent the duopoly from once again acquiring the budding player, as what they did with San Miguel Corp., Bayan Telecommunications Inc. and Digitel Mobile Philippines Inc. May 2018 is the new deadline for the new telco player to come in. Interested parties include Now Corp., Philippine Telegraph & Telephone Corp. and Converge ICT Solutions Inc.
targeted to be started in Boracay.
‘Cruise and fly’
THROUGH the “cruise and fly” concept, tourists will fly to Boracay, stay on the island for one or two days and transfer to their next destination via cruise. The cruise-ship hub, according to Maquirang, will help generate jobs and, likewise, boost income for Aklanon producers and from nearby provinces. “The proposed cruise port in Boracay will also be used as transit point to other Western Visayas areas like Sicogon in Iloilo,” Maquirang said. Royal Caribbean is one of the biggest contributors to Boracay cruise tourism. Legend of the Seas, one of its cruise lines, is among the earliest that included Boracay as its port of call in the country. Aside from being a beach destination, Boracay is also considered a major cruise destination in the country and is part of the Turquoise Triangle. This area includes Manila and Palawan. Last year Boracay retained its recognition as one of the best beach in the world by the international magazine Conde Nast Travel. The “Poor Travellers” web site also named Boracay as one of the top 10 best places in Asia for children. Boracay is also becoming a gaming capital of the country, with the anticipated entry of Chinese gaming firms. To be continued
ATM. . .
Continued from A1
years and fines ranging from P300,000 to P500,000. It will also increase security for overseas Filipino workers’ remittances totaling $33 billion each year, as well as the growing e-commerce/online shopping sector, which accounted for P60 billion in revenues last year. The bill acknowledges the advances in information technology on access devices have been exploited by criminals and criminal syndicates in perpetrating fraudulent activities that ultimately undermine the trust of the public in the banking industry. Due to this deleterious effect on the economy, the measure seeks to classify the use of access devices as a form of economic sabotage and heinous crime, which shall be punishable to the maxi-
mum level allowed by law. House Committee on Banks and Financial Intermediaries Chairman Ben Evardone of Eastern Samar, citing figures from the Bangko Sentral ng Pilipinas, said there are 76 million debit and prepaid cards currently in circulation in addition to 8.5 million credit cards. “The lower house recognized the urgency of the need for a tougher law against criminals preying on the unsuspecting public and acted accordingly. This bill seeks to protect holders of more than 80 million ATM/credit cards currently in circulation,” Evardone said. “Losses from ATM fraud have surged alarmingly from P175 million in 2012 to more than P600 million in 2016—a 250-percent increase in just four years. Add to this the reported P500 million stolen through fraudulent credit-card transactions in 2016 alone and one starts to get the scary picture. This has to stop,” he added.
Charter change. . . He said the advisory commission, composed mostly of legal experts, will nonetheless be helpful in providing substantial inputs. “Nobody has a monopoly of ideas. Whatever recommendations they come up with will surely be valuable,” he said. In previous administrations, Atienza said the public became distrustful of initiatives to introduce possible changes to the Constitution, mainly due to fears that members of Congress might introduce modifications that would further their own interests. “A controversial pitch concerns the possible lifting of the term limits of lawmakers and their family members in local posts,” he said. According to Atienza, the existing Constitution restricts the stay
Infra. . .
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major urban centers. Aside from the annual budget, the infrastructure program will also rake in 70 percent, or P84.84 billion, of the expected revenue of P121.2 billion from the new tax law. In line with the Department of Trade and Industry’s push to develop the MSME sector, Sibal-Limjoco said the PCCI will focus on assisting small businesses this year. “That is why my program is [geared toward] prosperity to inclusive business [because] I would like to help micro, small and medium enterprises,” she added. Sibal-Limjoco said she wants to put the spotlight on MSMEs this year to hop aboard the government’s campaign of including prod-
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in office of House members, as well as local executives to three successive three-year terms, and those of senators to no more than two successive six-year terms. “Only a duly-elected constitutional convention [Con-con] or Congress convening itself into a constituent assembly [Con-ass] may finally propose possible amendments to the Constitution that may be submitted to the people in a plebiscite,” Atienza said. In a Con-con, the people will elect representatives who will recommend revisions to the Constitution. In a Con-ass, Congress itself sits down to put forward the amendments. In both cases, the proposed changes will require final direct approval by the people in a referendum. ucts of small businesses available in the global value chain. Her focus will be on educating entrepreneurs on financial literacy and assisting them in sustaining their businesses in spite of market competition. “Hopefully, they will be able to put this into practice because what has happened [was] I have made many brands [that] were [formerly] micro and now they are global, and that is because of franchising," she said. “Now I just got all the good points in creating a business, which is to have a good foundation, financial literacy. What I did is I already [create] a checklist, like an easy form. We are going to explain it, and then we will just put a checklist to make sure if they have done this and that, like starting a business made simple,” the PCCI chief added.
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Editor: Vittorio V. Vitug • Monday, January 29, 2018 A3
Govt urged to build ‘convertible’ evacuation centers By Butch Fernandez
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@butchfBM & Recto Mercene
over P40 million worth of aid to help those who, were evacuated from their homes near Mount Mayon. The NDRRMC said it is now preparing for a three-monthlong emergency in areas around Mayon.
@rectomercene
he Duterte administration should consider building public gymnasiums convertible to evacuation centers to spare school facilities from being occupied as disaster shelters, Senate President Pro Tempore Ralph G. Recto said over the weekend.
Recto cited last week’s eruption of Mayon Volcano that he noted “again put on full display one constant in this calamity-prone land—of schoolchildren being the first collateral victims when their schools are commandeered to house refugees.” Recto recommended “building permanent evacuation centers” to stop the practice. The senator suggested that the Duterte administration can step up its evacuation center-building program that was started in 2016, “when that year’s national budget authorized funding for 32 dormitory-type buildings in 16 regions.” In addition to building more of these, Recto said the Duterte administration could “consider other designs, like gymnasiums, which will serve as evacuation centers during calamities.” As main author of Senate Bill 805, which aims to construct multipurpose gyms in every city and municipality, he said these facilities could be used “not just for sports activities but also in times of disaster.” This way, the sports-cum-evac-
uation center hits two birds with one stone, Recto said adding: “It addresses the shortage of covered sports facilities in municipalities and the need for a disaster-resilient safe building people can seek shelter in during calamities.” The senator added that such a multipurpose civic center can be the venue for community events on ordinary days but when calamity strikes, could take in evacuees, explaining that the building can also store disaster-rescue equipment and emergency supplies. “It can also serve as the headquarters of the local disaster management committee,” Recto said, noting that putting up that building in every town will prevent schools from becoming default evacuation areas during calamities, a practice which turns students into displaced persons, too. He said “disasters displace two kinds of people: those who are directly hit and the children, who, though unscathed, have to temporarily give up their classrooms to evacuees.” Recto recalled that in conflict areas, the vacation of children whose
Airport now open
Evacuees sit outside a classroom, that serves as their temporary shelter in Guinobatan, following the sporadic eruption of Mayon Volcano last Friday in Albay province. More than 74,000 people are staying in dozens of emergency shelters after fleeing the danger zone around Mount Mayon. A lawmaker had urged the government to construct permanent evacuation centers so that schools won’t have to be used as temporary shelters. AP Photo/Bullit Marquez
schools are used to house refugees “is coterminous with the length of fighting.” The senator said these structures are needed in the second most disaster-prone country in the world “where mass evacuations happen all the time.”
Aid from DOLE
The Department of Labor and Employment (DOLE) has allocated P30 million to provide aid to the individuals who were affected by the eruption of Mayon Volcano in the Bicol region. In an interview, Labor Secre-
tary Silvestre H. Bello III said the fund will benefit the initially estimated 7,000 displaced workers living near the vicinity of Mayon Volcano. He added this could still increase if the eruption would continue in the coming days. “We are considering [providing] emergency employment to the displaced workers. We will also extend the Government Internship Program to the children of the residents who were affected by the eruption,” Bello said. Last Friday the National Disaster
Risk Reduction and Management Council (NDRRMC) reported over 81,000 individuals, who were living in the danger zone of the volcano, were evacuated by the local government in the Bicol region because of the eruption. Mayon Volcano started spewing ash and lava on January 13. The Philippine Institute of Volcanology and Seismology has declared an Alert Level 4 for the volcano, a notch below its highest level, in anticipation of its hazardous eruption in the coming days. The government has allotted
Legazpi Airport, which has remained closed for several days due to the continued eruption of Mount Mayon, rendering the surrounding areas covered in clouds of ash, has been opened for commercial operations last Friday. The Civil Aviation Authority of the Philippines (Caap) in a “notice-to-airmen,” said: “Legazpi Airport is opened for commercial operations effective today [January 27] from 3 p.m. to 5 p.m. and from 6 a.m. to 5 p.m. daily until January 31.” “Legazpi, Naga and Masbate Airports are operational pursuant to visual meteorological conditions,” the Caap said in its latest advisory. Mayon Volcano is still on Alert Level 4 and the Caap advised pilots flying near the area to exercise extreme caution, as ash from volcanic eruption can be hazardous to the aircraft. Scores of f lights have been canceled since Mayon started to spew thick ash clouds last week, especially from the two local air carriers, Philippine Airlines and Cebu Pacific, including their respective subsidiaries, Pal Express and Cebgo respectively. Passengers were advised to coordinate with their respective airlines on the flight schedules that may be affected by the changing visibility brought about by continuing Mayon Volcano eruption. With Samuel P. Medenilla
Guerrero thanks US for support DENR’s Cimatu designates Leones as his spokesman From now on, we during Marawi City battle will have a weekly By Jonathan L. Mayuga
By Rene Acosta @reneacostaBM
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rmed Forces Chief of Staff Gen. Rey Leonardo Guerrero met with United States Air Force Secretary Heather Ann Wilson over the weekend wherein both discussed wideranging issues. The meeting was part of Wilson’s three-day visit in the country, which included calls on Defense Secretary Delfin N. Lorenzana and top Philippine Air Force (PAF) officials. During their meeting, Guerrero thanked Wilson for US support in the successful operations against the Maute-IS Group in Marawi City, especially in capability and technical cooperation. The US provided technical support to the operating troops during the five months of operations that freed Marawi from the clutches of local and international terrorists. Among others, the US provided
a surveillance place and a drone during the operation, which helped Filipino troops monitor the movements and identify the locations of the terrorists. During their meeting, Guerrero also thanked Wilson over the US military’s continuing assistance to the Armed Forces, especially in developing the capabilities of the PAF. Two of the Philippine Navy’s latest addition to its frigates, the BRP Gregorio del Pilar and the BRP Ramon Alcaraz, came from the US. Wilson talked about the mutual benefits of bilateral training between the United States and PAF, including live-fire exercises. Both officials agreed that peace and security is essential in Southeast Asia. Wilson is the 24th secretary of the Air Force, one of the three components of the US Department of Defense. She is responsible in organizing, training and equipping of the 660,000 US Air Force personnel. With a report from PNA
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@jonlmayuga
nvironment Secretary Roy A. Cimatu has appointed Undersecretary for Environment and International Affairs Jonas R. Leones as his spokesman. Cimatu said the designation took effect last week. Last Thursday Leones, who held his first meeting with the Public Affairs Office (PAO) chiefs of the Department of Environment and Natural Resources (DENR), told the BusinessMirror that Cimatu wants somebody who can deal with reporters’ important questions and queries. “The DENR Secretary just wants to ensure transparency,” said Leones, a lawyer. “From now on, we will have a weekly forum and I would like to ask our friends in the media to help us disseminate important information about our programs and activities,” he added. Leones has previously held key positions in the DENR, including as director of the Environmental Management Bureau. He is the concurrent point person of the DENR on environmental issues, such as international agreements of which the Philippines is a party or a signatory, including the Paris Agreement, wherein the country conditionally promised to reduce carbon emissions by 70 percent between
2020 and 2030 as part of the global effort to limit global temperature increase below the 1.5 degrees limit. According to Leones, the DENR chief wants all DENR PAO chiefs and their information officers to act in unison to effectively communicate President Duterte and Cimatu’s plans and programs for the environment and naturalresources sector. Starting next month, there will be a weekly forum with the DENR beat reporters and members of the media, during which queries about important issues and concerns will be answered by him and other concerned officials, he said. The media-shy Cimatu, a former Armed Forces of the Philippines chief of staff, has his hands full visiting DENR regional offices since he took over in May last year. He has also conducted a site inspection in large-scale mines in various parts of the country. He has declined interview requests and is elusive when sought for comments on pressing issues that require the response of the office of the DENR secretary. Cimatu is currently faced with tough decisions, particularly on mining issues, such as the appeals on the mine closure and suspension orders affecting over two dozen large-scale operating mines, and other controversial policy declarations of his
forum and I would like to ask our friends in the media to help us disseminate important information about our programs and activities.”—Leones
predecessor, Regina Paz L. Lopez. The mining industry’s big players represented by the Chamber of Mines of the Philippines is seeking a reversal of some of these policies, including the ban on open-pit mining method on select ores, such as gold, copper and silver and complexed ores, the cancellation of 75 mineral production sharing agreements for projects within or near watersheds, and several environmental compliance certificates for projects that threaten the country’s biodiversity.
Economy
A4 Monday, January 29, 2018 • Editors: Vittorio V. Vitug and Max V. de Leon
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‘Energy-procurement reforms to save consumers ₧13 billion’
Photo shows linemen doing maintenance work at some electrical posts in Makati City. A lawmaker is urging the Senate to pass a bill that would allow consumers to save billions of pesos in power charges. ALYSA SALEN
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By Butch Fernandez
@butchfBM
he Senate leadership was asked to fast-track passage of remedial law estimated to generate multibillion-peso annual savings for electric consumers.
To be known as Electricity Procurement Act of 2018, Senate Bill (SB) 1653 would enforce a competitive, transparent and uniform electricity-procurement process designed to “save consumers as much as P13 billion annually in electricity charges.” Authored by Sen. Sherwin T. Gatchalian, the bill, likewise, mandates the Energy Regulatory Com-
mission to set a maximum reserve price in the bidding process of electricity procurement, saying, “This will reveal the real cost of electricity and, in turn, will provide the lowest price for the benefit of consumers.” Gatchalian, who chairs the Senate Energy Committee, pointed out that the generation charge, which makes up about half of the costs shouldered by consumers in their monthly electricity bills, has long been the product of negotiated contracts between distribution utilities and generation companies. “This mysterious process, hidden from public scrutiny, has often given rise to allegations of sweetheart deals and raised concerns about how the prices of contracts unduly favor generation companies at the expense of the consumers,” the senator said. In seeking its early enactment into law of SB 1653, Gatchalian explains that the “revolutionary bill will remove the veil of secrecy that has long covered power-supply contracting—a veil that should not have been there in the first place, because it is the consumers who have been paying for every single centavo of what has been contracted.” Allaying concerns this will negatively affect power prices, Gatchal-
450 college workers may lose cash aid this year By Samuel P. Medenilla
@sam_medenilla
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ver 400 former higher education institutions (HEI) employees, who were displaced because of the K to 12 program, are now at risk of losing their financial aid from the Department of Labor and Employment (DOLE). This after the DOLE’s Assistance Measure Program received a budget of only P10 million for this year. Under the AMP, the DOLE provides a temporary cash aid to HEI workers, who lost their job because of the effects of the K to 12 program. In a phone interview, DOLE’s Bureau of Local Employment Director Dominique R. Tutay told the BusinessMirror that their current AMP budget is insufficient to cover for the needs of the remaining 450 AMP beneficiaries. “P10 million is not enough. For January alone, we will already need P13 million for the AMP beneficiaries,” Tutay said. She added they already requested for supplemental funding to raise their AMP budget for 2018 to P81 million. “We will also need this, since we are targeting to accommodate another 345 HEI employees this year through the AMP. I am confident our request will be granted,” Tutay said. In a separate interview, DOLE Financial
and Management Service Director Warren M. Miclat said there is an existing P150million budget for the AMP in the 2018 General Appropriations Act. “But this is for later release from the DBM [Department of Budget and Management]. This means this will not be released unless requested,” Miclat said. The DOLE decided to trim down its budget request for the AMP this year in anticipation of the phaseout of the program by 2022. The AMP has a regular budget allocation of P500 million from 2015, when it was first implemented, up to 2017. The DOLE drew criticisms from lawmakers in previous budget deliberations, since it was only able to use a small fraction of the large AMP budget. In the last three years the DOLE was only able to spend around P100 million to provide temporary cash aid to 600 displaced HEIs employees. Out of these beneficiaries 147 were already able to graduate from AMP. Tutay attributed the underutilization of the AMP fund to the lower-thanexpected displacement caused by the K to 12 program. She said the P500-million budget was based on the “worst-case scenario” projection of the Department of Education (DepEd), wherein around 12,000 HEIs personnel will lose their jobs during the transition phase for K to 12.
We will also need this, since we are targeting to accommodate another 345 HEI employees this year through the AMP. I am confident our request will be granted.”—Tutay The bulk of displacement was anticipated to be registered in 2016 and 2017, when enrollment in HEIs will be at its lowest as the DepEd has started implementing its Senior High program. However, as of Januar y, the DOLE said only around 1,400 HEI employees lost their jobs because of the K to 12 program. Tutay noted the remaining 800 of the displaced workers, who did not avail of the AMP, were hired by the DepEd or have applied for the scholarship program of the Commission on Higher Education. “Some of them were also employed in other schools, or they decided to change careers,” she said.
GATCHALIAN: “This mysterious process, hidden from public scrutiny, has often given rise to allegations of sweetheart deals and raised concerns about how the prices of contracts unduly favor generation companies at the expense of the consumers.”
ian foresees that, under the proposed system, competing power generators will be compelled to bring down rates to get contracts from distribution utilities. The senator estimates this increased competition “would then drive generation costs down, resulting into an average savings of P60 for the average household consuming 200 kilowatt hours per month —equivalent to approximately 2 kilograms of rice.” Moving to ensure consumer confidence in the procurement process, Gatchalian’s SB 1653 also mandates consumer representation at every step of the process, even as “an electronic portal containing all relevant information on the Competitive Selection Process will be made easily accessible to the public.”
Court orders testing of imports before sale to public
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Makati court has ordered commodity imports to go through mandatory sampling and testing to ensure their quality as required by law before they are released for sale to the public. The decision by Judge Phoeve Meer, released only this month, declared as null the Department of Trade and Industry (DTI) orders issued in previous administrations allowing imports to be conditionally released to their importers before testing. The nullified DTI orders allowed the issuance of “provisional” import commodity clearance and release of the untested shipments. The court said the law (Republic Act 4109) said testing “must precede” the release of the shipments, “not the other way around.” Last year, with infrastructure and construction on the uptrend, steel reinforcement bars (rebars) in the thousands of tons were imported from China through Subic and released to their importers prior to testing. On the other hand, local steel producers had to comply with the law requiring them to submit one sample for testing per 20 tons. If imports and local rebars were equally treated, for every 5,000 metric tons of shipment or production, 250 samples should be submitted for testing. The decision to nullify said the DTI order in effect amended and contradicted the law which, among others, requires the “inspection and certification [of imports] before the BOC [Bureau of Customs] may release or discharge the import shipment.” It also said the implementing rules of the law were drafted and passed by the head of the Bureau of Product Standards all by himself when the law required the approval of the trade secretary and the President.
Technology impacts on consumer attitudes and behaviors–report
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onsumer spending is expected to grow at its strongest pace in seven years in 2018, but marketers need to consider the changing consumers’ attitudes and purchasing behaviors, according to an international market-research firm. “Shifting consumer attitudes and behaviors will continue to cause disruption for business in 2018, with mobile technology and Internet accessibility playing a key role in shaping these changes,” said Euromonitor International in the report “Top 10 Global Consumer Trends for 2018.” The report pointed out that the Internet especially has increased awareness of global issues, inspiring consumers to pursue greater social responsibility. “Younger consumers are embracing mindfulness and betterment, choosing clean living aimed at reducing harm to themselves, others and the world around them,” it said. Budget retailers also thrive as the financial crisis continues to cast a shadow on consumer behavior despite reaching its 10-year anniversary, it added. “Consumers of all ages want and need less. Ownership is under question, and flexible, minimalist living is gaining popularity, with consumers sharing everything from clothing, household items and pets through to cars and living spaces,” it said. Affordability, convenience and sustain-
ability are key factors in the growth of the sharing economy. “People living hectic and increasingly mobile lifestyles continue looking for ways to cut costs, save time and live freely in a way that is also eco-friendly,” it noted. The report said consumers will seek more radical transparency from brands this year. “The desire for uniqueness and true authenticity is driving customization to a new level, with consumers becoming the creators in 2018, feeding into the design of products and becoming involved in the production process,” it added. Euromonitor International report also identified “View in My Roomers” trend this year, in which consumers would be able to visualize products before they try or buy, both in-store and online. “Consumers can be prone to abandon purchases, particularly for big-ticket items,” it said. “For items such as clothing or accessories, consumers who are undecided on what size or colour to buy, often order multiple options and then return the unwanted items. This is a frustrating way to shop and costly for businesses.” Augmented reality improves the consumer experience, providing a more lifelike view of the items and facilitates operational efficiencies for businesses by potentially reducing return rates. Philexport News & Features
Foreign linkages promote innovation capabilities of Pinoy manufacturers
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trengthening foreign linkages and participation in the global value chain (GVC) exerts a positive impact on both process and product innovation of Filipino companies, according to a new study released by a state-run think tank. The report, titled “Impact of Foreign Linkages on Innovation Activity of Manufacturing Firms in Calabarzon,” published by the Philippine Institute for Development Studies (Pids), sought to analyze previous literature and surveys on the manufacturing industry in the Cavite, Laguna, Batangas, Rizal and Quezon (Calabarzon) area to probe deeper into
the role of foreign linkages in the innovation activities of manufacturing firms. The report noted insights and findings reviewed underscored the potential of foreign linkages to improve both product and process innovation capabilities of Filipino companies. It further referenced relevant research pertaining to Asean member-states, including the Philippines, indicating that “innovation is an important determinant of small and medium enterprises’ (SMEs) participation in global value chains.” This is because it is through product and process innovations
that SMEs are able to meet the requirements of higher-tier firms, the Pids document said. Furthermore, it found that firms with more foreign linkages are “able to introduce new products, improve procurement processes and explore new markets more.” Foreign linkages “can indeed positively affect a firm’s likelihood to undertake product innovation that involves the development of a new product using a technology new to the firm,” the paper said . “On the other hand, process innovation has consistently shown to be positively influenced by foreign linkages.” The report defines a product in-
novator as a firm that has achieved any of four specific activities. One of these is that it has introduced a new product by redesigning packaging or significantly changing the appearance design of existing products. Another is it has introduced a new product by significantly improving on existing products. It has also developed a totally new product based on “existing” technologies for the establishment. Finally, it has developed a new product based on “new” technologies for the establishment. On the other hand, a firm is considered a process innovator if it has adopted a new method or significantly improved on a
method for any of the following: procurement, sales management, accounting, inventor y control and logistics. “The potential of foreign linkages as a means of establishing Philippine firms to the global value chain and market, as well as ensuring that domestic firms will continue to compete and innovate, are key points that can be contributed by this study,” authors Francis Mark A. Quimba and Sylwyn C. Calizo Jr. said. They recommend promoting stronger regional and/or global linkages to sustain manufacturing growth. As such, they said, it is important to be wary of policies that
might be detrimental to the formation of backward linkages. For instance, the proposed change in value-added tax (VAT) treatments of indirect exports from zero-rated to VAT-able “will have perverse effects on backward linkages of export activity,” said the report. Its other suggestions are to support the development of R&D capability of firms; highlight the role of innovation intermediaries; and recognize the value of establishmentlevel data on innovation activities of firms. In particular, it proposes having a measure for identifying where the firm is innovating across the global value chain. Philexport News & Features
Agriculture/Commodities BusinessMirror
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Editor: Jennifer A. Ng • Monday, January 29, 2018
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PHL chicken supply down 44%–report
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he country’s dressed-chicken inventory as of January 15 declined by nearly 44 percent to 13,660.03 metric tons (MT), from last year’s 24,314.63 MT, according to the National Meat Inspection Service (NMIS).
Data from the NMIS showed that the latest chicken inventory was lower compared to the levels recorded last month and the previous week. Chicken inventory as of January 15 was also lower than the 16,989.06 MT recorded at the start of 2018. According to the NMIS, poultry in cold storages reached 23,324.81 MT last December. As of January 8, inventory fell to 15,966.41 MT. Of the total chicken inventory as of January 15, 7,444.56 MT came from local producers, while the rest was imported. Among all the regions in the country, Region 3, or Central Luzon, recorded the highest inventory of local and imported chicken at 4,875.68 MT, followed by the National Capital Region (NCR) with 4,150.47 MT. NMIS, an attached agency of the Department of Agriculture, said the figures did not include
fresh, chilled chicken and mechanically deboned meat, as well as those already in distribution channels. The agency also said the survey covered only accredited cold-storage facilities. Industry sources earlier told the BusinessMirror that the volume of dressed in cold storages usually declines after the Christmas season, when stocks go up to meet the expected increase in demand. In contrast, NMIS data showed that frozen-pork inventory as of January 15 rose by 12.4 percent to 22,134.42 MT, from 19,693.87 MT recorded in the same period last year. Of the inventory during the period, the bulk consisted of imports at 21,030.51 MT. Locally produced pork in cold storages reached only 1,103.91 MT, according to NMIS data. Region 3 had the highest fro-
Report calls for hog farm moratorium in Iowa, rollout of new permit system
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zen-pork inventory at 7,103.93 MT, of which 7,063.03 MT were imported, figures from the NMIS showed. The NCR had the second highest frozen-pork inventory at 6,716.74 MT, of which 6,623.88 MT were imports. Last December NMIS data showed frozen-pork inventory reached 27,762.22 MT, of which 27,263.08 MT were purchased from abroad. As of January 8, pork imports in cold-storages declined to 24,292.09 MT.
The NMIS said the frozen-pork inventory included carcass, primal and specialty cuts. The survey covered accredited commercial and in-house cold-storage facilities. Filipino traders are allowed to purchase pork and chicken from abroad, and they usually do so via the minimum access volume scheme of the World Trade Organization. Pork imported through the MAV scheme is slapped a lower tariff.
ES MOINES, Iowa—A new report on the rapid expansion of hog farms in Iowa calls for a moratorium on new barns and concludes that the state’s regulatory system is failing to protect the environment and public health for the sake of profit of the politically powerful livestock industry. “A tipping point has been reached. Rural Iowans have every reason to be concerned,” said the report released last Thursday by retired University of Iowa professors James Merchant and David Osterberg. Merchant is professor emeritus of Public Health and Medicine and founded the College of Public Health, and Osterberg is professor emeritus of Occupational and Environmental Health. He is a cofounder of the Iowa Policy Project, a liberal-leaning Iowa City-based nonprofit group that offers research on environmental, economic, energy and tax policies, which released the report. They point out that the number of Iowa livestock farms called concentrated animal-feeding operations, or Cafos, has grown to more than 10,000, from 722 in 2001. The annual growth has been around 500 new or expanded barns a year for the last decade. Most of them are built to house pigs to satisfy the rapidly growing export mar-
ket for pork, which grew to nearly $6 billion in 2016, up 7 percent in one year. Exports to the China and Hong Kong markets broke the $1-billion mark for the first time in 2016, and exports are expected to further expand to meet China’s insatiable appetite for pork. The report concludes that livestock production contributes to degradation of water quality, increased cases of asthma and other illnesses among residents near hog-confinement operations and a 20-percent to 40-percent decline in the value of homes near hog farms because of the odor. “The current industrial model is not sustainable given its high input costs, rising energy demands, fresh-water needs, climate change and adverse environmental and public health impacts,” the report concluded. “The very real pushback from rural residents and communities will, however, be sustained.” Merchant and Osterberg made several recommendations, including revision of the permitting process for new barns that would allow for increased local input, a moratorium on new construction and establishment of land covenants and other local legal strategies to limit local livestock barn growth. AP
AseanMonday
A6 Monday, January 29, 2018 • Editor: Max V. de Leon
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Refugees in Indonesia hoped for brief stay, but many may be stuck for life
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AKARTA, Indonesia—Ibrahim Adam fled armed conflict in his home region of Darfur, Sudan, in 2011 and ended up seeking asylum in Indonesia, hoping to be eventually resettled in Australia or another Western country so he could resume his dream of being an economist. But, after languishing for nearly seven years in Indonesia—where he cannot legally work, access public services or obtain citizenship— Ibrahim recently received bad news: His resettlement is unlikely to ever happen. The United Nations Refugee Agency’s office in Indonesia has begun informing the nearly 14,000 refugees and asylum-seekers in the country that they should not expect to be welcomed by another country. Instead, they should prepare to assimilate into Indonesian society as best as they can, or consider returning to their strife-torn countries. “Still no home, and no hope,” said Ibrahim, 33, who was granted UN refugee status in 2015. Globally, there are more than 24 million certified refugees and asylum-seekers, the highest levels since World War II, according to the United Nations. Historically, the chances of refugees ever being resettled are only around 1 percent. Those refugees residing in Indonesia face the additional obstacle that the United States and Australia, the two main resettlement destinations for refugees here, have put in place more stringent immigration policies, further decreasing their already long odds. “We are as honest as we can be, and try to explain to them how unpredictable things are,” said Thomas Vargas, head of the UN Refugee Agency office in Indonesia. “We’re trying to tell them, ‘Have realistic expectations,’ because we’re having a global crisis and there are limited options.” Vargas added: “In general, resettlement countries were more generous in the past about providing opportunities in this part of the world.” For years, asylum-seekers from the Middle East and South Asia have used Indonesia as a transit point to reach Australia, boarding rickety wooden boats run by human smugglers for the perilous voyage across the Indian Ocean. In 2013, however, the Australian government adopted strict new measures to discourage future arrivals
We’re trying to tell them, ‘Have realistic expectations,’ because we’re having a global crisis and there are limited options.”
—Vargas
by immediately transferring those who made it to its shores to spartan detention centers in Papua New Guinea and Nauru, and refusing to ever consider them for resettlement. Australia has also towed boats packed with asylum-seekers back into Indonesian waters and has banned the resettlement of refugees who registered with the UN Refugee Agency in Indonesia after July 1, 2014. The situation of refugees hoping for resettlement in the West became more dire after President Donald J. Trump took office last January. His administration’s travel ban blocks people from eight countries from entering the US, including Somalia, the country with the secondhighest number of refugees and asylum-seekers stuck in Indonesia. The Trump administration is planning to cap the number of global refugees allowed to immigrate to the United States at as low as 40,000 for fiscal 2018. Last year only about 400 refugees living in Indonesia were resettled in the US, according to the UN. Indonesia is not a signatory to the 1951 United Nation refugee convention, which prohibits governments from returning people fleeing persecution to areas where they face serious threats, but the country has allowed certified refugees to remain here as they await resettlement in a third country. Indonesia also allows asylum-seekers to wait in the country as their cases are
Asylum seekers, mostly from Afghanistan, Somalia and Sudan, camp outside a filled-to-capacity immigration detention center in Jakarta, Indonesia, on January 4. The United Nations Refugee Agency’s office in Indonesia has begun informing the nearly 14,000 refugees and asylum seekers in the country that they should not expect to be welcomed by another country. Kemal Jufri/The New York Times
examined by the UN. Indonesian officials, however, say that permanent resettlement here is not an option. “Indonesia is only a transit country, to accommodate migrants to their destination country,” said Agung Sampurno, a spokesman for the Directorate General of Immigration. “If the UN asks us to make it permanent, Indonesia can’t do that.” Thomas Brown, an Australian researcher who focuses on refugee issues in Indonesia, said it was a punch in the gut for refugees and asylumseekers to hear from the UN that they may never leave the country. “There is a real possibility that some may never be resettled in their lifetime,” Brown said. Such a dead end is beyond the comprehension of Hamid Amini and Ali Azimi, two 18-year-olds from Afghanistan who made their way to Indonesia as unaccompanied minors in 2014 and 2015, after fleeing attacks by the Taliban against their ethnic minority Hazara communities. Both have been granted refugee status by the UN but were forced to move out of a shelter for refugee minors in Jakarta, run by an international aid organization, when they turned 18. They have been surviving on private donations since. “We have a dark life,” Azimi said. Still, Amini has more reason to hope than many Indonesian refugees. He said he had received a resettlement approval notification in February from the US government but is still waiting for clearance to fly, months later.
By comparison, his friend and fellow Afghan refugee, Sardar Hussain, who received resettlement approval during the final weeks of the Obama administration, was on a plane bound for Los Angeles just days later, and is now settled in Washington state. Amini said he fears the Trump administration’s immigration policies have effectively frozen his resettlement in America. “We all know about Trump,” Amini said. “Mr. Trump is a president. He should look at refugees as humans.” The International Organization for Migration (IOM), a UN agency, is assisting more than 8,400 refugees and asylum-seekers in Indonesia, including those being held in immigration detention centers and those living among local communities. The organization also runs a voluntary repatriation program for refugees who opt to return home rather than waiting in limbo here for the increasingly unlikely possibility of being resettled. Mark Getchell, the IOM’s chief of mission in Indonesia, said the policy changes in Australia and the United States, combined with a reluctance by Canada, New Zealand and European nations to take in additional refugees, means the number of resettlements are only about 400 people a year now in Indonesia. That is less than 3 percent of the total refugee and asylum-seeker population in Indonesia, whose levels have remained constant at around 14,000 in recent years. IOM is funding vocational
training courses for refugees, ranging from furniture-making to cutting hair to giving massages and manicures. It is also providing access to online study courses for minors and adults. Vargas, head of the UN Refugee Agency office in Indonesia, said the agency continues to urge refugees here to “hope for the best and prevent the worst,” stressing that learning new work and educational skills could make them more attractive to potential resettlement countries. But for many, job skills may not be enough. Families, single women with children and unaccompanied minors are given priority for resettlement in the US and other Western countries among refugees in Indonesia, as they are designated as “most vulnerable,” according to the United Nations. This does not sit well with Ibrahim, from Darfur, who received an economics degree from Alneelian University in Khartoum, Sudan, in 2009, and earns much-needed income in Jakarta by surreptitiously teaching English classes at local public schools. “They have to give me a chance also,” he said. Analysts said Ibrahim faces additional obstacles: He is single, Muslim and of military age, which could make countries worried about terrorism less likely to take him in. Ibrahim bristles at the suggestion that he is a security risk. “I’m not suffering here so I can then go and attack someone,” he said. “I just want to live.” New York Times News Service
Hollywood star Michelle Yeoh calls Rohingya plight ‘despicable’
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OX’S BA ZAR, Bangladesh—Holly wood star Michelle Yeoh says she’s appalled by the plight of the hundreds of thousands of Rohingya Muslims who have fled violence in Myanmar into Bangladesh. Yeoh, a goodwill ambassador for the United Nations Development Program, visited sprawling refugee camps in Bangladesh’s Cox’s Bazar last Saturday as part of a Malaysian delegation led by the Southeast Asian nation’s military chief. The team visited a hospital set up by Malaysia and distributed relief goods in another camp. “It is very important that we’re here, because what the Rohingya people are going through is despicable, and it’s very, very tragic. It should not be allowed,” she said. “Every single one of them deserves to have the human rights that should be given to them.”
Nearly 700,000 Rohingya have fled Myanmar since last August in what the UN has described as ethnic cleansing. Myanmar’s military has denied the charges, saying they were conducting “clearance operations” following attacks by Rohingya insurgents on police posts. Yeoh was most recently seen in sci-fi TV series Star Trek: Discovery. She also played Myanmar’s civilian leader Aung San Suu Kyi in The Lady, a 2011 biopic about the Nobel Peace laureate struggle to bring democracy to her country. Suu Kyi has faced widespread international criticism for not speaking out in defense of the Rohingya. Former New Mexico Gov. Bill Richardson resigned from an advisory panel on the crisis this past week, calling it a “whitewash and a cheerleading operation” for Suu Kyi. AP
Malaysian actress Michelle Yeoh holds a Rohingya refugee child during her visit to the Malaysia field hospital at Kutupalong refugee camp near Cox’s Bazar, Bangladesh, last Saturday. A special delegation led by Michelle Yeoh and Malaysian Armed Forces chief Gen. Raja Mohamad Affandi last Saturday visited Rohingya refugee camp and distributed relief material items, apart from evaluating the impact of the aid. AP/Manish Swarup
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Cambodia, India to expand ties in IT, infrastructure
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EW DELHI—The leaders of India and Cambodia last Saturday agreed to work toward a bilateral investment treaty that could see tens of millions of dollars pour into the Southeast Asian nation. The meeting between Cambodian Prime Minister Hun Sen and Indian Prime Minister Narendra Modi saw Cambodia invite Indian investment in information technology, pharmaceuticals, agriculture and horticulture, infrastructure and small and medium enterprises. A broader treaty will take time but India agreed to provide lines of credit, including nearly $37 million to finance a Cambodian water project. India also offered lines of credit for setting up specialty hospitals, expanding road, rail and digital connectivity and construction of a highpowered electric line. A joint statement said Modi also offered to train Cambodian youth in information technology. The leaders held talks in New Delhi at the end of a summit attended by 10 Southeast Asian leaders commemorating the 25th anniversary of Asean-India ties. India is seeking to deepen bonds with Southeast Asia amid wariness over China’s growing influence in the region. Modi also reaffirmed India’s commitment to undertake restoration and conservation work at the ancient temple of Lord Shiva at Preah Vihear in Cambodia. The two sides expressed satisfaction over the ongoing restoration work at Ta Prohm temple being carried out by the Archaeological Survey of India. The Cambodian prime minister concluded his visit to India last Sunday. AP
Grim reminders of Vietnam war, 4 decades later
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ANOI, Vietnam—It’s been over for 40-plus years, the war that Americans simply call Vietnam but the Vietnamese refer to as their Resistance War Against America. Yet it lingers in so many ways, as was apparent last week when Defense Secretary Jim Mattis dropped in for a couple of days of defense diplomacy with a former enemy. Although he never served in Vietnam and had not previously visited the country, Mattis has said he learned from a lot of Marines who did. In his meeting with Vietnamese government leaders, Mattis’s focus was on a peaceful future. Not the bloody past. Still, the legacy of the conflict that divided America and ultimately unified Vietnam confronted Mattis almost immediately after his arrival on Wednesday as he visited a United States office that oversees the search for remains of American servicemen still missing from the war. More than 1,200 Americans are unaccounted for in Vietnam and 350 more are missing in Lao PDR, Cambodia and China, according to the Pentagon’s POW-MIA Accounting Agency. That accounting effort, decades in the making and dependent on cooperation from Hanoi, is likely to continue for decades. Later, while talking to his Vietnamese counterpart, Mattis was presented with photo identification cards of two US servicemen from the war. Details weren’t made public. More than 58,000 United States service members were killed in the war, including more than 1,200 in Cambodia and Laos. Estimates of the number of Vietnamese killed vary widely, from about 2 million to nearly twice that. For the Vietnamese, the war was a continuation of their fight for independence from French colonial masters. And it was quickly followed by a border war with China in 1979. The country reunified and remains communist, although it has opened up to foreign investment. Hanoi is a bustling, vibrant capital city. Among Vietnam’s other reminders of the war: environmental damage and unexploded mines. Vietnamese still suffer from the effects of herbicides, including Agent Orange, sprayed by US forces to defoliate the countryside. AP
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Editor: Lyn Resurreccion • Monday, January 29, 2018 A7
Billionaire Saudi prince is freed from detention
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EIRUT—For more than 80 days, he was locked up, incommunicado, in the capital of the kingdom named after his family, as alarm spread among his relatives and business partners. Then last Saturday Prince Alwaleed bin Talal, Saudi Arabia’s most famous investor and one of the world’s richest men, reappeared, giving a videotaped tour of the luxury suite in the Ritz-Carlton hotel in Riyadh that he said had been his home for the past few months. Thinner and sporting a scruffy saltand-pepper beard, he pointed out his tennis shoes, his dining room and his salads; he hoisted a Diet Pepsi for inspection before taking a sip. “I’m very comfortable because I’m in my country, I’m in my city, so I feel at home,” he said in an interview with Reuters. “It’s no problem at all. Everything’s fine.” A few hours later, Prince Alwaleed was released and returned to his mansion in Riyadh, according to two associates of the prince’s family, who spoke on the condition of anonymity because the release had not
been officially announced. But his freedom, it is widely presumed, was purchased by handing over a chunk of his immense fortune to the government. The release of Prince Alwaleed appeared to signal the winding down of an opaque, two-and-a-half-month operation that Saudi officials said was meant to stamp out the kingdom’s endemic corruption. In addition to Prince Alwaleed, at least 10 other princes, four ministers and tens of former ministers were taken into custody last November. Many of the high-profile detainees have been released, apparently after being cleared or agreeing to hand over significant assets to the government. They included Waleed al-Ibrahim, the main owner of Middle East Broadcasting Co., a satellite broadcaster; Khalid al-Tuwaijri, the former head of the royal court; and Fawaz
Alhokair, who owns a large fashion retail company. While it remains to be seen whether the effort to root out Saudi Arabia’s widespread graft will succeed, many Saudis suspect that another primary goal of the leader who orchestrated the arrests, Crown Prince Mohammed bin Salman, is a radical reshuffle of the main players in the Saudi economy, with the apparent aim of casting himself in the lead role. “In the short run, it has worked, by generating some assets and consolidating his power, and it has been popular in a way that could offset some of the anger over austerity measures,” said Steffen Hertog, a professor at the London School of Economics, describing Mohammed’s gambit. “But in the mid to long term, I think confidence in the private sector has taken a hit, and this could be difficult to rebuild.” The entire process, from the initial arrests through the detentions, has been shrouded in such secrecy that it remains unclear exactly who was taken into custody, what they were accused of and what sort of deals they had to strike to get out. But interviews with more than a dozen people, most of whom spoke on the condition of anonymity to avoid provoking the prince, have pulled back the curtain on some details of the arrests and
bin Talal AP the detainees’ time in their five-star jail. It started with a storm of phone calls from the Royal Court. In early-November princes, businessmen and government ministers were invited to dinner with King Salman or to meetings with Mohammed. Others were handcuffed in their homes and dragged off like criminals. All were detained, and most landed in what became the world’s most luxurious prison. The Riyadh Ritz-Carlton stands behind high walls and ornate gates, across a freeway from the diplomatic district. The hotel has long welcomed distinguished guests, and when President Donald J. Trump and his family stayed there last May, American and Saudi flags were
projected on its façade. The hotel’s new guests—or inmates—received a cooler welcome. Each got his own room, but had to leave the door open, with guards posted outside. The detainees could order room service and watch TV, but they had no phones or Internet, to prevent appeals for help. The rooms were still lavish, but their curtain cords and glass shower doors had been removed to prevent suicide attempts. They were not allowed to summon lawyers, who might have been able to help, and many succumbed to being stripped of their substantial assets. Many of the detainees were overweight or had health problems, and some were in their 70s, so a doctor noted their medical needs. Since none had packed for an extended stay, a tailor came, took their measurements and soon brought them new outfits. Eventually, Royal Court officials confronted the detainees with files on assets they said had been stolen from the state and pressed the detainees to transfer them to the government. Mohammed, 32, who is spearheading efforts to diversify the kingdom’s economy and loosen its strict social conventions, has said that he believes the campaign could recover more than $100 billion in ill-gotten gains. To some, Mohammed’s anticorruption campaign could be an effective
way to address a problem that has long plagued the kingdom. “The campaign is, to my mind, a restriction of the practice and the ways of behaving, and it might even eliminate it altogether, other than to a few people,” said Bernard Haykel, a professor of Near Eastern Studies at Princeton University who studies Saudi Arabia. Others have called it a shakedown, noting that the detainees were denied access to their lawyers and could not negotiate freely or defend themselves. “It is just like playing Monopoly with a bunch of guys, but you are in charge of everything, you can change the rules, and everyone has to stay at the table and play with you,” said Jamal Khashoggi, a veteran Saudi journalist who is in selfimposed exile. Mohammed’s critics say that wrapped up in the anticorruption efforts are tactics aimed at increasing his control of the economy while curbing his rivals’ power and prominence. The arrest of Prince Alwaleed—who, like Mohammed, is a grandson of the kingdom’s founder—sent shock waves through the international business community, which had seen him as one of the more open faces of the normally private kingdom. He has been referred to as the Warren Buffett of the Middle East, and Forbes magazine estimates his net worth at $17.4 billion. New York Times News Service
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British lords get ready to disrupt Theresa May’s route to Brexit
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he bumpy journey toward Brexit reaches another fork in the road this week as the upper chamber of the British parliament plans to rewrite a key piece of Prime Minister Theresa May’s legislation. What happens to the European Union withdrawal bill in the predominantly pro-EU House of Lords could lead to a smoother divorce, a showdown with the government or even a constitutional crisis. It makes planned changes by the peers more than just a perfunctory stage in the sometimes-complex democratic machinery of Westminster. The law aims to replicate thousands of existing European Union regulations, so there’s no legal black hole on the day Britain’s membership ceases, currently set for March 29 next year. That process could go awry if the lords halt or, more likely, demand changes that might include delaying the exit date or increasing the chance of second public vote on the issue. “Drama is not a word usually associated with the House of Lords,” said Tom Strathclyde, a Conservative peer who used to guide legislation through the upper house. “On this occasion, there really could be high drama.” Already the passage of the law has been far from smooth as opponents of May’s vision for Brexit— taking Britain out of the EU single market and customs union—try to tear it up. She suffered a serious defeat in the House of Commons last month at the hands of mutineers from her own Conservative party who are opposed to Brexit in its current form. She slapped down Chancellor of the Exchequer Philip Hammond last week after he said Brexit would only herald modest changes to Britain’s relationship with the EU. Now, more rebels are set to vent their frustration in the Lords.
Dominating politics
The role of the unelected lords is supposed to be to revise rather than block legislation that the elected members of parliament have passed. In the case of Brexit, a majority of lawmakers in the House of Commons
There is a large majority of people in the Lords who feel that Brexit is a national disaster, and we will be trying to mobilize that majority as we go through.” — Newby also opposed it, although most cite the need to uphold the result of the referendum in 2016 that kicked off the whole Brexit process dominating United Kingdom politics. The key Commons amendment last month was that parliament would now get a final vote on the Brexit deal after an agreement with the EU on the cost of the divorce and future trading relationship. The lords can start proposing more changes on January 31. A list of them will be published two days later, and the government will decide how to proceed. “There is a large majority of people in the Lords who feel that Brexit is a national disaster, and we will be trying to mobilize that majority as we go through,” said Dick Newby, who leads the Liberal Democrat peers.
Another vote?
Amendments could include a clause on having to hold a second referendum, though an earlier attempt to do so failed to gain enough support. They may also try and strike out May’s commitment to leave the EU on a specific date, allowing the
Gates: Congress must clarify ‘cost’ if Trump fires
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ongress must underscore the “political cost” that President Donald J. Trump would pay if he fires Special Counsel Robert Mueller, said former Defense Secretary Robert Gates. It’s not clear that lawmakers would have the authority to stop the president with legislation if he decided to fire an executive branch appointee like Mueller, who’s overseeing the United States probe into Russia’s alleged interference in the 2016 US.election, Gates told NBC’s Meet the Press. “The one thing that can be done is to try and figure out how to make it clear, the magnitude of the political cost that would be incurred should he be fired,” Gates said, according to a partial transcript released by the network ahead of last Sunday’s broadcast. Gates, 74, who served both Republican and Democratic presidents, praised Mueller’s “extraordinary integrity and character.” He said the former FBI director “may come to a different conclusion” in the Russia investigation than what people are assuming “that will elate some people and anger some people.” Trump wanted to fire Mueller in June, weeks after he was appointed, the New York Times reported on January 25. The president rescinded the order after White House counsel Donald McGahn threatened to resign rather than carry it out, the Times reported, citing people familiar with the matter who it didn’t identify. Trump called the story “fake news.” Bloomberg News
British Prime Minister Theresa May meets with US President Donald J. Trump at the World Economic Forum on January 25 in Davos, Switzerland. AP/Evan Vucci
UK more time to negotiate a deal or transition phase if necessary and let parliament have more say. It wouldn’t be about stopping Brexit, but making sure parliament can then vote on future arrangements rather than just a binary choice of in or out, said Ros Altmann, a Conservative baroness. Sweeping new powers in the bill are “dangerous,” she added. More broadly, the lords want to review the power of the government to implement Brexit. There’s also crossparty support for inserting the EU’s Charter of Fundamental Rights into UK law and lords want to clarify the length of time the European Court of Justice will be supreme to British courts in the future. In theory, the governing Conservatives command the support of 248 lords, the opposition Labour Party has 197 and the Liberal Democrats have 100. Among the rest there are a further 110 with no party affiliation and 25 bishops. Labour’s leader in the Lords, Angela Smith, is concerned May’s negotiations are faltering, and said she will be tabling changes to the bill designed to ensure there is a smooth transition for businesses. Newby, meanwhile, said he’s
confident the Conservatives would be defeated even if none of them defied the government. Conservative peer James Arbuthnot acknowledged the constitutional issue his colleagues face and the need to not be seen interfering with the democratic “will of the people” after the 52 percent to 48 percent vote for Brexit. He also said it could lead to more existential threats to the lords, a perennial target in British debates over abolishing the unelected chamber. “One-third of people voted to go, one-third voted to stay and one-third didn’t vote,” Arbuthnot said. “If the Lords don’t choose this moment to brave abolition, then what really is the point of the Lords?” Despite the dramatic rhetoric of some Europhiles, others in the proEU camp say it won’t lead to a great battle with the House of Lords defying the will of the Commons and voters. Strathclyde, the Conservative, said an effort to stop the Brexit legislative process all together would be “an act of suicide” for the House of Lords. David Hannay, a so-called crossbench lawmaker with no party affiliation, instead expects the lords to vent their anger and vote through
some amendments, but stop short at precipitating a fight between the two houses of parliament. He was a member of the negotiating team for the UK’s accession to the European bloc in 1970-1972. “The characterization of this as a great shoot-out at the OK Corral of constitutional confrontation is wrong,” said Hannay, who was also a senior adviser to former Prime Minister Margaret Thatcher during her negotiations for a rebate on Britain’s budgetary contributions in the 1980s. That said, May’s government would need to fight another day. The Lords will have another “meaningful” vote on whether to press ahead with Brexit later in the year after what Meg Russell, director of the constitution unit at University College London described as a “phony war” between the two houses of parliament. That could come when the UK’s long-term relationship with the EU is still unclear. “The bigger political battle may come in the autumn when parliament will vote on whether to implement the withdrawal agreement,” said Russell. “The government will then be asking MPs and peers to vote on an uncertain prospectus.” Bloomberg News
Casino mogul resigns as finance RNC chairman
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A SHINGTON—Stephen Wynn, the billionaire casino mogul and prominent political donor, has stepped down as finance chairman of the Republican National Committee (RNC). He left the post, for which he had been handpicked by President Donald J. Trump, after being accused of a yearslong pattern of sexual misconduct with his casino employees. Wynn had faced growing calls to step aside in the wake of a detailed investigative report in The Wall Street Journal last Friday that said Wynn had frequently demanded naked massages from female employees, and had sometimes pressured them to engage in sexual intercourse or to perform sex acts on him. In a statement last Saturday, the committee’s chairman, Ronna Romney McDaniel, said, “Today, I accepted Steve Wynn’s resignation as Republican National Committee finance chair.” The committee had remained silent for more than a day until McDaniel spoke to Trump, who has a long-standing friendship with Wynn. Wynn said last Saturday evening that he was resigning to eliminate a “distraction” for the party. “The unbelievable success we have achieved must continue,” he said in a statement. “The work
we are doing to make America a better place is too important to be impaired by this distraction. I thank the president for the opportunity to serve and wish him continued success.” A day before, Wynn had dismissed any claims of sexual misconduct as “preposterous.” The committee is expected to consider a replacement at a previously planned meeting this coming week in Washington. “This is an important position, so they’re going to have to look carefully to find the right person,” said Ronald Weiser, a Michigan real-estate developer and former finance chairman for the committee. Wynn’s decision to step down was first reported by Politico. Wynn, who turned 76 last Saturday, was appointed to the position shortly after the 2016 presidential election. He hosted a fund-raiser this past week at Mar-a-Lago, Trump’s Florida estate. The casino mogul and his companies have donated more than $5.2 million over the years to a mix of Republican and Democratic candidates and committees. Last Friday Democrats called for the Republican committee and Republican candidates to return donations from Wynn, noting that Republicans had issued
similar demands after multiple women came forward to accuse Harvey Weinstein, a prominent Democratic donor, of sexual assault. It remained unclear last Saturday whether Republicans would move to give away their Wynn money. Wynn is one of the most prominent leaders in the casino industry, helping to transform the Las Vegas Strip with his ornate casinos—which once included the Bellagio, the Mirage, Treasure Island and Wynn—glamorous restaurants and exotic attractions like circuses. He made more than $28 million in total compensation from Wynn Resorts for 2016. Last Friday the Wynn Resorts board met to form an independent committee of directors to investigate the allegations, saying in a statement that it was “deeply committed to ensuring the safety and wellbeing of all of the company’s employees and to operating with the highest ethical standards.” The stock value of Wynn’s company fell sharply last Friday as trading closed for the week, and Massachusetts gambling officials said they had opened a review into Wynn’s behavior, given his company’s plans to open a $2.4-billion casino resort near Boston next year. New York Times News Service
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Russian bots retweeted Trump 470,000 times–Twitter
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ussian-linked Twitter bots shared Donald J. Trump’s tweets almost half a million times during the final months of the 2016 election, Twitter Inc. said in a submission to Congress. The automated accounts retweeted the Republican candidate’s @realDonaldTrump posts almost 470,000 times, accounting for just more than 4 percent of the retweets he received from September 1, 2016, to November 15, 2016. Hillary Clinton’s account got less than 50,000 retweets by the Russianlinked automated accounts during the same period of time, the company said in documents posted last Friday by the Senate Judiciary Committee. The information further underscores how Russian-linked accounts sought to stir up discord during the 2016 United States presidential election. Congress has been investigating exactly how social-media platforms like Twitter, Facebook Inc. and Alphabet Inc.’s YouTube were manipulated during the election. The documents are Twitter’s response to follow-up questions from the Senate committee following an October 31, 2017, hearing on the issue of Russian infiltration of the media platforms. Twitter also found that Russian-linked accounts were responsible for 48 percent to 73 percent of the retweets of WikiLeaks’s Twitter accounts during the same period. During the campaign WikiLeaks published e-mails from hacked Democratic party servers. In this further assessment, Twitter said it identified about 2.12 million automated, election-related tweets from Russian-linked accounts that collectively received about 455 million impressions within the first seven days of posting. This is significantly higher than the number of impressions Twitter had previously reported. Twitter also said accounts linked to the Russian government-backed Internet Research Agency (IRA) exhibited nonautomated patterns of activity, such as trying to reach out to journalists and “prominent individuals” through mentions. Some of those accounts represented themselves as news outlets, members of activist organizations, or politically engaged Americans, the company said. Bloomberg News has previously reported that the IRA operated dozens of Twitter accounts masquerading as local American news sources that collectively garnered more than half-a-million followers. More than 100 news outlets also published stories containing those handles in the run-up to the election, and some of them were even tweeted by a top presidential aide. “Some of the accounts appear to have attempted to organize rallies and demonstrations, and several engaged in abusive behavior and harassment,” Twitter said. The new disclosures from Twitter demonstrate how Russian meddlers are complementing their networks of bots with human activity, which the company said makes it harder for Twitter’s algorithms to detect the difference. Twitter previously said it had suspended 3,814 IRA-linked accounts. The company has made several changes to address the manipulation in the past several months. It has banned Russian state media accounts from buying ads and is creating a “transparency center” to show how much political campaigns spend on advertising, the identity of the organization funding the campaign, and what demographics the ads targeted. Facebook told a Senate panel in a written response to questions released earlier this week that it has detected “only what appears to be insignificant overlap” between targeting of ads and content promoted by a pro-Kremlin Russia group and by Trump’s presidential campaign. The company said it “does not believe it is in a position to substantiate or disprove allegations of possible collusion” between Russia and the campaign. Bloomberg News
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Europe closes in on fresh trade deal as Trump puts up barriers
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urope is approaching the next stop in its global marketopening drive aimed at countering US President Donald J. Trump’s protectionist tilt.
Top officials from the European Union (EU) will meet with the Mercosur group of Argentina, Brazil, Paraguay and Uruguay on January 30 in Brussels to gauge the prospects for a free-trade deal that would follow groundbreaking commercial pacts with Japan and Canada. The EU-Mercosur talks began almost two decades ago, faltered and were restarted in 2010. Trump’s move into the White House a year ago with his “America First” agenda prompted an EU push to wrap up the negotiations, which advanced before getting hung up last month over the politically sensitive issues of agriculture and cars. “Our aim is to conclude a very ambitious trade agreement between us and Mercosur in the coming weeks,” EU Trade Commissioner Cecilia Malmstrom said in an interview in Brussels last week. “We aim to finalize this very soon because the clock is ticking.” European Union policy-makers are seeking to keep markets open worldwide in the face of Trump’s anti-globalization stance and to underscore the bloc’s continuing com-
mercial clout as the United Kingdom prepares to leave. In addition to building on existing European free-trade pacts with partners that also include Singapore, Vietnam and South Korea, a deal with Mercosur would give the EU political momentum as it gears up for talks with Australia and New Zealand. The United States threat to the global order in place since the end of World War II was highlighted last week when Trump invoked rarely used “safeguard” rules to impose tariffs on US imports of solar panels and washing machines. With EU-Mercosur trade worth almost €85 billion ($105 billion) in 2016, a market-opening agreement would be among Europe’s biggest. The meeting on Tuesday will be at ministerial level, giving both sides a chance to make political concessions that would embolden the negotiators. Mercosur says an EU offer to open further its agricultural markets, including for beef, is inadequate. Malmstrom’s team last December proposed to let Mercosur export to the bloc at reduced duties an extra
U.S. President Donald J. Trump (left) shakes hands with German Klaus Schwab, founder and executive chairman of the World Economic Forum (WEF), on the last day of WEF’s annual meeting in Davos, Switzerland, on January 26. Laurent Gillieron/Keystone via AP
70,000 metric tons of beef, 600,000 tons of ethanol and 100,000 tons of sugar annually. “If we don’t get a significant agricultural offer, we cannot achieve this agreement,” Rigoberto Gauto Vielman, Paraguay’s ambassador to the EU, told the European Parliament’s trade committee on January 23 in Brussels. Europe must do more to ensure a “fair and
Our aim is to conclude a very ambitious trade agreement between us and Mercosur in the coming weeks. We aim to finalize this very soon because the clock is ticking.” –Malmstrom
reasonable” accord, he said. The EU counters that its farm offer is generous and Mercosur must agree to open its markets more to European cheeses, cars and car parts. European agricultural producers’ interests, traditionally a touchy issue in Brussels, may be even more so now because Ireland is concerned about the potential impact of the UK’s planned exit from the European Union on Irish beef exports. Mercosur already accounts for around three-quarters of EU beef imports and focuses on pricier cuts. “The moment is quite difficult for Europe in terms of beef,” Sandra Gallina, the chief EU negotiator with Mercosur, told European lawmakers last Tuesday. “Our partners are very well aware that there is a Brexit going on and that beef from Ireland may be impacted, so I want to say this is perhaps not the best of moments to go after such a deal.” Pekka Pesonen, secretary-general of Copa-Cogeca, the main European farm-lobby group, told reporters on January 24 that a Mercosur-EU accord could cost farmers in Europe billions of euros and that “we would reject any concessions at this stage.” Malmstrom played down the deadlock over agriculture, saying farmers’ interests have long kept international trade negotiators at the table longer. “They are always the last to remain,” she said. “They are difficult, but I hope they are surmountable.” Bloomberg News
Nafta said to gain steam with State of Union address to feature infra plans deal on anticorruption moves P
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alks to update the North American Free Trade Agreement (Nafta) took a step forward after negotiators in Montreal agreed to measures aimed at preventing corruption, the first official “chapter” completed since October, five people with knowledge of the process said. The efforts to clamp down on graft and bribery had been pushed by Mexico as a new issue for the 24-year-old Nafta. The measures were agreed to last Friday, according to the people, who asked not to be identified speaking before a public announcement. The three nations had agreed to similar anticorruption measures— such as increasing transparency in their laws, encouraging due process in legal cases and promoting integrity among public officials—as part of the Trans-Pacific Partnership. US President Donald J. Trump withdrew from that Pacific Rim pact a year ago, days after taking office. Officials attending the Nafta talks were upbeat about progress in general, even as Trump continues to dangle the prospect of pulling the United States out of the deal. “With every passing round of the negotiations, more and more of the contentious issues are closer to being solved,” Andrew Leslie, a
Canadian lawmaker who serves as a deputy for Foreign Minister Chrystia Freeland with a particular focus on Canada-US ties, told reporters last Saturday.
Corruption perceptions
Mexico is attempting, through the antigraft chapter, to reassure companies investing and doing business there and to attract new investment. The country ranked 123rd out of 176 in Transparency International’s Corruption Perceptions Index in 2016, behind nations, including Brazil, Italy and Pakistan. The US and Canada were likewise interested in establishing the chapter to ensure fair treatment and opportunity for their companies. Nailing down the anticorruption chapter, on top of work finished months ago on rules for smalland medium-sized businesses and for competition, means that in five months, negotiators have completed three of about 30 chapters likely to form the updated deal. Chapters on telecommunications and e-commerce are also said to be near agreement. The next test for the current round of talks, and for the Nafta process in general, will be how much progress is made in a meeting
on Monday between Freeland, US Trade Representative (USTR) Robert Lighthizer and Mexican Economy Minister Ildefonso Guajardo. Mexico and Canada began negotiating with the United States last August at the initiative of Trump, who’s repeatedly said the Nafta accord led US companies to fire workers and move factories to Mexico— a “horrible deal” for the US. Trump has promised to negotiate a better deal for America or withdraw. Yet as recently as last Thursday, at the World Economic Forum in Davos, the president sent mixed signals. “I may terminate Nafta, I may not,” he said in an interview with CNBC. “We have a good chance” at renegotiating, Trump added. The most contentious issues in the talks have included a proposal to require more auto manufacturing in the US, seasonal barriers to agriculture trade, access to US procurement deals, dispute resolution mechanisms and a clause that would terminate the deal after five years unless the nations agree to continue it. The media office of the USTR declined to comment, spokesmen for Canada’s Freeland and the press office of the Mexican Economy Ministry all declined to comment. Bloomberg News
‘Saudi remains an investment hub after crackdown’
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audi Arabia remains an attractive destination for investors, despite a sudden crackdown on corruption that led to concerns about transparency, according to a top executive at asset-management firm Investcorp Bank BSC. “Saudi Arabia is still a big market in terms of fund-raising and investing,” Hazem Ben-Gacem, head of the Bahrain-based firm’s European private equity business, said on the sidelines of the World Economic Forum in Davos. “Our businesses in the Gulf continue to thrive.” The firm, which aims to double its assets under management to $50 billion in five years, is betting on investors’ fears being put to rest
as the kingdom winds down the anticorruption drive that led to dozens of princes and billionaires being detained in Riyadh starting last November. Saudi Arabia freed Prince Alwaleed bin Talal and several of the nation’s most prominent businessmen from detention this weekend, clearing the Ritz-Carlton hotel that served as their jail. The Prince Mohammed bin Salman bin Abdulaziz Foundation, named after the heir to the throne, sponsored a lavish lunch for Davos attendees last Friday, before US President Donald J. Trump also addressed the gathering of the world’s elite.
I nvestcor p now h a s over $21.4-billion assets under management, spread over companies, real estate, alternative investments and credit management. The firm has started marketing its Gulf healthcare fund, set to raise $750 million, and hopes to close a Gulf technology fund raising $400 million by the summer, Ben-Gacem said. It is considering investments in companies, including Saudi Arabian eye-care specialists Magrabi Hospitals and Centers, he added. Magrabi is working with HSBC Holdings Plc. on a potential stake sale in the business, people familiar with the matter told Bloomberg last year. Bloomberg News
resident Donald J. Trump plans to use Tuesday’s State of the Union address to build momentum for sweeping legislation on infrastructure and immigration that could buoy the White House and fellow Republicans ahead of crucial midterm elections. Emboldened by a booming economy and victory in his staredown with Senate Democrats over government funding, Trump will make the case that the Republican tax cuts passed last December and his administration’s efforts to curb regulations are drawing investment to the US and creating jobs, said a White House official who discussed the speech on condition of anonymity. There are few obvious areas for compromise, and little incentive to do so among increasingly polarized lawmakers whose chief concern remains an upcoming election season primed for a wave of votes protesting Trump. Yet, the president also aims to strike a bipartisan tone, the official said—a stark departure from his address to Congress a year ago. That speech delighted supporters, who saw his on-script performance as evidence that Trump, a mercurial political novice, could seize the power of the bully pulpit.
Future-focused vision
This year, aides say, he’ll offer a future-focused vision. His agenda, the official said, includes a longanticipated plan to rebuild and improve the nation’s infrastructure, continuing efforts to cut regulations, and an overhaul of the immigration system—campaign promises that got set aside last year as the administration focused on efforts to repeal Obamacare and pass the tax overhaul. Lawmakers are keenly aware of Trump’s unpopularity. Just 36 percent of Americans approve of the job the president is doing, according to a Quinnipiac poll released on January 25. A RealClearPolitics average of recent surveys puts Trump’s approval rating at 40 percent. And the White House remains mired in the months-long investigation into Russian interference in the 2016 election. For that reason, Trump is expected to devote much of the speech to an effort that’s so far proven
elusive—convincing Americans to give him credit for a booming stock market and positive employment numbers. Trump’s immigration plan, unveiled last Thursday, will offer deportation protection and a pathway to citizenship for as many as 1.8 million people who were brought to the country illegally as children. In exchange, the White House wants $30 billion for additional border and port security, and the construction of a wall on the USMexico border—a proposal Democrats have fiercely opposed.
Rhetorical battle
Trump also wants to limit a program that gives preferential status to the families of US citizens and immigrants, and eliminate the visa-lottery program. Critics say the president’s plan would sharply curtail legal immigration and waste money on a barrier that would prove difficult to build and only a slight deterrent to illegal immigration. But the White House says they’ll win any rhetorical battle where they can paint Democrats as holding out for the benefit of undocumented immigrants—and point to the quick surrender during the government shutdown earlier this month as a signal of their strength. The president is also expected to highlight his administration’s protectionist trade policies, saying the withdrawal from and renegotiation of international trade agreements has helped retain American jobs. He’s not expected, though, to use the widely watched speech to announce a formal intent to withdraw from the North American Free Trade Agreement.
Trade deals, tariffs
last Thursday at the World Economic Forum in Davos, Switzerland, Trump pitched global business leaders on expanding their footprint in the US. He also said he’d be open to reconsidering the Trans-Pacific Partnership, after pulling the US out of the Pacific Rim trade pact as one of his first moves in office. Earlier this month, the president slapped new tariffs on washing machines and solar panels in a bid to help domestic manufacturing. The administration is weighing similar measures over aluminum and steel
dumping, and on intellectual-property theft. Central to the president’s push for bipartisan support is an infrastructure plan that could help revitalize the country’s roads and waterways. The White House proposal, which would include about $200 billion in federal spending, is designed to encourage states, local governments and private entities to match federal dollars.
Federal outlays
While Trump estimated as recently as last week that the overall infrastructure investment could reach $1.7 trillion in total spending, Democrats have argued for more direct federal outlays, and say the plan could benefit real-estate developers and leave crucial but unprofitable projects unaddressed. Foreign policy will almost certainly take up significant part of Trump’s State of the Union speech, with the president looking to burnish his résumé in an area where many voters give him low marks. Just 38 percent of Americans approve of the way Trump is handling foreign affairs, according to a Reuters/Ipsos poll released on January 24, with a majority—55 percent—disapproving. That’s driven in no small part by the president’s high-stakes feud with North Korean leader Kim Jong Un, whom Trump has provocatively labeled “Little Rocket Man” and dismissed as possessing a smaller “nuclear button.” Trump is likely to strike a more measured tone in Tuesday’s address, and could again signal his openness to direct talks with North Korea under the right circumstances. The president may also address his desire to increase pressure on the government of Iran, even as many world leaders warn him against actions that could undermine the 2015 accord that halted the Iranian nuclear weapons program in exchange for sanctions relief. “I still think the president is struggling to articulate what American leadership means,” said Jon B. Alterman, director of the Middle East program at the Center for Strategic and International Studies in Washington. “The president’s big challenge has been how to lead in ways that people are eager to follow.” Bloomberg News
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Nail clippers, shovels banned in North Korea
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ASHINGTON—Two shipping containers full of hygiene kits languish for weeks in a Chinese port, unable to reach North Korea. They’re intended for people with tuberculosis or hepatitis, not to advance nuclear or missile programs, but Chinese customs officers see something objectionable in the cargo: nail clippers. As sanctions on Kim Jong Un’s government intensify, the few aid groups operating in North Korea are facing sometimes bewildering economic restrictions and bureaucratic hurdles that could cripple lifesaving work. While the UN Security Council says the penalties shouldn’t affect humanitarian help, the Trump administration cites even North Korea’s reported food and fuel shortages as evidence of a pressure campaign working. The nail clippers were part of a consignment sent by Christian Friends of Korea, among the United States charities working in North Korea, despite escalating nuclear tensions. The latest round of UN sanctions bans the supply of metal items, so that explains the clipper holdup. It’s not the only example. The American Friends Services Committee, another aid group, is struggling to deliver agricultural equipment, such as threshers, compost makers and shovels. “Sanctions should not have an impact on the well-being of ordinary citizens,” said Linda Lewis, a member of the Quaker committee that’s helped North Korean farmers for two decades. “This work should not be shut down for political reasons.” How do you pressure governments, short of war, to change their behavior without unduly injuring innocent civilians? That’s one of biggest questions
for the economists, foreign-policy professionals and political leaders who devise and put in place economic sanctions around the world. UN penalties routinely include broad exceptions for most basic civilian goods. Even when the US targets its most intractable foes, it exempts food, medicine and humanitarian supplies. In the case of North Korea, which the US and others want to rid of nuclear weapons, it’s unclear whether the right balance is being struck. Citing reports last week from Tokyo of scores of North Korean fishing boats, with dead crews, drifting into Japanese waters, Secretary of State Rex Tillerson said the sanctions are “really starting to hurt.” The human suffering, he said, was North Korea’s responsibility and an “unavoidable outcome” of its failure to help its own people. Tillerson also doubted that humanitarian assistance, which South Korea is considering, would reach the right people in the North. His remarks alarmed humanitarian advocates. But given that the alternative to the US-led pressure may be military conflict, the Trump administration is getting much leeway from international partners and the public over how the sanctions are affecting North Korea’s 25 million people. Recent visitors to the isolated country say fuel prices have risen, but food supplies don’t seem any scarcer.
Hepatitis B medicine, provided by the United States-based aid group Christian Friends of Korea, is delivered to a health-care center in the North Korean capital Pyongyang in August 2017. Christian Friends of Korea via AP
Sanctions should not have an impact on the well-being of ordinary citizens.”—Lewis They anticipate conditions to worsen in the coming months. Three times in the past year, the UN Security Council has tightened economic restrictions on North Korea, cutting fuel supplies and banning trade in the goods that make up 90 percent of the North’s export revenue. The latest round, designed to punish a North Korean long-range missile test, prohibit selling the North iron, steel and other metals. That covers nearly 150 different categories of products, covering everything from stainless steel ingots to spoons and paper clips. For US aid groups, tiny operations already hindered by myriad requirements from US authorities, the new
rules are causing headaches. The groups need special export licenses from the departments of Commerce or Treasury; special US customs inspections of their cargo; and State Department waivers to travel to North Korea. They also must contend with reluctant banks and suppliers, fearful of being fined for any transaction related to North Korea. In the case of the nail clippers, Heidi Linton of the Christian Friends of Korea, which supports more than 30 tuberculosis and hepatitis care centers, said its routine shipment of hygiene kits was stuck this month in the northern Chinese port of Dalian for two weeks. Finally, Chinese customs gave
special permission for the shipment to proceed. Without that decision, Linton would have had to pay people to individually unpack the metal nail clippers from several thousand kits for the two containers to be cleared. “To what purpose?” asked a relieved and grateful Linton, who now wonders whether her group can import a replacement clutch for its vehicle in North Korea. It needs other metal items for renovating clinics and for clean water projects. Lewis, from the Quaker aid group, echoed the sentiment. “Now we can’t even send shovels, anything made of steel,” she said. Her group helps four cooperative farms in North Korea and had no problem with shipping basic agricultural equipment just a few months ago. Lewis joked that the specific prohibition covering shovels must be an “excessively conservative interpretation” of dual-use technologies
that are targeted in UN sanctions because they can have both peaceful civilian and lethal military uses. It’s unclear what specific military use a shovel has. For North Korea’s civilians, the aid groups play a crucial role. The UN works on child health care and provided food for more than 800,000 North Koreans last year. “Sanctions may be adversely affecting that essential help,” UN Human Rights Chief Zeid Ra’ad alHussein told the Security Council last month. The country is in far better shape than the famine years of the 1990s, when hundreds of thousands starved to death. But 70 percent of the people still suffer food insecurity, and two in five are undernourished, according to the UN. The aid group Care International calls it the world’s most underreported humanitarian crisis. Most governments refuse to help. The US last gave aid to North Korea a decade ago. Few others are stepping up when North Korea’s Kim is being almost universally lambasted for plowing his impoverished nation’s sparse resources into weapons. The United Nations’s $114-million humanitarian appeal last year, mostly for children and mothers, was only 30 percent funded. Last November the World Food Program was compelled by a money shortage to exclude 190,000 children from a program that offers cereal and enriched biscuits to the hungry. China had long resisted the US pressure to use all its economic leverage on North Korea. It’s unclear why authorities are now interpreting the rules so strictly. The UN resolutions on North Korea specify they’re “not intended to have adverse humanitarian consequences.” Chinese Foreign Ministry Spokesman Hua Chunying acknowledged the problems with humanitarian aid resulting from the North Korea sanctions, but said her country “always completely and strictly implements Security Council resolutions.” AP
After California pot stockpiles Taliban attack in Kabul deepens toll of long war go up in smoke, what’s next? K
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OS ANGELES—Like many pot shops in California, the Urbn Leaf in San Diego bulked up its inventory before legal sales began on January 1, stockpiling enough marijuana to last for months because no one knew what the era of legal pot would bring. The shop, along with others involved in the state’s fledgling cannabis economy, are now concerned that too few operators have been licensed to support a pot pipeline of state-approved growers, distributors and retailers. In some cases, they say, bottlenecks have already slowed the supply chain from fields to storefronts. “They are going to have to come online with more producers in the next 12 months to keep up with the demand,” said Will Senn, the founder of Urbn Leaf who operates three dispensaries and plans to open three more, including one in Los Angeles. “The black market will balloon if we can’t get legal, licensed producers to step into the industry. That’s the biggest risk,” he said. Nearly a month after legal sales began for adults in the nation’s most populous state, the longstanding medicinal and illegal marijuana markets are still transitioning to a multibillion-dollar regulated system, estimated to eventually reach $7 billion in value. Questions about the supply chain represent just one example of early obstacles that range from complaints about hefty taxes to the refusal of
most banks to do business with pot companies because the drug remains illegal on the federal level. In one way, the arrival of legal sales has been a story about borrowed time. Most of the pot now being legally sold in California comes from plants that were harvested last year, and those reserves can be sold until July 1, provided they have required labeling. Lori Ajax, the state’s top pot regulator, said officials are aware that those initial supplies will eventually dry up but it’s too early to tell how the legal supply chain will work. “We legalized cannabis—you want to have that product available,” she said. “We don’t want people going to the black market because they can’t get product from the legal market.” In Santa Cruz County TreeHouse dispensary CEO Bryce Berryessa is already having trouble keeping some popular brands on his shelves. The problem, he says, is smaller producers haven’t been able to obtain licenses, either because they are in an area where growing is banned by local government or they haven’t been able to obtain a license from their hometown government. Operators are required to have state and local licenses to conduct business, but must get the local one first. Without money to relocate to a pot-friendly community, “they are going to be unable to find a path-
way to legally sell their products,” said Berryessa, who sits on the board of the California Cannabis Industry Association. “I think this affects a large portion of California cannabis businesses throughout the state,” he said. For now, legal sales for adults appear to be robust in San Diego, Los Angeles and San Francisco. But the patchwork of local regulations—some cities and counties have banned all commercial activity—has erected barriers to getting pot from place to place. Some longtime growers are marooned in counties that don’t allow pot or have imposed regulations so tight it’s tantamount to prohibition. In some cases, investors are backing away. For example, in previously potfriendly Calaveras County, officials reversed course and banned commercial marijuana farms, leaving growers in a bind. Without a local license, “it doesn’t matter how incredible their products are,” Berryessa said. Indeed, the once-shadowy business of pot distribution is no longer about sending a text message to a friend. Regulators have come with complex procedures to keep a tight leash on the market, though some say it’s bringing more confusion than efficiency. In general, a retailer who needs to stock shelves must contact a distributor, who in turn picks up cannabis from a grower. AP
ABUL, Afghanistan—The Taliban drove an ambulance packed with explosives into a crowded Kabul Street last Saturday, setting off an enormous blast that killed at least 95 people and injured 158 others, adding to the grim toll in what has been one of the most violent stretches of the long war, Afghan officials said. The attack came days after a 15hour siege by militants at the Intercontinental Hotel in Kabul that left 22 dead, including 14 foreigners. Last Saturday hospitals overflowed with the wounded, and forensic workers at the morgue struggled to identify the dead. The casualties were another reminder of how badly Afghanistan is bleeding. Over the past year, about 10,000 of the country’s security forces have been killed and more than 16,000 others wounded, according to a senior Afghan government official. The Taliban losses are believed to be about the same. And about 10 civilians were killed every day on average over the first nine months of 2017, United Nations data suggest. The surge in violence across the country, particularly deadly attacks that have shut down large parts of Afghan cities, comes as the government is in disarray. President Ashraf Ghani has struggled to build consensus and has recently found himself in a protracted showdown with a regional strongman, a dispute that has taken up much of the administration’s energy. The strongman, Atta Muhammad Noor, a powerful governor, was fired by the president but has refused to leave his post, raising fears that
escalating political tensions could further undermine the country’s fragile security. The recent carnage is also tied, analysts said, to President Donald J. Trump’s decision last month to increase pressure on Pakistan, long seen as supporting the Taliban as a proxy force in Afghanistan. Trump made a gamble to try to tilt the war in Afghanistan toward a resolution, holding back security aid to Pakistan for what he called the country’s “lies and deceit.” At the time of the announcement, many Afghan officials feared an immediate escalation in violence in retaliation and wondered whether their shaky government could absorb the blows. Last Saturday Trump issued a statement denouncing the attack. “I condemn the despicable car bombing attack in Kabul today that has left scores of innocent civilians dead and hundreds injured,” he said. “The Taliban’s cruelty will not prevail. The United States is committed to a secure Afghanistan that is free from terrorists who would target Americans, our allies and anyone who does not share their wicked ideology.” In last weekend’s attack, Taliban militants barged into the highly guarded Intercontinental Hotel, battling security forces in an hours-long siege. At least 14 of their victims were foreign citizens, including Americans, and nine were pilots and flight crew members from Ukraine and Venezuela who worked for a private Afghan airline, Kam Air. At the time of last Saturday’s attack, Gen. Joseph L. Votel, commander of the US Central Command, which oversees military operations
in the region, was in Kabul. He met with Ghani, and officials aware of the discussion said Pakistan was much of the focus. Anger at the Afghan government for its dysfunction and ineffectiveness in the face of violence was palpable on the streets. At the site of the explosion, an old man, his clothes stained with blood, sat on the ground and wailed. He cursed the two leaders of the Afghan government—Ghani and his coalition partner, Abdullah Abdullah—for the security lapses. He said his son was dead. “May God punish you, may Allah punishyouboth,”theoldmanrepeated. “Thereisnothingleftformeanymore— come kill me and my family, too.” Last Saturday’s explosion occurred on a guarded street that leads to an old Interior Ministry building and several embassies. Many ministry departments still have offices there, and visitors line up every day for routine business. “I saw a flame that blinded my eyes, then I went unconscious,” said Nazeer Ahmad, 45, who suffered a head wound. “When I opened my eyes, I saw bodies lying on the ground.” “It’s a massacre,” said Dejan Panic, coordinator in Afghanistan for the Italian aid group Emergency, which runs a nearby trauma center. At least 131 people were brought to the group’s Kabul hospital. Baseer Mujahid, a spokesman for the Kabul police, said the bomber drove past the first checkpoint, at the entrance to the street. Police had allowed it to pass because it was an ambulance, and one of the city’s main hospitals was just beyond the checkpoint. New York Times News Service
www.businessmirror.com.ph
Banking&Finance BusinessMirror
Editor: Jun B. Vallecera • Monday, January 29, 2018 A11
‘Net worth minimum may have been too high’ By Rea Cu
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@ReaCuBM
he Insurance Commission (IC) last Friday acknowledged that local insurers have some of the highest capital requirements in the Association of Southeast Asian Nations and agreed to reevaluate the mandate for the industry to observe a progressively higher minimum base. This developed in the wake of a petition from some of the nonlife players who argued for a reduction rather than an escalation in minimum capital on the ground that the mandate has rendered some of the businesses unviable. According to Insurance chief Dennis B. Funa, he previously tasked a team to look into the networth capitalization system within the Asean as consequence of some lobbying from insurance companies proposing instead for a reduction in the required net worth of their respective businesses. “Based on our initial findings, it really appears the Philippines has the highest net-worth requirement by law. On top of that, you have the risk-based capital [RBC] system. So I think having a second look at the net-worth requirement under the amended Insurance Code is worth doing,” Funa said at the sidelines of the agency’s 69th anniversary last Friday. As a result, Funa, in a text message, bared
a plan for an amendment to the Insurance Code allowing for a reduction in the net-worth requirement. “We will most likely recommend legislation to the DOF [Department of Finance] and Congress to amend the pertinent provision of the Insurance Code. Meaning, we will probably draft a proposed bill to amend the net-worth requirement,” he said. Under Republic Act 10607, or the Amended Insurance Code of the Philippines, new industry players are required to have P1 billion in paid-up capital, while existing insurance companies need a paid-up capital of P550 million by December 2016, P900 million by December 2019 and P1.3 billion by December 2022. The IC had said the mandatory minimum net worth of P550 million for existing insurance companies, from the previous P250 million, assures the consuming public that all insurance providers are able to pay policyholder
claims and other liabilities. As for the RBC system, this helps determine the minimum capital of an insurer is enough to support its overall business operations given its size and risk profile. A specific formula is required in the computation of the RBC requirement. Last year the Manila Surety and Fidelity Co., a nonlife insurance company, made good its planned exit from the insurance industry due to its inability to comply with the increase in paid-up capital. Funa said at least five other insurance companies have volunteered to exit upon seeing that they cannot meet the minimum paid-up capital. “I think about five or six have voluntarily decided to discontinue their insurance business,” he said. Earlier, the IC reported that 2017 had been another banner year for the industry, with all sectors posting growth. Based on unaudited statistics submitted quarterly by life, nonlife and mutual benefit associations (MBAs), the industry posted total assets of P1.5 trillion last year, which was 18 percent higher than in 2016 amounting to only P1.3 trillion. “The three sectors—life, nonlife and MBAs— all posted positive growth in the four parameters of assets, premiums earned, net worth and paidup capital or guaranty fund,” Funa said. Total premiums earned reached P259.6 billion for 2017, or growth of 11.9 percent, from only P231.8 billion in 2016. Total paid-up capital or guaranty fund also registered positive growth for the year of 10.4 percent amounting to P50 billion, from P45.9 billion in 2016.
LandBank, DBP merit Fitch credit boost
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he credit watcher Fitch Ratings has upgraded the credit stature of two state-owned financial institutions on the back of the government’s perceived commitment to support the lenders in the worst of times. In a statement, Fitch Ratings said it upgraded the long-term issuer default ratings (IDRs) of state-owned Development Bank of the Philippines (DBP) and LandBank of the Philippines (LandBank) both from “BBB-” to “BBB.” Fitch assigned a stable outlook on both, meaning the new ratings will likely hold and that no significant changes on them both in the next 12 to 18 months. The government banks’ IRD boost came
on the heels of the upward revision of their support rating floors (SRFs). “The SRF revisions stem from a reassessment of the government’s propensity to support the banks and follow their rating upgrades in December 2017 to ‘BBB-’ from ‘BB+’, reflecting the Philippine sovereign’s greater capacity for support,” Fitch said. Fitch upgraded the country’s sovereign rating to “BBB” from “BBB-” in December 2017. “The banks’ roles appear to have been expanded and future roles made clearer after pronouncements by the administration of President Duterte, even though there have been no changes in their state ownership, systemic importance or broader mandates,”
the credit watcher said. “This raises our expectations for the state to provide support to the banks in times of need to enable them to carry out their objectives in support of government policy,” it added. Fitch also welcomed the LandBank ’s absorption of the smaller, state-owned Philippine Postal Savings Bank and conversion into the Overseas Filipino Bank. The government earlier proposed to repurpose the DBP as an infrastructure bank. “Both declarations are in line with the administration’s policy agenda, which includes improving the nation’s infrastructure base and better catering to the needs of overseas Filipinos,” Fitch said. Bianca Cuaresma
Perspectives
Renewable energy–an M&A overview
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aluations are up as utilities and other larger players strive to keep up with new entrants and the pace of technological change. Corporate and financial buyers alike are searching for new opportunities, while keeping a close eye on the potential risks. M&A activity in renewables is healthy and growing. Deal volumes have increased every year since 2010 and continue to climb. In the first half of 2017, there were 198 deals globally, worth €22.5 billion. Valuations are expected to rise for offshore renewables in particular. Offshore renewables are expected to increase over the next 24 months, according to 82 percent of respondents, followed by photovoltaic solar (81 percent), hydropower (68 percent) and thermal solar (51 percent). There are still bureaucratic and legislative obstacles to overcome for those considering an investment in renewables. Planning permits and licenses are the main concern for 25 percent of respondents in the survey.
Deal drivers in renewables
Much of the M&A activity in renewables is being driven by traditional energy businesses scrambling to acquire new capabilities and institutional investors looking for stable and predictable returns. In addition, we see diversification of the landscape with new players like oil and gas companies coming into the game. Utilities are also racing to keep pace with public demands to tackle climate change. Another deal driver is renewable-energy integration. Australia, for example, is facing some of the most complex integration of renewables in the world, with coal down 20 percent since 2008 and wind power up 325 percent in the same time period, according to the Australian Energy Market Operator.
There is also the “potential for an annual energy shortfall in the domestic gas market” in eastern and southeastern Australia. Solar and wind power, while on the rise, are dealing with a fragile and stretched energy grid in many areas. While integrating such a complex energy mix can cause headaches for end-users and government policy-makers, it gives investors opportunities.
Valuation outlook
Valuation is a factor in investment decisions, with investors anticipating major shifts in value for some renewables subsectors. Among the deal-specific factors influencing the valuation of individual renewable assets are asset quality, cost of finance, regulatory stability, the state of the wholesale energy market, evolution of the competitive environment, the lifecycle stage of the asset relative to the prevailing subsidy regime and curtailment risks that lie beyond the control of the asset owner. All of these factors vary markedly between geographies and across subsectors. Eightytwo percent of respondents expect valuations to rise over the next 24 months for offshore renewables, closely followed by photovoltaic solar (81 percent). Majorities also expect increases in the hydropower (68 percent) and thermal solar (51 percent) subsectors. Looking to the bigger picture, two macro factors are likely to account for these anticipated increases. One is the decline of fixed income from traditional sources, e.g. bond markets, which has driven an increasing number of financial investors into the renewable arena in search of returns, and intensified competition for assets. Another factor is the commodification and relative maturity of renewable technologies—particularly offshore wind—which now makes renewables a far more appealing bet for tra-
ditionally cautious investors.
Investment blockers
Investors looking for their next big opportunity in this relatively nascent industry face multiple obstacles, from planning permits and licenses to uncertainty around incentives, feed-in tariffs (FiTs) and regulations, as well as the ongoing disruption and pace of technological change and the perennial challenges involved in financing such projects.
Main investment blockers
TWENTY-FIVE percent of respondents cited that acquiring planning permits and licenses was the most significant obstacle to investment. Twenty-one percent of respondents say that uncertainty around incentives and FiTs is blocking potential investment. Technology challenges can block investment, particularly as digital forms such a significant part of renewable-energy systems. As the CFO of a renewables developer in Brazil points out, technology keeps evolving and keeping up with that evolution is expensive and difficult for most companies, especially in such a young industry. Legislation and regulation remains an issue, as well, cited by 18 percent of respondents, as governments around the world struggle to create policy that both understands and encourages renewables. The article “Renewable energy—an M&A overview” by Charles Abbey, KPMG in France, was taken from KPMG’s publication, entitled Great expectations: Deal making in the renewable energy sector. R.G. Manabat & Co., a Philippine partnership and a member-firm of the KPMG network of independent member-firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the Philippines. For more information on KPMG in the Philippines, you may visit www.kpmg.com.ph.
China Bank Securities eyes 75-percent growth
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hina Bank Securities Corp. (CBSec), the stock-brokerage arm of China Bank subsidiary China Bank Capital Corporation (CBCC), is optimistic about its growth prospects for the year. CBSec President and CEO Marisol M. Teodoro, who took office just four months ago, and was recently approved by the Philippine Stock Exchange (PSE) board as CBSec nominee, is looking at a 75-percent revenue growth this year. “The supportive economic conditions, positive investor confidence, upbeat trend in both the equity and capital markets, in addition to the healthy pipeline of initial public offerings or IPOs bode well for our growth projections and plans to further build our business,” Teodoro said. Formerly known as ATC Securities, the stock-brokerage firm was acquired by CBCC in March 2017. The change in name to China Bank Securities was approved by the Securities Exchange Commission last July, together with a capital infusion that hiked its authorized capitalization almost fourfold to P150 million from P38 million. “We are laying the foundation for stronger operations, like stepping up our marketing efforts, beefing up our team of seasoned traders and analysts and scaling up our IT infrastructure to boost trading volumes,” Teodoro added. As a broker and dealer in equities and a trading participant at the PSE, CBSec’s services include
distributing equity issues under IPOs. Most recently, it was involved in the marketing and distribution of the P8.6-billion maiden public issue of Eagle Cement and 8990 Holdings’s P5-billion preferred shares sale, which were both underwritten solely by CBCC. It also facilitates the secondary buying and selling of stocks in the PSE and provides relevant market, industry and technical analysis to enable clients to make informed investment decisions. CBSec completes the suite of China Bank’s services to serve clients’ investment needs across all asset classes, from fixed-income securities to equities. Before taking the reins of CBSec, Teodoro was the bank’s Treasury Business Center head, responsible for the marketing and distribution of treasury products and services to retail and corporate clients. She also helped setup the bank’s money center desks in key provincial locations. The 34-year banking veteran joined the bank in 1994 as Investments Division head of the Trust Group. She previously worked with Security Bank and the International Corporate Bank, which later merged with Union Bank. Teodoro completed the Philippine Trust Institute’s one-year Trust Course and is also a Treasury Certified Professional and a Registered Financial Consultant. She earned her MBA and Business Economics degree from the University of the Philippines Diliman.
Phl still works with other EU countries
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he Department of Finance (DOF) said the Philippines continues to maintain a good working relationship with a number of European countries, despite the rejection of trade assistance worth €6.1 million, or P382 million, by President Duterte. According to Finance Secretary Carlos G. Dominguez III, the rejection of trade assistance under the EU-Philippine Trade Related Technical Assistance in 2017 arose from an agreement clause that impinged on the country’s sovereignty. “The commission may suspend this financing agreement if the partner country breaches an obligation relating to respect on human rights, democratic principles and the rule of law, and in serious
cases of corruption,” the European Union (EU) agreement stipulated. Dominguez said other aid assistance agreements offered by other European countries to the Philippines do not contain such a provision, making the EU fina nc ing ag reement t he on ly one to bear the specific clause that the government considered unacceptable. “Based on the financing grant agreements previously executed by the national government through the DOF, none of our other development partners around the world have such provisions in their respective financing grant agreements. It’s only the EU, not the European countries,” Dominguez said.
Green Monday BusinessMirror
A12 Monday, January 29, 2018
www.businessmirror.com.ph • Editor: Lyn Resurreccion
Climate change triggers bigger, faster avalanches
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hen 247 million cubic feet of snow and ice collapsed off a glacier in the dry, mountainous region of western Tibet in 2016, the roiling mass took with it nine human lives and hundreds of animals, spreading more than 5 miles in three minutes at speeds of up to 186 miles per hour (mph.) The event surprised scientists, who had seen a collapse that big and that fast only once before. And then it happened again, three months later, on a neighboring glacier, though without fatalities. Glaciologists had not quite believed that glaciers could behave this way, and suddenly they had witnessed two similar collapses in a year. A n analysis of the events, published this week in the journal Nature Geoscience, found that climate change was the culprit in both collapses. The study suggests that in addition to the known risks posed by a warming climate, such as sea-level rise, we may also be in line for some cataclysmic surprises. To understand what the researchers found, it helps to know that, generally, there are two kinds of mountain glaciers: flat and steep. When a flat glacier collapses, it can move a lot of snow and ice, but in slow motion. These “surges” can last for weeks and even years, but move no more than
Survey: Mayors view climate change as pressing urban issue
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OSTON—US mayors increasingly view climate change as a pressing urban issue, so much so that many advocate policies that could inconvenience residents or even hurt their cities financially. The annual survey of big-city executives, released last Tuesday by the Boston University Initiative on Cities, also reflected the nation‘s sharp political divide. Ninet y-five percent of D emocratic mayors who responded believed climate change was caused by human ac tivities, a view shared by only half of Republican mayors. A clear majority of mayors were prepared to confront President Donald J. Trump’s administration over climate change and felt their cities could be influential in counteracting the policies of the Republican president, who at times has called global warming a hoax and last year withdrew the United States from the Paris climate accord. “A striking 68 percent of mayors agree that cities should play a strong role in reducing the effects of climate change, even if it means sacrificing revenues or increasing expenditures,” a report accompanying the survey stated. In all, 115 mayors of cities with at least 75,000 residents answered the fourth annual survey named for Thomas Menino, a longtime Democratic mayor of Boston who founded the university program before his death in 2014. The survey was sponsored in part by The Rockefeller Foundation and Citigroup. Organizers of the survey declined to release a list of the 115 mayors who responded, citing confidentially agreements. According to the report, nearly two-thirds of the mayors were Democrats and the cities had an average population of 233,000. The survey cited the availability and affordability of housing as the single most pressing concern of mayors, followed closely by climate change and municipal budget pressures caused, in part, by federal and state cuts. A foreword to the report, signed by Democratic Los Angeles Mayor Eric Garcetti and Betsy Price, the Republican mayor of Fort Worth, Texas, argued that cities can exert formidable influence over US and global policies. AP
1M The number of freight trains stretching 7,500 miles, which the collapsed glaciers could fill, or roughly the distance between New York City and Shanghai
a few hundred feet a day. Steep glaciers appear perilously affixed to mountain walls, and when they do collapse, they create avalanches with speeds up to 250 mph. Those avalanches may imperil mountain climbers, but overall they do not move as much snow and ice. In Tibet, however, researchers saw a frightening hybrid of the two.
The slope patrol in a helicopter (top, right) of Air Zermatt throws an explosive material out of the window to artificially blow up avalanches this noon at the skiing resort Belalp in Naters on January 23. Dominic Steinmann/Keystone via AP
“It was a flat glacier, but it produced speeds of up to 300 kilometers per hour [186 mph],” said Andreas Kääb, a professor of geosciences at the University of Oslo in Norway and lead author of the study. On top of the speed, each of the collapses moved enough snow and ice to fill 1 million f reight tra in cars stretching 7,500 miles, Kääb added. That’s roughly the distance between New York City and Shanghai. The only other comparable event scientists have recorded was the 2002 collapse of the Kolka Glacier in the Caucasus Mountains.
That collapse tumbled 8 miles downriver, reaching speeds of 179 mph and killing more than 120 people in the North Ossetia region of southwestern Russia. “It happened during the second Chechen war, very close to the boundary to Chechnya, so there were a lot of refugees camping,” Kääb said. Researchers thought that collapse was linked to factors specific to the region—the glacial equivalent of a freak accident. Then came the first collapse in Tibet. “We were thinking, ‘It happened again. It’s not only in the
Flood of waste stirs uproar in Lebanon
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OUQ MOSBEH, Lebanon— Lebanon’s festering trash crisis came crashing ashore this week, after residents woke up to find a powerful winter storm had laid a mantle of waste at a beach just a few minutes’ drive north of the capital, Beirut. The scenes were a national embarrassment for a country that once prided itself on its sparkling Mediterranean coastline but cannot wean itself off the convenience of throwing its trash into the sea. Prime Minister Saad Hariri ordered an immediate cleanup of Zouq Mosbeh beach, but the futility of it was immediately apparent as rough waves carried in even more trash last Tuesday. “We said it was not possible to keep dumping in the water. We knew we were going to get here,” said Paul Abi Rached, a local environmentalist who spearheaded a campaign to overhaul the government’s waste policies three years ago. Few issues have driven a wedge between the Lebanese and their leaders like garbage—the most conspicuous of the government’s many failings to provide basic services to its constituents. Lebanon has long been plagued by daily water and electricity outages, but it was not until the trash started going uncollected in Beirut that despair erupted into a wave of protests in 2015. Demonstrators rallied under the banner “You Stink ”—a reference not only to the stench accompanying the summer heat, but to the corruption and favoritism that has defined politics and paralyzed administrative services in the country. Civil-society groups say officials are making fortunes on shady deals for landfills and incinerators, at the public’s expense.
A man (top, left) takes photos of piles of garbage washed on shore after an extended storm battered the Mediterranean country at the Zouq Mosbeh costal town, north of Beirut, Lebanon, on January 22. Environmentalists say a winter storm has pushed a wave of trash onto the Lebanese shore outside Beirut, stirring outrage over a wastemanagement crisis that has choked the country since 2015. AP/Hussein Malla
They added the government is using trash to fill in land along the coast—a bonanza for politically connected developers who can cash in on the property that’s been raised, quite literally, from the sea. A fleet of heavy machinery has been working the coastline east of Beirut since 2017, pouring trash into the Mediterranean at a landreclamation site at Dbayeh. Officials say they are doing nothing untoward, and that the landfills they operate are done to technical specifications. But the stench is impossible to deny. Travelers arriving to Beirut’s Rafiq Hariri International Airport are greeted with a waft of odors from an expanding landfill at the end of one of the runways. Officials reopened the Costa Brava landfill there to absorb the trash left out in 2015. Last December Prime Minister Saad Hariri ordered officials to close a waste-sorting plant in the city of Tripoli, built with $1.6 million from the European Union, just six months after it was inaugurated. Locals said the smells from
the plant and the nearby fill were suffocating. The scandal at Zouq Mosbeh beach led Lebanon’s nightly news broadcasts last Monday, but environmentalists say they were not surprised by the scene—a pile of cattle bones, footwear, tires and vast amounts of plastic waste that reached over 30 meters (100 feet) inland. “The sea is regurgitating our trash,” said Joslin Kehdy, who heads Recycle Lebanon, a non-governmental organization that has organized a cleanup of Zouq Mosbeh beach each year since 2015. The country’s official wastemanagement plan provides scant support to recycling initiatives. Abi Rached said rough waves had broken down a faulty retaining wall around a coastal dump just east of Beirut, pouring trash into the sea. The garbage saga is likely to spill into campaigns ahead of parliamentary elections in May. Lawmaker Sami Gemayel, who leads the country’s Kataeb party, said he would take the government to international court over the pollution. AP
Caucasus. This is crazy, it can happen somewhere else,’” Kääb added. “We were not even finished thinking that, then the second one came down.” It is not certain what caused the Caucasus collapse. But scientists say the driving factor in Tibet was climate change. Normally, the cold air in the Tibetan plateau cannot hold much moisture. But warmer air caused by climate change—the region has warmed 0.4 degrees Celsius per decade since the 1960s—holds more moisture, leading to more winter snowfall.
While many glaciers around the world are in retreat because warmer temperatures are melting them, the Tibetan glaciers that collapsed are among those that are growing because of more snow. In the summer months, there has also been more rain. That water created crevices through the glacier and saturated the ground below, acting as a kind of lubricant. With more weight on top and less friction to hold the glacier in place on the bottom, it collapsed. “You have a thicker glacier soaked with water,” Kääb said. “That’s two climate-change impacts that contributed to making the glaciers unstable.” Lonnie G. Thompson, a professor of geological sciences at Ohio State University, said the underlying mountain range didn’t help, either. “The bedrock of this mountain range was laminated shales and sandstone, which are not extremely resistant to start with,” said Thompson, who was not a part of the study but by chance was in Tibet when the first glacier collapsed. Kääb said he hoped that the study would be a wake-up call to people living near mountain glaciers that this kind of collapse, though rare, can happen. “The travel of the Tibetan avalanches was 8, 9 kilometers. The one in the Caucasus traveled 18 kilometers. If you draw an 18-kilometer-diameter circle around glaciers of the world, you see that even cities are within this reach,” he said. “If this happens in areas that are not as loosely populated as Tibet, this is a huge disaster.” New York Times News Service
India’s ban on dirty oil residue is big worry for crude refiner
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craping the bottom of the oil barrel for cheap fuel may be turning into a multibillion-dollar headache for India’s largest crude refiner. The South Asian nation’s battle against pollution has left Indian Oil Corp. searching for alternative markets to sell petroleum coke, the cheapest and dirtiest among the oil products. A host of new limits on the fuel’s use in India, including bans and increased taxes, have been adopted after refiners in the fastest-growing oil consumer built plants to process the “bottom of the barrel” fuel. “Petcoke will be a big challenge in 2018,” Indian Oil Finance Director Arun Kumar Sharma said in an interview in New Delhi. “We have to prepare ourselves for an alternative plan.” Indian refiners aren’t alone in their struggle to deal with the various environmental regulations sweeping the region. With tighter emission controls from China to Indonesia, oil processors across Asia are being rocked by constantly changing rules on what they can produce, as governments strive to breathe clean air into some of the world’s most polluted cities.
Alternative to coal
Petco ke took off in India after the government began limiting coal use to reduce carbon emissions. Consumption of the oil residue has quadrupled since 2011, with the fuel being used by cement manufacturers, captive power generators and small manufacturing industries who see it as a low-cost coal alternative. Last year India used 25 million tons (MT) of petcoke, making the country the world’s biggest market for the crude-waste product, with imports from the US to China surging. “Since coal can be substituted by petcoke, the usage in cement industries increased in India, especially after imported coal prices rose in the recent years,” said Satnam Singh, director for energy at Crisil Infrastructure Advisory. During that time, Indian Oil built the world’s largest delayed-coker unit with the ability to produce as much as 1.3 MT of petcoke a year. The state-run refiner now has similar units across seven of its nine refineries and
is investing $480 million to add another in eastern India. The plants enable Indian Oil to process the heavy, high-sulfur crude, or the worst of the oil, and turn it into higher quantities of a more valuable product. Then petcoke began facing its own issues. The fuel contains more sulfur than in coal and natural gas, exposing people to the risk of stroke, heart disease and lung cancer. Pollution in New Delhi skyrocketed last year, with the level of deadly carcinogenic pollutants roughly 10 times than in Beijing. As public opposition mounted, India’s top court banned the use of petcoke in Delhi and three neighboring states last October, with the Supreme Court, adding it would like to see its use prohibited across the country. The government also removed tax exemptions and raised the levy on its imports last month.
Spreading impact
“Eventually, similar pollution-impact effects will spread to the rest of the country,” said Virendra Chauhan, an analyst at industry consultant Energy Aspects Ltd. “Indian Oil will have to look at long-term solutions to keep operations running.” Indian Oil could turn to Reliance Industries Ltd. for inspiration. The rival refiner, which produces half of the country’s total production of petcoke at 13 MT a year, has found use for the unwanted fuel. The company is estimated to have spent as much as $5 billion building a gasification unit that will convert petcoke into environment friendly synthetic gas, which can be used to generate power for running its plants. Indian Oil Chairman Sanjiv Singh said last month that the company is looking into building a gasification unit. However, Sharma is concerned about finding a quicker fix. Gasification units are a long-term solution, he says, but in the mean time, sending it to other parts of the country or abroad may be its best option, despite the risk of shipping costs impacting profits. “As an immediate solution, we have to think about disposal only, say to other parts of the country or through exports,” Sharma said. “We will have to be watchful on this. We have to find some solutions, because this problem will come up tomorrow, if not today.” Bloomberg News
Biodiversity Monday BusinessMirror
Asean Champions of Biodiversity Media Category 2014
Monday, January 29, 2018 A13
Editor: Lyn Resurreccion • www.businessmirror.com.ph
Hammerhead shark, Cocos Island, Costa Rica. The shape of the hammerhead shark’s head may enhance olfaction by spacing the nostrils further apart. Wikimedia Commons
The value of shark fins for fin soup has led to an increase in shark catches. Usually, only the fins are taken, while the rest of the shark is discarded, usually into the sea. Wikimedia Commons
D.O.S.T., U.P. projects to ensure sustainable mussel production G
reen mussel, locally known as tahong, is the only species of mussel being cultured commercially in the Philippines. A challenge that hinders sustainability of mussel production is the insufficient supply of seed stock. Mussel farmers rely mainly on seeds gathered from the wild. However, due to the impacts of natural and human influences, mussel spats from natural beds are now becoming scarce and could hardly support the requirement of the growers. To address the problem of low production of mussel spats, the Depar tment of Science and Technology (DOST), through the Philippine Council for Agriculture, Aquatic and Natural Resources Research and Development (PCAARRD), funded the Mussel Hatchery Project. The project, which was implemented
by the University of the Philippines Visayas (UPV) in Miagao, Iloilo, aimed to develop technologies to ensure a reliable supply of mussel spats for grow-out production. Mussel spats are very young shellfish, which are the raw material of mussel farms. They develop from a floating larval stage, which attach themselves to seaweed or ropes and develop into miniature shellfish Following the method established by the project, the transport of broodstock from the natural mussel ground to the UPV hatchery, that ranges from seven to 36 hours after harvest, attained a high survival rate of 98 percent. The “warm water-spawning technique” was employed and consistently exhibited good results. Transitioning from “D-hinged” to “early spat” stage of about 1mm provided more than 4-percent survival rate, which was higher
than that obtained in other Asian countries, with only 1 percent to 2 percent. The spent spawners were rematured by restocking them in the natural environment. Mussel farmers, entrepreneurs, vendors, middlemen, processors, researchers, technicians, extension workers, policymakers and consumers are set to benefit from this project. The Mussel Hatchery Project was initially led by Dr. Liberato V. Laureta Jr. After his retirement, Dr. Mary Jane A. Amar, also from the Institute of Aquaculture, College of Fisheries and Ocean Sciences, UPV, took over the leadership.
14 potential sites for mussel culture
A project funded by the DOST-PCAARRD has identified 14 locations, measuring a total of 6,283.30 hectares as potential sites for mussel
culture. This was a result of a project that aimed to increase mussel production through identifying potential sites for mussel culture in the country. The project, “Suitability assessment and database development for enhanced mussel-culture management using geospatial technologies,” is being implemented by the UPV and UP Diliman, under the leadership of Dr. Carlos C. Baylon of UPV, Miagao, Iloilo. The project aims to identify potential sites that favor the hydrographic and biophysical conditions for mussel growth. Identification of suitable and potential areas for mussel culture could provide areas for expansion of mussel culture, leading to an increased mussel production. Additional mussel-growing areas can then lead to a more sustainable mussel industry, which can help in addressing
national issues like food security, livelihood and poverty alleviation. Using geospatial technologies, 14 sites were identified, which include Hagnaya, Cebu (122 hectares); Calape, Bohol (680 hectares); Misamis Occidental, particularly in Murcielagos and Panguil Bay (512.50 hectares); Placer, Surigao del Norte (71.5 hectares); Sagay, Negros Occidental (1,390 hectares); Bais, Negros Oriental (1,300 hectares); Marinduque (1,098 hectares); Buguey, Cagayan (34.3 hectares); Davao in Mati City and Panabo (990 hectares); and Bislig, Surigao del Sur (100 hectares). These are being validated by overlaying other information, such as road accessibility, navigational lane, presence of corals and sea grasses, red-tide history, source of spats, pollution and tourism. As such, these sites can be utilized as expansion areas for green-mussel culture to increase
production in the Philippines. Available satellite data from the National Aeronautics and Space Administration and European Space Agency have been used to develop models for identifying suitable sites. Water parameters such as temperature, pH, dissolved oxygen, salinity and chlorophyll a were collected from representative areas in the country. The criteria were also set to serve as basis for classification of sites. Using the data gathered, maps were created showing the different parameters and specific areas suitable for mussel culture. To make the information accessible, the data gathered will then be incorporated in a database and will soon be posted online through an interactive web site for the use of mussel farmers/growers, local government officials and private individuals. S&T Media Service
A14 Monday, January 29, 2018 • Editor: Angel R. Calso
Opinion BusinessMirror
www.businessmirror.com.ph
editorial
As important: Economic freedom
W
e are told that “freedom of ” is crucially important for a government and society that is best for the people. Freedom of the press is what keeps the government accountable. Freedom of speech allows for a vibrant participatory democracy. Freedom of assembly insures that the people can make their collective voice heard. However, Singapore is considered by many to be a model state and its founding father, Prime Minster Lee Kuan Yew, an iconic leader. Yet, we know the devil is in the details. Singapore’s government regularly silences and even imprisons the political opposition. Censorship of both local and foreign press and media that cross the government red line of what is acceptable criticism is common. Freedom of assembly and public protest is only with the approval of the government. The basic right of a citizen of Singapore in the past and right now is “The right to do what you are told.” What makes Singapore the shining city on the hill is that in less than one generation from 1979, per capita economic output increased by 500 percent to $50,000, from $10,000. Lee Kuan Yew said clearly what he attributed that economic growth to: “I do not believe democracy necessarily leads to development. I believe what a country needs to develop is discipline more than democracy.” Everyone must do what they are told to do. In spite of curtailing civil liberties, the one area that Singapore has nearly absolute freedom is “economic freedom,” ranking No. 2 in the world behind Hong Kong in the 2017 Index of Economic Freedom. The Heritage Foundation describes it this way: “Economic freedom is the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume and invest in any way they please.” The Singapore government provided the foundation that would allow for wealth creation by way of economic freedom. A world-class educational system also meant telling the students that they do not have time for protests as they should be studying. If labor wanted higher wages, it should increase productivity, not go on a strike. If corporations wanted to maximize profits, then they had to adhere strictly to the rules or face severe government penalties. The reality is that the Philippines has greater civil liberties than in Singapore. Yet, the Philippines ranks No. 58 in the world on economic freedom. The Philippines ranks 110th in “judicial effectiveness,” slightly above Iran. Our property-rights ranking puts us below Tunisia. Turkey outscores the Philippines in business freedom. What does it say when Cambodia has a higher ranking than the Philippines for investment freedom? The nation scores well in the government’s financial health and stability. We have moved beyond the old ways of being subservient to foreign aid and foreign borrowing. But we are still caught in not providing the legal protection necessary for the country to become prosperous. The nation is making slow progress in some areas. However, survey after survey and year after year we are always told that, unless and until our judicial system enforces the rule of law effectively, without bias and throughout the country, then we are not going to have the economic freedom we need to increase wealth. If Lee Kuan Yew was correct about democracy and discipline, then we will remain short of our wealth potential. If Lee was correct, then we are going to have to choose what is more important to us as a people.
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Tertiary education for all Atty. Jose Ferdinand M. Rojas II
RISING SUN
T
he Commission on Higher Education (CHED), now headed by its new Officer in Charge (OIC) Prospero E. Vera, who replaced Patricia B. Licuanan who resigned some days ago, is ready to implement an unprecedented program in the country— the Universal Access to Quality Tertiary Education Act (UAQTEA), or RA 10931. For the first time, students and learners enrolling in state universities and colleges (SUCs), and local universities and colleges (LUCs) recognized by the commission, private higher-education institutions included in the registry, and even those enrolling in Technical Education and Skills Development Authority (Tesda) technological institutions and local government units (LGU)-run technical-vocation-
al education and training (TVET) centers will all benefit from the said program. It is important to note at this point that RA 10931 will be implemented in the first semester of the coming academic year 2018-2019, and that it is entirely different from what is being implemented at the moment, which is the Free Tuition 2017 program of the government. The current program, in effect for one year only
Undue haste
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legally speaking
T
he present conflict between the Senate and the lower house on its interpretation of Article VIII, Section 1(a) on a constituent assembly to propose amendments to the Constitution appears to be at an impasse. The collective sentiment in the Senate is that Charter change (Cha-cha) is dead if the lower house will not yield to the Senate’s voting (or convening) separately as a constituent assembly. The lower house has not been deterred by the Senate’s position. The House Committee on Constitutional Amendments (the “Mother Committee”) headed by Southern Leyte Rep. Roger Mercado has four subcommittees under it assigned to work on certain provisions of the Constitution: n Vice Chairman Corazon Nuñez Malanyaon; subcommittee on the executive and legislative, new article on federal and regional powers, number of states, local government and taxation, allocation of resources. n Vice Chairman and Deputy Speaker Fredenil Castro; subcommittee on the judiciary, constitutional commissions, amendments or revisions, suffrage, citizenship,
bill of rights, new article on the bill of duties. n Rep. Albee Beni-tez; subcommittee on the preamble, national territory, declaration of principles and state policies, general provisions and transitory provisions. n Vice Chairman Vicente Veloso; subcommittee on social justice, education, science and others, national patrimony and economy, accountability of public officers and the family. Among the proposals submitted to the Mother Committee as presented to the media last week (see Rg Cruz, ABS/CBN Post 1/16/18) were: n A shift to a federal parliamentary form of government; n Legislative power to be vested
(academic year 2017-2018), offers free tuition for students in SUCs. The new law, on the other hand, offers a host of benefits for students enrolling in the abovementioned institutions. Those enrolling in a college program will benefit whether they choose to go to a public institution (SUCs or LUCs), or study in a private school. Those who want to take up a technical or vocational program will benefit when they enroll in an LGU-run center or an institution being run by Tesda. UAQTEA has four components: free higher education, free TVET, tertiary-education subsidy and the student-loan program. The success of the program will depend on the effective implementation of these components. The Unified Student Financial Assistance System for Tertiary Education, an attached agency of CHED, is mandated by law to administer the program. The program itself has been given P40 billion by the government on its first year of implementation. There are too many Filipinos
who miss the opportunity to have better lives because of poverty. Students stay out of school because it is too expensive for them to take up a college course or a technicalvocational program. With the new law, there is no more excuse because everyone can now afford to go to school, at least this coming school year. We hope that the government can continuously fund the program even beyond the upcoming academic year. It was, indeed, a good move by the government to put more money into education this time. But as with most things, implementation is key. I do hope that the commission, under the leadership of the new OIC, and whoever will be taking the permanent chairmanship eventually, will be able to empower the groups or teams tasked to ensure the smooth implementation of this law. To help you, my dear readers, understand the law better, I intend to get into the details of the benefits and coverage of UAQTEA in the coming weeks.
To present these to the people in a plebiscite to coincide with the May 2019 elections is unrealistic, arbitrary and smacks of railroading. Especially, if it is true that among the proposed amendments is the removal of term limits for senators and congressmen. That would make public office the private property of our politicians who can remain in office ad infinitum.
ate; Mercado proposes to retain 24 senators elected nationally, plus the senators elected by regions; n The federal assembly shall elect its Speaker and the Senate its President by a majority vote of all its respective members; n The President shall be the head of state, elected by direct vote for a five-year term with one reelection; n Power of the President; oversight over all branches of government (Legislative, Executive, Judiciary, constitutional bodies, independent bodies, departments, agencies and offices of the government); head of international relations and foreign affairs, commander in chief of the Armed Forces of the Philippines (AFP), appointing power, pardoning power, residual power, enter into treaties, appoint members of the judiciary, constitutional bodies, Foreign affairs officials, address the parliament on the State of the Nation Address, proclaim the Prime Minister; n The Prime Minister will be the head of government; n Responsible exercise of the freedom of speech; n Remove the judicial power to determine grave abuse of discretion; n Create a regional Court of Appeals in the five proposed regions; n Deletion of the Judicial and Bar Council;
in a federal assembly as the national legislative department and the Senate as the legislative body representative of the regions; n The assembly shall have not more than 300 members. 80 percent of the members of the assembly shall be elected by plurality votes, where each single member legislative electoral district shall have one seat in the assembly; the remaining 20 percent shall be elected through a party-list system of registered federal or regional sectoral parties or organizations, representing the marginalized sectors to include labor, peasant, fisherfolk, urban poor, indigenous cultural communities, elderly, handicapped, women, youth, veterans, overseas workers and seafarers; n Each region shall have a minimum of three seats in the Senate; the senators receiving the three highest number of direct votes by registered voters in a region shall represent their region in the Sen-
See “Kapunan,” A15
www.businessmirror.com.ph
Opinion
We are 95 years old
Why we must be unfailingly kind to our enemies
BusinessMirror
Siegfred Bueno Mison, Esq.
Joel L. Tan-Torres
THE PATRIOT
DEBIT CREDIT
G
uess who are the significant “some ones” celebrating their 95th year this year? For accountants in the Philippines, the celebrants are the accountancy profession and the Board of Accountancy (BOA). In 1923 accounting was legally recognized as a profession in the country when the sixth Philippines Legislature approved Act 3105 on March 17, 1923. This law created the BOA vested with authority to promulgate rules and regulations, to set professional standards for the accountingprofession practice and to issue certified public accountant (CPA) certificates to those who have qualified in accordance with the requirements of the law. The board then was composed of a chairman and two members. The first BOA was composed of Chairman W. W. Larkin, and Domingo Dikit and Felix Tiongson, as members. The 95th anniversary commemoration this year will be celebrated by the many Filipino accountants here and abroad, and their many stakeholders. Since 1923 there have been over 185,000 CPAs who have joined the ranks of the profession. There will be a yearlong celebration of the anniversary. The activities will be focused on the theme “95 years of invaluable service to the Philippines and global accountancy community.” An official logo is being used for the anniversary. The accounting leaders and stakeholders are encouraged to download the logo from the BOA web site (boa.com.ph) or Facebook (Accountancy95years) and use this for their anniversary activities. There will be various events and activities that are being organized by the BOA and the various accountancy organizations. These will involve the participation and involvement of the many Filipino accountancy communities in the country and worldwide. Some of the activities are the holding of conferences and other learning special events, writing of articles for special edition publications, a Miss Diamond CPA beauty
Kapunan. . .
continued from A14
n Power to nominate members of the Judiciary shall be vested upon the Prime Minister and with the consent of the Commission on Appointments; n Retirement age of members of the Supreme Court from 70 to 65; n Creation of a Constitutional Court which shall have exclusive jurisdiction over constitutionalities of treaties, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance or regulation, electoral protests which were under the jurisdiction of the electoral tribunal, dispute between the federal and state government, between and among state governments and disputes between the states and local government units; n Power of the federal election commissions to investigate and prosecute election-related crimes is repealed and vested in the Department of Justice; remove quasi judicial functions of the Commission on Elections, including the Commission on Human Rights as a constitutional commission; n Deletion of the current 60:40 limit on foreign investments in the areas of exploitation, development and utilization of natural resources, ownership of alienable lands, franchises on public utilities, practice of profession, ownership of educational institutions, mass media and advertising; The committee also included the following transitory provisions
and personality contest, an anniversary shirt-design competition, arranging for the proclamation of Malacañang of 2018 as the 95th year of the accountancy profession, issuance of a postal commemorative stamp, roll out of the applications for Asean Chartered Professional Accountants, documenting the history of the accountancy profession, releasing, accountancy tid bits, a write up and recognition of prominent accountancy graduates from the various school, advocating for the approval of Accountancy Law amendments, implementation of the eQAR and an accountancy anniversary song competition All accounting organizations, including the Philippine Institute of Certified Public Accountants chapters in the Philippines and abroad, are encouraged by the BOA to organize their own activities to commemorate the anniversary and to showcase the invaluable service of Filipino accountants in the local and global accountancy community. The Filipino accountants have so much to celebrate in their diamond year. Their many stakeholders fully appreciate the contribution and the service they have been rendering for all these 95 years. For more information on the 95th anniversary celebration, go to https://www.facebook.com/Accountancy95years. Chairman Joel L. Tan-Torres is the chairman of the Professional Regulatory Board of Accountancy. He is a certified public accountant who placed No. 1 in the May 1979 CPA Board Examinations. He is a partner of Reyes Tacandong & Co., CPAs. He was the former commissioner of the Bureau of Internal Revenue from 2009 to 2010. This column accepts contributions from accountants, especially articles that are of interest to the accountancy profession, in particular, and to the business community, in general. These can be e-mailed to boa.secretariat.@gmail.com. n First election will be second Monday of May 2022; n Following the adoption of the Constitution, the present Congress will be dissolved, the Senate and House will be replaced by an Interim Parliament; n The interim Prime Minister shall be elected by a majority vote of the Parliament. He shall be a member of the Cabinet; n The incumbent President shall exercise all powers and functions of head of state and government under this federal constitution until the election of the next President and Prime Minister in May 2022; n The first regular elections for President will be on the second Monday of May 2022 and shall be elected by direct vote of the people for five years. n The incumbent Vice President will continue until 2022, after which the position of Vice President will be abolished. So broad and substantive are the proposed amendments that public hearings, consultation with various stakeholders, in depth research and studies must necessarily be done. To present these to the people in a plebiscite to coincide with the May 2019 elections is unrealistic, arbitrary and smacks of railroading. Especially, if it is true that among the proposed amendments is the removal of term limits for senators and congressmen. That would make public office the private property of our politicians who can remain in office ad infinitum. Viewed in this context, we can understand why the “undue haste”!
L
ooking back, I feel fulfilled to have weathered many difficulties when I tried to institute reforms in a graft-ridden government agency. However, a few days ago, detached from the bureau, I served for 1,699 days, I received a letter from the Ombudsman asking me to explain why I failed to specifically list down my licensed firearms in my Statement of Assets and Liabilities and Net Worth (SALN).
According to the complaint, such an omission supposedly constituted as a criminal offense and considered falsification. Knowing that I made a few enemies at the Bureau of Immigration (BI), I can safely surmise that such a complaint was obviously the handiwork of my loving “enemies.” In exchange for four and a half years in the BI, I had garnered a tarnished reputation through administrative cases and character assassinations in the media. For that reward, I thanked Quirante, Abrazaldo, Bello, Versoza and Hussin, among others. All of them were responsible for filing cases against me as they objected
to being reassigned to less powerful or influential positions. In his book, A Good Lawyer, Bobby Quitain said that our purpose must be tested with fire, which comes in many forms. Among these forms are pressure, practicality, pride and pain. But despite and perhaps because of these fires (administrative cases), I have to stand my ground knowing that I was doing things for a higher purpose. I have been tempted to take the easier route of “settling” these administrative cases for a fee. I refused. And so I suffered, albeit willingly and gladly. In his book, Secrets of the Vine,
Monday, January 29, 2018 A15
best-selling author Bruce Wilkinson said that pain is his way of either disciplining you or pruning you. Wilkinson’s first secret of the vine is that, “if your life consistently bears no fruit, God will intervene to discipline you.” His second secret is that “if your life bears some fruit, God will intervene to prune you.” When we are at the disciplining stage, Wilkinson said we should feel guilty but still repent with the hope that the trials will stop as soon as we stop doing our evil ways. When we are at the pruning stage, Wilkinson said that we should feel relieved and trust God all the more, realizing that these difficulties will cease when God is finished with us in the pruning process. In the words of Wilkinson, “pruning is how God answers your prayers that your life will please Him more and have a greater impact for eternity.” So whenever we face trials, especially coming from our enemies, let’s discard any ideas of revenge. In the Bible, Romans 12: 19-20 tells us, “Do not take revenge, my dear friends, but leave room for God’s wrath, for it is written: ‘It is mine to avenge; I will repay,’ says the Lord.” On the contrary: “If your enemy is hungry, feed him; if he is thirsty, give him something to drink. In
doing this, you will heap burning coals on his head.” In short, we should even be unfailingly kind to them. Furthermore, in Luke 6:27-28, the Bible tells us, “Love your enemies, do good to those who hate you, bless those who curse you, pray for those who abuse you.” When I was in the bureau, praying for my enemies was unheard of. The instinct was to be vindictive. But I think we can still manage to be kind, especially to our enemies as soon as we gain spiritual maturity, an eternal perspective and exert a bit of conscious effort to just be decent human beings. I take this opportunity to thank Quirante, Abrazaldo, Bello, Versoza, Hussin and others who made my service in the government difficult yet fulfilling, frustrating yet satisfying. For those who are facing all kinds of difficulties, those who are unjustly persecuted and those whose enemies appear to overpower them, be assured of what Psalm 126:5 tells us, “Those who sow with tears will reap with songs of joy.” Let’s be kind and give thanks to our enemies for they will make us joyful—all in a matter of time. For questions and comments, please e-mail me at sbmison@gmail.com.
Donald McGahn’s job is to protect the president Noah Feldman
BLOOMBERG
T
he Web is abuzz with the revelation that President Donald J. Trump tried to fire special counsel Robert Mueller last June but was blocked by White House counsel Donald McGahn. What information can be gleaned from the leak and its circumstances? Let’s pull on the deerstalker and try to draw some inferences—both positive and negative. Start with the source of the leak. There was plenty of unsubstantiated speculation on Twitter that it might be McGahn, eager to distance himself from the rack that the White House is fast becoming. This is pretty strongly unlikely: McGahn has an obligation of lawyer-client confidentiality to Trump. If he breached that obligation by leaking details of a legal conversation with Trump, he is liable to sanction. He might even lose his license to practice law. To be sure, the White House counsel is not Trump’s private lawyer. That’s where private lawyers John Dowd and Jay Sekulow come in. Those lawyers work for private firms and are paid directly by Trump. They represent the president in his personal capacity. The White House counsel and his team represent the president of the United States in his official capacity. It would be too simple to say that their client is the US government—that’s whom the Department of Justice says it represents. Rather, the counsel’s office likes to
say that it represents “the White House.” Because the building isn’t an actual constitutional entity, the formal way to say it is that the White House counsel’s client is the president in so far as he is acting as president. The division of the president’s lawyers into two sets personal and professional—has an almost medieval air about it. In old English constitutional thought, it was said that the king had two bodies, his body politic, which was immortal, and his natural body, which could be born and die. The adage “the king is dead, long live the king” captures the legal fiction that the king’s political body never dies, even when the king himself does. What that means today is that McGahn is acting as the president’s lawyer when he advises him about any legal matter connected to his official duties. Firing Mueller would have been an official act with major legal implications. McGahn’s advice not to do so would absolutely be protected by lawyer-client confidentiality. It’s really hard to
imagine that an experienced lawyer like McGahn would take the risk of violating that confidentiality by telling reporters about it. On the other hand, a source who knew about the exchange between Trump and McGahn but was not himself a lawyer—say, former senior adviser Steve Bannon or any other nonlawyer in the White House—would not be under a legal duty to respect the confidentiality of the lawyer-client exchange. For such a leaker, the only relevant question would be whether the leak might get him or her fired. In the example of Bannon, he has already been fired, so he wouldn’t face that risk. Of course, there is a tiny possibility that Trump himself would have authorized McGahn to leak, maybe in order to convey his seriousness about firing Mueller. If that happened, McGahn wouldn’t have been breaching confidentiality—his client agreed to the leak. But that would be an extraordinarily high risk for Trump. Authorizing the leak could later make him vulnerable to having to testify about the conversation. It would have been a voluntary waiver of his privilege to speak privately with his lawyer, not to mention with non lawyer senior officials in his administration. Another issue is whether Mueller is focusing his investigation on McGahn, or whether (again, as some on Twitter have speculated) McGahn is cooperating with the Mueller probe. Both of these are unlikely to the point of being almost impossible. Of all the people in the White House to investigate or interview,
Hands off the Justice Department
I
t would be outrageous for a president to ask the question under any circumstances. But it is especially alarming to learn that Donald J. Trump asked a candidate to lead the FBI, Andrew McCabe, who he voted for in the 2016 election. There is good reason that the federal government is forbidden by law to ask applicants to the Federal Bureau of Investigation about their political affiliations. But coming as it did on the heels of Trump’s firing of former FBI Director James Comey for his refusal to be sufficiently deferential in a criminal probe, and after a year in which both Democrats and Republicans accused Comey of political bias, Trump’s question was nothing short of unethical— corrupt, even.
And the question to McCabe was not an isolated incident. Last year Trump took the highly unusual step of interviewing a candidate for the post of US attorney for the Southern District of New York—a jurisdiction that includes Trump’s home of Manhattan. The candidate, a wellregarded former federal prosecutor and white-collar criminal-defense lawyer named Geoffrey Berman, was later appointed to the post on an interim basis and expected to be nominated for the permanent position. Presidents rarely interview US attorney candidates, and yet Trump also spoke with candidates for New York’s Eastern District and for Washington—both places where he has business holdings. It’s true that
these positions are presidential appointments, but they report to the attorney general, not the White House. And it does not appear that Trump has interviewed many, if any, candidates for the other 90 US attorney positions. Since taking office, Trump has shown reckless disregard for ethical safeguards and been equally dismissive of prosecutorial independence. So concerns about what transpired between Trump and Berman, and Trump and McCabe, are valid. Did Trump ask Berman who he voted for? Or other questions of a political nature? Did he raise with McCabe the department’s ongoing investigation into Russian interference in the 2016 election? The extensive public record shows
McGahn is probably the last that Mueller would go after. A criminal subpoena could overcome the president’s executive privilege to keep secret whatever he may have said to his political advisers, but it’s much harder to breach lawyerclient confidentiality. In theory, if a client tells a lawyer before the fact that he specifically plans to commit a criminal act, the communication might not be privileged. But just about any other form of communication between a client and a lawyer is going to be protected from an investigation like Mueller’s. McGahn can’t say much, so there’s little reason for Mueller to focus on him. It would also look bad for Mueller to try to breach lawyer-client confidentiality, and it would be highly inconsistent with his team’s respect for lawyers and the rule of law. That’s also the reason to conclude with 99-percent certainty that McGahn hasn’t been “flipped.” There would be no ethical way for a lawyer to continue representing a client while participating in a potentially criminal investigation of that client. That would certainly be true if the target didn’t know about the cooperation. But it would very likely still be true if McGahn had told Trump he was talking to Mueller. The conflict of interest is just too deep. The upshot is that the leak of the story about Trump’s ordering Mueller to be fired was probably made without McGahn’s knowledge or consent, and it would be a mistake to take it as proof that Mueller is focused on McGahn.
his unhappiness with it, and with McCabe. No one is questioning Berman’s qualifications for the job or McCabe’s competence. It’s Trump’s treatment of the Justice Department and the FBI that raises serious ethical questions. Senate hearings—on Trump’s nominees for US attorney or about his directives to anyone responsible for investigating the 2016 election—would be an appropriate place to ask for answers to such questions. In the meantime, Republican senators ought to deliver a clear message to the president: Political interference in the Justice Department undermines public respect both for the rule of law and the institutions that must preserve it. Bloomberg
2nd Front Page BusinessMirror
A16 Monday, January 29, 2018
House vows to work closely with Charter change consultative committee
T
By Jovee Marie N. dela Cruz
@joveemarie
he chairman of the House Committee on Constitutional Amendments last Sunday vowed to closely coordinate with the consultative committee created by President Duterte to study possible changes to the 1987 Constitution.
Rep. Roger G. Mercado of the Lone Distrct of Southern Leyte, the panel chairman, said the coordination between Congress and the Executive depa r t ment—t hrough t he 19-member consultative committee headed by retired Chief Justice Reynato Puno—is needed to discuss contentious issues on Charter change (Cha-cha). “The creation of the committee
is a welcome development toward the plan to revisit or amend the Constitution. The creation of the committee would be a great help for us in drafting this historic Constitution,” Mercado said. He added his committee will also continue to hear different sides of stakeholders and conduct public consultation on the proposed Cha-cha to get other “valuable inputs.”
Mercado: “The creation of the committee is a welcome development toward the plan to revisit or amend the Constitution.”
Despite the review panel chaired by Puno, House Majority Leader Rodolfo C. Fariñas Sr. of Ilocos Norte earlier said it will still be up to Congress to decide whether to accept their recommendations. Last week the leadership of the both chambers of Congress have agreed to pursue separately their amendments to the 1987 Constitution that will shift the country’s form of government to federalism. Speaker Pantaleon D. Alvarez said congressional leaders have forged an agreement to veer their attention away from the more “contentious issues” on Charter change,
and instead try to first reach a consensus on the general features of the envisioned federal government. Once both chambers of Congress reach a consensus on the structure of the proposed federal government, Alvarez expects the rest of the discussions for Cha-cha between the House and the Senate to “flow more smoothly.”
Not self-serving
Senior Deputy Minority Leader Party-list Rep. Lito L. Atienza Jr. of Buhay said he is confident that the consultative committee created would not produce “self-serving recommendations.” “Since the advisory commission does not include a sitting member of the House or the Senate, they are not expected to advocate possible amendments that might benefit incumbent elected officials. This is very reassuring,” Atienza said. See “Charter change,” A2
www.businessmirror.com.ph
Japan foreign minister hopes for improved ties with China Continued from A1
The sides experienced a major break in relations in 2012, after China responded furiously to Japan’s nationalization of uninhabited East China Sea islands that Tokyo controls but which China claims. They moved toward normalization with Abe’s visit to Beijing in 2014, however, mutual distrust continues to run high, especially over the islands, known in Japan as the Senkakus and in China as the Diaoyus. Taiwan also claims the islands, referring to them as Diaoyutai. Earlier this month, Tokyo expressed concern when a Chinese nuclear powered attack submarine was found operating just outside Japan’s territorial waters. The sub later surfaced in the high seas flying the Chinese flag. Japanese media quoted Defense Minister Itsunori Onodera telling reporters after the incident that Japan was “seriously concerned over acts that unilaterally raise tensions” and would “respond swiftly if a similar incident happens.” Also this month, three Chinese coast guard vessels passed through what Japan considers its territorial waters surrounding the East China Sea islands in the third such intrusion this month. Both incidents have been viewed as attempts by China to probe Japan’s ability to patrol the area and detect intrusions. Animosity between the sides owes
largely to Chinese resentment over Japan’s brutal invasion and occupation of large parts of China. Many Chinese feel Japan has never shown adequate contrition for its acts, a sentiment fueled by the ruling Communist Party’s use of heavy-handed nationalistic propaganda in schools and entirely statecontrolled media. Yet, the Japan-US military alliance remains stronger than ever and Japan has responded to China’s territorial claims by recently opening a museum in Tokyo to present evidence intended to support its position. China’s generally positive relationship with South Korea, another close US ally, has also soured over Beijing’s demands that Seoul remove a sophisticated antimissile system intended to counter the threat from Pyongyang. South Korea has refused to do so and Beijing has lately softened its position by accepting a commitment to not expand the system, known as THAAD. Hopes for further reconciliation rose last November when officials from Japan, South Korea and China met in the Philippines to discuss the possibility of again holding a trilateral summit between them. The last one was held in 2015. Japanese reports say Tokyo hopes to arrange for a visit to China by Abe later this year, followed by a visit to Japan by Xi next year. AP