Businessmirror january 30, 2018 by BusinessMirror

Compliance in 2018: What You Need to Know

By Henry J. Schumacher

In most cases, however, regulatory change can present real challenges and risks for entrepreneurs and growing businesses. As you expand into new territories, or offer new products and services, the number of rules that apply to you increases and, sometimes,

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hether you zero in on compliance in the Philippines or zoom out to the global regulatory environment, a lot of issues were raised in the last few months of 2017, which most probably will spearhead a lot of change. contradicts one another. In 2018 companies will need to keep these challenges at the forefront of their annual planning. Here are some ways companies should be engaging with the need for compliance in this (still) new year: Continued on A12

BusinessMirror A broader look at today’s business

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Tuesday, January 30, 2018 Vol. 13 No. 111

Exporters eye 20% share in ₧89.4-billion CCT fund

By Elijah Felice E. Rosales

he House of Representatives had a productive day on Monday, approving three controversial bills on third and final reading. The three measures—strengthening the security of tenure, providing immediate financial assistance to agrarian-reform beneficiaries and recognizing the civil effects of church-decreed annulment—will now be transmitted to the Senate for its own deliberations. Voting 199 affirmative and seven negat ive, law ma kers passed House Bill (HB) 6908, which seeks to strengthen the security of tenure of workers by amending for the purpose Presidential Decree (PD) 442, or the Labor Code of the Philippines.

The measure prohibits laboronly contracting and defines its existence when any of the following is present: the contractor does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others; and the contractor has no control over the workers’ methods and mean of accomplishing their work; and the contractor’s workers are performing activities which are directly related to the principal business of the employer. The bill also introduces a new provision requiring all persons or entities doing business as job contractors to obtain a license from the Department of Labor and Employment (DOLE). See “Bills,” A2

No new tax bill on Senate’s list of priority bills for now–Sotto By Butch Fernandez @butchfBM

iven a breather from working on Charter change (Cha-cha) with Malacañang’s creation of a consultative committee to draft proposed amendments to the 1987 Constitution, Senate and House leaders are now expected to line up their own list of priority bills for plenary approval before Congress adjourns for its next recess during the Holy week break. Senate Majority Leader Vicente C. Sotto III, however, gave assurances that no bill seeking imposition of higher

taxes to raise more revenues eyed to bankroll the “Build, Build, Build” infrastructure program of the Duterte administration is on the table, as yet. “Wala pa [none yet],” Sotto told the BusinessMirror. Sotto made the clarification |when asked if any new revenue measure or appropriation bill—supposed to emanate from the House of Representatives—is rife for Senate plenary approval. The Senate majority leader confirmed that what is on their priority list is the pending bill embodying the Continued on A12

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xporters are asking the government to reallocate at least 20 percent of its funding for the conditional-cash transfer (CCT) program to interventions that will help the export sector diversify its offerings and make its growth less vulnerable to external conditions.

House okays bills on security of tenure, annulment decrees

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Ortiz-Luis: “Up to now, I cannot understand what the CCT is for.”

The sector’s growth has been fluctuating in the previous years, growing robustly in one year then falling sharply the following year, before rebounding strongly the next year.

Manny B. Villar

THE ENTREPRENEUR

lame it on the impressive performance of the economy—traditionally, it should have been lackluster, coming after an election year—but gross domestic product actually grew by 6.7 percent in 2017, just a bit slower than the 6.9 percent in 2016, which was boosted by spending related to the presidential election. In addition, the prognosis for this year is very good, as I discussed in last week’s column. No less than the World Bank said it expected the Philippines to continue to be the fastest-growing economy in the Association of Southeast Asian Nations (Asean).

See “Exporters,” A2

Continued on A10

BMReports

Govt addresses major problems in Boracay By Ma. Stella F. Arnaldo

By Claudeth Mocon-Ciriaco

@akosistellaBM Special to the BusinessMirror

Correspondent

Part Two

HE first time I went to Boracay Island was in the late-1980s. I remember riding a six-seater plane, which took off from Roxas City in Capiz, then landed 15 minutes later in some outback airstrip. When I finally caught a glimpse of the famous white beach, I was stunned speechless. The sand was a creamy off-white color, with the texture almost of confectioner’s sugar. And I immediately wanted to dive straight into the cerulean water, which was clear to the bottom. But as the trip was totally unscheduled on our agenda, I wasn’t able to bring a swimsuit to change into. There were hardly any resorts back then, so the white beach was quite expansive even at high tide, with coconut trees as far as the eye could see. Electricity was spotty, too; the establishments were powered mainly by generators. But the tourists then, mostly Caucasians from Europe burned to a bright lobster red from staying out too long in the sun, didn’t seem to mind. They were only too glad to have found Boracay, which was still a secret even to most Filipinos, and get away from the wintry chill of their own homelands.

Govt demands full refund of payment for dengue vaccine

Tourists flock to witness the famous sunset view of Boracay Island. The previous pristine beaches of Boracay that have lured tourists from all over the world are now threatened by garbage and heightened commercialization. ALYSA SALEN

One could curl up with a good book while splayed out under the sun, or just play in the cool freshness of the sea. The shore was spotless— just cream on cream of small dunes shaped by the wind and the water—and, most of all, it was peaceful and quiet. It was, as the foreigners dubbed it, a perfect paradise. After that initial trip, I had gone to Boracay several more times with friends, families or colleagues from work to enjoy the world famous white sand beach. With each visit, however, I have noticed the worrisome changes that have taken place over the years, as the once-pristine island reaps more fame here and

around the world.

Best beach in the world

TODAY, Boracay Island has become synonymous to the Philippines. It is the focal point of most promotions undertaken by the Department of Tourism (DOT) here and abroad, such that it has become the primary destination of most foreign and local visitors. The DOT reports that about two million people visited Boracay last year, split almost in half between foreign and domestic travelers. This year, that number is expected to rise to 2.2 million. The island has been recognized Continued on A2

he Department of Health (DOH) has asked French pharmaceutical giant Sanofi Pasteur to return the P3.5 billion the government had paid for the Dengvaxia vaccines in 2016. This was revealed by Health Secretary Francisco Duque III right after his meeting with DOH regional directors late Monday afternoon. “We already sent the [demand] letter for the refund of the used vaccines,” Duque said, stressing, “the purported protection wasn’t felt, wasn’t there.” The demand letter was sent to Sanofi’s Asia Pacific head Thomas Triomphe on January 26. “In fact, they withdrew the label. They did a relabelling because they said you can no longer use this for seronegative children who never had past dengue infection,” Duque said. Earlier, Duque asked Sanofi to pay back the P1.5 billion for the unused dengue vaccine vials that had been kept in the DOH’s warehouses. Sanofi then complied by returning the amount to the Philippine government for the unused vaccines. Duque also gave his marching orders to regional directors and DOH hospitals on how they should monitor and manage cases of vaccinated kids who may later develop dengue. The DOH chief said the hospitalization costs of the vaccinated children should be covered by the Philippine Health Insurance Corp.

n japan 0.4682 n UK 71.9717 n HK 6.5095 n CHINA 8.0393 n singapore 38.9446 n australia 41.2270 n EU 63.2297 n SAUDI arabia 13.5686

Source: BSP (29 January 2018 )

BMReports BusinessMirror

A2 Tuesday, January 30, 2018

Govt addresses major problems in Boracay Continued from A1

by influential foreign travel publications, such as Conde Nast (Best Island in the World for 2017, Reader’s Choice) and Travel + Leisure (World’s Best Island, 2012). Blogs like CNN Travel regularly puts Boracay among the Philippines’s or world’s best beaches. But this may not be for long; even though considered among the top beaches in the world: Its ranking is slowly slipping, overtaken by the far more pristine and unsullied resort islands in Palawan. Boracay, of late, has become overpopulated, over-commercialized, with its own little traffic jams along the main road, has flooding issues and dirty sewage water seeping into the waters surrounding it. Development in Boracay in the early-1980s to the mid-1990s was gradual and predictably slow. The 1997 Asian financial crisis may have eventually sparked the domestic tourism boom in Boracay that would push the island into an environmental tailspin. With the peso dropping to P43-mark to the dollar in mid-1998 from just P26.31 at the opening of the previous year, Filipinos shelved plans of vacationing abroad and, instead, started finding their way to resort island.

With accessibility comes the horde

DOMESTIC tourists flew directly to Caticlan, the gateway to Boracay, or via Roxas City or Iloilo, then made the four- to- six-hour travel by land along dusty roads to the Caticlan port,

Exporters. . .

before braving a 30-minute pump boat ride to one’s resort of choice. It was like the gold rush in California which attracted tens of thousands of prospectors from across the United States and overseas, only in the Philippines’s case, it was a mad rush to discover the 4-kilometer crystalline white-sand beach of Boracay. For another, accessibility to the island has improved. Former President Gloria MacapagalArroyo’s ambitious flagship project, the Strong Republic Nautical Highway, sought to connect the entire archipelago of the Philippines via buses accommodated on roll-on, roll-off sea transport. Launched in 2003, the project connected 17 cities, towns and islands, including Caticlan. Busloads of tourists have arrived, all eager to swim in the island’s cool clear waters. From just one airline flying to Caticlan in 1996, almost all Philippine carriers, both legacy or low cost, now service Boracay. Some even fly as far as mainland China to bring in the tourists, landing at the Kalibo International Airport, with local tour operators ferrying them by air-conditioned buses to Caticlan. Even the road from Kalibo to the gateway to Boracay has been paved allowing tourists a short and painless ride. So from just about a hundred or so rustic resorts and nipa hut accommodations in the early-1980s, there are now over 500 resorts established in Boracay by the DOT’s latest count. And I expect more to come as the municipality of Malay, which oversees the island, continues to approve more business permits

Continued from A1

With this, the Philippine Exporters Confederation Inc. (Philexport) is urging the Duterte administration to rethink its allocation for the CCT program, which, according to the group’s president, is consuming a huge portion of the government’s budget without providing long-term benefits for Filipinos. Sergio R. Ortiz-Luis lamented the government’s decision to allocate P89.41 billion to the CCT program, but only gave the Department of Trade and Industry (DTI) P5.18 billion this year. The Philexport president said to improve the country’s export industry, it must prioritize funding for the DTI, especially due to its critical mandate. “Well, obviously, the product development and marketing-promotions budget should be improved because the budget of the DTI, which is tasked to do these, is just too little,” Ortiz-Luis said in an interview with the BusinessMirror. Under the 2018 national budget, the DTI received P5.18 billion, of which P2.25 billion is allotted for the development of micro, small and medium enterprises (MSMEs). On the other hand, the CCT program raked in P89.41 billion, of which P82.08 billion is for cash grants. Ortiz-Luis recommended that the government transfer at least 20 percent of the funding for the CCT program to assistance to MSMEs. “What we are trying to ask the government is why not devote or allocate 20 percent of that to Small Business Corp. [SBC]?” he said. Based on calculations done by the B usiness M irror, this could come up to P17.88 billion in additional funds for SBC, which presently has an allocation of P1 billion. “Up to now, I cannot understand what the CCT is for,” Ortiz-luis said.

The Philexport chief added that exporters will greatly benefit from additional financial support from the government, as the industry has not been seeing steady growth over the past years. According to the Philippine Statistics Authority (PSA), total exports from January to November of last year reached $58.10 billion, a 10.8-percent hike compared to $52.44 billion year-on-year. Ortiz-Luis pointed out the country could grow out of its export comfort zone of electronic products if the government would just provide MSMEs additional funding. He added that

to would-be resort owners.

An environment in distress

ALONG with the burgeoning number of resorts, and the rush of visitors most times of the year, Boracay Island has become less of the paradise it once was. What was once a perfect white beach, barely marked by footprints in the sand, there are now overwhelming crowds most times of the year that resort owners say “there is no more low season in Boracay.” When locals rush back to Manila and other urban cities as the school season starts in June, the foreigners take their place. And they come from all over the world—even as far as Argentina, France or South Africa, according to DOT data. The huge crowds and the burgeoning number of commercial establishments have distressed the environment. Strings of slimy green algae during the summer season, when Boracay hits its peak number of visitors, are now a regular fixture on the beach. And no, the algae don’t help bleach the sand, no matter how many local businessmen try to spin this as a reason for its existence. At the back of the island, in what is called Bulabog Beach, where activities like kite surfing, kite boarding, windsurfing and other water sports take place, the situation is even worse. The water toward the shore is a brownish muck as pipes drain out what appears to be fecal matter and untreated sewage waste.

“it is easier said than done” to diversify the country’s exports, but is attainable if given proper assistance. Electronic products continue to top the country’s export commodities, as of latest data from the PSA, as it accounted for 58.1 percent of the total share of export revenue last November. The export of this commodity grew by 12.7 percent, from a value of $2.56 billion in November 2016. The country’s export sales in 2016 registered a 4.4-percent decrease to $56.23 billion, from $58.83 billion in 2015. In reporting the country’s 2016 external trade performance, Socioeconomic Planning Secretary Ernesto M. Pernia already mentioned the need to diversify. “This means that we need to keep diversifying and exploring new markets, in addition to fully tapping our existing trade agreements to push further our upward trajectory.” He added that the countr y needs to instill a global mind-set on MSMEs and provide them a conducive business environment. This can be done through helping them address internal and external constraints to their development and trade potential. He noted that all these strategies are included in the proposed Philippine Development Plan 2017-2022. The Export Development Council (EDC) aimed for a 4-percent to 5-percent export growth for 2017, and is optimistic that it hit that target, Ortiz-Luis said. He added the EDC’s growth target for this year is 3 percent to 5 percent, but, considering the recent improvement in the country’s export performance, he said it might reach as high as 8 percent. “We expect to be nearer to 8 percent this year [given the proper] assistance from the government,” he said. Ortiz-Luis also said the government’s infrastructure program, which will go into full swing this year, will bolster the country’s

To be continued

trade movement, leading to better export performance. “We know very well that investments on infrastructure will be the driver for this, provided that the government will not get distracted in its plan,” he said. Economist Alvin Ang, director of the Ateneo Center for Economic Research and Development, said this is not the right time to slash the CCT budget, as it is hoped to cushion the impact of the administration tax-reform program. “We can’t do that. The MSME sector has enough funds; it’s the quality of projects that is the problem. As I said, I think the issue is the quality, because the banks themselves are supposed to loan by law but are not doing it. Besides, you need the CCT to cushion tax impacts. Of course, correct targeting and implementation of CCT is a different issue,” Ang told the BusinessMirror.

House. . .

Continued from A12

The congressional leaders have forged an agreement to shift their attention from the more contentious issues on Cha-cha and, instead, try to first reach a consensus on the general features of the federal government being envisioned. Once both chambers of Congress reach a consensus on the structure of the proposed federal government, the leadership of the lower chamber expects the rest of the discussions for Cha-cha between the House and the Senate to flow more smoothly.

Power of Congress Meanwhile, Garcia reiterated that the manner of proposing amendments to the Constitution is exclusively reserved by the Filipino people to Congress of the Philippines. “President Duterte’s creation of a consultative commission, composed of experts and headed by former Supreme Court Chief Justice Reynato S. Puno, will provide lawmakers with invaluable inputs to the respective work of the House of Representatives and the Senate in preparing proposed amendments to the 1987 Constitution,” she said. “But as its name suggests, the commission’s task is consultative. It’s role is purely to be consulted. Congress may consider the recommendation of the 19-man commission, as well as those of any citizen, and may decide to adopt or not adopt them.” The consultative committee has been given six months to draft their proposed amendments to the 1987 Constitution. “[However] I do not foresee any crisis that will result in the consultative commission being at loggerheads with the House of Representatives,” she added. Jovee Marie N. dela Cruz

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Bicolano tycoon offers land to temporarily house Mayon evacuees

B icolano c o n s t r u c tion magnate on Monday offered 41 hectares of prime land in Legazpi City as temporary evacuation site for thousands of A lbay residents fleeing the 9-kilometer danger zone around Mayon Volcano. Through Sunwest Care Foundation Inc. (SCFI), businessman Elizaldy Co said his group is working closely with the Legazpi city government, the Philippine National Red Cross (PNRC) and Department of Social Welfare and Development (DSWD) to move thousands of families housed in various public schools to their proposed temporary shelter in Barangay Lamba, Legazpi City. He is allowing use of his property free of charge. SCFI said the 41-hectare estate on Legazpi Boulevard can comfortably accommodate more than 50,000 families. The foundation is teaming up with PNRC for tents, while Legazpi City Mayor Noel Rosal and Albay Gov. Al Francis Bichara have committed to provide GI sheets and tarpaulins. Coordination is also ongoing with the DSWD for the provision of construction materials and relief goods like rice, noodles, canned goods and hygiene kits. The foundation is also preparing a daily feeding program for the evacuees. “We thank SCFI and Mr. Co for his generosity in lending his property that will benefit close to 16,000 evacuees from Legazpi City alone,” Rosal said. He appealed to other private entities in Albay to help

Bills. . .

Continued from A1

The bill also seeks to amend Article 106 of PD 44, titled “Contractor,” so that whenever an employer enters into a contract with workers, the employees of the contractor shall be paid in accordance with the Labor Code and other laws. It simplifies and clarifies the classification of employees. Under the measure, fixed-term employment would be prohibited, except in cases of overseas workers, temporary relievers, seasonal workers and project employees. It said relievers, project employees and seasonal employees would be entitled to the rights of regular employees for the duration of their service. A probationary employee, who has rendered at least one month of service, would be entitled to termination pay of a half-month’s salary. Likewise, all other forms of discontinuous employment are prohibited. Clauses in employment contracts providing for a fixed term or definite period of employment are void. Workers under such arrangements are deemed regular employees reckoned from the first day of employment. The bill inserted Article 303-A titled “Admi-nistrative Penalties,” which cites the penalties the DOLE shall impose on erring principal employers, job contractors, manpower agencies, workers’ cooperatives and any other similar entities.

DOLE support

Labor Undersecretary Joel Maglunsod said they support the passage of the current version of HB 6908 since it will grant them more authority to go after erring contractors. “We hope they would fast-track its passage since it will help us in our enforcement [of basic labor standards] and in complying to with the President’s campaign against contractualization,” Maglunsod said in an interview. He said it would complement the existing provision of Department Order 174 and their proposed executive order on contractualization. “The marked improvement in its provisions would surely address to a great deal widespread use of contractual labor in the country,” Maglunsod said, as he expressed hope that lawmakers will be able to pass HB 6908 before May so it could serve as the government’s early Labor Day gift to workers.

Annulment

Meanwhile, HB 6779, or “An Act Recognizing the Civil Effects of Church Annulment Decrees”, has also been approved by 203 lawmakers. Currently, the state recognizes divorce under the Code of Muslim Personal Laws of

ensure the welfare of students and relocated families. The transfer to a new evacuation site would help ease the cramped and unsanitary living conditions of evacuees temporarily housed in various public schools around Albay. By decongesting public schools, the foundation and local officials said regular classes could immediately resume in areas outside of the danger zone. Co, who sits as chairman and CEO of Sunwest Group Holding Co. Inc., initiated the project, saying that Albayanons deserve decent living quarters with communal latrines to prevent the spread of disease. “The education of our youth is of paramount importance. Despite the threat of an impending calamity, classes and the learning of our students beyond the 9-kilometer danger zone shouldn’t be interrupted or compromised,” he said. Aside from offering the temporary evacuation site, SCFI has other initiatives to help Albay residents affected by Mayon’s volcanic activity that began on January 13. The Foundation’s programs include daily feeding programs in Barangay Mabinit, Legazpi City and eight other evacuation centers in two cities and three municipalities of Albay. SCFI is an affiliate of Sunwest Group Holding Co. Inc. It is a member of the League of Corporate Foundations, accredited by the DSWD since 2013 and has a License to Operate from the DSWD Region 5 since 2009. the Philippines, which is based on the Sharia, or Islamic law. Under the bill, whenever a marriage, duly and legally solemnized by a priest, minister, rabbi or presiding elder of any church or religious sect in the Philippines is subsequently annulled, dissolved or declared a nullity in a final judgment or decree in accordance with the canons or precepts of the church or religious sect, it will have the same effect as a decree of annulment, dissolution or declaration of nullity issued by a competent court. It added that the status of children of marriages subject of the church-annulment decree shall be determined in accordance with the provisions of Executive Order 209, or the “Family Code of the Philippines.” In case the ground for the churchannulment decree is not similar to any of the grounds provided in the Family Code of the Philippines, their common children born or conceived before the issuance of the church annulment shall be considered legitimate. On the other hand, the liquidation, partition and distribution of the properties of the spouses, the custody and support of the common children, and the delivery of their presumptive legitimate shall be agreed by the spouses, and embodied in a public document. In case no agreement is met, the provisions of the Family Code of the Philippines shall be in force.

Financial assistance

Also approved on third and final reading is HB 6686, which seeks to provide immediate financial assistance to affected agrarian-reform beneficiaries in the event of natural calamities to make their losses more bearable. Voting 201-0, lawmakers passed the amendment to RA 9700. It seeks to give full insurance coverage to all qualified agrarianreform beneficiaries as defined in RA 10000 of the “Agri-Agra Law”and who are actually tilling the land and capitalizing on crops as certified by the Department of Agrarian Reform. The bill mandates full crop-insurance coverage to farmer beneficiaries whose losses were the result of natural calamities such as typhoon, drought, volcanic eruption and flood. The measure also included in the cropinsuranceagricultural losses triggered by plant diseases, such as pathogens, bacteria, fungi and pest infestations caused by nematodes, insects, mites, snails and other parasites. Crops that are covered by full insurance are palay, corn, sugarcane, high value crops as defined in Section 4(b) of RA 7900, also known as the “High-Value Crops Development Act of 1995,”coconut, tobacco; aquaculture, livestock; and noncrop agricultural assets. With Samuel Medenilla

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The Nation BusinessMirror

Editor: Vittorio V. Vitug • Tuesday, January 30, 2018 A3

Rights groups, clergy welcome to join ‘Tokhang’ operations

ational Police (PNP) chief Director General Ronald M. dela Rosa on Monday said human-rights advocates are welcome to join in “Oplan Tokhang” operations, emphasizing that policemen will not gun down drug suspects indiscriminately.

“Well, imbitado sila para makita nila [we invite them to witness our operations]. We are inviting them sumama kayo sa [come with us in] sa Oplan Tokhang para makita ninyo kung paano namin ginagawa ito, pati mga pari nila iniimbitahan namin kung gusto nilang sumama [so you will see how we undertake our anti-drug operations, and this invitation includes priests],” he added. De l a R osa sa id t h at t he y would also request the Commission on Human Rights to come up with a list of legitimate humanrights groups. PNP Spokesman Chief Supt. Dionardo B. Carlos earlier said supplemental guidelines for Oplan Tokhang are essentially founded on the fundamental principles of

respect for human rights and strict adherence to the rule of law, with greater emphasis on transparency, accountability and command responsibility. “The more salient items in the 12-point guidelines prescribe that the ‘Rule of Law’ shall always prevail during the conduct of all anti-illegal drug-related activities, including Tokhang activities, and respect for human rights shall be strictly observed at all times,” he added. The guidelines specifically stipulate that Tokhang operations shall be intelligence-driven, targeting suspected illegal drug personalities listed by the PNP Directorate for Intelligence. It is required that police Tokhang teams are in proper PNP uniform,

must be led by a police commissioned officer and shall conduct operations from 8 a.m. to 5 p.m., Monday to Friday. “When available, the use of body camera and similar video-recording gadgets is highly encouraged in Tokhang operations,” Carlos said. The documentation of surrenderers, taking of mug shots and fingerprint, is voluntary and should not be mandatory for surrenderers. The PNP vows to impose sanctions against unwarranted violation of these guidelines. “Any violation of this PNP Supplemental Operational Guidelines shall be dealt with under existing PNP disciplinary mechanisms,” the PNP spokesman added.

Body cameras

In line with the efforts to ensure transparency in the conduct of the anti-illegal drug campaigns, the Philippine Drug Enforcement Agency (PDEA) has issued guidelines on the use of body cameras during anti-illegal drug operations. PDEA Director General Aaron N. Aquino said that as far as practicable, the use of body cameras is encouraged and media should be invited to cover antidrug operations, especially for high-impact operations. The guidelines issued in the conduct of antidrug operations are as follows:

The more salient items in the 12-point guidelines prescribe that the ‘Rule of Law’ shall always prevail during the conduct of all antiillegal drug-related activities, including Tokhang activities, and respect for human rights shall be strictly observed at all times.”—dela Rosa ■ Agents and witnesses, particularly media representatives shall mandatorily wear body cameras; ■ All media representatives shall likewise wear bulletproof vest, ballistic helmets and other protective gears. Their safety and security shall be ensured by the ground commander; ■ All media representatives may be allowed to get actual footage of the antidrug operations and maybe allowed to enter target areas simultaneously with the operating units; ■ The ground commander shall collect the body cameras after the antidrug operation; ■ The video, or any portion of it, generated during the operation shall never be edited, cut, spliced or deleted, otherwise, the Regional Director shall be made answerable;

Bongbong Marcos uncovers ‘massive cheating’ anew in 2016 VP election By Joel R. San Juan

@jrsanjuan1573

HE camp of former senator and vice presidential candidate Ferdinand “Bongbong” Marcos Jr. on Monday claimed that it has uncovered evidence of “massive cheating” during the 2016 elections that favored his opponent Vice President Maria Leonor G. Robredo. At a news briefing, Marcos presented to the media photocopies of “shocking” and “highly questionable” printed ballot images from the decrypted secure digital cards from the provinces of Camarines Sur and Negros Oriental, which formed part of the pilot provinces in his election protest currently pending before the Supreme Court sitting as the Presidential Election Tribunal (PET). Marcos, the only son and namesake of the late strongman former President Ferdinand E. Marcos Sr., noted the presence of square shapes in the ballot images, instead of the oval shapes, which voters shaded for their choice of candidates. The young Marcos added that, based on the election-results summary, the squares indicated the

Former senator and vice presidential candidate in the May 2016 elections Ferdinand “Bongbong” Marcos Jr. dishes out a PowerPoint presentation on how he was allegedly cheated of his victory in his electoral battle with Vice President Maria Leonor G. Rodredo. Roy Domingo

candidates that were voted upon. However, he noted that this was a new feature that the Commission on Election (Comelec) and Smartmatic added in the system, and that the parties were not informed of the presence of such feature in the images. Marcos also pointed out that, in the past elections, ballot images would contain the oval shapes because the images were supposed to be just mirror images of the actual ballots.

“How come in the 2016 elections, there are squares? The ovals are now missing. Comelec should explain this,” Marcos said. Marcos also noted that the ballot images were printed three months ago, and it was only recently that the PET allowed his camp to get the soft copies. “Now we know why, this is precisely the reason, because they knew we would uncover how they had manipulated the voting and trampled upon the true will of

the people on their choice for vice president,” he said. Marcos said copies of ballot images from Camarines Sur and Negros Oriental would show that votes for him were not counted and considered “undervotes.” But, in some ballot images, even though two or more candidates were shaded in the vice presidential race, the votes still went for his opponent. Marcos’s lawyer Victor Rodriguez disclosed that their technical and legal team discovered the “shocking and disturbing” discrepancies in the “hundreds upon hundreds” of decrypted ballot images in Camarines Sur and Negros Oriental, which they were able to review in the last seven days. Marcos camp earlier criticized the resolution of the PET to withhold the original copies of the decrypted ballot images and other documents from Marcos after requiring him to pay for the costs of the decryption and the printing of the ballot images. The PET’s recent resolution, according to Marcos, is a confirmation of the bias by Associate Justice Benjamin Caguioa, who is handling his election protest being the case’s ponente.

Albay legislator seeks more assistance as Mayon evacuees breach 80K mark

he number of evacuees displaced by the escalating eruption of Mayon Volcano in Albay has breached the 80,000 mark, and their pressing need for assistance has assumed serious urgency. Partial records of the Albay Provincial Disaster Risk Reduction and Management Council show the number of evacuees housed in evacuation centers stands at 79,121 persons belonging to 21,693 families, with several thousands more having taken refuge in homes of relatives outside the danger zone. The Philippine Institute of Volcanology and Seismology has raised Mayon’s danger level category to Alert Level 4 and extended its danger zone perimeter to 9 kilometers. The situation has prompted Rep.

Joey S. Salceda of the Second District of Albay to reiterate his appeal for relief assistance and donations for the evacuees, now housed in various government evacuation centers around the province, to augment limited local resources, even as the Department of Social Welfare and Development has started distributing relief assistance. Salceda said there is a need for steady supply of food items, drinking water, gas masks and other relief assistance, especially since no one can tell when the calamity would end. In past Mayon eruptions, evacuees were compelled to remain in evacuation centers for months. In 2006 the evacuation period lasted 147 days, and in 2009, 185 days. The evacuees come from identified risk areas around Mount Mayon. Of

their total number, 10,000 families, or 38,188 individuals, come from Legazpi City (4,076 families/15,530 persons), Daraga (3,296/13,305) and Camalig (2,979/11,218)—all in the Second District. The other evacuees are from Guinobatan (3,147/10,724), Tabaco City (1,701/6,750), Santo Domingo (2,853/11,292), Ligao Cit y (1,332/5,755), Mililipot (1,261/4,926) and Bacacay (124/559). The Team Albay Youth Organization Inc. (Tayo), a youth group under Salceda’s Albay Second District Office, now accepts relief donations for the evacuees. Donors can contact Tayo, at its address at Door 2, Citispire Bldg., Imelda Roces Avenue, Gogon, Legazpi City, with telephone number 092- 6654715. Donors may also deposit their cash donations into Tayo’s Metro-

bank account with Account No. 5957-59500460-4. For Legazpi, donors can contact Mayor Noel Rosal at 0917-5581777; Daraga, Vice Mayor Carlwyn Baldo at 0918-9637372; and Teresa Bausa at 0939-2041088; for Camalig, through Mayor Ding Baldo, or call 0917-8500235. “We urge and appeal to kindhearted individuals and organizations to please assist our evacuees with their basic necessities so that they can go through this calamity easier, even as Albay’s DNA is resilienc—the Albayano strength of character and knack for survival that have been proven many times over, but not without support from kind individuals and humanitarian groups, as this kind of disaster normally takes longer periods of time,” Salceda appealed.

■ The media may be provided with the whole video footage upon request; and ■ All video footages generated during antidrug operations must be saved in separate folders in the computer or laptop. The footages shall likewise be archived. The guidelines were issued to ensure adherence of the operatives to the operational procedures and to avoid the negative perceptions on the drug operations conducted, Aquino added.

Dismissal from service

Dela Rosa, meanwhile, reported thathe had already dismissed from the service a total of 352 policemen, more than half were related to drug cases, since he became the chief of the PNP. Dela Rosa, who was serving an extended term, bared this at the

sidelines of the recent 27th foundation anniversary celebrations of the PNP attended by police and public officials. “Since I assumed as PNP chief, I have already dismissed 352 policemen for various offenses. 167 of these are drug-related [and] 185 others [are for] kidnapping, murder, extortion and various offenses,” the PNP chief said. Aside from the 352 policemen, an additional 329 also have pending cases as part of the organization’s continuing efforts to rid its ranks of misfits and scalawags. “Pending, meaning either that the investigation is already finished and my signature is only needed or the investigation is still ongoing,” dela Rosa said. He added that two senior police officials with the rank of senior superintendent were included in the lists of dismissed and being are investigated. The PNP chief admitted that the former guidelines which the police leadership issued in the PNP’s campaign against illegal drugs were abused by some of its personnel by using it as cover to commit extortion cases. “I admit it was abused by some, who, on their own, went out to talk to those who are in the [drug] list. If they will not give money, their names will not be taken out [of the list]. The list was used in extortion,” he admitted. Rene Acosta with PNA

Faeldon demands immediate release from Senate custody

ORMER Customs Commissioner Nicanor E. Faeldon on Monday filed a petition for his immediate release from Senate detention due to his continued refusal to testify in the Senate’s ongoing investigation on the smuggling of P6.4 billion shabu from China last year. In his 30-page petition filed through his lawyer Jose Diño, Faeldon also sought the nullification of the arrest and detention order issued by the Senate on September 7, 2017. Faeldon noted that he has been deprived of liberty for 134 days already, despite the fact that what we committed was merely legislative contempt, which is neither a heinous nor a non-bailable offense. Faeldon named Sen. Richard J. Gordon, chairman of the Senate Committee on Accountability of Public Officers and Investigations, or the Blue Ribbon Committee and Maj. Gen. Jose Balajadia as respondents. The former military officer lamented that instead of reaping praise for the seizure of the illegal drugs on May 26, 2017, he was accused of being involved in the smuggling of shabu and other malicious imputations prompting him to decide against participating in the Senate Blue Ribbon Committee hearing on the matter. This prompted the committee to order his arrest and detention on September 8, 2017. Faeldon insisted that his arrest and detention order should be declared null and void as it was issued pursuant to a proceeding without any legislative purpose, but purely for “persecution, grandstanding and self-confessed obsession.” Faeldon noted that, from July 2017, the author or any other member-senator of the respondent Senate Blue Ribbon Committee, has not filed any proposed amendatory law, or any proposed new law related to the

drug-smuggling case. He added that his arrest also has no factual basis and was issued in violation of his right to due process of law as there was no show cause order issued prior to the order for his arrest and detention. “All that respondent Sen. Gordon and the Senate Blue Ribbon Committee succeeded at, from the 11 fruitless and wasteful hearings they conducted, was to focus the tri-media’s attention and media mileage on themselves, as well as to carry out their vindictive persecution of the petitioner,” the petition read.

Jailed

Acting on Gordon’s motion during Monday’s session of the Senate Blue Ribbon Committe, senators have agreed to transfer Faeldon—presently detained for contempt at the Senate basement—to the Pasay City Jail indefinitely. “The [shabu shipment] was allowed during Faeldon’s watch,” Gordon told reporters, indicating that Faeldon will remain under detention at the Senate premises until probers vote to set him free. Gordon did not rule out the possibility of elevating Faeldon’s case to the Office of the Ombudsman. “When we feel he [Faeldon] is guilty, we will call the Ombudsman so they can get the evidence [to pursue the appropriate charges against the former Customs chief],” the senator said. Voicing frustration over Faeldon’s demeanor before the Senate Committee, Gordon blurted out: “You are not a sacred cow, as far as I am concerned.” But Faeldon, an ex-Marine captain, retorted the Senate probers are really out to get him. “The senators can ask questions to malign you,” he told reporters. Faeldon added: “They are out to destroy me.” Joel R. San Juan and Butch Fernandez

Economy

A4 Tuesday, January 30, 2018 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

Neda chief to manufacturers: Focus on specialized products

By Cai U. Ordinario

@cuo_bm

he National Economic and Development Authority (Neda) said the Philippines needs to look for specialized products that can boost the country’s manufacturing sector. Socioeconomic Planning Secretary Ernesto M. Pernia told reporters this is one of the ways by which the Philippines can continue to compete in the global market amid rising protectionism. Pernia said this includes manufacturing advanced, knowledgebased type and technically innovative goods. “We have to specialize in something where we have our inherent expertise. So, in trade among countries, there will be

specialization in terms of strengths and weaknesses,” he said. Pernia added the electronics sector is already introducing some innovations, particularly in terms of electronics inputs. He said there are no more locally produced electronic products that the sector uses in its production of exported electronic products, the country’s top export. However, the Neda chief said other industries must follow in the

$58.1B The Philippines’s total export earnings as of November 2017, representing a 10.8percent growth compared to the $52.44-billion figure registered during the same period in 2016

footsteps of the electronics sector to further the diversification of the country’s exports. “We should continue to put emphasis on manufacturing, not the traditional kinds of merchandise and goods,” Pernia said. A s of November 2017, the country’s total export earnings reached $58.1 billion. This was a 10.8-percent growth from the $52.44 billion in the January-to-

November 2016 period. Last November alone, the Philippines’s export revenues amounted to $4.96 billion, representing a mere 1.6-percent hike over the value of $4.89 billion in the same period. Total receipts from the top 10 major exports reached $4.15 billion or a share of 83.6 percent of the total export in November 2017. This was a growth of 10.8 percent from the November 2016 level of $3.75 billion. Electronic products led the top 10 export commodities with total sales of $2.88 billion, comprising 58.1-percent share of the total exports revenue in November 2017. Exports of this commodity expanded by 12.7 percent from a value of $2.56 billion in November 2016. Components/devices, or semiconductors, accounted for the largest share of 42.9 percent among electronic products, increasing by 17.8 percent to $2.13 billion in November 2017, from $1.81 billion in November 2016.

Iron faith A team of hardy construction workers completes the post and wall steel assembly of structure that would soon be proclaimed as the newest church in the Aseana district along Macapagal Avenue Drive in Pasay City. roy domingo

PIDS study bares potential savings on STD awareness drive

he country can save as much as P294.13 million a year in health costs if poor Filipinos are given more access to contraceptives to combat HIV/AIDS, according to the Philippine Institute for Development Studies (PIDS). In a discussion paper, titled “HIV/AIDS Knowledge and Sexual Behavior of Female Young Adults in the Philippines,” PIDS research fellow Michael Abrigo said increasing knowledge about HIV/AIDS decreases at-risk population by 1.1 percentage points. This translates to a cost savings of P25.35 million or $0.5 million to P294.13 million or $5.8 million. “The estimates we presented

could be well undervaluing the effect of increasing HIV/AIDS knowledge, as the estimates only consider the value of condom use among females and does not include the decreased probability of cross infection with their partner,” Abrigo said. “In addition, the estimates only represent instances where both partners agree to using condoms, and excludes females who would have used condoms, but have been vetoed by her partner,” he added. Using data from the 2008 Philippine National Demographic and Health Survey, Abrigo found that 41 percent of poor females aged 15 to 24 years are at risk of getting infected with sexually transmitted

diseases (STDs) compared to only 22 percent of females from welloff families. Abrigo said this can be attributed to the low level of awareness about STDs among poor female young adults in the country. Recent records of the Department of Health show that there are 9,217 listed cases of HIV/AIDS from January to October last year, while the total reported cases from January 2010 to May 2017 is at 40,388. To prevent and minimize the spread of the disease, the author urged government to make sexuality and reproductive-health information more accessible in the Philippines, especially to the young adult population through

social and mainstream media. He also proposed government support to family-planning programs under the country’s reproductive health (RH) law. Earlier last year, the Supreme Court lifted the two-year-old temporary restraining order (TRO) that covered several contraceptive products, following the findings of Food and Drug Administration (FDA) declaring these drugs as nonabortifacient. “The reclassifying of these contraceptives as non-abortive products by the FDA and lifting of the TRO by the Supreme Court are welcome developments in the full implementation of the RH law,” Abrigo stated. Cai U. Ordinario

www.businessmirror.com.ph

Govt and private sector set info drive on CTRP Package 2

he government and the private sector are now gearing up to introduce to the public the second package of the Comprehensive Tax Reform Program (CTRP) to educate businesses about the proposed provisions of the measure and, at the same time, gather their sentiments. In a news statement released on Monday, the Philippine Chamber of Commerce and Industry (PCCI) and the Department of Finance (DOF) announced they are set to conduct a nationwide information drive on the provisions of the second tax-reform bill. The second package is aimed at lowering corporate income-tax rate to 25 percent, from 30 percent, and rationalizing fiscal incentives. PCCI President Maria Alegria Sibal-Limjoco said the road show intends to gather the position and sentiments of businessmen on the proposed tax reform. “We fully recognize the efforts of the government to raise revenue to support its infrastructure projects, and we hope that the proposed measure, once passed into law, would be beneficial for everyone,” she said. On the other hand, PCCI Director for Taxation Edgardo G. Lacson argued that the lowering of corporate-income tax is the “rational next step” after the reduction of personal income-tax rates through the Tax Reform for Acceleration and Inclusion (TRAIN). “We cannot discount the fact that our country has the highest corporate income-tax rate, both nominal and effective, in [Southeast Asia],” he said. At 30 percent, the country imposes the highest corporate-income tax compared to its peer states in the region, such as Indonesia at 25 percent, Malaysia at 24 percent, Thailand and Vietnam at 20 percent and Singapore at 17 percent. “There is a need to reduce the rates to a level that will make us competitive in a field of countries competing for the same direct investment funds,” Lacson said.

On the other hand, PCCI Taxation Committee Chairman Benedicta Du-Baladad said the country is in dire need of revising its investment-tax policy, adding there are redundancies in the granting of tax incentives that need to be removed so as to make these perks clearer and more transparent. The information drive, which will run from January to March, will travel to Bacolod City on January 31; General Santos City on February 7; Clark, Pampanga, on February 13; Cebu City on February 16; Zamboanga City on February 21; Makati City on February 28; Baguio City on March 7; and Tacloban City on March 23. Finance Undersecretary Karl Kendrick T. Chua and Assistant Secretary Teresita S. Habitan will represent the government, while Baladad and PCCI Taxation Committee Cochairman Tomasa H. Lipana will speak for the private sector. The government is keen on enacting into law the second package of the CTRP this year, picking up from the momentum it gained last year after being able to pass the TRAIN. The TRAIN—first of the five packages of the CTRP— slashed the personal incometax rate at the expense of excise taxes on oil, petroleum products, automobiles, sugar-sweetened beverages, cosmetic surgery, coal and minerals. The Department of Finance (DOF), in partnership with other organizations, meanwhile, lined up a series information campaigns across the country within the first quarter of the year. According to the DOF, the taxreform road show will be held in various cities with the support of the United States Agency for International Development’s Facilitating Public Investments Project. The road show is in partnership with the Participatory Governance Cluster-Open Government Partnership led by the departments of Budget and Management and the Interior Local Government, and PCCI. Cai U. Ordinario and Rea Cu

Senate disclaims link to digital money scam By Butch Fernandez

@butchfBM

enate President Aquilino L. Pimentel III warned against a “new swindling operation” by a local digital firm claiming partnership with the Senate and Pimentel, to lure potential victims of the scam. Pimentel bared reports on Monday that Digital Currency Co. Ltd. (DCC) had claimed it partnered with the Senate of the Philippines for the release of a virtual currency called the Philippine Global Coin, even using pictures of the Senate President to buttress its claims. In a news statement, the Pimentel affirmed “there is no partnership between me and DCC, or the Senate and DCC.” Admitting that he “met with these people as a matter of courtesy

to visitors,” Pimentel added, however, that he was “shocked at their bold claims of an agreement between us using pictures that politicians normally have with visitors.” The Senate leader clarified the Senate is not empowered to issue currency, as this is the mandate of the Bangko Sentral ng Pilipinas. But Pimentel voiced concern DCC might target overseas Filipino workers to invest their hardearned savings at risk. “I ask our OFWs to be wary of those who use the names of government officials and institutions in investment schemes,” he said. “The government will never engage in activities that will profit off their sacrifices and hard work.” The senator also advised OFWs to “always check with the Philippine Embassy to verify individual claims of this nature.”

Acerd lists online gaming as emerging BPO industry in PHL O

nline gaming is now being touted to be the next big business process outsourcing (BPO) industry, according to the Ateneo Center for Economic Research and Development (Acerd). At a recent forum, Acerd Director Alvin P. Ang said online gaming and game development could save the BPO sector, which, he said, has already reached its saturation point. Ang said in terms of real-estate demand in Metro Manila, online gaming now accounts for 32 percent. The information technology-business process management still accounts the lion’s share at 40 percent.

“There are new BPOs coming into the picture and this is the online gaming. If you notice many of the buildings here in Makati have some of these, especially those accredited by Philippine Economic Zone Authority,” Ang said. Ang added these firms are considered Philippine Offshore Gaming Operators (Pogos). They have sprouted in Quezon City, Manila, and Muntinlupa. However, the bulk of these Pogos are locating in Taguig, specifically Bonifacio Global City because of its location in Metro Manila. These Pogos are currently serving the Chinese market and Ang expects the trend to continue

because of the size of the market. “That’s something that you want to consider, how to diversify your BPOs in such a way that you go for higher value sectors,” Ang said. Meanwhile, Socioeconomic Planning Secretary Ernesto M. Pernia said diversifying and growing the BPO sector should come from the private sector. This is why Pernia said the government is encouraging BPO firms to be more conscious of technological advancements, especially now that artificial intelligence (AI) has entered the picture. “What we are saying is you have to be conscious now of the technological advances, innovations and

AI, for example, is a major challenge to an industry like BPO because then there will be less need for people in the BPO if these things can be done by robots or machines,” Pernia said. In 2017 the United Nations Conference on Trade and Development (Unctad) said some 85 percent of retail and 89 percent of BPO workers are at risk of automation. Unctad said that, while increased digitalization will create new jobs, there will be occupations that will disappear as a result of automation. Unctad added increased digitalization will introduce four changes—job creation, job destruction,

job changes and job shifts. New jobs will stem from the production of new goods and services, such as 3D printing, software, app development and AI. The report stated that conditions of work will be affected, such as benefits extended to workers that allow more flexibility for people in remote locations and people with disabilities. Unctad also said new skills and education adjustments will be required particularly those linked to digital skills. Workers will also be required to have strong cognitive, adaptive and creative skills.

Cai U. Ordinario

www.businessmirror.com.ph

Banking&Finance BusinessMirror

Editor: Jun B. Vallecera • Tuesday, January 30, 2018 A5

External events trigger T-bill rate hikes

he Bureau of the Treasury (BTr) posted mixed results in the sale of Treasury Bills (T-bills) on Monday when it partially awarded a total of P16.5 billion instead of the full P20-billion lot. Officials said the government securities eligible dealers (GSEDs) still held back from pouncing on the full offer as they try to second-guess the US Federal Open Market Committee (FOMC) and President Donald J. Trump when he delivers the State of the Union Address of the United States.

According to Deputy Treasurer Erwin D. Sta. Ana, the auction committee fully awarded the 91day tenor on the back of strong demand for the security, with the market clearly leaning toward shorter-dated IOUs. The 91-day tenor was awarded in full at P9 billion, with tenders

reaching P18.720 billion. The committee rejected P9.720 billion. As a result, the 91-day T-bill rate rose 8.8 basis points higher to 2.321 percent, from the previous auction’s 2.233 percent. “We saw that much of the demand came at the shortest end, so we doubled the size on that one.

But, for the others, it was a little bit over the offer size. We think liquidity. I think the market is waiting for some leads. There are critical events in the US this week,” Sta. Ana told financial reporters. The lead events include the FOMC meeting, the State of the Union address of Trump and that Treasury rates are trending higher. “The market is actually factoring those out,” Sta. Ana said. The BTr also decided on a partial award for both the sixmonth and one-year T-bills on the back of high rates offered by the market. “It’s really based on our internal reading on where the rates are with respect to those tenors, and we actually surveyed our GSEDs and, basically, we are putting it at levels where we also see them coming in. We actually just cut it where we think the rates should be,” he said. The 182-day tenor was sold

Digital transformation, agency growth among Sun Life priorities

igital transformation and growing the agency force are the top priorities for new Sun Life of Canada (Philippines) Inc. (Sun Life) President Alex Narciso as he leads the company toward maintaining industry leadership. “Part of my mandate is to ensure that Sun Life remains at the forefront of the changing landscape of the insurance industry amid changing consumer preferences, a more volatile environment, and new business models emerging,” Narciso said in a briefing. “To begin with, we want to drive digital transformation to adapt to the changing needs of our clients. At the same time, this is an opportunity for us to leverage on the power of data and technology. We want to enhance customer experiences across all channels and lines of business by simplifying processes and reducing customer effort,” he added.

In the past few years, Sun Life has boosted its offerings in the digital space by creating the first ever mobile app in the insurance industry with account-management capability, launching massive open online courses on financial topics and creating an automated leadsconversion program that allows its advisors to quickly respond to inquiries of potential clients. Among its offerings this year are new tools embedded on the Sun Life web site (sunlife.com.ph), such as the Online Financial Assessment, Life Insurance Calculator, Investment Calculator and the Advisor Match. But as it boosts its digital capabilities, Sun Life will also continue to grow its agency force, which is now 11,000-strong. “Recruitment is definitely a priority, because the agency force remains a significant component of our business. They bring in the personal touch, which

is very important because the topic of money is very personal,” Narciso said. “We aim to have more Sun Life advisors nationwide in order to reach more Filipinos.” The executive, who also acts as chief agency distribution officer, said that, with these two components, Sun Life is confident it would accomplish its goal of serving 5 million Filipinos by year 2020 under the company’s long-term growth plan dubbed “RI5E PH.” “We gave ourselves five years to accomplish this and, halfway through it, we are already at 3 million clients. That means we have nearly doubled our client base in just two years, and we are definitely on track to complete this goal,” Narciso said. “We will continue to anchor our efforts on financial literacy to help Filipinos become more savvy and empowered when it comes to managing their money and utilizing financial instruments.”

MITIGATING THE EFFECTS OF THE ‘BIG ONE’

nsuring the safety of Angat Dam, the main source of water for Metro Manila and its environs, is the focus of the ongoing Angat Dam and Dike Strengthening Project (ADDSP). With the absence of an adequate, alternative source of water, damage to the dam in the event of a 7.2-magnitude earthquake will greatly impact not only on the health and well being of the Filipinos but also on food supply, public safety and energy resource. Metropolitan Waterworks and Sewerage System (MWSS) Administrator Reynaldo V. Velaso said: “Because we all can’t take risks, we should always be prepared and ready when and where disaster strikes.” The frequent occurrence of earthquakes and Philippine Institute of Volcanology and Seismology’s pronouncement on the dangers posed by the West Valley Fault prompted MWSS to initiate and sign a Memorandum of Agreement with the Power Sector Assets and Liabilities Management Corp., the National Power Corp. (Napocor), the National Irrigation Administration, the Philippine Institute of Vocanology and Seismology (Phlvolcs), the Philippine Atmospheric, Geophysical and Astronomical

Administration (Pagasa), Office of Civil Defense and the provincial government of Bulacan aimed at identifying, prioritizing and implementing a project that will ensure the safety and reliability of the Angat Dam and Dyke from geological and hydrometeorological hazards. A local fault of the West Valley Fault lies 200 meters east of the Angat Main Dike in Barangay San Lorenzo, Norzagaray, Bulacan. Movement in the West Valley Fault may affect the local fault. This is the first time Angat Dam is undergoing a massive rehabilitation project since it was constructed in the 1960s and operationalized in 1968. The dyke strengthening, according to Velasco, is very timely, adding: “In the business of water and water security, there must be no limit given the growing population, and God forbid the occurrence of the Big One in our lifetime.” Although Angat Dam is under the management of the Napocor, being a multipurpose hydro facility, it provides irrigation to 20 municipalities in Pampanga and Bulacan; supplies the domestic and industrial water requirements of residents in

Case clippings

By Justice S J Ranada Jr. REVIVAL OF JUDGMENT—jurisdiction with RTC An action to revive judgment raises issues of whether the plaintiff has a right to have a final and executory judgment revived, and to have that judgment enforced, and does not involve recovery of a sum of money, so that the jurisdiction over a petition to revive judgment is with the Regional Trial Court. The Court of Appeals has no jurisdiction to hear and decide such an action. Anama v. Citibank 13 Dec 2017

GR No 192048 Jardeleza, J

Metro Manila; generates hydroelectric power to feed the Luzon Grid; and reduces flooding to downstream towns and villages, as well as releases water for the MWSS through the auxiliary turbines, where it is diverted to two tunnels going to the MWSS- owned and operated Ipo Dam. The ADDSP is being funded and spearheaded by the Angat Hydropower Corp. (AHC), which is coowned by Korea Water Resources Corp. (K-Water) and SMC Global Power through its subsidiary Power Ventures Energy Inc. AHC acquired the Angat Hydroelectric Power Plant (Ahepp). The Supreme Court on October 9, 2012 declared the award of the Ahepp to K-Water —now known as AHC—as valid and legal, and the implementation of the ADDSP was handed over to K-Water. Since contract Packages 2 and 4 of ADDSP in the total cost of P553.30 million remains the responsibility of the government, the MWSS decided to transfer the funds directly to the agency mandated to implement contract Packages 2 and 4, which are the Napocor and the Provincial Government of Bulacan, respectively, as allowed by the Department of Budget and Management and the National Economic and Development Authority, subject to the execution of a memorandum of agreement. The MOA between MWSS and the Provincial Government of Bulacan was signed on March 22, 2016 including the turnover of check for the corresponding fund transfer intended to finance portion of works under the Angat River Downstream Improvement Project of Bulacan while MOA between MWSS and the Napocor was signed on May 3, 2016, including the turnover of check for the corresponding transfer of funds intended to finance the Angat Dam Instrumentation.

for a total of only P4.615 billion, although tenders actually totaled P6.965 billion. Another P2.350 billion, was rejected by the auction committee. As a result, the six-month T-bill rate moved 5.8 basis points higher to 2.577 percent, from the 2.519 percent at the previous auction. Tenders for the 364-day tenor reached P5.853 billion with the auction committee partially awarding only P2.853 billion and rejecting P3 billion. The one-year T-bill rate averaged 2.925 percent, or 7.6 basis points higher the previous auction’s 2.849 percent. Total tenders for the security reached P31.5 billion versus the P20 billion on offer. The FOMC meeting is scheduled to happen this week, the last for the Chairman of the Board of Governors of the Federal Reserve System Janet Yellen. The US State of the Union Address will happen on January 30. Rea Cu

MSMEs looking to benefit from Alibaba Group

epartment of Finance (DOF) officials are to meet with Alibaba Group founder Jack Ma in Hangzhou, China, on February 1, to explore innovations in digital commerce seen helping the country’s micro, small and medium enterprises (MSMEs). According to the DOF, Finance Secretary Carlos G. Dominguez III and officials from the Bangko Sentral ng Pilipinas are to meet with Ma in China next month in a scheduled visit to the Alibaba Business School. The Alibaba Business School is focused on implementing the Alibaba Group’s electronic commerce (e-commerce) training system. The Philippine delegation will take part in a lecture series from January 31 to February 2 to gain a wider understanding of the e-commerce ecosystem, including the digital technologies that can be employed to improve the country’s nascent onlinepayments system. “We will look at the financial regulations in China and explore how we can tap digital technologies to empower our MSMEs, especially those in the countryside, the same way that Jack Ma did to help small enterprises in China gain a foothold in the global e-commerce industry,” Dominguez said. The three -day new economy workshop organized by Alibaba and tailor-fit to the Philippine setting “will incorporate firsthand experience with real-life e-commerce applications in an effort to provide a framework for creating a regulatory environment that encourages growth across the financial technology, logistics, e-commerce and big data industries.” Dominguez and Ma met briefly last November in Manila when the Chinese technology entrepreneur paid a courtesy call to President Duterte in Malacañan Palace. Ma invited Dominguez to visit China to hold more extensive discussions on how to ensure an “enabling financial regulatory environment” for e-commerce growth in the Philippines, with MSMEs as the primary beneficiaries. Alibaba Cloud, the cloud-computing arm of Alibaba Group, will also include a lecture on the use of artificial intelligence for smart traffic management, which could become a useful tool to help ease congestion in Metro Manila’s major thoroughfares. Ma earlier said he wants to assist developing countries like the Philippines in building digital technologies so that even small enterprises can benefit from globalization. “The Philippines has the best service and has the heart to become key players in the industry,” Ma said. The Alibaba Group’s ecosystem is estimated to have indirectly created over 30 million job opportunities in China. Rea Cu

Where to invest this 2018 personal finance Kendrick Chua

017 continues to be stellar year for the local economy. After all, we are riding on the momentum of 72 consecutive quarters of economic growth—with the third-quarter growth at 6.9 percent, beating analyst’s estimate. Toward the last few days of the year, the much awaited Tax Reform for Acceleration and Inclusion (TRAIN) was finally signed into law. Interest rate remains stable as inflation falls within the limits. All these point to even brighter prospects in 2018. Given that, shouldn’t we all take advantage of the upbeat economy and invest our hard-earned money? Frankly, no one knows how long this optimism will last. Ten years ago, we saw a different story. No telling what will happen in the next few years. But, while the iron is hot, it’s good to strike. What are the top 3 assets that we can make money from? These are my personal choices:

Cryptocurrencies

As of this writing, Bitcoin and other cryptocurrencies are starting to gain traction and recognition here in the Philippines. A year ago, it was barely in the radar of investors and traders. Now, dedicated groups have been formed to analyze, study and share a wealth of information on these. Even our own Central Bank is considering regulating Bitcoin. I myself have dabbled in Bitcoin in the middle of last year. The question I often get aside from “What is Bitcoin?” is “Is it safe?” Frankly, even I can’t answer the question if it is safe or not. It has boom and bust even if it is only about a year. The volatility of cryptocurrencies is overwhelming for newbie investors. But, overall, the trend has been up since, well, its inception. But Bitcoin is just one of the many cryptocurrencies to invest in. There are others out there are also worth looking at. Ethereum made 4,276 percent, Ripple made 3,415 percent and NEM made a mind-blowing 8,662 percent. Those who held them had a merry Christmas and a happy new year. Will the uptrend last? No one really knows. It has been making money for the investors, and it’s also worth risking a bit of fund and going for it. Always remember, though: invest only the money you can afford to lose.

Stocks

Just last year, the Philippine Stock Exchange Index made several record highs and even hit 8,640 before settling at 8,558—a good 25-percent gain for the full year. Putting things in perspective, had you invested P100,000, you would have earned P25,000. But that’s just the main index. A handful of stocks outperformed the main index by leaps and bounds. Macroasia Corp. (MAC), Ayala-owned Integrated Micro-electronics, Inc., Waterfront Philippines, 2GO Group Inc. and Harbor Star Shipping just to name a few. Even the giant SM made double what the index did! The low-interest rate environment is conducive to growth. After all, bank deposits earn even lower than inflation so it’s natural for the investing public to seek higher yield for their money. Stocks may prove the best option. Sentiments continue to be bullish. For those afraid to invest directly in equities, pooled funds such as Unit Investment Trust Funds and the mutual funds also present an alternative. Ideal for those who don’t have much time studying and analyzing individual stocks.

Properties

Just when the property markets can’t get any rosier, 2018 ushers in an even more upbeat sentiment. Real estate continues to be a darling investment for most Filipinos. After all, owning one’s home is a dream of every Filipino. And that dream is not going to fade away anytime soon. Low interest rates plus rising disposable income, especially after the passage of the TRAIN, allow accessibility to affordable home ownership. The “golden age of infrastructure” of the current administration should give rise to land values outside Metro Manila since the objective of decongesting traffic would allow previously hard-to-access areas to be more accessible. Another advantage of investing in property is its ability to generate passive income through rental income. Property rental yields stand at 7 percent to 8 percent. That’s four times higher than time-deposit rates. Capital appreciation is also another benefit of investing in real estate. According to the Global Property Guide, residential real-estate price index grew by 9.2 percent in 2016. So you not only earn through rental income but the value of your property continues to rise, as well. 2018 should prove to be an exciting year for us in terms of wealth. Don’t be left behind. Find the most suitable asset for you, and start investing. Kendrick Chua is a Registered Financial Planner of RFP Philippines. To learn more about financial planning, attend the 68th RFP program this March 2018. To inquire, e-mail info@rfp.ph or text <name><e-mail> <RFP> at 0917-9689774.

The World

A6 Tuesday, January 30, 2018 • Editor: Lyn Resurreccion

BusinessMirror

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China infra push reaches Arctic, leaving out US

he sun never sets on China’s trade and infrastructure ambitions.

With the addition of the Arctic and Latin America last week, Chinese President Xi Jinping’s signature “Belt and Road” initiative has become truly global. Only the United States, its neighbor Canada and ally Japan have yet to be included in the plan, which seeks to build or upgrade a network of highways, railways, ports and pipelines. China added the two regions— about 33.7 million total square

kilometers (13 million square miles)—in the span of five days. First, Xi urged the creation of a “Trans-Pacific Maritime Silk Road” in a January 22 message to a gathering of leaders from Latin American and Caribbean countries. Last Friday China also announced a “Polar Silk Road,” while unveiling its first white paper detailing an Arctic policy. While it’s unclear how much

support the initiative might find in the new geographic regions, the expansion is the latest illustration of Xi’s desire to play a greater global role as the US turns more inwardlooking under Donald J. Trump. As the United States president drafts a $1-trillion plan to overhaul America’s aging roads and bridges, Xi’s infrastructure-building endeavor is pushing into the US’s backyard. Xi, seeking to avoid direct competition with Washington, has invited the United States to join the Belt and Road initiative. Trump has not yet accepted the offer. Japanese Prime Minister Shinzo Abe has expressed an interest in participating. Canada has joined the China-led Asian

Infrastructure Investment Bank, which has investments in Belt and Road projects. Even before this latest expansion, questions have swirled over the risk and necessity of Chinese investments linked with the Belt and Road initiative. Still, the project—which China’s ruling Communist Party wrote into its constitution—has only grown more ambitious since Xi first proposed restoring ancient Eurasian trade routes in 2013. Here’s how the initiative came to cover most of the globe: September 2013: Xi proposes land-based “Silk Road Economic Belt” in Astana, Kazakhstan. October 2013: Xi adds a “21st-

Century Maritime Silk Road” in Jakarta. March 2015: Belt-and-Road action plan specifies the inclusion of South Asia, the Indian Ocean, the South Pacific and the Mediterranean Sea. June 2017: China’s “Vision for Maritime Cooperation under the Belt and Road Initiative” highlights three “blue economic corridors” spanning Europe, Africa, Asia and Oceania. January 22: Xi proposes “TransPacific Maritime Silk Road” with Latin America and Caribbean countries. January 26: Arctic white paper unveils “Polar Silk Road.” Bloomberg News

Australia plans to become leading defense-industry exporter

A NBER R A , Austra lia— Australia’s government announced a strategy on Monday to create high-tech jobs and become one of the top 10 defenseindustry-exporting countries within a decade through arms sales to likeminded nations while also keeping those weapons from rogue regimes. Australia will create a A$3.8billion ($3.1 billion) fund to lend to exporters that banks are reluctant to finance, a central defense export office and expand the roles of defense attaches in Australian embassies around the world. Prime Minister Malcom Turnbull said that with A$200 billion budgeted to increase Australian defense capabilities in the next decade, Australia should rank higher than 20th among arms-exporting countries. The planned Australian military buildup was the largest in its peacetime history, he said. “Given the size of our defense budget, we should be a lot higher up the scale than that. So the goal is to get into the top 10,” Turnbull told reporters. Defense Industr y Minister Christopher Pyne said Australia would focus on growing sales to its biggest markets, including the United States, Britain, Canada and New Zealand, which already import Australian-made equipment—including the Bushmaster armored vehicle and the Nulka missile decoy. The five nations belong

Bloomberg

to an intelligence-sharing network known as the Five Eyes. “We want to support the United States, the United Kingdom, New Zealand, Canada, our European friends and allies, Japan, South Korea, et cetera, in what is a building up of the global military capability of countries like ourself who support the rules-based international order,” Pyne said. “The defense export strategy is not designed to get into markets

where we don’t want to be. It’s designed to maximize the markets where we perhaps haven’t been making the most of our opportunities,” he added. Turnbull said the strategy was about creating high-tech Australian jobs and not a response to any national threat, such as increasing tensions and the Chinese military buildup in the South China Sea over competing territorial claims. “Apart from North Korea, there is

no country in the region that shows any hostile intent toward Australia,” Turnbull said. “We don’t see threats from our neighbors in the region, but, nonetheless, every country must always plan ahead and you need to build the capabilities to defend yourself, not just today, but in 10 years or 20 years hence.” The push to increase Australian defense manufacturing jobs came after General Motors Co. last October became the last automaker to quit

building Australian cars. Most of the new Australian defense spending is on submarines and frigates that will be largely built in Australia. Australian law prohibits military exports that are inconsistent with Australia’s international obligations or national interests. Prospective exports are assessed in areas, including impacts on human rights, regional security and Australian foreign policy. “We’ve got strict controls and those controls make sure we only supply defense assets in the future to like-minded countries that have a strong human-rights record and have protections in place,” Trade Minister Steve Ciobo told Nine Network television. Amnesty International said it has been urging Australia to publicly report on arms transfers to Saudi Arabia and its allies in the war in Yemen. “While there is reluctance on the government’s part to exercise transparency in its arms exports trade, it is unthinkable that it would even contemplate expanding it,” the London-based rights group coordinator Diana Sayed said in a statement. Peter Jennings, executive director of the Australian Strategic Policy Institute, a government-established independent think tank, said the top10 target was achievable and would create an industry base to support the Australian military. AP

Massive cryptocurrency heist spurs call for more regulation

t 2:57 a.m. last Friday morning in Tokyo, someone hacked into the digital wallet of Japanese cryptocurrency exchange Coincheck Inc. and pulled off one of the biggest heists in history. Three days later, the theft of nearly $500 million in digital tokens is still reverberating through cryptocurrency markets and policy circles around the world. The episode, disclosed by Coincheck executives at a hastily arranged news conference last Friday night, has heightened calls for stricter oversight at a time when many governments are working out how to regulate the booming cryptocurrency exchange industry. Japanese policy-makers began a new licensing system for the venues just a few months ago, and regulators in South Korea are debating whether to ban exchanges outright. While Bitcoin and its ilk have recovered from their selloff last Friday—thanks in part to Coincheck’s assurances over the weekend that customers would be partially reimbursed—market observers say concerns over security lapses at cryptocurrency exchanges are likely to persist. They may even push some investors toward peer-to-peer methods of trading that don’t rely on centralized platforms. “The latest theft will have two immediate effects: more regulation by authorities over exchanges and more

recognition of the advantages offered by decentralized ways of trading,” said David Moskowitz, cofounder of Indorse Pte. in Singapore, which runs a social network for blockchain enthusiasts. On Monday Japan’s Financial Services Agency ordered Coincheck to submit a report by February 13 outlining the root causes of the debacle and its response to customers, and detailing how it intended to enhance risk management and internal controls. Japan’s government is working with relevant ministries and agencies to determine the cause of the Coincheck hack and stands ready to take action as needed, Chief Cabinet Secretary Yoshihide Suga told reporters in Tokyo on Monday. Coincheck will receive a business improvement order today, Suga said. The Coincheck heist adds to a long list of thefts at cryptocurrency exchanges and wallets, stretching back to the robbery of Tokyo-based Mt. Gox in 2014. As prices of digital assets have soared, the platforms have become increasingly juicy targets for hackers. A lack of confidence in exchanges—most of which operate with little to no regulation—has prompted many institutional investors to spurn cryptocurrencies, although some are now dipping into the market after CME Group Inc. and Cboe Global Markets Inc. introduced Bitcoin futures in the United States last month.

“Such large-scale hacks are some of the biggest risks faced today by the global crypto community,” said Henri Arslanian, fintech and regtech lead at PwC in Hong Kong. Coincheck, one of Japan’s biggest cryptocurrency exchanges, will use its own capital to reimburse customers who lost money in the theft, according to a statement posted on its web site last Sunday. The exchange—whose shareholders include 27-year-old CEO Koichiro Wada, COO Yusuke Otsuka and two investment firms—said it has been in touch with Japan’s Financial Services Authority and the Tokyo Metropolitan Police. According to Coincheck’s account of the incident, an unidentified thief stole 523 million coins tied to the New Economy Money (NEM) block chain project, which is also known

by some as the New Economy Movement. The tokens were trading at about 94 US cents at the time of the hack. It wasn’t until around 11 a.m. last Friday morning—about eight hours after the initial breach—that Coincheck staff noticed an alert pointing to a sharp drop in their NEM coin reserves. The thief was able to seize such a large sum in part because Coincheck lacked basic security protocols. It kept customer assets in what’s known as a hot wallet, which is connected to external networks. Exchanges generally try to keep a majority of customer deposits in cold wallets, which aren’t connected to the outside world and, thus, are less vulnerable to hacks. Coincheck also lacked multisignature, a security measure requiring multiple sign-offs before funds

can be moved. While the safeguard failed to prevent a $65-million heist from Bitfinex in August 2016, NEM’s blockchain had multisignature functions that experts say would have made the theft more difficult. “I really wish they would have been using NEM’s multisignature contract,” Jeff McDonald, vice president of the NEM Foundation, said in a YouTube video. “That would have probably saved them all these problems.” The exchange hadn’t implemented the security measures due to “the difficulty of the technology and a lack of staff able to carry out the task,” Wada, who also serves as Coincheck’s chief technology officer, told a roomful of unusually combative reporters during a 90-minute press conference at the Tokyo Stock Exchange headquarters that stretched into the early hours of Saturday morning. The theft sparked a social-media firestorm in Japan, one of the world’s biggest cryptocurrency markets, and spurred angry customers to gather in the bitter cold outside Coincheck’s headquarters—just an eight-minute walk from the site where Mt. Gox imploded four years earlier. It was exactly the kind of scene that the country’s financial regulator had been hoping to avoid when it introduced a licensing system for cryptocurrency exchanges last April. Bloomberg News

Trump: I would be ‘tougher’ in Brexit talks than UK’s May

ONDON—United States President Donald J. Trump says he would take a “tougher” attitude toward Brexit negotiations than the approach now being used by British Prime Minister Theresa May. “Would it be the way I negotiate? No, I wouldn’t negotiate it the way it’s [being] negotiated...I would have had a different attitude,” he says in an ITV interview. He adds: “I would have said that the European Union is not cracked up to what it’s supposed to be.” Britain is preparing to leave the EU in March 2019. The complex negotiations have moved slowly and May’s Cabinet seems deeply divided over how best to separate Britain from the 28-nation bloc. Trump expressed annoyance with EU trade policy: “We cannot get our product in,” he said. “It’s very, very tough. And yet, they send their product to us — no taxes, very little taxes.” He says his problems with the EU “may morph into something very big” from a trade standpoint. In the interview with journalist Piers Morgan, Trump has high praise for French President Emmanuel Macron. “He’s a great guy,” Trump says. “His wife is fantastic. I like them a lot. You know, we had dinner at the top of the Eiffel Tower and everything was closed.” He says he looks forward to visiting Britain, where he has been invited for a state visit to be hosted by Queen Elizabeth II, and says he doesn’t care that some Britons want him to stay away. He even joked about his hair: “It’s hanging in, barely,” he says. Discussing the upcoming royal wedding that will feature an American bride, he says Britain’s Prince Harry and actress Meghan Markle look like a “lovely couple” and says he doesn’t know if he’s been invited to their May 19 nuptials. Told by Morgan that Markle had called him a “divisive misogynist,” the president struck a friendly note: “Well, I still hope they’re happy,” he says. Trump also says that his administration might not withdraw from the Paris climate accord if terms more favorable to the United States are reached, in part because he likes Macron. Asked about his treatment of women, Trump says he has “tremendous respect” for women but does not consider himself a feminist. “I think that would be, maybe, going too far,” he adds. The interview was conducted last Thursday during Trump’s brief visit to the World Economic Forum in Davos, Switzerland. The guest list for Harry and Markle’s May 19 wedding at Windsor Castle has not been made public. The prince’s press team said invitations have not been sent out yet. It is not clear if a final list has been drawn up. The British press has been filled with speculation that Harry and Markle might snub Trump and invite former United States President Barack Obama as a wedding guest. The prince and Obama have met on several occasions, and Obama gave Harry a rare interview last year that was broadcast on the BBC. Trump, in contrast, has angered many people in Britain with his crackdown on immigration and his climate-change policies. During the interview, he seemed open to revisiting his pledge to withdraw from 2015 Paris climate accord if the deal could be substantially revised. AP

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In State of Union, Trump to make his case on economy

ASHINGTON—Seeking to move past the shadow of the Russia investigation, President Donald J. Trump intends to use his first State of the Union address to cite economic progress under his watch while pushing for bipartisanship with Democrats on issues such as rebuilding roads and bridges. The White House said on Sunday that the president would point to a robust economy and low unemployment during his first year and the benefits of a tax overhaul during Tuesday’s address to Congress and the nation. Aides have said Trump, who stayed at the White House over the weekend as he prepared, is expected to set aside his more combative tone for one of compromise and bipartisanship. “The president is going to talk about how America’s back,” said White House legislative director Marc Short. “The president is also going to make an appeal to Democrats...to say we need to rebuild our country. And to make an appeal that to do infrastructure, we need to do it in a bipartisan way.” Short said Trump would urge Democrats to support additional military spending in light of “dramatic threats on the global scene.” White House officials have said the theme of the annual address will be “building a safe, strong and proud America” and that Trump was looking to showcase the accomplishments of his first year while setting the tone for the second. As Trump looks ahead, special counsel Robert Mueller’s investigation into possible obstruction of justice and Trump campaign ties to Russian meddling in the 2016 election grinds on. It often has distracted from the president’s message. For example, Trump’s address to financial and global leaders in Davos, Switzerland, last week followed reports that he ordered a top White House lawyer to fire Mueller last June but backed off when the lawyer threatened to resign. Trump called the report “fake news.” On the policy front, immigration is an immediate flashpoint for Trump and Congress. In the prime-time speech on Tuesday, the president plans to promote

his proposal for $25 billion for a wall along the Mexican border and for a path to citizenship for nearly 2 million young people brought to the United States illegally as children. Trump’s plan includes billions for border security and significant changes to legal immigration long sought by hardliners within the Republican Party. But some conservatives have warned that the deal would amount to “amnesty” for the young immigrants known as Dreamers, and many Democrats and immigration activists have outright rejected it. “I think all of us realize that it’s going to take a compromise on this issue for us to get something done and to protect the Dreamer population, which is certainly a goal of mine,” said Sen. Susan Collins, R-Maine. “But I think the president is also right about border security, that we do need to beef up our border security.” Sen. Joe Manchin, D-W.Va., called Trump’s proposal “a good starting point.” “Let’s see if it’s something that we can agree on, something we need to adjust, something we can negotiate with,” he said. Part of Trump’s goal in the speech is to set the course of the debate as Republicans look to retain their majority in Congress. He is expected to say the tax overhaul will unleash economic growth and he will point to companies that have provided their employees with $1,000 bonuses and other benefits. Trump plans to outline a nearly $2 trillion plan that his administration contends will trigger $1 trillion or more in public and private spending on roads, bridges and other public works projects. On trade, Trump will note his preference for one-on-one deals instead of multilateral agreements, building on his speech at the World Economic Forum in Switzerland. And he will offer an update on the fight against terrorism and his view of international threats, including North Korea. A senior administration official providing a preview of the speech said Trump probably would avoid the taunts of “Little Rocket Man” for Kim Jong Un and “fire and fury” that he used before. The official wasn’t authorized to speak publicly and spoke on condition of anonymity. AP

Tuesday, January 30, 2018 A7

US considers building 5G network amid China concerns

Bloomberg

he United States is in talks with private companies to build a secure 5G network, amid concerns about China and cybersecurity, said two administration officials familiar with the plans. Talks are preliminary, and key decisions over funding and control haven’t been reached, said the people, who discussed the deliberations on condition of anonymity. The government aims to decide on a plan by the end of September and build it out over the next few years, said one of the officials. If the US opts for one secure network rather than multiple systems, the main unresolved questions would be what portion of the project would

be taxpayer funded, and whether it would be owned by the government, a private consortium or some combination of public and private entities, one of the officials said. If the federal government directly participates in building a wireless network intended for commercial use, it’d be a departure from the decades-long tradition of auctioning licenses to telecommunications companies to build their own networks.

A handful of carriers, including Verizon Communications Inc., have already been moving from trials to deployments of the next-generation wireless network known as 5G. Most mobile-phone companies are targeting 2020 for the initial roll-out of the technology, which promises 10 times faster speeds and lower latency, or lag time, in transferring data when it’s requested.

Network takeover

The Trump administration is in contact with United States, European and Asian companies, but not Chinese firms, one of the officials said. Engineers are still trying to figure out how to make 5G work. Rain, fog and trees have long been the enemy of high-frequency radio waves. Given the relatively short, fragile nature of 5G signals, carriers have to configure networks differently. They’re shifting more

of the network hardware from tall towers that are scattered to spread signals over broad areas to smaller, more clustered sites like rooftops and street poles. Axios, citing sensitive documents it had obtained, reported earlier Sunday that Trump national security officials are considering a takeover of part of the nation’s mobile network to guard against China. The best way to protect against China—the “dominant malicious actor in the Information Domain”—is for the US to build a network itself and then rent access to carriers such as AT&T Inc., Verizon and T-Mobile US Inc., Axios quoted a memo as saying. One of the officials dismissed the notion of a “takeover” referenced by Axios as not part of the administration’s thinking. “Thanks to multibillion-dollar investments made by American companies, the work to launch 5G service in the United States is already well down the road,” AT&T said in a statement. “We have no doubt that America will lead the 5G revolution.” The company didn’t comment on whether it was in talks about a government-run network. Verizon, Sprint Corp. and T-Mobile didn’t respond to requests for comment late Sunday. According to the documents, a secure 5G network is critical to create a secure pathway for new technologies like self-driving cars and virtual reality, Axios reported. US lawmakers have sounded alarms about the growing power of Huawei, the Chinese network equipment maker that’s expanded its market share around the globe, with its products operating networks in Europe and Latin America. A government-backed plan to accelerate the development of 5G in the United States would require support from Huawei’s top rivals, such as Nokia Oyj and Ericsson AB. Bloomberg News

Ingvar Kamprad, who founded furniture giant Ikea, dies in Sweden at 91

TOCKHOLM—Ikea founder Ingvar Kamprad, who turned a small-scale mail-order business started on his family’s farm into a furniture empire by letting customers piece together his simple and inexpensive furniture themselves, has died at age 91. Kamprad died on Saturday at his home in Smaland, in southern Sweden, the chain’s Swedish unit, Ikea Sverige, said on Twitter on Sunday. He died peacefully following a short illness, it said. “He will be much missed and warmly remembered by his family and Ikea staff all around the world,” the company said. The Ikea Group’s president, Jesper Brodin, said Kamprad’s “legacy will be admired for many years to come and his vision—to create a better everyday life for many people—will continue to guide and inspire us.” Kamprad’s life story is intimately linked to the company he founded at age 17 on the family farm. His work ethic, frugality and down-to-earth style remain at the core of its corporate identity today. But his missteps in life, including early flirtations with Nazism, never rubbed off on Ikea, one of the world’s most recognizable brands. Along the way, Kamprad became extremely rich, though estimates of his wealth vary wildly, from slightly more than $100 million to nearly $60 billion when he died. Kamprad formed the company’s name from his own initials and the first letters of the family farm, Elmtaryd, and the parish where it’s located, Agunnaryd. The farm is in the heart of Smaland, a forested province whose people are known for their thrift and ingenuity, qualities Kamprad possessed. Kamprad, despite his wealth, never adopted the aura of a tycoon, though his name regularly appeared on lists of the world’s richest men. He drove a modest Volvo and dressed unassumingly. In a 1998 book he coauthored about Ikea’s history, he described his habit of visiting vegetable street markets

Since then the Ikea concept— keeping prices low by letting customers put together the furniture themselves—offers affordable home furnishings at stores across the globe. The concept of selling unassembled future in flat boxes was revolutionary at the time, said Neil Saunders, managing director of the research firm GlobalData Retail. “He believed people should be able to buy quality furniture at accessible prices, as long as they were willing to do some assembly themselves,” Saunders said. “He really left an indelible imprint on retail and on consumers’ lives.” But IKEA’S often-confounding assembly instructions have flummoxed so many people through the years that some couldn’t resist wondering how long it might take to put together Kamprad’s coffin in macabre posts on Twitter. Before Kamprad’s company A visitor takes a photo of founder of Swedish multinational furniture retailer Ikea, Ingvar Kamprad, at the IKEA museum, in Almhult, Sweden, on January 28. The portrait of Kamprad on the wall is made out of a big amount of small portraits of employees. Kamprad died Saturday became a household word, he formed allegiances that came January 27, aged 91. Ola Torkelsson/TT via AP back to haunt him. In 1994 Swedish newspaper Expressen sell them at a low price but still make a good right before they closed for the day, hoping reported that Kamprad had contacts with profit. From matches, he expanded to selling to get better prices. Swedish fascist leader Per Engdahl in the fish, Christmas tree decorations, seeds and His reputation for living modestly became 1940s and 1950s. In a letter to IKEA employlater ballpoint pens and pencils. part of a carefully crafted image perpetuated ees, Kamprad acknowledged that he once had He soon moved away from making sales by him and his company, his former execusympathies for the far-right leader and called calls and began advertising in local newspative assistant Johan Stenebo said. it “a part of my life which I bitterly regret.” pers and operating a makeshift mail-order “He wanted to appear a man of the people, In the 1998 book, he gave more details about catalog. He distributed his products via the one of us,” Stenebo wrote in a behind-thehis youthful “delusions,” saying he had been local milk van, which delivered them to the scenes book, The Truth About Ikea, released influenced as a child by his German grandnearby train station. shortly after he left the company nearly a mother’s strong support for Adolf Hitler. In 1950 Kamprad introduced furniture, decade ago. “Now I have told all I can,” he said at a book pieces produced by manufacturers in the forKamprad, who was born on March 30, release ceremony at an Ikea store in suburban ests close to his home, into his catalog. After 1926, was a precocious entrepreneur who sold Stockholm. “Can one ever get forgiveness for the positive response he received, he decided matchboxes to neighbors from his bicycle. such stupidity?” to discontinue all other products and focus He found that he could buy the matchboxes The book also contained details about his on low-priced furniture. in bulk very cheaply from Stockholm and

struggles with alcohol and his successes and failures in business. IKEA celebrates its Swedish heritage: Its stores are painted blue and yellow like the Swedish flag and serve meatballs and other traditional Swedish food. But Kamprad’s relationship with his homeland was sometimes complicated. He moved to Switzerland in the late 1970s to avoid paying Swedish taxes, which at the time were the highest in the world. He decided to return home only after his second wife died in 2011. The estate inventory filed to Swedish tax authorities in 2013 confirmed that the couple lived comfortably but hardly in opulence. They had two cars, a 2008 Skoda and a 1993 Volvo 240. Kamprad’s personal wealth was established at 750 million kronor ($113 million), a considerable amount but far from the multibillion-dollar sums attributed to him on world’s-richest lists compiled by Forbes and others. Ikea officials have said such lists, which compared his wealth to that of Warren Buffet or Bill Gates, erroneously considered Ikea’s assets as his own. Ikea is owned by a foundation Kamprad created, whose statutes require profits to be reinvested in the company or donated to charity. The estate inventory showed that Kamprad had donated more than $20 million to philanthropic causes in 2012 alone. In June 2013 Kamprad announced he would retire from the board that controls the Ikea brand as part of moves to hand responsibilities over to one of his sons. Although he was no longer involved in Ikea’s daily operations, his principles remained deeply ingrained in the company, which sometimes operated more like a secretive cult than a business, according to Stenebo’s book. “There was an unwritten law for Ikea’s upper management—loyalty to Ingvar until death,” Stenebo wrote. AP

A8 Tuesday, January 30, 2018 • Editor: Efleda P. Campos

The Regions BusinessMirror

Batangas hastens infra buildup for expected entry of investors Roderick Abad

@rodrik_28 | Contributor

ALVAR, Batangas—Gov. Hermilando I. Mandanas bared last Friday the province is rushing their infrastructure projects due to the entry of more investors into the province beginning 2018. During the Batangas Development Summit held last Friday at the Lima Park Hotel here, he said more foreign food-processing companies will be putting up their manufacturing plants here. “We are going to have many investors in food production this year. These are coming not only from Japan, but also from China,” he said, without citing their exact number and total amount of investments. The governor said they are fasttracking the development of a food terminal, alongside the expansion of the Batangas Port, to help ease the flow of goods within and outside the province. This is because of the slow pace of securing the necessary documents to push through with the projects, he said. “We have a one-year delay [as far as convincing the right authority] in

We are going to have many investors in food production this year. These are coming not only from Japan, but also from China.”—Mandanas giving us the necessary endorsement for approval, when it comes to our port [expansion and] with regards to our food terminal [establishment],” the governor noted. Regarding the other initiatives

MANDANAS

of the provincial government, Mandanas wants Fernando Air Base in Lipa City to become a subsidiary aviation to the Ninoy Aquino International Airport in Manila. He also wants to pursue the construction of a Batangas-Calamba, Laguna railways system to accelerate the growth between these two areas in Region 4A. These development projects are aimed at “avoiding not only the traffic in the air and Metro Manila, but even the traffic on the roads,” he said. Last December Mandanas forged a partnership with a China-based real-estate company to build an airport, a seaport and a railway system in the province. He signed a memorandum of understanding (MOU) with Teamrise Group Co. Ltd. for six major undertakings to help promote tourism, food security and air and cargo transportation in Batangas. The agreement includes the development of the Batangas Access

Zone, the expansion of seaports and terminals and a food terminal in a 29-hectare property. The Teamrise Group has the financial and technical expertise, as well as vast experience in the planning, design, financing, building and operating ports, railways and airports. As a head start of the partnership, the Chinese firm will conduct a preliminary study and research on the proposed initiative and provide recommendations and technical support in relation to the building, construction and operation of the projects. Also, the MOU allows both parties eventually to enter into a partnership or a joint venture to realize the plans. “We are doing our part in the province and the region because I was also appointed in March 2017 to be the chairman of the Calabarzon [Cavite, Laguna, Batangas, Rizal and Quezon] Development Council,” Mandanas said. Batangas continues to experience progress and has emerged as a leading hot spot of development among local economies, alongside the Philippines’s high economic growth, with its GDP growing at 6.7 percent in 2017. Based on the 2016 National Competitiveness Index, the province is ranked ninth among all the provinces in the country as a key player in the country’s future growth. It’s the only area in Calabarzon that made it to the top 10 list.

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DPWH eyes flood-control project in Tacloban City By Elmer Recuerdo Correspondent

ACLOBAN CITY—Amid mounting complaints of flooding in many areas of the city during rainy days, the Department of Public Works and Highways (DPWH) will implement a P170-million flood-control project it hopes will put an end to this perennial problem. Flooding in recent weeks brought by weather disturbances—either a low-pressure area or caused by the tail end of the cold front—reached waist level in some major thoroughfares that transportation is cut to the city’s northern villages where over 100,000 city dwellers are relocated. Predetailed engineering works will soon start for the proposed P170-million floodcontrol project. DPWH Region 8 Director Edgar B. Tabacon has instructed the Planning and Design Engineers to assess the major waterways and drains along the National Irrigation Administration to Cancabato Bay and craft a flood-control master plan for Tacloban City. “This long-term solution to solve perennial flooding will be tailored fit with the study conducted by the Japan International Cooperation Agency for the Waterways Master

Plan in Tacloban City,” Tabacon said. Tacloban City Councilor Jerry Uy said it would help if the DPWH could also provide funding for the clearing and cleaning of rivers, creeks and major waterways that are clogged up and need dredging or widening. “These tasks need to be addressed immediately as part of short-term but effective solutions,” Uy said. To be funded under the 2018 General Appropriations Act, the proposed flood- control project involves the construction of 1.78 kilometers of a drainage and sewage system, including dredging and excavation, revetment and stone masonry with flap gates, and six meters wide of an access road implemented in two phases. Phase 1 of the project is a 1-kilometer flood control passing through marshland and traverses the Tabuan National Highway, Tacloban-Baybay South Road and Manlurip Road while Phase 2 covers 0.78 kilometer traversing Manlurip Road to Section 4 of the road-heightening project also known as the Great Wall of Leyte. “It’s about time our agency prioritizes and increases its maintenance fund to sustain and prolong the service life of our existing flood-control projects,” Tabacon said.

Clark Freeport all set for 22nd PHL Intl Hot Air Fiesta on February 8-11 By Ashley Manabat Correspondent

LARK FREEPORT—It’s all systems go for the 22nd Philippine International Hot Air Balloon Fiesta (Pihabf) set for February 8 to 11 at the Omni Aviation Complex here. Dubbed “A Weekend of Everything that Flies,” this year’s festivities will showcase 26 colorful hotair balloons from all over the world featuring a big number of new special-shaped balloons: Happy Heart, Matryoshka Russian Doll, Queen’s Guard, Giant Strawberry, Buddy Balloon, Captain Jack, Princess Nellie, Vostok Balloon, Master Yoda, Morris the Donkey, Bruno the Clown and Pepe the Hedgehog. During a news conference at the Oasis Hotel here last Friday, Pihabf organizer Capt. Joy Roa said earlymorning balloon flights will be followed by nonstop flying activi-

ties, including paragliding, skydiving, aerobatic exhibitions, formation flights, balloon-bursting competitions and kite flying. A special sight to watch out for this year is the exhilarating performance of the world-renowned Aerosuperbatics Wingwalkers, who consider themselves “the world’s only aerobatic formation wing-walking team,” performing for the first time in the Philippines, Roa said. He said the audience will be treated to the sight of two Stearman biplanes flown in an energetic routine of dazzling aerobatics doing loops, rolls, stall turns and inverted flights—while two fearless female wing walkers doing their own acrobatic moves and handstands while strapped to the aircraft’s wings. It is a spectacular aerial show not to be missed, he added. Those interested to see Clark through the eyes of a pilot can book discovery flights, such as hot-air

BOY STO. NIÑO 2018 Denzel Rayne Librodo-Valencia (center), youngest son of

Tigbauan, Iloilo, Sangguniang Member Dennis Valencia (fourth from left) and Iloilo Province First District Board Member Renee Librodo-Valencia (second from left) is crowned Boy Sto. Niño 2018 on January 20 during the celebration of the town’s religious fiesta in honor of their patron saint, the Holy Child Señor Santo Niño. Joining Denzel Rayne are the rest of his siblings Dyan Reizl, Red and Dylan.

balloon rides, tandem skydiving, tandem paragliding, airplane and helicopter rides and aerobatic flights —all supervised by expert aviators. Discovery flight tickets should be booked through the fiesta’s official web site prior to the fiesta. On the ground, full entertainment is guaranteed for the whole family, with supercar-drifting exhibitions as airplanes drop flour bombs overhead; drone racing and RC control-line flying exhibitions; unique finds from the Fly Market; or archery, horseback riding, camel riding and even animal feeding. In the evenings, musical artists from different countries will perform side by side with local talents at the One World Music Cultural Exchange Concert. ABS-CBN artists will also stage performances throughout the weekend, with a fireworks display and balloon nightglow that will illuminate the last night of the fiesta. Beyond all the flying exhibitions, the Pihabf has made it its mission to annually gather pilots from the world over to show them the beauty of the Philippines, and allow Filipinos to learn from other cultures, as well. The Philippines will be hosting the Airsport Federation of Asia conference this year at the fiesta, to promote and strengthen air-sport events within all member-nations. The Pihabf is the longest-running sports-aviation event in Asia, annually boosting tourism in Clark, Pampanga and the Philippines. For over two decades, it has stayed true to its longtime objectives: to spark interest in aviation; to instill discipline in young pilots; and to impart a spirit of volunteerism to the whole community, a Pihabf statement said. Entrance tickets are at P500 each, a percentage of which goes to the Pihabf Foundation Scholarship Fund, granting scholarships to underprivileged, but deserving students who want to pursue a career in aviation. Tickets are available through the Fiesta’s web site, Ticketnet outlets or at the event gates.

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Tuesday, January 30, 2018 A9

What central banks say about cryptocurrencies

By Eric Lam | Bloomberg

ine years since the birth of Bitcoin, central banks around the world are increasingly recognizing the potential upsides—and downsides—of digital currencies.

The guardians of the global economy have two sets of issues to address. First is what to do, if anything, about the growth of the private cryptocurrencies that are grabbing more and more attention for a host of reasons: security concerns after a $500-million exchange hack in Japan, volatile price moves and—in the case of Bitcoin, at least—their introduction on regulated derivatives exchanges. The second question is whether to issue official versions. Here’s a wrap-up of how the world’s largest central banks (and some smaller ones) are approaching the crypto phenomenon: US: Privacy worry The Federal Reserve’s (the Fed) investigation into cryptocurrencies is in its early days, and policy-makers haven’t been overtly enthusiastic about the idea of a central-bank issued answer to Bitcoin. Jerome Powell, a board member and nominee for chairman, said in 2017 that technical issues with the technology remain and “governance and risk management will be critical.” Powell said there are “meaningful” challenges to a central-bank cryptocurrency, that privacy issues could be a problem, and private-sector alternatives may do the job. Randal Quarles, vice chairman for supervision at the Fed, said last December 1 that, while the central bank of the world’s biggest economy has no policy toward regulation of Bitcoin, it is “worth thinking about.” The volume of cryptocurrencies could matter to monetary policy at some point, Powell said in answering a question at his Senate confirmation hearing last November. Right now, though, “they’re just not big enough,” he said. Euro area: Tulip-like The European Central Bank (ECB) has repeatedly warned about the dangers of investing in digital currencies. Vice President Vitor Constancio said last September that Bitcoin isn’t a currency, but a “tulip”—alluding to the 17th-century bubble in the Netherlands. Colleague Benoit Coeure has warned about Bitcoin’s unstable value, saying its links to tax evasion and crime are major risks. ECB President Mario Draghi said last November that the impact of digital currencies on the euro-area economy was limited and they posed no threat to central banks’ monopoly on money. China: Cracking down China has made it clear: the

central bank has full control over cryptocurrencies. With a research team set up in 2014 to develop digital fiat money, the People’s Bank of China believes “conditions are ripe” for it to embrace the technology. But, at the same time, the authorities are cracking down on Bitcoin mining and cryptocurrency trading. While there’s no formal start date for introducing digital currencies, China says going digital could help improve payment efficiency and allow more accurate control of currencies. Japan: Not needed Cash is still king in Japan, according to the head of the central bank’s FinTech Center. The Bank of Japan (BOJ) is not considering issuing a digital currency as there is “no demand” for it, Yuko Kawai said this month, noting the rise of cashless transactions remains a work in progress in the country. Authorities may be forced to take action on the sector, however, after nearly $500 million in digital tokens was stolen from the Coincheck Inc. exchange in Tokyo on January 26. BOJ chief Haruhiko Kuroda said last December of Bitcoin that “if it’s a question of whether it’s functioning like currencies as a form of payment or means of settlement, I don’t think it is.” Bitcoin “is being traded for investing or for speculation,” he said. Last October he said the BOJ had no imminent plan to issue a digital currency, though it’s important to deepen knowledge about them. Taking such a step would involve revisiting “fundamental issues of central banking,” as it would effectively extend access to their accounts to the public. Germany: Investors beware In a country where a lot of people still prefer to pay in cash, the Bundesbank has been particularly wary of the emergence of Bitcoin and other virtual currencies. President Jens Weidmann described Bitcoin’s move last December as having a “speculative character,” but for regulators, “just because investors can lose money isn’t a reason to get involved.” Board member Carl-Ludwig Thiele said last September that a shift of deposits into blockchain would disrupt banks’ business models. At the same time, the Bundesbank has been actively studying the application of the technology in payment systems.

A bitcoin logo sits on a security gate inside the offices of La Maison du Bitcoin bank in Paris, France. Bloomberg

UK: Potential ‘revolution’ Bank of England (BOE) Governor Mark Carney has cited cryptocurrencies as part of a potential “revolution” in finance. The central bank started a financial technology accelerator in 2016, a Silicon Valley practice aimed at incubating young companies. Carney says technology based on blockchain, the distributed accounting database, shows “great promise” in enabling central banks to strengthen their defenses against cyberattacks and overhaul the way payments are made between institutions and consumers. He has nevertheless cautioned that the BOE is still a long way from creating a digital version of sterling. France: ‘Dark side’ Bank of France Governor François Villeroy de Galhau said last June that French officials “advise great caution with respect to Bitcoin because there is no public institution behind it to provide confidence—in history all examples of private currencies ended badly.” Bitcoin has a “dark side,” he said, citing data attacks. Villeroy de Galhau has warned that people who use the cryptocurrency “do so at their own risk.” India: Not allowed India’s central bank is opposed to cryptocurrencies given that they can be a channel for money laundering and terrorist financing. Nevertheless, the Reserve Bank of India has a group studying whether digital currencies backed by global central banks can be used as legal tender. Currently, the use of cryptocurrencies is a violation of foreignexchange rules. Singapore: Official warning Characterized—sometimes with pride—as a nanny state, Singapore has lived up to that label when it comes to cryptocurrencies, issuing an official warning to citizens to be wary. The city-state’s monetary authority said in a December 19 statement it “is concerned that members of the public may be attracted to invest” in them because of the surge in prices. Buyers should be aware “they run the risk of losing all their capital.” The authority pointed out

that there’s no regulatory protection for investors, and urged citizens to report fraud suspicions related to cryptocurrencies to the police. Brazil: Support innovation The Banco Central do Brasil sees “no immediate risk for the Brazilian financial system” from cryptocurrencies, but remains alert to the developments in their usage, according to a statement issued last November. The central bank pledged “to support financial innovation, including new technologies that make the financial system safer and more efficient.” Canada: Asset-like Carolyn Wilkins, the Bank of Canada’s (BOC) senior deputy governor, is leading research on cryptocurrencies, and said last November that cryptocurrencies aren’t true forms of money. “This is really an asset, or a security, and so it should be treated that way,” Wilkins said. Like others, she viewed distributedledger technology as promising for making the financial system more efficient. BOC staff are also exploring the circumstances under which it might be appropriate for the bank to issue its own digital currency for retail transactions. South Korea: Crime watch Authorities in South Korea have focused on protecting consumers and preventing cryptocurrencies from being used as a tool of crime. While the government continues to weigh legislation to shut down cryptocurrency exchanges, the nation’s Financial Services Commission is setting up a special team to probe cryptocurrency trading. South Korea will begin a real-name account system for such trading on January 30. Bank of Korea Deputy Governor Shin Ho-soon said last November more research and monitoring was needed. So many Koreans have embraced Bitcoin that the prime minister has warned cryptocurrencies might corrupt the nation’s youth. Russia: ‘Pyramid schemes’ Russia’s central bank has expressed concern over potential risks from digital currencies, with Governor Elvira Nabiullina saying “we

don’t legalize pyramid schemes” and “we are totally opposed to private money, no matter if it is in physical or virtual form.” For the moment, the Bank of Russia prefers to delay a decision on regulating the financial instruments unless President Vladimir Putin pushes for action sooner. The central bank will work with prosecutors to block web sites that allow retail investors access to Bitcoin exchanges, according to Sergey Shvetsov, a deputy governor at the central bank. Speaking with reporters in January, Shvetsov said he didn’t see any demand for a cryptoruble as the regulator can’t afford to issue something that allows laws to be violated. Australia: Speculative mania Australia’s central bank chief criticized cryptocurrencies in a speech in Sydney last December 13, arguing the asset is more likely to appeal to criminals than consumers. “The current fascination with these currencies feels more like a speculative mania than it has to do with their use as an efficient and convenient form of electronic payment,” said Philip Lowe, the Reserve Bank of Australia’s (RBA) governor. The bank is not planning to issue its own digital currency as a case hasn’t been made to do so, Lowe said. The RBA is in close contact with its peers in other countries and few see electronic banknotes on the horizon, he said. Turkey: Important element Digital currencies may contribute to financial stability if designed well, Turkish Central Bank Governor Murat Cetinkaya said in Istanbul last November. But they do pose new risks to central banks, including to their control of money supply and price stability, and the transmission of monetary policy, Cetinkaya said. Even so, the Turkish central banker said that cryptocurrencies may be an important element for a cashless economy, and the technologies used can help speed up and make payment systems more efficient. Netherlands: Own cryptocurrency The Dutch have been among the most daring when it comes to experimenting with digital currencies. Two years ago the central bank created its own cryptocurrency called DNBcoin—for internal circulation only—to better understand how it works. Presenting the results in 2016, Ron Berndsen, who was in charge of the project, said blockchain may be “naturally applicable” in the settlement of complex financial transactions. S c a nd i n av i a: E x plor i ng options Like the Dutch, some Nordic authorities have been keen to explore the idea of digital cash. Sweden’s Riksbank, the world’s oldest central bank, is probing options, including a digital register-based e-krona,

with balances in central-database accounts or with values stored in an app or on a card. The bank says the introduction of an e-krona poses “no major obstacles” to monetary policy. In an environment where the use of cash is decreasing, Norway’s Norges Bank is looking at possibilities, such as individual accounts at the central bank, plastic cards or an app to use for payments, it said in a May report. Denmark has backtracked somewhat on its initial enthusiasm, with Deputy Governor Per Callesen cautioning against central banks offering digital currencies directly to consumers. One argument is that such direct access to central bank liquidity could contribute to runs on commercial banks in times of crisis. New Zealand: Too unstable The Reserve Bank of New Zealand’s Acting Governor Grant Spencer has warned that Bitcoin’s runaway gains look like a speculative bubble. “Digital currencies, cryptocurrencies, are a real and serious proposition for the future,” Spencer said in a December 10 interview with TVNZ. “I think they are part of the future, but not the sort that we see in Bitcoin.” The central bank, once a pioneer on the global stage with its early introduction of inflation targeting, said in an analytical note last November that it’s considering future plans for currency issuance and how digital units may fit into those strategies. Morocco: Violating law In one of the more strident reactions, Morocco has deemed that all transactions involving virtual currencies violate exchange regulations and are punishable by law. Cryptocurrencies amount to a hidden payment system not backed by any institution and involve significant risks for their users, authorities said in a statement last November. Bank for International Settlements: Can’t ignore The central bank for central banks has said that policy-makers can’t ignore the growth of cryptocurrencies and will likely have to consider whether it makes sense for them to issue their own digital currencies at some point. “Bitcoin has gone from being an obscure curiosity to a household name,” the BIS said last September. One option is a currency available to the public, with only the central bank able to issue units that would be directly convertible to cash and reserves. There might be a greater risk of bank runs, however, and commercial lenders might face a shortage of deposits. Privacy could also be a concern. Agustin Carstens, the incoming head of the BIS, told Bloomberg that Bitcoin deserves close scrutiny. “Anything that grows in price as fast as Bitcoin has done it, without having a real clear understanding of what is behind it, should at least raise some eyebrows,” he said.

Hong Kong investors in good position to cash in on frenzy for Chinese biotech

hinese drug companies have been on a tear in the US stock market. Now, entrepreneurs and investors betting on the Asian country’s fledgling biotechnology industry see another reason for optimism. The stock exchange in Hong Kong—home to the world’s fourthlargest equity market—is in the midst of weighing a proposal that would allow biotech companies to list even before they turn a profit. If those plans go through, it would pave the way for more Chinese health-care firms to raise money via initial public offerings, giving them easier access to funds for research. Annual spending on prescription medicines has crossed $100 billion in China as the incidences of diseases like diabetes and cancer have surged. The Asian country has lagged behind the US and other developed markets on innovation, and Beijing has said it wants to build homegrown champions in the health-care industry. The

proposed Hong Kong listing rules would provide a boost to those plans, while helping the exchange list more of China’s so-called new-economy companies that are particularly attractive to international investors. Without access to the Hong Kong market, such pre-profit companies “will likely go to America, but now Hong Kong comes in with its advantages in geography and language,” said Lu Xianping, founder of Chipscreen Biosciences Ltd., a Shenzhenbased drug developer. Chipscreen is preparing for an initial public offering (IPO) and weighing options, including mainland China and Hong Kong, according to Lu, whose company has one cancer drug on the market in China and is developing other oncology and diabetes therapies. Hong Kong Exchanges & Clearing Ltd. famously missed the opportunity to list Alibaba Group Holding Ltd., with the Chinese e-commerce giant choosing to list in the US where its weighted voting structure

was allowed. The biotech proposal comes as a string of Chinese companies working on innovative drugs are seeking IPOs. The Hong Kong exchange aims to finalize the new rules and begin taking applications around June, and plans to add people with biotech expertise to its listing division, CEO Charles Li told media on January 24. China’s drug innovation has gained momentum in recent years, in part due to dramatic regulatory reforms to speed up approvals. The surge in Chinese biotech stocks shows growing appreciation for Chinese R&D, and the opportunity among US investors, said Debra Yu, head of US cross-border health-care investment banking for China Renaissance, a Chinese boutique investment bank. Three Nasdaq-listed pioneers have surged over the past year: Hutchison China MediTech Ltd. has jumped about 172 percent as of January 25 in the US, BeiGene Ltd.

has gained 246 percent and Zai Lab Ltd. has risen more than 35 percent since its September IPO. Other companies have also benefited from the general optimism. Wuxi Biologics Cayman Inc., a profitable Shanghai-based service contractor that helps its clients develop and manufacture biotech drugs, has seen its share price surge more than 165 percent after a Hong Kong listing last June. It can take up to 10 years to fully develop a new drug, and success can be elusive even in the later stages. Only a tiny fraction of experimental medicines ever make it to the market. In the US, the Nasdaq Biotechnology index has seen sharp swings and the stocks of small biotech companies are often hammered over bad news from clinical trials. For instance, Axovant Sciences Ltd. lost 74 percent of its market value in a day in September after a main pipeline drug failed a crucial clinical trial. By contrast, Seattle-

based Juno Therapeutics Inc. surged earlier this month after Celgene Corp. announced it would buy the biotech firm. Asia’s biotechnology industry is still developing, and analysts and investors in the region have less experience in analyzing early-stage drug firms. Historically, the Hong Kong market pays a lot of attention to earnings and market size, and lacks a track record of evaluating firms before they start recording earnings, said Jonathan Wang, cofounder at the Asia fund of OrbiMed Advisors Llc. Meanwhile, some already warn of the risk from the flood of venture capital rushing into early-stage Chinese biotechs. “The domestic pharmaceutical investment is also booming so much there’s some bubble,” said Lu of Chipscreen, referring to valuations of unlisted firms. “But it is still pushing the industry forward.” Hua Medicine Ltd., a Shanghaibased developer of mainly diabetes

drugs, recently hired George Lin, former head of Asia consumer, retail and health-care investment banking at Bank of America Corp. The company is evaluating options including a Hong Kong or US IPO, Chen said in a phone interview. Investors in Hong Kong have a better understanding of China’s regulatory and market situations, which are key to evaluating a drug developer, said Chen. Stock links with Shanghai and Shenzhen will allow mainland investors to buy the shares of Chinese biotech companies in Hong Kong much more easily than on the Nasdaq, he added. While it can take time for Hong Kong to build the expertise, its links to mainland China could help outweigh the shortcomings. “A lot of Chinese companies feel a lot closer to Hong Kong. They can travel to Hong Kong, and talk to investors there, who often can speak Chinese. It’s a good thing for them,” said Wang at OrbiMed. Bloomberg News

A10 Tuesday, January 30, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

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editorial

‘If it ain’t broke…’

S there a compelling reason to change the 1987 Constitution at this time? Philippine Socioeconomic Planning Secretary Ernesto M. Pernia recently declared that the Philippines has one of the fastestgrowing economies in Asia after China’s and Vietnam’s, with our GDP growing 6.7 percent in 2017 and expected to grow at a faster 6.9 percent this year.

Finance Secretary Carlos G. Dominguez III also sees greater economic activity with the Duterte administration unrolling an P8.44-trillion infrastructure spending plan until 2022. “As I said last year, there will be a more exciting growth narrative for the Philippines this 2018, more so now that all of the government’s plans to keep the country among the world’s fastest-growing economies have started falling into place,” Dominguez said in a statement. It’s not just government propaganda. Moody’s Investor Service, which rates Philippine sovereign debt at investment grade, has also said the Philippines will be among Southeast Asia’s “standout” economies this year, along with Vietnam. Nomura senior economist for Southeast Asia, Euben Paracuelles, also agrees with the optimistic forecast, saying the impact from tax reforms, infrastructure building and higher consumption could only lead to more economic growth in 2018. So why amend the Charter right now when the economy is doing so good and the Philippines is one of the hottest prospects in the Asia Pacific region, if not the world? Why is Congress, specifically the House of Representatives, trying to ram Charter change down our throats? If the Philippines has enjoyed strong economic growth even without Charter change, to borrow a popular adage from the Americans, “Why fix something that ain’t broke?” If the Duterte administration is working wonders for the economy, why not allow it to work some more and ride its momentum before even thinking of tinkering with the Constitution? Besides, is there really any solid evidence that proves the nationality restrictions in our Constitution are what really impede the influx of foreign investments? And is it written in stone that shifting our form of government from a unitarypresidential form to a federal-parliamentary form would deliver our country from all government evils? The resulting political noise Charter change moves would create prior to actually being able to implement these changes is bound to do more harm before good, more harm that we don’t need at this time. It is simply bad timing to push for Charter change when most Filipinos are more worried about getting jobs and putting food on their tables. Charter change will not alleviate these worries. Good governance could, and good governance is possible even without Charter change. It only takes our government officials’ commitment to their Constitutional oath that public service is public trust. We need more jobs and opportunities, our best bets for a sustainable democracy and economic development. We need less corruption, which drains billions from the public coffers that would otherwise go to social services and infrastructure. We need strong public institutions, the enforcement of justice, the observance of due process and human rights. We need to lower electricity costs. We need to do away with wishy-washy state policies. The Duterte administration seems well on its way to making a dent on these problems right now, even without Charter change. James Carville had coined the phrase “it’s the economy, stupid” as part of Bill Clinton’s successful 1992 presidential campaign against then sitting US President George H. W. Bush. Again, if our economy is doing great with this supposedly outdated and archaic 1987 Constitution at this time, then why change it? We are already moving into a cycle of sustained and inclusive growth because of the Duterte administration’s emphasis on good governance and prudence in fiscal management. Do we really want to break this momentum with Charter change proposals that will surely be met with protests on the streets and tedious debates in Congress? Our answer is no.

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We’re hot, but not overheating Manny B. Villar

THE Entrepreneur Continued from A1

itters have been creeping up among some analysts and institutions, which were perhaps still seeing the Philippines as a laggard, although it had already proven its resilience to challenges and is now actually competing, instead of catching up, with its peers. Thus, laggard has been replaced with a new term, “overheating,” which is the opposite of the label attached to the Philippines in the past. Online Business Dictionary (http://www.businessdictionary.com) defines overheating as: “Situation where the aggregate demand is increasing so fast that it cannot be met by the economy’s productive capacity and is, thus, liable to cause or fuel inflation. It is the condition of ‘too much money chasing too few goods.’” London-based credit-rating firm Fitch Ratings, Singapore-based DBS Bank, Moody’s Investor Service and the local unit of ING Bank have been cited in news reports as saying fast credit growth, rising inflation and other factors were raising the risks of overheating for the local economy. In a statement following its regular consultation with local authorities late last year, the International Monetary Fund said the “combination of high-credit growth, buoyant

private investment and fiscal expansion without tax reform could lead to overheating of the economy.” For its part, the Asian Development Bank sees no signs of overheating, while it expects the economy to sustain its growth momentum through 2018 on the back of infrastructure spending and implementation of the tax-reform program. In its Asian Development Outlook 2017 Update released last September 26, the regional lender noted that, instead of a rising inflation, one of the factors that may indicate overheating, inflation had remained within the Bangko Sentral ng Pilipinas’s (BSP) target range of 2 percent to 4 percent. In a separate statement, the BSP said inflation for the whole of 2017 averaged 3.2 percent, well within the official target. Rising liquidity, technically known as M3 (the broadest measure of money in the financial system), and credit growth are also among the factors that could raise the risks

of overheating. In the Philippines, however, liquidity and credit growth has not always been on a straight uphill climb. For example, preliminary data from the BSP show that domestic liquidity (M3) grew by 14.0 percent year-on-year to about P10.4 trillion in November 2017, slower than the 14.8-percent expansion in the previous month. In a separate report last December, the BSP said preliminary data on outstanding loans of commercial banks, net of reverse repurchase placements with the BSP, expanded at a slower rate of 19.2 percent last November, from 19.9 percent last October. Meanwhile, bank lending inclusive of RRPs grew by 18.3 percent last November, from 18.0 percent in the previous month. On a monthon-month seasonally adjusted basis, commercial bank lending for loans net of RRPs and loans inclusive of RRPs increased by 1.2 percent and 1.9 percent, respectively. Loans for production activities— which comprised 88.4 percent of banks’ aggregate loan portfolio, net of RRP—grew albeit at a slower rate of 18.5 percent last November, from 18.7 percent last October. Growth in loans for household consumption decelerated to 20.6 percent last November, from 23.4 percent last October. The acceleration in the growth in credit-card loans was offset by the slower increase in motor-vehicle loans and salary-based general-purpose loans, as well as the decline in other types of household loans. Experts, including banks, have been projecting, or proposing, that the BSP increase its policy rates (the

Worse than fake news: Dumb people John Mangun

OUTSIDE THE BOX

he term “fake news” may soon be part of the official dictionary of the Merriam-Webster company. Merriam-Webster is the modern incarnation of a 187-year-old company that first published Noah Webster’s A Compendious Dictionary of the English Language. The definition will run something like this: “False news stories, often of a sensational nature, created to be widely shared online for the purpose of generating ad revenue via Web traffic or discrediting a public figure, political movement, company, etc.” Last year I asked this question: “Is fake news the web sites that claim the moon landing never

happened, or is the government spreading fake news that men did walk on the moon?” Fake news at its purest is a lie. The information falls somewhere between the cracks of “The truth, the whole truth and nothing but the truth.” Commentators are fond of pointing out that, if the public is taken in by fake news, they deserve what they get for not being smart

enough to spot the lie. If that is the case, then news should only be read by mothers and teachers, since they are the best at catching lies. My motto is that I totally believe whatever anyone tells me until proven false. The mirror image of my motto is “Do not believe anyone on anything until proven true.” Maybe that is really my motto. Much more disturbing than fake news is dumb people. I am not talking about those that believe everything they read on the Internet, but people who are ignorant of facts and prefer to remain that way. It is like the small child who thinks that chocolate milk must come from brown cows. That might be normal for a 6-year-old, but it does not sit well with an adult. Yet, that is the kind of nonsense we are faced with every day. It is not that people are “dumber” today than in the past. It is just that, because of the Internet and social media, we are exposed to

interest imposed on BSP loans or borrowings from private banks), which are used by private institutions in determining interest rates on private individual or corporate borrowers. Higher interest rate, which also means higher inflation, is a tool to fight overheating because it slows down credit growth, and leads to slow demand. The Monetary Board, the highest policy-making body of the BSP, has maintained the policy rates since their last adjustment in September 2014 in line with its mandate to maintain price stability. My perspective as a businessman is that our economy is far from overheating. Much as I would like it, we have not fully achieved our potential growth—we need to grow faster and sustain a high-paced growth. While there is ample room for growth, there is no room for complacency. Vigilance, which has enabled me to prepare for any challenges in my line of business, should also help the government and the private sector in coping with risks of overheating. Thus, I welcome the BSP’s continued monitoring of internal and external developments that may affect the domestic economy. Overheating could be the big spoiler in the robust and fast growth of the economy. Fortunately, the Bangko Sentral has developed, based on its experience with past global crises, a culture of vigilance. This, in turn, has made reforms in the banking industry a continuing tradition rather than a one-time exercise aimed at correcting a specific glitch. For comments, e-mail mbv.secretariat@gmail. com or visit www.mannyvillar.com.ph.

people’s “dumbness.” I never imagined how many people thought that the world was flat until the Internet exposed them. For over 50 years, I have been following and learning about the global financial and asset markets, and, on April 1, I will have been a paid professional at this for 42 years. Some of the things I read on the Internet about the markets are so absurd, they would bring tears to a dead man’s eyes. Since we first installed home Internet almost 20 years ago, any time my sons asked me questions like “Who is Mahatma Gandhi?” I always tell them to look it up and then ask me questions. When they come to me with “I read on the Internet that...”, I tell them to find me five web sites that agree with that statement and five that disagree. I hope they have learned critical evaluation. Yesterday I read that the local stock market reaching a historic See “Mangun,” A11

www.businessmirror.com.ph

Opinion

A colossal deception

Casino mogul’s losing streak

BusinessMirror

Ernesto M. Hilario

Cecilio T. Arillo

database A case study of corruption, cronyism and regulatory capture…

RITTEN by veteran investigative journalist Rigoberto D. Tiglao, “this book exposes one of the biggest deceptions ever foisted on the nation, which has hidden from it foreigners’ complete domination of our telecommunication industry and certain other public utilities, a blatant violation of the Philippine Constitution. Former President Benigno S. Aquino III defied in 2012 a Supreme Court ruling ordering a stop to the foreign control of such strategic public utility.” According to Tiglao, “Foreign ownership in Philippine Long Distance Telephone Co. [PLDT] and Globe Telecom [Globe]—the duopoly in the lucrative telecom industry— are 76 percent and 73 percent, respectively, way above the 40-percent limit set by the Constitution on public-utility firms. The Constitution’s Section 11, Article XII indeed is quite categorical: ‘No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens.’” In his well-researched book, Colossal Deception, in 171 pages published in 2016 by Strong Republic Books and The Manila Times Publishing Corp., Tiglao said: “To skirt this constitutional limit, these foreign-controlled firms have claimed and widely propagated the falsehood, that they are majority Filipino-owned: PLDT claims its foreign ownership is just 18 percent, while Globe, 27 percent.” “With such fabrications,” he explained, “foreigners have been able to control, mostly own, and profit from the country’s telecoms industry, a strategic sector of the economy that exploits sovereign natural resources and the radio spectrum, mobile telephony’s medium. This fact has been concealed from the Filipino nation since 2000.” He explained: “In just about 15 years, an Indonesian magnate, Anthoni Salim, the biggest, controlling stockholder of PLDT through his Hong Kong-based firm First Pacific Co. Ltd. and its subsidiaries used the telco as his launching pad to establish and expand in the country a conglomerate even bigger than those built over so many decades by the old Spanish and Chinese-Filipino elites.” “Salim, through First Pacific, now controls and mostly owns the biggest conglomerate of public-utility companies in the Philippines. Its 26-percent shares in PLDT make it the controlling stockholder in the country’s biggest telecommunications firm that has 70 percent of the telecom market. Its two other huge public-utility firms are Manila Electric Co., which has monopoly of power distribution in Metropolitan Manila and six adjacent provinces, and Maynilad Water, the water-distribution monopoly for the western part of the metropolis. It also has a major mining company, Philex Mining and Exploration, with its four oil and gas exploration subsidiaries, one of which has as its area of exploration in a disputed area in the Spratlys islands,” Tiglao said. He further explained in the overview of the book in Chapter 1, thus: “Through his holding firm MPIC [Metro Pacific Investments Corp.], Salim controls Metro Pacific Tollways Corp., now the biggest toll

Mangun. . .

continued from A10

high “means nothing because so few people invest.” “The historic high is a result of government policies.” “The historic high is a result of price manipulation by the administration.” These are not stated as “I think” opinions. These are “I know” facts. Everyone is born ignorant, but

and expressway operation in the country managing the North Luzon Expressway, the Subic-Clark-Tarlac Expressway and the Manila-Cavite Expressway. “Under President Aquino III’s administration, First Pacific has expanded rapidly and bagged the contracts for the country’s biggest infrastructure projects. “In 2013 55-percent controlled Salim consortium was chosen to build the P65-billion Light Rail Transit [LRT] Line 1 Cavite Extension, the biggest infrastructure project awarded under the Aquino regime. In 2015 Salim led the consortium that won the bidding for the CaviteLaguna Expressway project with its offer of P27 billion, P5 billion more than the next highest bidder, a group led by San Miguel Corp. “Either because of Salim and his partner, the Ayalas’s persuasive genius or, allegedly, their strong influence with President Aquino, thrown in into this project was the award of the construction of the LRT-MRT [Metro Rail Transit] common station in Quezon City to the consortium, which moved its location from its original SM North Mall site to the nearby Trinoma mall of the Ayalas—who are Salim’s partners with a 35-percent stake. This government decision was so irregular that the owner of the SM group, the Henry Sy family who were originally members of the consortium, has sued government, even elevating the case to the Supreme Court. “In partnership with the Ayala group [who were big supporters of the Aquino family], the Salim conglomerate also won the P1 billion worth of projects to operate an automated fare-collection system for the masstransit lines. Other infrastructure projects awarded to Salim’s group by the Aquino Administration are the P11-billion North Luzon Expressway (Nlex) Harbor Link, the P7-billion Nlex Citi Link and the P12.4-billion Connector Road/Metro Expressway Link. The group has diversified into bridge construction, as well, with its P18-billion project to build the CebuCordova Bridge.” Tiglao added: “The last time in Philippine post-war history that a foreigner wielded such economic power in the country was in the 1950s, when a US army lieutenant who fought here during World War II and stayed on, Harry Stonehill, built a conglomerate of cigarette, glass and cement manufacturers. His net worth was estimated at $50 million at the time, equivalent to $400 million today— peanuts compared with Salim’s estimated assets in the country of $6 billion, based on the worth of his shares in PLDT, his infrastructure-holding firm Metro Pacific Investments Corp. and Philex Mining.” To reach the writer, e-mail cecilio.arillo@ gmail.com.

you have to work at it to remain that way. And the reason for the recent historic high is completely obvious. The next full moon will be a Blue Moon—the second full moon of the month—on January 31. E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

ABOUT TOWN

on’t look now, but casino mogul Steve Wynn and his Las Vegas gambling empire, Wynn Resorts, faces a losing streak, not in the gaming tables but in courts of law.

It appears that Wynn Resorts is on the brink of losing a Las Vegas, Nevada, lawsuit it filed against Universal Entertainment Corp. and its wholly owned subsidiary, Aruze USA. Here’s what happened: Wynn Resorts redeemed Aruze USA’s $2.7 billion worth of Wynn Resorts stocks in 2012, then froze Aruze stocks in a promissory note at least $1.5 billion less than it owed Aruze USA. To counter a Wynn Resorts suit initiated against Universal/Aruze USA, the latter sued Wynn Resorts in 2012. Despite efforts by Wynn and Wynn Resorts to delay and dismiss Universal/Aruze USA’s case, they will be facing each other in court with a trial scheduled to start on April 16, 2018, in a Nevada state court. Universal/Aruze USA repeatedly trounced Wynn Resorts attempts to dismiss their claims. On November 30, 2017, the Court ruled that Universal/Aruze USA’s claims against Wynn Resorts, Steve Wynn and Elaine Wynn that the redemption of Aruze USA’s shares was invalid because it was a pretext to eliminate a dissenting shareholder and also that the valuation of the shares was improperly low, hence must proceed to

trial. The Court denied a Steve Wynn motion for summary judgment. Universal/Aruze USA claims damages of more than $1.5 billion. Wynn Resorts has appealed this decision to the Nevada Supreme Court and sought a delay in the trial from both the Nevada District Court and the Nevada Supreme Court. Both the District Court and Supreme Court denied Wynn Resorts’ request, thus letting the April 16, 2018, trial proceed. Universal/Aruze USA also obtained substantial sanctions against Wynn Resorts for its intentional violation of court orders requiring it to produce documents relating to its purchase of land and a license for its Macau casino. On October 31, 2017, the Court slapped sanctions on Wynn Resorts for its failure to comply with orders to produce documents from Macau relating to potential Wynn Resorts misconduct there. The Court ordered Wynn Resorts to produce the documents within 15 days or at trial the Judge will instruct the jury that the documents that were not produced are harmful to Wynn’s position. The Court also ruled that Wynn

Tuesday, January 30, 2018 A11

Resorts may not use certain documents and call certain witnesses at trial. The Court ordered Wynn Resorts to pay Universal’s legal fees incurred in obtaining the sanctions. Universal just submitted documentation to the Court seeking to require Wynn Resorts to pay almost $2.5 million in legal fees and expenses to Universal. On December 4, 2017, the Nevada Supreme Court denied Wynn’s appeal of the Judge’s Macau sanctions order. Wynn Resorts has also fought a losing battle to conceal incriminating documents from Universal/Aruze USA. On December 4, 2017, the Nevada Supreme Court rejected Wynn Resorts’ appeal of the Court’s ruling that Wynn cannot claim privilege over and withhold documents from its auditors related to the value of the promissory note issued in redemption of Aruze USA shares. Wynn Resorts tried repeatedly to prevent the disclosure of these documents, but has now lost its final appeal on this issue. Actuations of Wynn and Wynn Resorts have not exactly endeared them to media. A December 28, 2017, Bloomberg report said an undisclosed settlement by Wynn with a former employee at Wynn Resorts involved allegations of sexual harassment. The next day, the Wall Street Journal reported that Wynn Resorts made a $2-million contribution to the Republican Governors Association, after which the group made a $2.2-million contribution to help the Republican candidate for Governor in Massachusetts, where Wynn Resorts was in the process of getting approvals for its next major casino project.

Economists should not make forecasts Paul Donovan

ecember always has a rash of economic forecasts for the year ahead. The reception areas at CNBC and Bloomberg TV are crowded with mobs of economists fighting to get their forecasts on air. But there are big problems with making precise economic forecasts. Economic models are not precise. Models use lots of assumptions. Those assumptions may not turn out to be true. Models give a range of possibilities rather than a single, certain number. Economists know and understand these issues. However, the world of hashtag economics does not allow for all of this to be explained. It is difficult to warn about possibility ranges and underlying assumptions in 280 characters. This is why economists should not use Twitter (follow me @PDonovan_Econ). Economic views often give a false sense of precision, because the reporting of economics is simplified and shortened. The illusion of precision is not helped by other media. A dramatic headline “Growth forecast to fall below 1 percent” attracts more readers or viewers. “Growth will be a bit below trend, probably” is far less dramatic. Economists know that the real world is messy. The relationship between policy and the economy is always changing. The ways different parts of an economy behave are always changing.

Past experience can never be a precise guide to the future. A further problem is that economic data is not very precise. Economists are trying to hit a target that is moving rapidly. Economic data is being revised more often, and the revisions are larger than in the past. How fast did the economy grow in the first quarter of 2015? It depends when you ask the question. Growth was initially reported as very weak, in fact barely moving. Then, the data was revised to show the US economy was shrinking a lot (the number was –0.7 percent annualized). Then it was revised to show the economy was shrinking a bit. Then it was revised to show the economy was growing, but well below trend growth. The growth number was then revised in line with trend growth. Now, US growth at the start of 2015 is thought above trend at 3.2 percent. So which number in the range of –0.7 percent to 3.2 percent is the economist supposed to be forecasting? An economist predicting 3.2-percent growth when the

data was first released would have been ridiculed. According to the latest information we have, that economist would have been right. Economic models produce imprecise forecasts for numbers that are revised significantly. So, what can economics do? Economics is about relative relationships. In the real world, the difference between 1.5-percent growth and 1.8-percent growth is not that much. What matters is how an economy is doing in a relative sense. What is growth relative to its trend rate? Is growth accelerating or decelerating? How an economy is performing relative to other economies? Economic models can be used to compare policies. Economics can help to identify where the effects of a policy will be felt. Economics can show that ending Nafta will raise prices paid by low-income Americans, for instance. Economics can identify cause and effect. Economics can show that USChinese trade has created about the same number of new United States jobs as it has destroyed. Economics can show that there is still a bias against women when it comes to pay. Economics can show that income inequality has risen in China. Economics can generally predict central-bank policy. This is hardly surprising. Central banks—good central banks—are run by economists. So, ignoring the numbers, what is the 2018 story that economists should be telling? The world is in a mid-cycle growth position. Globally, growth should be around trend. There is very little chance of a significant global downturn in 2018 (there are no signs of the triggers of a downturn, like policy

There is ample evidence suggesting that Wynn Resorts engaged in improper conduct to obtain land and license for its Macau casino. Starting in 2005, Wynn Resorts affiliates signed deals with a group from Beijing, China to obtain land rights for their Wynn Palace project in Cotai, Macau. Wynn Resorts paid a total of $50 million in 2012 to the Beijing group led by a certain “Ho Ho.” Wynn claimed in media interviews that then-Macau Chief Executive Edmund Ho informed him that the Cotai land had been reserved for the Ho Ho group and that he had to deal with Ho Ho before he could develop the Cotai property. However, the Wall Street Journal reported that it was unable to locate records showing that the Cotai land was ever owned by Ho Ho. Wynn later admitted that nothing was on paper, and that was how things worked in Macau. The Macau government later declared that the Ho Ho group had no apparent documented rights to the Cotai land. In July 2014, the Macau government’s anticorruption agency, CCAC, initiated an investigation into the Cotai land transaction. Wynn Resorts developed its first Macau casino, Wynn Macau, on the Macau peninsula next to the Nam Van Lake. And, like in the Cotai arrangement, Wynn was required to make a payment of $18 million to a group of local businessmen to relinquish their land rights to the casino site. It’s really been a losing streak for Steve Wynn and Wynn Resorts recently, and the question is: Will they ever get over the slump?

E-mail: ernhil@yahoo.com.

error or overheating, today). China and Europe are likely to be a little slower in 2018 than they were in 2017. China is likely to limit credit creation, contributing to slower growth. Consumer spending should underpin both US and euro-area growth. The ups and downs of the economic cycle may be less violent than they used to be. Recessions are probably less recessionary in the future. Inflation is likely to be a little higher in 2018, in most economies. Cost pressures from labor markets should push prices a little higher, although technical adjustments are limiting some inflation measures. Central banks are likely to continue to slowly normalize their policies. The US Federal Reserve and the European Central Bank have been very clear about their plans. The Bank of Japan is likely to be relatively slow in tightening policy. Don’t worry about the precise economic numbers predicted for 2018. We believe investors just need to know that the world is doing OK. Inflation may rise a little. Central banks will likely slowly tighten policy. Economics is exciting enough; there is no need to get dramatic about decimal points

Paul Donovan is the managing director and deputy head of global economics of Zurich-headquartered UBS. He is responsible for formulating and presenting the UBS Investment Research global economic view, drawing on the bank’s worldwide resources. Donovan took up philosophy, politics and economics at Oxford University. He holds an MSc in financial economics from the University of London. In the Philippines his column will appear exclusively once a month in the BusinessMirror.

Take Trump’s immigration plan seriously

resident Donald J. Trump has done something that has eluded the Republican Party for nearly a decade: He has outlined the possibility of broad immigration reform. Trump’s immigration framework is far from perfect. But the fact that it is being criticized by the extreme wing of his party should be taken as a sign of hope that we may just have a basis for bipartisan discussion. For this reason, Democrats should treat the proposal with more seriousness (and less derision) than they have to date. To be sure, there’s plenty wrong with

Trump’s framework—his insistence on wasting $25 billion for a wall system, in particular, and the veiled curbs on asylum. But, in other ways, the plan is an advance. For the Dreamers, anything less than a path to citizenship would be deeply unfair. And, in principle, it makes good economic sense, as Trump proposes, to replace the US emphasis on family reunification with rules addressed to shortages of labor. Trump’s suggested limitations on family sponsorships echo the recommendations of earlier blue-ribbon commissions and aren’t as harsh as they

would have been before travel and telecommunications became more affordable. (A new skills-based system could also grant extra points to those with extended family relationships.) The end of the diversity-visa lottery program is overdue—unless, that is, you’re a believer in citizenship bingo. A crucial question, though, is how far these changes would affect immigration in the aggregate. It’s one thing to tilt the balance away from family sponsorships to economic criteria, quite another to seek a system that clamps down on legal immigration as

a whole—a woefully misguided strategy, especially at a time when American industries and businesses are hungry for qualified workers. The implications of the plan for overall immigration would depend on the numerical caps that the administration would go on to set and exactly how it would handle the backlog of almost 4 million familysponsored visas. The administration’s intentions on this score are suspect. Nonetheless, starting from here, a good-faith bipartisan effort could resolve those issues.

Bloomberg View

2nd Front Page BusinessMirror

A12 Tuesday, January 30, 2018

House about to give up on May 2018 target for Charter change plebiscite

ven the leadership of the House of Representatives is apparently giving up on the possibility of holding a plebiscite for the Charter change (Cha-cha) initiative by May.

Deputy Speaker Gwendolyn F. Garcia the Third District of Cebu, at a news conference, said the House Committee on Constitutional Amendments needs more time to consolidate all the proposed amendments to the 1987 Constitution submitted by its four subcommittees. “The leadership of the House of Representatives has set the initial deadline in submitting the proposed Charter amendments in a plebiscite for approval of the Filipino people for May 2018, but acknowledged that it may be extended if Congress cannot meet the requirements of the law. In that case, the plebiscite may be held simultaneously with the May 2019 elections. As such, the May 2019 elections will push through as scheduled,” she said. “Our deliberations [on the proposed Cha-cha] at the committee level might take longer period of time...so it [the May 2018 plebiscite target] might not be a realistic target to reach,” Garcia added. Earlier, Speaker Pantaleon D. Alvarez said that, while his original target date is to submit to the Filipino people the proposed Charter changes simultaneous with the May 2018 barangay elections, he is open to the possibility of moving the deadline to the 2019 midterm

elections if necessary. Moreover, like normal bills, Garcia said all the Cha-cha proposals of the four subcommittees will be submitted to the mother committee for another round of deliberation. After the committee deliberation, the bill’s

GARCIA:“Our deliberations [on the proposed Cha-cha] at the committee level might take longer period of time. . . so it [the May 2018 plebiscite target] might not be a realistic target to reach.

committee report will also be transmitted to the plenary for approval. Garcia, however, assured the public that the committee is still at “full speed” on its task of crafting the proposed Charter amendments for a shift to federal form of government. “The committee has received

the respective reports of the four subcommittees earlier created and tasked to prepare drafts of proposed Charter change covering specific areas per subcommittee,” the deputy speaker added. “The proposed amendments of the four subcommittees are still undergoing deliberation by the mother committee [House Committee on Constitutional Amendments].” Last week the leadership of both chambers of Congress agreed to pursue separately their amendments to the 1987 Constitution that will shift the country’s form of government to federalism. See “House,” A2

PINATUBO ADVENTURE Tourists going to Mount Pinatubo traverse a bumpy and dusty trail aboard 4x4 jeepneys at Santa Juliana, Capas, Tarlac. ALYSA SALEN

C.A. junks oil firm’s bid to stop civil-forfeiture case filed by AMLC By Joel R. San Juan @jrsanjuan1573

HE Court of Appeals (CA) has given the go signal for the trial of the civil-forfeiture case filed by the Anti-Money Laundering Council (AMLC) against a local oil company accused of illegally importing petroleum products amounting to P10.4 billion. In an 18-page decision penned by Associate Justice Manuel Barrios, the CA’s Special Eight Division denied the petition filed by Cross Country Oil and Petroleum Corp. and one of its major stockholders, Aleli Arellano. CCOPC sought the reversal of the August 30, 2016, resolution issued by the Regional Trial Court (RTC) of Makati City denying its motion to dismiss the civil forfeiture complaint filed by the AMLC. The CCOPC sought the dismissal of the civil-forfeiture case after the Department of Justice (DOJ) junked the criminal complaints for violation of Sections 3601 and 3602, in relation to Section 2530 of the Tariff Customs Code of the Philippines, filed by the Bureau of Customs (BOC). The first criminal complaint alleged that CCOPC unlawfully imported 961,943.2 metric tons of petroleum products with a dutiable value of P8.45 billion and fraudulently secured the issuance of a tax-credit certificate in its favor in the amount of P99.4 million. The second criminal complaint alleged that the petitioner again unlawfully imported 81,176,336 liters of diesel with a dutiable value of P2.03 billion. Subsequently, the BOC informed the AMLC on the possibility that CCOPC may be involved in money-laundering activities, considering that its paid-up capital was only P3.1 million, but it managed to import petroleum products worth P8.5 billion in 2010. This prompted AMLC to seek for the freezing of the assets of CCOPC

No new tax bill on Senate’s list of priority bills for now–Sotto

Bangsamoro basic law, an awaited legislative measure that will operationalize the road map for peace between the government and the Moro Islamic Liberation Front. He added that, also on this list are the anti-hazing bill and the proposed overseas Filipino workers Handbook bill, among other pending measures earlier endorsed by various committees for Senate plenary consideration. The proposed amendments to the existing anti-hazing law was filed by Sen. Sherwin T. Gatchalian following what he described as the “gruesome

murder” of University of Santo Tomas freshman law student Atio Castillo during fraternity initiation rites. Gatchalian said he is enlisting support of fellow senators to speed up passage of the measure to impose stiffer penalties in a bid to effectively avert deadly hazing practices among student fraternities. The senator confirmed he is keen on seeing the urgent passage of the remedial measure to avert “further bloodshed” in what has turned out to be deadly fraternity hazing rites. In sponsoring the amending bill

for early approval, Gatchalian admitted having “a sad sense of déjà vu,” lamenting that “history has repeated itself once more.” “Yet another innocent and promising young man, Atio Castillo, has lost his life during brutal hazing rites conducted by his fraternity brothers-to-be, and the people demand action from their representatives in Congress,” he said. Gatchalian recalled his experience as a Valenzuela congressman back in 2014, when he learned about the murder of De La Salle-College of Saint Benilde student Guillo Servando during

initiation rites conducted by the Tau Gamma Phi Fraternity, which, he said, “shocked the nation.” Gatchalian added that the case prompted him to file an anti-hazing measure embodied in House Bill 5760 that the House of Representatives passed on third and final reading, but which the Senate then failed to pass during the 16th Congress. He, however, noted that the House of Representatives of the 17th Congress already approved proposed amendments to the anti-hazing law of 1995 (Republic Act 8049) earlier this week,

www.businessmirror.com.ph

before the CA, which was granted in October 2011. On April 16, 2012, the AMLC filed a petition for civil forfeiture with an urgent plea for the issuance of a provisional asset preservation order before the RTC in Makati City against CCOPC. However, on July 20, 2012, the DOJ finally dismissed the criminal complaints against the oil company. With this development, CCOPC moved for the lifting of the asset preservation order (APO), which was granted by the RTC in Makati City. But the trial court denied CCOPC’s motion for the issuance of summary judgment seeking the dismissal of the case. The petitioner argued that the trial court committed grave abuse of discretion when it refused to dismiss AMLC’s civil case despite its finding of lack of probable cause for the issuance of a permanent APO. It added that the trial court erred when it held that a trial is still necessary to sufficiently establish a predicate crime in a forfeiture proceeding. In denying CCOPC’s petition, the CA agreed with the trial court that there is no basis to grant the petitioner’s motion for summary judgment considering that the issues presented by AMLC calls for the presentation of evidence. “As said, notwithstanding the fact that the DOJ found no probable cause to institute criminal charges against petitioners, civil-forfeiture cases can still proceed,” the CA said. “ To rule other wise would sustain the view that the court’s bounded duty under the law and applicable rules shall be merely secondary and entirely dependent upon the actions of the Executive,” it added. The CA explained that, if it upheld CCOPC’s arguments, the courts in civil-forfeiture cases “would be rendered powerless to make determinations on its own without imprimatur of the Executive.”

Continued from a1

adding that approval of the measure into law now rests on the Senate anew. Gatchalian admitted that he is lobbying hard for “speedy passage” of the Anti-Hazing Act of 2018 to finally plug close “loopholes” in the 23-year-old anti-hazing law. He added that Senate probers themselves uncovered the loopholes during their recent inquiry into the hazing death of Castillo. Gatchalian cited the need to include provisions in the remedial legislation to establish “clear-cut responsibilities and liabilities of educational institutions in preventing

and policing hazing.” He asserted the importance of adding provisions that would “severely punish resident and alumni members of fraternities who would dare attempt to frustrate the ends of justice by covering up the hazing crimes committed by their brothers.” The senator added that, more important, the remedial legislation is expected to introduce “changes [in] the central paradigm of the law—instead of regulating hazing, it will completely prohibit all forms of hazing, once and for all.”

Compliance in 2018: What You Need to Know Continued from A1

1. A unified compliance strategy Gone are the days when compliance was the responsibility of siloed departments. In today’s intense regulatory climate, it’s critical to have your whole team committed to compliance strategy. Look at Volkswagen: Having skirted compliance with various US agencies as part of its emissions scandal, acknowledged in 2015, the car company did a turnabout and brought on a new chief compliance officer, Kurt Michels. Michels captured the new spirit of compliance culture at Volkswagen when he said, on the Volkswagen Group’s web site’s “New Code of Conduct” page: “We all share responsibility for compliance with the existing rules.” He then went on to say that the role of compliance teams and policies is “to provide help, guidance and reassurance, especially in difficult situations.”

In order to help carry out such a vision at your company, your compliance team needs to be fully integrated with other workgroups, to ensure the best support possible for preventing costly errors. By doing so, companies can avoid the kinds of mistakes that even giants like Volkswagen made due to a poor compliance culture. 2. Compliance platforms to the rescue Anyone who has managed compliance knows that the accompanying technology is frequently inflexible, and that legacy software may not meet the unique needs of the business. That’s why more and more companies are turning to platforms that can house all of their compliance data and management efforts in one place. We are presently evaluating Integrity Platforms that are built on the premise that

compliance efforts should be more visible to the entire team, in order to keep key players in the know. As companies gain access to better compliance technology, they may be able to detect and solve problems sooner. 3. Forward thinking to head off potential risks We’ve become accustomed to reading about scandals in today’s news headlines. Those scandals frequently end up costing companies millions in lawsuits and government penalties, while damaging their reputation with customers, business partners and the general public. The sad thing is that most of the problems involved are completely avoidable. With compliance management—from data privacy to cybersecurity, from quality control to anticorruption—becoming more and more important for any kind of

business, it is essential to talk about designing a compliance program that’s proportional to the company’s risks. The concept makes sense, but still raises the question: What, exactly, does a “proportional” compliance program look like? You can easily do too little to manage your compliance risks—or do too much. Compliance officers must find the balance that manages risk well and keeps senior executives, business units protected and regulators happy. A great example of the challenge can be found in data-security control audits that are tailored to assess a wide range of security practices, and they’re derived from five basic trust principles: security, availability, processing integrity, confidentiality and privacy. 4. Making your values known To successfully navigate the regulatory

environment and deliver on core values, companies need to make compliance a priority in 2018. In many organizations, compliance has a bit of an image problem and is thought of as a ‘crisis-intervention team’ that simply waits for something bad to happen. In rea lit y, the affir mative effor t of leadership in compliance and the technology they use helps to prevent regulatory pitfalls. By empowering compliance teams to be a more integral part of operations, companies can develop a stronger culture that will help prevent mistakes, protect employees and respect the rules in regions where they operate. If you need assistance, we have teams on standby; contact me— e-mail Schumacher@eitsc.com.