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TAX REFORM ONE REASON BEHIND S&P’S ‘POSITIVE’ OUTLOOK ON PHL S By Bianca Cuaresma

holiday INN EXPRESS MANILA There’s a new haven for those seeking the best of business and pleasure in Newport City: the Holiday Inn Express Manila Newport City. Gracing its opening, seen here unveiling the landmark’s logo are, from left: Martin Paz, Resorts World Manila chief integrated marketing officer; Kathy Mercado, Resorts World Manila senior director for international hotel sales and marketing; Stephen Reilly, Resorts World Manila COO; H.T.Cheah, Holiday Inn Express Manila Newport City general manager; Chris McGonnell, Resorts World Manila VP for hotel operations; and Christian Pirodon, International Hotel Group regional general manager Philippines. ROY DOMINGO

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TANDARD & Poor’s Global Ratings (S&P) expressed optimism on the local economy’s prospects on Tuesday, citing the government’s “proactive” approach to policy-making, among others. In the S&P Asia-Pacific Credit Conditions webcast, S&P economists said the government’s ability to have carried out the first tax-reform package, and proceed with the second package, is one of the reasons the major credit watcher recently decided to put the Philippines’s outlook to positive. A positive outlook raises the possibility of a credit upgrade in the next 12 to 18 months, depending on the credit watchers’ periodic assessments on the economy’s dynamics. S&P Senior Director for the Sovereign and International Public Finance Ratings in Asia Pacific Kim Eng Tan said that, while the second tax-reform pack-

A broader look at today’s business n

Wednesday, July 4, 2018 Vol. 13 No. 263

Biz groups nix sugary drinks’ warning labels B

DOF: June inflation may have hit 4.9%

By Elijah Felice E. Rosales @alyasjah & Jasper Emmanuel Y. Arcalas @jearcalas

EVERAGE makers might be amenable to it under certain conditions, but the country’s top business leaders have thumbed down the government’s plan to put health warnings on sugar-based drinks, deeming it too much of an intrusion into the private sector.

“That is really difficult for the private sector, as problems pile up on us one after another.” —Ortiz-Luis

In a statement sent to the BusinessMirror, the Beverage Industry Association of the Philippines (BIAP) said it “fully supports a factual, accurate, nondiscriminatory Continued on A2

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free fire Philippine statement delivered by Ambassador Teddy Locsin Jr. on June 26, 2018, at the United Nations General Assembly Plenary Debate on Agenda Item 118— The United Nations Global Counter-Terrorism Strategy; General Assembly Hall, UN Headquarters, New York. “Mr. President, he Philippines welcomes the adoption, by consensus, of this sixth iteration of the UN Global Counter-Terrorism Strategy. We extend our appreciation to the permanent representatives of Finland and Jordan and their teams for their tireless efforts in facilitating this resolution. And we thank the secretary-general for his report and recommendations.

‘t

LITTLE RISK OF CURRENCY TURMOIL IN ASIA–A.D.B. By Cai U. Ordinario @cuo_bm

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ONSUMER prices in June likely rose by 4.9 percent on the back of increases in the prices of “sin products,” as well as of fish, rice and vegetables, according to the Department of Finance (DOF). Based on the latest DOF economic bulletin, inflation in June may reach 4.9 percent, faster than the previous month’s 4.6 percent and the previous year’s 2.5 percent. “Inflation in June likely inched up to 4.9 percent year-on-year [YoY], up from the previous month’s 4.6 percent due to base effects and 0.35percent month-on-month [MoM] increase,” the DOF bulletin read.

2016 ejap journalism awards

Continued on A6

By Rea Cu

See “DOF,” A2

Continued on A8

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age has little bearing on the country’s fiscal position, its implementation shows the policy direction of the current administration. “The key things we are looking at in tax reforms is that the government actually has the ability to carry this out, and I think to the extent that this shows greater proactiveness on the part of the policy-makers and improvements in the government’s support for sovereign ratings,” the S&P official said. “This is one of the reasons we have a positive outlook on the Philippines’s credit rating,” he added. The administration’s tax package has been receiving a lot of friction from local groups, after provisions in the first package caused prices to spike in recent months. Data from the Bangko Sentral ng Pilipinas (BSP) showed inflation averaging at 4.1 percent in the first five months of the year, with the peak hitting in May at 4.6 percent.

A worker at a softdrink warehouse in Manila arranges different brands of soda drinks and energy drinks. Some of the country’s largest business groups are objecting to the government’s proposal to put health warning labels on sugar-sweetened beverages, saying such a warning is an undue burden on industry, already reeling from excise taxes on sugar-sweetend beverages under the TRAIN law. NONIE REYES

PESO exchange rates n US 53.3900

ESPITE the rash of currency depreciation experienced by Asian economies in the past few weeks, the Asian Development Bank (ADB) has played down the risk of currency turmoil. In an Asian Development Blog, ADB Economic Research and Regional Cooperation Department’s Cynthia Castillejos Petacorin, Donghyun Park, and Shu Tian said the depreciation of these currencies only reflects the strength of the US dollar and not a weakness in their economies. The Philippine peso, the authors said, saw a depreciation of over 6 percent, the second-most depreciated currency. The Pakistani rupee was the most depreciated currency among DMCs with a depreciation of over 8 percent. “The risk of currency turmoil in emerging Asian economies seems

“The drop [depreciation of currencies] has been relatively limited and largely anticipated as global investors pulled back from emerging markets seeking better returns in the US.” —ADB researchers relatively limited,” the authors said. “Asia can thank its relatively strong economic fundamentals for its continued stability despite higher US interest rates and a stronger dollar,”they added. The authors said, however, that certain market factors— including current account deficits and high inflation— affected the currency depreciation in Indonesia, India and the Philippines. The Philippines, Indonesia and India have current account deficits that are well below 2 percent of GDP and are backed up by enough reserves and import cover. See “Currency,” A2

n japan 0.4815 n UK 70.1812 n HK 6.8058 n CHINA 8.0093 n singapore 38.9993 n australia 39.1829 n EU 62.1566 n SAUDI arabia 14.2362

Source: BSP (3 July 2018 )

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A2 Wednesday, July 4, 2018

DTI insists steel used for ‘BBB’ is safe after project’s collapse T By Elijah Felice E. Rosales

@alyasjah

HE Department of Trade and Industry (DTI) has assured the public steel and construction materials used by contractors in “Build, Build, Build” projects are safe and reliable, following the collapse of a floodcontrol project in Pampanga River. In a news release on Tuesday, the DTI’s Bureau of Philippine Standards (DTI-BPS) said domestic manufacturers have to secure Philippine standard (PS) marks and importers have to obtain Import Commodity Clearance (ICC) before materials are sold in the market. This certification measure, the agency said, is enough to ensure consumer safety. “ T he DT I-BPS implements mandatory certification schemes for critical products and systems prior to its distribution and sale. Particular on mechanical/building and construction materials,

the DTI-BPS regulates BI/GI steel pipes, blended hydraulic cement with pozzolan, Portland cement, pipes, uPVC rigid electrical conduit, PVC-U pipes for drain wastes and vent, sanitary wares, steel wires, finishing wire nails, deformed steel bars, equal-leg angle steel bars and rerolled steel bars,” Trade Undersecretary Ruth B. Castelo said. DTI-BPS Director in Charge James E. Empeño said steel products for public infrastructure are also compliant with government standards. “Among the 73 products and systems that we monitor are the steel products, namely, de-

formed steel bars, equal-leg angle steel bars, rerolled steel bars, which are integral components in the administration’s infrastructure development,” he said. Castelo said consumer safety is a priority in the certification of construction materials. She said the DTI-BPS “provides the highest quality of materials that we use to build and repair our homes, offices and other government and privatesector projects.” The DTI-BPS said the PS and ICC marks are placed on tags securely attached to each bundle of steel bars. The government’s infrastructure program came under focus after a flood-control project along the Pampanga River collapsed two days before its scheduled completion. The ruined wall is among the dozens of projects listed under the infrastructure binge. Contractors Ferdstar Builders and DL Cervantes Construction vowed to repair the flood-control project without additional costs to the government. Initial assessment by the contractors said the concrete base of the wall eroded due to heavy rains.

Biz groups nix sugary drinks’ warning labels

and informative back-of-pack and front-of-pack labeling in products.” It added BIAP member-firms are transparent in informing consumers about the contents of their sugarsweetened beverages (SSBs). “All products comply with all applicable regulatory requirements on nutrition and content labeling of the government. The BIAP looks forward to working with the DTI [Department of Trade and Industry] and [the] FDA [Food and Drug Administration] in encouraging consumers to make informed choices,” the BIAP said. However, the new measure on SSBs does not sit well with business leaders. George T. Barcelon, chairman of the Philippine Chamber of Commerce and Industry (PCCI), warned the plan might lead to further government regulation on other products. “If people are addicted, they don’t really care so much. What we need is prevention, especially for children, and that begins in schools,” Barcelon told the BusinessMirror. “However, it is alarming that the government is intruding on that aspect of private business, of the private sector, projecting certain industries as negative,” he added. Barcelon argued there is a downside in portraying specific goods as harmful to health. He said the industry they belong to might drag other sectors in the mix, accusing the others of manufacturing prod-

Currency. . . Continued from A1

Furthermore, monetary authorities from the Philippines, Indonesia and India raised policy rates to stem inflation. Indonesia raised rates by a total of 50 basis points in May; India raised rates by 25 basis points in June, and the Philippines by 25 basis points last month. “The drop [depreciation of currencies] has been relatively limited and largely anticipated as global investors pulled back from emerging markets seeking better returns in the US. Central banks in the region have also slightly intervened to defend their local currencies,” the authors said. However, the recent market turbulence in Argentina and Turkey should be enough reason for Asian countries to “monitor external developments, maintain strong fundamentals, and keep an eye on liquidity conditions to protect financial stability.” On Monday the President’s economic team assured the public that a weak peso

ucts that could also be detrimental to health. An indication that Barcelon may have a point is that beverage makers were reportedly asking the government to also put health warnings on packaged snacks. “The labeling requirement must also cover packaged goods, according to the beverage industry,” Trade Secretary Ramon M. Lopez had said, after the DTI’s consultation with the FDA and SSB manufacturers last week. “It doesn’t have to be the government intruding too much, but more of preventive [measures to] help the young know what is good and what is bad for their health. The government does not have to resort to targeting certain industries,” Barcelon added.

Next: Vetsin, confectionery?

The PCCI chairman said he will not be surprised if the government goes after products reliant on monosodium glutamate once the health warnings on SSBs are rolled out. He said the confectionery industry can also be targeted. Barcelon’s sentiment was echoed by Sergio R. Ortiz-Luis Jr., president of the Philippine Exporters Confederation Inc.

‘SSB tax was bad enough’

Ortiz-Luis said businesses are facing daunting challenges recently, and it will further injure does not mean a weak economy. They stressed that a depreciated peso only means more money for exporters and overseas Filipino workers (OFWs). The peso will continue to weaken in the coming months on the back of the country’s widening trade deficit, according to local economists. However, economists assured that while this may be the case, it should still not be a cause for “too much worry” since the peso is expected to appreciate toward the end of the year. In a recent statement, First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) noted the peso breached the 53 level and two days after, the peso further slid by 5.8 percent. With this, FMIC and UA&P said foreign analysts have already raised alarm bells. But overall, the weak peso’s impact will be net positive for the country. FMIC and UA&P estimated that a 10-percent peso depreciation could lead to a 0.5-percent increase in inflation, while a 6-percent depreciation could lead to 0.3-percent increase.

their operations if the government launches a campaign to discourage consumption of certain products. “That is really difficult for the private sector, as problems pile up on us one after another,” he told the BusinessMirror, in a mix of English and Filipino. He explained the excise taxes on SSBs under the Tax Reform for Acceleration and Inclusion (TRAIN) and the high prices of domestic sugar are enough to damage the sales of SSB producers. He asked the government if the two are not enough crosses for beverage makers to carry. “In my opinion, those health warnings are useless. It will just be extra expenses,” Ortiz-Luis said.

‘No correlation’

The Philippine Sugar Millers Association Inc. (PSMA) said it is averse to the government’s proposal to put health warnings on SSBs as it could confuse the public sans concrete data that sugary drinks are harmful to human health. PSMA Executive Director Francisco D. Varua also said millers would be open to putting labels on SSBs that would indicate the breakdown of ingredients, such as the percentage of sugar content. “We are willing to have that [breakdown of ingredients] but to label soft drinks, for example, as injurious to your health, that’s a questionable issue,” Varua told the

DOF. . .

Continued from A1

The drivers for the increase include the hike in tobacco prices, which likely expanded by 27.83 percent. The rate of increase, however, is slower than the 28.29 percent in May, and the 9.09 percent recorded in June 2017. Prices of sin products, which include alcoholic beverages and tobacco, may have gone up by 20.44 percent in June. Alcoholic beverages alone likely rose by 5.76 percent. “Price increase from sin products continues to be double digit YoY, even as the MoM rate plunged to 0.3 percent from 0.81 percent last May. For the June inflation rate, sin products contribute as much as 0.46 percentage points YoY,” the bulletin read. The hike in fish prices also caused the June inflation rate to accelerate, according to the DOF. Prices may have expanded by 10.61 percent, although the rate is lower than the 11.36 percent recorded in May and the 7.73-percent recorded in June 2017. The DOF noted that the prices of vegetables may have gone up by 7.49 percent in June, faster than the 7.03 percent in the previous month and the 0.55 percent recorded a year ago. The price of rice and nonalcoholic beverages likely rose by 4.17

Coseteng’s warning

Before t he col l apse of t he Pampanga R iver wall, former Sen. Anna Dominique Coseteng warned the government is making use of quenched and tempered (QT) steel for public infrastructure it is building. She said the use of QT steel in high-rise and sensitive buildings is risky and could lead to accidents. Coseteng and Emilio M. Morales, former chairman of the Association of Structural Engineers of the Philippines, argued that quenched steel bars will fail prematurely in incidents of cyclic loading, such as earthquakes, as compared to micro-alloyed steel. They also said QT steel might have passed government tests, but argued these tests are not comprehensive. The DTI has refuted Coseteng and Morales’s allegation, and said the use of QT steel has been approved by several steel groups, such as the Philippine Constructors Association, Philippine Iron and Steel Institute and Association of Structural Engineers of the Philippines, among others. With Beatrice Laforga and

Gillian Villanueva

Continued from A1

BusinessMirror. “We can give a thousand and one arguments in favor or against it. And we are not in favor of it.” He urged the government to conduct a study that would show a definite correlation between the consumption of sugary drinks and illnesses to justify the government’s proposal. This, Varua noted, would justify the government’s proposal as it would be backed by research.

Not like tobacco

“It’s like the cigarettes but there is a definite correlation between cancer and cigarettes. There is none as far as sugar is concerned,” he said. “So, why are you going to do that? Why are you going to scare everybody?” But even if the government pushes through with its plan to put health warnings on SSBs, the PSMA chief said he does not expect the demand for sugar-based food items to decline. Varua said, however, that they will oppose the government’s proposal. The government’s proposed policy to compel the putting of health warnings on sugar-bearing products was brought up six months after it slapped additional taxes on SSBs under the TRAIN. The new tax law slapped a P6-per-liter tax on drinks containing caloric or noncaloric sweetener, and a P12per-liter duty on beverages with high-fructose corn syrup. percent and 10.15 percent, respectively. “Food prices contributed to the YoY uptick mainly due to vegetables while MoM inflation of fish and rice price moderated to 0.11 percent and 0.1 percent, respectively,” the bulletin read. The DOF said the month-on-month inflation adjustment can also be attributed to education, which may have gone up by 2.69 percent in June, faster than the 1.78 percent recorded in May and 2.05 percent in June 2017. According to the DOF, housing, utilities and fuels likely went up by 4.51 percent, faster than the 3 percent in May and the 1.84 percent in June 2017. The hike in the price of furnishings and household equipment also rose by 3.03 percent. On Monday the Development Budget Coordination Committee reported that it revised its inflation forecast for this year. Inflation for 2018 was projected to hit 4 percent to 4.5 percent, faster than the previous forecast of 2 percent to 4 percent. The government, however, maintained its forecast of 2-percent to 4-percent inflation rate for 2019 to 2022. “From 2 percent to 4 percent, we’ll make it to 4 percent to 4.5 percent, in recognition of what already happened in the first five months of the year. Year-to-date, [inflation] is 4.1 percent, we expect inflation to taper off in the second half of the year,” Budget Secretary Benjamin E. Diokno said.

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Duterte keeps up attack on church critics as talks are set with CBCP head By Bernadette D. Nicolas

@BNicolasBM

HE President’s spokesman Harry L. Roque Jr. confirmed on Tuesday that President Duterte will be meeting with the president of the Catholic Bishops’ Conference of the Philippines (CBCP) next Monday, July 9. Earlier, the President created a committee to hold a dialogue with the Church in his behalf after drawing flak from religious groups and even the public for calling God “stupid” and for his controversial remarks on the Catholic faith. “Well, I confirm that this Monday, July 9, Archbishop Valles will be meeting with the President here in Malacañang. So that’s the update on the dialogue, ” Roque said. “Although the President highlighted that this is really not unusual because they have had an open communication lines with Archbishop Valles since he became President.” Roque was part of the committee to hold the dialogues with the Church. The other committee members include Edsa People Power Commissioner Pastor “Boy” Saycon, and Foreign Undersecretary Ernesto C. Abella and Cabinet Secretary and former Catholic priest Leoncio “Jun” Evasco Jr.. Malacañang expressed hope in a press briefing last week that the Davao Archbishop will have a fruitful dialogue with the President since they are on good terms. Amid these efforts from the government to reach out to the Church, the President, however, still continued to slam Roman Catholics.

In a speech on Monday, Duterte said in Bisaya: “To those religious who keep on criticizing me, this is how it is: Do not use God. Do not include him in your criticisms against me, God sentenced you to rot in there. “Because when I answer, I will include your God as well because you used Him against me,” he said. However, Roque defended the President, saying: “If there is going to be a cessation of hostile language, I think it has to be from both institutions.” Manila Archbishop Broderick Pabillo slammed Duterte on July 1 in a blog post, saying that Duterte’s election was not God’s will. Pabillo was responding to the question raised in an e-mail, “Why did God give us Duterte?” “God did not give us Duterte to be our president. The 16 million voters chose him to be President and he is now President,” he said. He also hopes that the Filipinos have “learned the lesson not to be blinded by propaganda, like tough talk…and now, social media,” he added. Still, Roque said he thinks that it’s not just the President who should be told that the dialogue should be treated as a “two-way street,” adding that the goal of the dialogue is for both sides to recognize that they are serving the same people and constituency. “So I think it’s not just the President who should be told that as we hold this dialogue, that perhaps there should be a cease-fire; it should also be told to some leading Church leaders, as well,” he said.

Meralco sees generation charge higher in July bill

HE Mani la Electr ic Co. (Meralco) said on Tuesday that the generation charge for July is likely to go up from last month’s P4.9828 per kilowatthour (kWh). Generation charge is the largest component of an electric bill. Last month’s generation charge was lower from the prev ious month’s P5.0523 per kWh. “There are indications of a higher gen charge this July,” said Meralco Utility Economics head Lawrence Fernandez. He did not reveal actual figures since Meralco has yet to finalize its computation. It is expected to release this month’s power rates next week. The Meralco official cited several yellow alert warnings and the peso depreciation as main reasons for the generation charge adjustment in June, which will be reflected in

the July power bills of consumers. “For one, we recall that the Luzon grid experienced several yellow alerts in the first half of the June supply month, when demand in Luzon reached a new high,” said Fernandez. The Luzon grid was placed on yellow alert due to unexpected shutdowns and the limited generation of some power plants and high power demand. A yellow alert means there are not enough reserves to cover the largest-running generating unit at the time but does not necessarily lead to power outages. The highest peak load demand of 10,876 megawatts was recorded for the Luzon grid, breaching this year’s peak demand forecast of 10,561 MW set by the Department of Energy’s Power Development Plan.

CMMA to hold Judges’ Conference

HE Catholic Mass Media Awards (CMMA) is spearheading the first CMMA Judges’ Conference on July 5, Thursday, from 8 a.m. to 12 noon, at the 4th Floor, Lay Formation Center, San Carlos Seminary, Guadalupe, Makati City. The conference will start with a Holy Mass to be celebrated by Fr. Anton C. T. Pascual, Radio Veritas president. Celebrating its 40th anniversary this year, the CMMA is holding the Judges’ Conference “as a way for CMMA judges to update and renew their commitment to serve the Lord by acknowledging the true and positive image of the mass media,” said Rev. Fr. Hans Magdurulang, CMMA judges coordinator. The CMMA Judges’ Conference will feature two speakers: broadcaster and RGMA Network Inc. President Mike Enriquez, and Fr. Jerome Secillano, Parish Priest of the Our Lady of Perpetual Succour Parish. Their talks will focus on the theme, “The truth will set you free [Jn 8.32]: Fake news and journalism for peace,” based on the message of Pope Francis for World Social Communications Day 2018. Aside from the talks, there will also be an open forum among the CMMA judges and the speakers, as well as group sharing activities during the Conference. Established in 1978 by the late Jaime L. Cardinal Sin, then Archbishop of Manila, the CMMA serves as a “tribute to those who are serving God through media.” Through the years, this purpose was attained with the help of respected communications professionals, media observers and critics, members of academe, the clergy and laity and civic organizations, who generously lent their time and expertise to the CMMA by being the judges who pick the best and most deserving entries in various media categories.

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Editor: Vittorio V. Vitug • Wednesday, July 4, 2018 A3

War vs drugs, ‘aggressive’ police operations bring down Metro crime rate from Jan to June

By Rene Acosta

@reneacostaBM

HE crime rate in Metro Manila has declined during the first six months of the year compared with the same period last year, a drop attributed by the police to the war on illegal drugs and an “aggressive” anticriminality campaign.

A statement released by the National Capital Region Police Office (NCRPO) through its spokesman, Senior Inspector Myrna Diploma, said that the crime rate decreased by about 25 percent from January up to June this year, compared with the first six months of last year. The statement said that the crime rate during the first two years of the Duterte administration, or from July 2016 up to June 2018, also dipped by about 49 percent compared with the first two years of the Aquino administration. NCRPO Director chief Supt. Guillermo Eleazar attributed the decrease to several factors, two of which were the intensified campaign against illegal drugs and the aggressive operations against criminals. “The government’s war on drugs has been considerably very effective,” said Eleazar, noting that from July 2016 up to June this year, at least 233,896 drug users and pushers have surrendered in Metro Manila, while 48,886 were also arrested and jailed. Another 1,590 were neutralized during the police operations. “Evidently, the less number of drug addicts on the streets equates to lesser criminal activities and criminal incidents. The drug addicts, as expected, will always find ways to get money in order to satisfy their physical and psychological craving [for] illegal drugs,” Eleazar said. “To some extent, they are forced to steal, rob shops and innocent people on the streets, barge into homes, in worst cases have to assault, hurt and even kill their victims to get money to buy illegal drugs,” he added. The NCRPO chief said their nonstop operations against criminality resulted in the arrest and neutralization of more criminals, which served as a deterrent to the commission of additional or even other crimes. Internally, the campaign against unfit members of the NCRPO has also contributed in the decline of crimes in the capital. “The serious internal cleansing policy of the PNP [Philippine National Police] spearheaded by former PNP Chief, PDG [police director general] Ronaldo ‘Bato’ dela Rosa, and now aggressively pursued by our current PNP chief, PDG Oscar Albayalde, has been a driving force in eradicating scalawag cops,” Eleazar said. The policy included the conduct of random inspections to police stations and police precincts to ensure that every policeman on duty is performing his job. On Friday Eleazar launched hot lines for the NCRPO where civilians can report abuses, or any infraction, by policemen, which on its first day alone received 144 information and complaints.

Bataan human smuggling try foiled; 139 undocumented workers rescued

By Henry Empeño | Correspondent

UBIC BAY FREEPORT— A total of 139 undocumented workers recruited for work abroad were rescued by authorities early Tuesday at the Port of Orion in Bataan, as they were waiting to be shipped to Micronesia. According to the National Coast Watch Center (NCWC), a unit attached to the Office of the President, a joint team of the Philippine Coast Guard and the National Bureau of Investigation boarded the vessel M/V Forever Lucky at the Orion port in Bataan and found the undocumented passengers onboard. The NCWC said in a news statement that Fahrenheit Co. Ltd. (FCL), which owns and operates the passenger vessel, had failed to produce permits for the supposed travel to the Federated States of Micronesia, a country comprised of some 600 islands in the western Pacific Ocean. It added that FCL, a company based in the Subic Bay Freeport, “produced falsified and fictitious Special Permit to Navigate, [failed to present] a Certificate of Public Convenience or franchise to legalize its operation, no manifest for the 139 passengers on board, and other documents required for its operation.” The NCWC said it flagged the vessel after receiving information from its foreign counterpart that a domestic passenger vessel docked in Bataan was allegedly involved in human smuggling and other illegal activities. Some of the undocumented workers found in the ship said they were recruited to work as performers, waiters and disc jockeys for an event in Micronesia. They added that they were not asked to pay for any processing fee, and had the faint idea that they were to leave the country through the back door. The recruitment was reportedly conducted in the offices of FCL and MacroAsia Pharma Inc., which are both located along Canal Road in the Subic Bay Freeport Zone. Meanwhile, the Subic Bay Metropolitan Authority (SBMA) said that it would not tolerate any unlawful activity by any business locator operating out of the Subic Bay Freeport. “As manager of the Subic Bay Freeport Zone, where FCL is based, we deplore the involvement of any Subic-registered company in any unlawful activity, and will unconditionally support the investigation to ferret out the truth about the instant case,” SBMA Chairman and Administrator Wilma T. Eisma said in a news statement. She said that, according to SBMA records, FCL is engaged in construction, land development, subcontracting, transshipment of agricultural and marine products, quarrying and mining.

A4 Wednesday, July 4, 2018 • Editor: Vittorio V. Vitug

Economy BusinessMirror

DOTr lines up ‘basket of solutions’ to ease city traffic in Metro Cebu

he transportation department will adopt an integrated transport system (ITS) in Metro Cebu to address the “worsening traffic congestion” in the area through the synchronization of various transportation solutions. Transportation Secretary Arthur P. Tugade said the components of the said program will include a point-to-point (P2P) bus system similar to MyBus, which is already operational in the city; a monorail in Lapu-Lapu City; the bus-rapid transit (BRT) in three-lane roads; and the Light Rail Transit (LRT) lines from Carcar to Danao, and the Mandaue to Airport Line. “There is no single solution to address transportation issues. It needs a basket of solutions, that is why we are pursuing the implementation of the integrated transportation system in Cebu in the next two years,” he said. Tugade said the program is an offshoot of a World Bank discussion held last month. “The ITS was developed after due consideration of Metro Cebu’s road

“The ITS was developed after due consideration of Metro Cebu’s road profile, and the fast-growing need of efficient mass transport systems in bigger, interconnected cities.”—Tugade

profile, and the fast-growing need of efficient mass transport systems in bigger, interconnected cities,” the transport chief explained. Tugade noted that the P2P bus system is the fastest to implement. “There’s already an established system which the DOTr [Department of

Transportation] sees its potential to complement with other mass transit systems. All we need to do is to add more units,” he said. The monorail, meanwhile, will become Mactan island’s transport system, connecting Mactan-Cebu International Airport (MCIA) to different hotels and resorts in the tourist island. The LRT, on the other hand, will run from the city of Carcar to Danao City, which a SingaporeanChinese and Filipino consortium has proposed. Included in the $3-billion LRT system proposal is a subway, component in Cebu City, an aboveground component from Talisay to Carcar and from Mandaue to Danao, and an airport line from Mandaue to the MCIA complex. “The LRT will become the main arterial backbone of Cebu’s mass transportation, with other ITS components as feeder lines serving internal peripheries,” Tugade said. He noted that the construction of the LRT “will go beyond the first three ITS components, as it will take more years to build than the rest.” Presidential Assistant for Visayas Michael L. Dino clarified that the BRT will only be allowed on three-lane roads. “It was a common agreement that

BRT on narrow roads will fail. The DOTr has identified the roads with three lanes in both directions where we can allow it to operate, as it will not be effective if we allow them to operate on already congested areas,” he said. He added that the BRT on narrow roads “may cause disaster” to other ITS components and existing transport systems. The Metro-wide mass transit program will converge in a common station. Passengers will be ushered to an interlink terminal where connecting transit systems of all the components are located. Tugade said his agency is “studying two areas where the common station will be put up—one in a coastal district and the other in a city center.” Partial operation of the some of the components of the program will be available in the next two years. “Once implemented, Cebu will become beautiful and more livable. The ITS will encourage interoperability and interconnectivity of land, air and sea transportation,” Tugade said. Aside from the ITS, the transport chief said his group is also considering the construction of flared intersections, road widening and intelligence signaling systems as “other basket of solutions” to resolve traffic congestion in Metro Cebu. Lorenz S. Marasigan

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Senate mulls over options to freeze TRAIN law’s fuel excise tax provision By Butch Fernandez

he chairman of the Senate’s Economic Affairs Committee is mulling over options to move for the suspension of the Tax Reform for Acceleration and Inclusion (TR AIN) law’s provision imposing higher excise tax on fuel. Sen. Sherwin T. Gatchalian confirmed on Tuesday he is just awaiting inf lation forecast this June before pushing for the adoption of mitigating measures, including fuel tax suspension. “It [June inflation forecast] will give us an indication whether it is moving fast or slowing down,” Gatchalian said in an ambush interview. “If it slows down, then that is a good sign. If it accelerates, then we will have to strongly recommend the suspension of excise tax.” The senator, however, hastened to clarify he is not suggesting suspension of the entire TRAIN law, “just the excise tax on fuel.” “The Senate has the power to repeal a portion of that law,” he added. Gatchalian said this means

PHL urged to ‘work harder’ on global economic tie-ups By Elijah Felice E. Rosales

enacting remedial legislation soon after Congress reconvenes regular sessions on July 23. Asked what will trigger the fuel excise tax adjustment, the senator cited the Bangko Sentral ng Pilipinas’s (BSP) new target of “around 4.5 percent, the second increase of their target, from 4.1 percent to 4.5 percent now.” “They [BSP] increased the upper limit of the target. For example, [if] this would breach 4.5 percent at a faster rate, then we have to do some drastic measures. We cannot take it sitting down.” Gatchalian indicated he will schedule a briefing from the Duterte administration’s economic managers, including academe, when regular sessions resume later this month. “At least, after the second quarter we have an indication,” he said, adding that “the resolution I filed to review inflation forecasts is ongoing.” This developed after Sens. Joseph Victor Ejercito and Paulo Benigno Aquino IV earlier pressed for a Senate review of the TRAIN law, citing its “inflationary effects” Ejercito initially batted for TRAIN’s suspension “if the trend continues to breach the inflation threshold.”

@butchfBM

@alyasjah

he local affiliate of an international business group is urging the government to enlist the country in the Trans-Pacific Partnership, and consider hopping aboard the Pacific Alliance to provide larger market access for local manufacturers. In a news statement issued on Wednesday, the Asia-Pacific Economic Cooperation Business Advisory Council (Abac) Philippines pressed the government to be aggressive in securing economic partnerships for the country. This includes concluding the Regional Comprehensive Economic Partnership (RCEP), joining the TPP and reaching out to the Pacific Alliance. The RCEP is currently being negotiated by Asean members, Australia, China, India, Japan, New Zealand and South Korea, who are all targeting to finalize the ambitious trade deal this year. On the other hand, Manila is not a negotiator of the TPP, now known as the Comprehensive and Progressive Agreement on TPP, which is a trade deal among 11 economies that was formalized this year. It originally included the United States, but since its withdrawal, the TPP is now left to Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam to negotiate. The Abac Philippines said the government should consider enlisting the country in the TPP, in spite of its reduced economic size with the withdrawal of the US, once the trade deal open its doors to new members. Member Guillermo M. Luz said “these may help us gain preferential access from economies we do not have existing partnerships with, such as Canada, Chile, Mexico and Peru.” Apart from this, Abac Philippines said the trade deal will also provide the Philippines a level playing field in competing with Malaysia and Vietnam in exporting to TPP economies, such as Australia and Canada. The group is also urging the government to study the potential opportunities that the country can take advantage of if it reaches out to the Pacific Alliance, composed of Chile, Colombia, Mexico and Peru. The Latin American coalition now has Australia, Canada, New Zealand and Singapore as associate members and Southeast Asian nations Indonesia and Thailand as observer parties. Economic relations between the Philippines and Latin American economies could be improved by the Pacific Alliance. The bloc accounts for 37 percent of the region’s population, 35 percent of its gross domestic product and half of all exports and imports. However, Manila’s trade with Pacific Alliance membercountries has been insignificant, accounting for less than 1percent share in exports and imports. Philippine Ambassador to the World Trade Organization Manuel A.J. Teehankee said “establishing economic ties with our friends from Pacific Alliance may serve as the Philippines’s entry point to the entire Latin American market.” Abac Philippines Chairman Tomas I. Alcantara said trade ties with Asia-Pacific economies could be improved under the RCEP, TPP and Pacific Alliance. “We enjoin the government to define the Philippine position in these regional agreements, and to work with the private sector in honing our country’s competitive advantage,” he said. Taking advantage of regional trade deals is one area Abac Philippines wants Asia-Pacific trade ministers to prioritize this year, as well as nontariff measures, local services sector, development of micro, small and medium enterprises and national strategy on digital innovation.

87 electric cooperatives get NEA’s ‘AAA’ grade By Lenie Lectura

@llectura

ore than half of the electric cooperatives (ECs) operating in the country were given the highest ratings in terms of performance standards, the National Electrification Administration (NEA) said on Tuesday. There are 121 ECs under the NEA, which evaluates and determines EC’s overall performance ratings using two criteria—key performance standard (KPS) at 80 percent and EC classification (ECC), at 20 percent. Based on the agency’s 2017 EC overall performance assessment, 87 ECs were rated AAA. Of the 87 ECs, 33 received an overall score of 100. In 2016 78 ECs were rated AAA, of which, 24 garnered 100 points. It also reported that all power distributors in Regions 6 (Western Visayas), 7 (Central Visayas) and Caraga attained AAA rating, making them the highest performers. Region 8 (Eastern Visayas) is the most improved region with 10 of its 11 ECs earning the AAA categorization from the state-run agency. Also, 76 ECs maintained their AAA status, while 20 ECs showed improvement in ratings. The AAA rating is the highest score given by the NEA to ECs that indicates the power distributors’ full compliance on 4 parameters, namely financial, institutional, technical and reportorial requirements. The D rating is the lowest. Scores and their corresponding ratings are as follows: 95-100 = AAA; 90-94 = AA; 85-89 = A; 75-84 = B; 50-74 = C; and 49 and below = D. Results of the recent assessment also showed that 83 percent or a total of 101 out of the 121 ECs have notched either AAA, AA or A status last year. Of the remaining 20 ECs, four improved their performance either from C to B or D to C; 13 ECs manifested improvement in total scores, while three retained their performance level. NEA Administrator Edgardo Masongsong welcomed the results of last year’s overall performance assessment of 121 ECs nationwide, while urging them to keep upgrading their services and remain responsive to the needs of their member-consumer-owners. “The results of this annual assessment of electric cooperatives also indicate that the institutional, financial and technical assistance readily given by the NEA are getting significant results in terms of developing the capacity and performance of the EC sector,” Masongsong said. “Let me challenge the ECs to convert these categorization figures into more salient improvements in their services, as these must also be felt more by their respective memberconsumer-owners,” the NEA chief added.

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Editor: Angel Calso • Wednesday, July 4, 2018 A5

Iran issues oil warning as UAE eyes production hike

EHRAN, Iran—Iran issued a new warning over Mideast oil supplies as the United Arab Emirates (UAE) said on Tuesday it could increase its own production, the latest remarks to follow President Donald J. Trump’s demand for lower global energy prices.

The comments by Iranian President Hassan Rouhani and the unexpected announcement by the UAE’s oil-rich capital Abu Dhabi came as US benchmark crude traded around $75 a barrel. A recent decision by the Organiza-

tion of the Petroleum Exporting Countries (Opec) to increase the cartel’s own production by 1 million barrels a day has yet to tamp down prices. That’s led to higher prices at gasoline pumps in the United States as it heads toward

Former Malaysian PM Najib Razak arrested

In this photo taken on May 24, 2018, former Malaysian Prime Minister Najib Razak, center, speaks to media as he leaves the Malaysian Anti-Corruption Commission Office in Putrajaya in Kuala Lumpur. Razak was arrested on Tuesday by anti-graft investigators. AP Photo/Vincent Thian

UALA LUMPUR, Malaysia—Former Malaysian Prime Minister Najib Razak was arrested on Tuesday by anti-graft investigators and will be charged over his alleged role in the multibillion-dollar looting of a state investment fund. A government task force probing alleged theft and money laundering at the 1MDB state investment fund said Najib’s arrest was linked to a suspicious transfer of 42 million ringgit ($10.6 million) into his bank account from SRC International, a former 1MDB unit, using multiple intermediary companies. It said in a brief statement that Najib will be brought to court on Wednesday to be charged, but didn’t give details of the charges against him. Najib’s arrest comes nearly two months after his coalition’s stunning rejection by voters in a May 9 general election. The new government has reopened investigations into 1MDB that were stifled under Najib’s rule. Najib and his wife, who have been questioned over the SRC issue by the anti-graft agency, have been barred from leaving the country. Police have also seized jewelry and valuables valued at more than 1.1 billion ringgit ($272 million) from

properties linked to Najib, who has denied any wrongdoing. The anticorruption agency earlier on Tuesday questioned Riza Aziz, Najib’s stepson and a Hollywood film producer, as it stepped up its probe on 1MDB. Riza was solemn as he arrived at the anti-graft office and didn’t speak to reporters. US investigators say Riza’s company, Red Granite Pictures Inc., used money stolen from 1MDB to finance Hollywood films including the Martin Scorsese-directed The Wolf of Wall Street. Red Granite in March agreed to pay the US government $60 million to settle claims that it benefited from the 1MDB scandal. The civil suit against Red Granite was part of an effort to recover some of the $4.5 billion that US prosecutors say was stolen from 1MDB. They say hundreds of millions from 1MDB landed in Najib’s bank accounts. The 1MDB government task force this week said 408 bank accounts involving funds of nearly 1.1 billion ringgit had been frozen. It said the accounts, belonging to 81 people and 55 companies, are thought to have received funds from 1MDB between 2011 and 2015. AP

Boys, coach in stable health after 10 days lost in Thai cave

AE SAI, Thailand—The 12 boys and soccer coach found in a partially flooded cave in northern Thailand after 10 days are mostly in stable medical condition and have received high-protein liquid food, officials said on Tuesday, though it is not known when they will be able to go home. Video released early Tuesday by the Thai navy showed the boys in their soccer uniforms sitting on a dry area inside the cave above the water as a spotlight, apparently from a rescuer, illuminated their faces. The boys were found late Monday night during a desperate search that drew international help and captivated the nation. Chiang Rai provincial Gov. Narongsak Osatanakorn said the health of the boys and coach were checked using a field assessment in which red is critical condition, yellow is serious and green is stable. “We found that

most of the boys are in green condition,” he said. “Maybe some of the boys have injuries or light injuries and would be categorized as yellow condition. But no one is in red condition.” When the group will be able to leave the cave isn’t known due to flooding and other factors that could make their extraction dangerous. Experts have said it could be safer to simply supply them where they are for now. Thailand’s rainy season typically lasts through October. Family members of the missing hugged each other and cheered as they heard they had been found. Aisha Wiboonrungrueng, the mother of 11-year-old Chanin Wiboonrungrueng, smiled and hugged her family as news of their discovery spread. She said she would cook her son a Thai omelet, his favorite food, when he returns home. AP

midterm elections for Congress. Speaking to Iranian expatriates on Monday night in Switzerland, where he was on an official visit, Rouhani took aim at America. The US pulled out of the Iran nuclear deal in May and initially said it wanted allies to stop buying Iranian crude entirely. The State Department said on Monday it would examine waivers on a “case-by-case basis” as it reimposes sanctions. “The main goal of the United States by imposing sanctions is to put pressure on people, but they claim that they want to put pressure on the Iranian government,” Rouhani’s web site quoted him as saying. “But when they apply sanctions on people’s basic needs like medicine, who will be put under pressure?” Rouhani added that if Iran’s crude oil exports were threatened, the rest of the Mideast’s would be, as well. “It seems they do not understand what they are saying when they say Iran will not be allowed to export even a single drop of oil,” Rouhani said in remarks aired by Iranian state television. “All right, if you can do such a thing, do it and see the result!”

Rouhani did not elaborate, but Iran long has asserted it could shut down the Strait of Hormuz, the narrow body of water that separates the Persian Gulf from the wider world. A third of all oil traded by sea passes through the strait and the US Navy regularly has direct, tense encounters with Iran’s paramilitary Revolutionary Guard there. The US Navy’s 5th Fleet, which patrols the region, has said it has not seen any “unsafe and unprofessional” actions by Iranian naval forces in the Gulf since August 2017. It did not immediately respond to a request for comment on Tuesday over Rouhani’s remarks. Meanwhile, the state-run Abu Dhabi National Oil Co. issued a surprise statement on Tuesday saying it has an oil production capacity of 3.3 million barrels per day. It added that it “remains on track to increase its production capacity to 3.5 million [barrels per day] by the end of 2018.” The company also said it “has the ability to increase oil production by several hundred thousand barrels of oil per day, should this be required to help alleviate any potential supply

shortage in the market.” T he oi l compa ny pre v iou sly a n nounced last November it had plans to expand its capacity to 3.5 million barrels of oil per day. It produced some 2.8 million barrels of oil per day in May, according to the most-recent figures released by the Opec. But Tuesday’s statement comes as Trump increasingly has criticized the Opec for not doing enough to lower oil prices. On Saturday Trump wrote on Twitter that he had received assurances from King Salman of Saudi Arabia that the kingdom will increase oil production, “maybe up to 2,000,000 barrels” in response to turmoil in Iran and Venezuela. The White House later seemed to walk back on Trump’s tweet. Saudi Arabia has acknowledged the call took place, but mentioned no production targets. The kingdom currently produces some 10 million barrels of crude daily. Its record is 10.72 million barrels a day. The UAE, an American-allied federation of seven sheikhdoms on the Arabian Peninsula, hosts some 5,000 US troops. Dubai also is the US Navy’s busiest port of call abroad. AP

A6 Wednesday, July 4, 2018 • Editor: Angel R. Calso

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editorial

NFA’s sticky rice supply situation

he latest data on the government’s palay procurement program is, to say the least, discouraging. The National Food Authority (NFA) planned to buy at least 100,000 metric tons of unmilled rice from farmers. However, the food agency’s purchases only reached 3,806 MT as of end-June. This is only about 4 percent of the official target procurement volume for the year. The lean season for rice in the Philippines kicked off on July 1 and will last until the end of September. During this period, the rice harvest of farmers significantly declines. It is also during the lean season when devastating storms visit the country, making it imperative for the government to stock up on rice. Part of the so-called buffer stock of the NFA is distributed to victims of natural calamities. Ideally, the entire stockpile of the NFA should consist of locally grown paddy because the food agency attached to the Department of Agriculture customarily buys rice from farmers. Given the NFA’s mandate to ensure the availability of rice at any given time, the agency also imports the staple from neighboring Southeast Asian countries, such as Vietnam and Thailand. While Presidential Decree 4 mandated the NFA to ensure the stability of rice prices and supply in the domestic market, it did not specify the volume of stockpile that it should keep. This has been addressed by the Legislative-Executive Development Advisory Council, which required the NFA to have a stockpile equivalent to 30 days of national consumption during the lean season and a minimum of 15 days at any given time. When the Duterte administration came into power two years ago, there were already clear signs that the NFA would encounter stock difficulties. Data from the Philippine Statistics Authority showed that rice inventory as of December 1, 2016, declined by 3 percent to 3.33 million metric tons, from the previous year’s 3.44 MMT. The food agency’s stockpile dropped by more than 250,000 MT during the main harvest season in 2016, meaning, it encountered difficulties in buying rice from farmers. The NFA’s problem became more pronounced the following year when its inventory as of December 1, 2017, fell by 72.24 percent to 156,620 MT, from the previous year’s 564,180 MT. This means the NFA’s stockpile declined by more than 400,000 MT. But unlike in 2016, the NFA this time alarmed the public about its buffer stock problems. As its rice purchases fell below target, the NFA sought Presidential imprimatur to import the staple before the end of 2017. Unfortunately, the food agency’s warning was only taken seriously when it disclosed in January that its stockpile would be good for only three days and that it would have to withdraw the cheap rice it distributes in local markets. Some politicians chided the NFA for going public about its dwindling stockpile, not knowing the NFA’s hands were tied—the food agency would still be crucified whether or not it warned the public about the imminent depletion of its stockpile. This is because the absence of NFA rice in local markets would drive commercial rice prices through the roof. The release of NFA’s rice procurement data should prompt the national government to expeditiously explore possible strategies to help the food agency shore up its stockpile. Despite apprehensions that raising the support price of NFA rice would accelerate inflation, the national government must still look for other remedies. For example, the proposal to increase the buying price of palay during the harvest season should be considered. This would make the NFA competitive against traders at a time when the agency needs to beef up its stockpile. The NFA should also be allowed to hike its incentives if the national government is averse to the idea of increasing the support price. The President himself said that it is taxpayers’ money that subsidizes cheap rice. Other countries give this money to farmers; it’s about time the government give priority to Filipino rice planters.

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Combat, cooperation and interfaith dialogue Teddy Locsin Jr.

Free fire Continued from A1

‘T

he Philippines values the Strategy as it advocates the necessity of developing a broad UN Global CounterTerrorism Strategy, as shown by its focus on:

“First. Broadening counterterrorism by highlighting the growing nexus between transnational crime organizations, especially the drug trade, and terrorist groups, as well as increasing interfaith dialogue. “Second. Engaging more actors— not just states, international and regional organizations but also private stakeholders, nonpartisan nongovernment organizations [NGOs], peaceful religious bodies and the youth, who are the most susceptible to terrorist recruitment—in preventing: radicalization, interdicting terrorist financing especially through the drug trade, the enlistment of foreign terrorist fighters and strengthening legal and financial institutions. “Third. Emphasizing the ‘weaponization’ of the Internet in terrorist recruitment and as integral to the communication of their message of violence and the crowdsourcing of funds. “Fourth. Affirming the importance of human rights and international humanitarian law so that fighting terrorists is done, effectively always by returning fire, but also without the careless disregard of human rights, which recruits their replacements. “These issues resonate in my country because of Marawi, a Muslim-majority city in central

Mindanao attacked in May 2017 by hundreds of men belonging to a Daesh-inspired terrorist organization called the “Maute Group.” The attack is arguably the most destructive act of terrorism in my country’s history. It caused an unprecedented humanitarian crisis, with around 200,000 persons displaced by the fighting but fortunately mostly absorbed by the Philippine culture of hospitality. “Peaceful coexistence between Christians and Muslims is what it has been for centuries; Catholicism’s holiest sites are adjacent to Islam’s in the capital of Manila and elsewhere; a man’s religion is no one’s concern but her own. Marawi in particular stood out in that mutually tolerant and harmonious regard, which is why the terrorists chose Marawi to stake out their first presence in my country. If they succeeded there, they would have better chances elsewhere. They failed. In a textbook perfect military victory, over a thousand of them were killed to 165 of our brave soldiers. “Marawi illustrates the intimate and symbiotic relationship between terrorism and the illegal drug trade. The poor are not terrorists but their victims. With drug money, the terrorists were able to gather a motley assortment of extremists, criminals, mercenaries and foreign

Terrorism is a global problem no country can tackle alone. President Rodrigo Duterte understands this. Counterterrorism is a cornerstone of his national agenda, and this includes strengthening cooperation with our regional partners, especially Indonesia, Malaysia, and with Australia and the United States, so that the Philippines can have a more effective defense system to crush terrorism when it will not be deterred.

fighters to take control of Marawi and reestablish in our part of the world their shattered caliphate in the Middle East. “The Philippines condemns terrorism anywhere in the world, however inspired—by religious madness or individual perversity. We abhor it in all its manifestations, wherever, by whomever, and against whomsoever committed and whatever the excuse. We do not accept poverty as an excuse. “The Philippines addresses violent extremism through a “whole of nation” approach. We engage women, the youth, Muslim and Christian leaders and teachers, nonpartisan NGOs, the academe and the private sector, as partners in counter-radicalization and as a collective force for moderation, peace, democracy and development. “We raise the security awareness of local communities and implement community awareness; we target radical programs within the framework of the rule of law and human rights as the fundamental complement of combat in counterterrorism. “We continue to train law-enforcement and security experts to increase their capacity, in partnership with grassroots connections, to detect and stop threats from home-

grown extremists. “Mr. President, terrorism is an evil so pure, it must be countered with means that are sure—a global effort against terror on every front by every society worthy to be called one and not a gang. Terrorism is a global problem no country can tackle alone. President Rodrigo Duterte understands this. Counterterrorism is a cornerstone of his national agenda, and this includes strengthening cooperation with our regional partners, especially Indonesia, Malaysia, and with Australia and the United States, so that the Philippines can have a more effective defense system to crush terrorism when it will not be deterred. “The fight against terrorism should unite us all. Foreign terrorist operations do not recognize borders, and the complexity and reach of the threat they pose have expanded. Every civilized society they destroy is a platform for the destruction of another. To put a stop to them, member-states must work together. International cooperation must cover the whole range of the counterterrorism spectrum: from border control to countering the narratives of violent extremism—and always and ever to flat-out fighting it. “This is what the Strategy provides. For the Strategy to be effective, the United Nations and its institutional architecture must be not just comprehensive but coherent, coordinated and not waste its time talking. The United Nations Office of Counter-Terrorism must work closely with the Counter-Terrorism Committee Executive Directorate and with the Global Counter-Terrorism Coordination Compact, ensuring always respect for national ownership and national priorities. No one can know better than a country how its particular terrorist threat must be addressed. This is one area where there are no experts outside those who are fighting it in-country. Thank you.”

Japanese businesses don’t cower amid trade gloom

By Daniel Moss | Bloomberg Opinion

O much for the trade war apocalypse. While many headlines feature gloom about the precarious state of relations between the United States and its economic partners, Japan’s most widely watched indicator has some sunny patches worthy of attention. Japanese companies plan a surge in capital spending in the year through March 2019, according to the central bank’s quarterly Tankan survey released this week. Some increase was anticipated, in part because the second quarter usually

shows an improvement, but the 13.6 percent gain blew away forecasts. It looks even better when compared with the 2.3 percent notched in the preceding three months. The labor market is extremely tight, with the unemployment rate at 2.2 percent,

Economic isolationism also cannot explain Japan’s strong numbers at this moment. The nation is no longer a free-trade recalcitrant. Japan was a leader in reviving the Trans-Pacific Partnership sans America. Separately, Asian trade ministers met in Tokyo this week in an effort to fashion what could be the world’s biggest trading bloc—including China but, again, without the US.

the lowest since 1992. Can some of this be attributed to Japanese exceptionalism, chiefly the shrinking population and the country’s traditional reluctance to fully embrace free trade? Sure. But while Japan has ceased to be the biggest game in Asia, it’s a still major player, and its companies are woven into the fabric of the world economy. If the prospect of a trade war is so dire, why are companies prepared to invest so much? They could have just hunkered down. It’s a reality check on the idea that Donald J. Trump See “Japanese,” A7

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STL is Duterte’s legacy vs jueteng

PLDT’s labor row is no excuse for its inefficiency Michael Makabenta Alunan

on the contrary

Florante S. Solmerin

FACT IS MIGHT!

resident Duterte’s declaration that he may allow for the meantime jueteng operations in Luzon and some other numbers games, such as swertres and masiao in the Visayas and Mindanao and even pares, jai-alai and peryahan ng bayan, will definitely embolden gambling lords and their protectors in the government to the detriment of the gains made by the government-sponsored Small Town Lottery (STL).

STL has been successful in STL is one of the lottery games of the Philippine Charity Sweepareas previously controlled stakes Office (PCSO) designed to kill by jueteng, masiao, jai-alai jueteng in the provinces. STL is now and other illegal gaming earning almost P2 billion a month. operations. As a result, STL I’m not questioning the wisdom of President Duterte when he said he has contributed substantially would rather allow jueteng to conto the charity funds of the tinue to maintain “economic activPCSO, which, in turn, greatly ity” in the provinces. Killing jueteng, increased its medical he said, would render thousands assistance and charity jobless. However, some economists, including his finance manager, are programs. saying otherwise. The President is not repealing P7,000 a month with PhilHealth and Executive Order 13 that he signed SSS benefits. These employees have in February 2017. I’m sure of that. below employment skills, hence The EO aims to eradicate all forms they could not pass normal job fairs. of illegal gambling in the country. “STL is a work in progress and Of course, the President is serihence it is being constantly imous in eradicating corruption and proved to maximize its revenue jueteng and all forms of illegal gamgeneration. But this gaming prodbling that breed corruption. uct has gone a long way in terms of There is also Republic Act 9287 the objectives it was so conceived to (An act increasing the penalties for accomplish. If ever a successful antiillegal numbers games, amending illegal gambling campaign would certain provisions of Presidential be one of the lasting legacies of the Decree 1602, and for other purDuterte administration, then STL poses). This law specifically tarwill surely be its brightest accomgets jueteng, gambling lords and plishment,” an observer said. protectors. Despite the President’s proIf we sideline STL in favor of nouncements, the Duterte adjueteng, gambling lords and their ministration has succeeded in its protectors will continue laughing anti-jueteng campaign more than all the way to the bank. all other previous administrations Let’s talk about facts and figures combined, considering that the that the PCSO under the leadership President has only been in office of General Alexander “Mandirigma” for two years. Balutan, in line with the governI have seen how STL, the mass ment’s battle against jueteng and lottery gaming designed to combat other forms of illegal numbers game. jueteng and at the same time raise STL was created to eradicate funds for the government’s health jueteng based in the lottery game’s and medical assistance programs, implementing rules and regulations has expanded nationwide and (IRR). In 2006 there were only 13 gained public acceptance. STL has Authorized Agent Corp. (AACs) been successful in areas previously playing STL and the declared annual controlled by jueteng, masiao, jai-alai revenue was only P707.59 million. and other illegal gaming operations. In September 2016, after MandiAs a result, STL has contributed rigma assumed PCSO leadership, substantially to the charity funds there were 18 AACs with combined of the PCSO, which, in turn, greatly annual sales of P4.79 billion. increased its medical assistance and For almost a decade, the new charity programs. PCSO leadership defanged gambling These achievements should silords and their cohorts in the govlence critics—mostly corrupt pubernment from manipulating STL. lic officials who lined their pockets The board of directors, together with jueteng money—who claim with Mandirigma, managed to inwithout proof that STL is a front for crease the number of STL players jueteng. The truth is STL and jueteng to 36 at the end of 2016. Sales incannot coexist because one can only creased to about P7 billion in 2017. operate at the expense of the other. When the board approved 92 AACs For the STL, an AAC needs to but only 84 were in operation, STL maintain its good standing to premade total sales of P15.7 billion, or vent any jueteng or STL bookies 143.68- percent increase from the operating in its area of coverage as previous year. Mandirigma called it they siphon off portions of sales. the banner year of STL expansion The PCSO, on the other hand, into areas controlled by jueteng and may review, adjust and update the other illegal games. presumptive monthly retail receipt From January to May 2018, STL at any given time as provided for sales hit P9.7 billion, an average of in the STL implementing rules and almost P2 billion per month, with regulations. 83 AACs actively playing the game. The President must be happy to Here are figures of the STL’s 2017 know that many people previously contributions to the different govinvolved in jueteng are now in STL: ernment sectors, including charity The financiers (or jueteng lords), the services to the people: employees, cabos and cobradores, n Bureau of Internal Revenue, and the bettors. But isn’t this one Taxes—P2.156 billion; of the main objectives of STL, for n C it y/mu n i c i p a l it y, S T L people to renounce illegal gambling share—P472.42 million; and support the legal STL? Conn Congressional district, STL sider: STL is fair and transparent; share—P103.72 million; jueteng is questionable with clann Provincial LGU, STL share destine operation. STL pays taxes —P150.28 million; and charity contributions to the govn Philippine National Police, ernment; jueteng pays no taxes but STL share—P393.68 million; and gives protection payola to corrupt n PCSO Charity/Operating public officials. The government Fund—P2.675 billion. through the PCSO supervises STL; At present, there are more than gambling lords run jueteng. 309,000 regular STL employees nationwide receiving more than E-mail: fetad@yahoo.com.

Wednesday, July 4, 2018 A7

he recent layoff of some 7,000 contract workers of the telecommunications giant Philippine Long Distance Telephone (PLDT) Inc. is no valid excuse for the company to blame its long-drawn inefficiencies on the blown-up “labor pain” problems. n Pointing fingers at each other. PLDT reportedly terminated the service contracts of 7,000 workers. However, PLDT denies this, claiming it was the Department of Labor and Employment (Dole) that allegedly ordered PLDT’s 38 service contract providers, including call center and business process service providers, to cease and desist providing services to PLDT. PLDT added it was the Dole that was holding up its operations, amid complaints of crippled customer services. The Dole can equally argue that PLDT could have prepared long ago for the eventuality of reducing and totally eliminating labor contractualization, popularly called as endo or short for “end of contract.” After all, the services rendered by the contract workers are regular activities done by a telco. As both parties point fingers at each other, the public is painfully affected. Personally, our PLDT Internet at home has been down for about two weeks now and has not been attended to, despite repeated calls, requests, pleas and visits to PLDT’s various offices. n Archaic PLDT habits remain? While we are made to understand PLDT’s labor pains or woes,

the problem only magnifies the telco’s inefficiencies, which can be traced decades back at a time when it was the only telephone company in the country and opposed the entry of new players even if it could not meet current demand. Embar rassingly, Singapore strongman Lee Kuan Yew even jestingly quipped then that 98 percent of Filipinos were waiting for a telephone, while the other 2 percent were waiting for a dial tone. Technologies have vastly improved and PLDT’s ownership has already changed, but its monopolistic or oligopolistic habits remain. Unless President Duterte makes good with his “change is coming” promise and speed up the reform process, this kind of problem will drag on indefinitely. n PHL Internet among slowest in the world. We may brag about being one the fastest-growing economy in the region, but it is ridiculous to note that we have one of the slowest Internet speed in the world, ranking at number 100 among so many countries. It is lamentable if policy-makers do not realize that slow Internet speed affects our economic growth, preventing us to catch up with our Asian neighbors.

Derivatives as investments

PLDT said it was the Dole that was holding up its operations, amid complaints of crippled customer services. The Dole can equally argue that PLDT could have prepared long ago for the eventuality of reducing and totally eliminating labor contractualization, popularly called as endo or short for “end of contract.” After all, the services rendered by the contract workers are regular activities done by a telco.

Internet-monitoring firm Akamai reported in 2017 that Internet speed in the Philippines of 5.5 megabits per second is so much behind South Korea’s 29 Mbps, which is the world’s fastest. Our Asean neighbors have faster Internet speeds with Malaysia’s 8.9 Mbps, Indonesia’s 7.2 Mbps, and Vietnam’s 9.5 Mbps. Advanced countries have higher Internet speeds, like Japan’s 20.2 Mbps, Norway’s 23.6 Mbps, Sweden’s 22.8 Mbps and Hong Kong’s 21.9 Mbps. The US has an average Internet speed of 15.3 Mbps. n Giant firms are telcobased. The Philippines cannot dream of growing fast sustainably without giving due attention and reforms to its telecommunication sector. Many decades back, the global corporate giants were the oil companies like Exxon, Standard Oil, British Petroleum, etc.; and the too-big-to-fail banks include JP Morgan, Deutschbank, HSBC, etc. It took them 100 to 150 years to grow that big. Currently, the new corporate giants, mostly organized in the last

10 to 20 years, are telcos or Internet-based companies. The biggest transport company, which does not have its own vehicle, is Internetbased Grab. Author Scott Galloway wrote the book The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google, which discusses the fascinating rise of the most influential companies in the world, which somehow help mold people’s behavior and consumer preferences as they manage to keep track of everything we buy, like, share and post on e-commerce portals and social media. Not to be outdone is Jack Ma’s Alibaba, which already hit over $500 billion in sales last year. n Nordic nations have over 10 telcos. The opportunities for the Philippines in many industries can be realized if our telecommunication sector is upgraded and liberalized to allow for more competition. Most European countries have four to five telco companies competing. Socialist Russia, which is supposed to be averse to free market, has eight telcos, while Scandinavian countries have 10 or even more companies competing with one another. Sweden, for instance, has the most number of telco companies competing. With more players, one can expect better services and pricing for the benefit of businesses and individual consumers. Where are the big projects? One of the excuses of the duopoly is that they are having difficulty with local government units in building cell sites. However, the Department of Information and Communications Technology earlier offered to build the cell sites for them, which triggered opposition.

E-mail: mikealunan@yahoo.com

Derivatives is big business. In 2016 $25 billion in derivative contracts were traded—36 percent of these were traded in Asia, 34 percent were traded in North America and 26 percent were traded in Europe. Global derivative contracts were worth $570 trillion in 2016. In practical terms, derivatives can be useful for companies. The delivery of raw materials in the future at an agreed upon price may be secured by a futures contract. A derivative is a contract that derives its value from something else or from the performance of underlying asset or assets. The underlying asset may either be a market index, interest rate or other assets (commodities, stocks, bonds

and currencies). Commodities may be oil, gasoline or gold. Currencies would often refer to the US dollar. An illustration of interest as an underlying asset is the yield on the 10-year Treasury notes. Hence, the value of the derivative is dependent on the fluctuations of the underlying asset. There are different types of derivatives. Among these are the forwards, futures, options, swaps and other variations. There are other forms, as well, such as the collateralized debt obligations and the credit default swaps, which featured prominently during the 2007 to 2009 financial crises. CDOs are structured asset-backed security, which is a bit of a misnomer. These assets

are usually credit-card receivables, auto loans, manufactured-housing contracts and home-equity loans. CDOs are composed of “bundled debts,” and premised on the promise that the debts or loans will be repaid. Similarly, mortgaged-backed securities are securities based on mortgages. Every type of derivative would have its own function or application. Hence, certain derivatives may be used as a risk management tool (or a hedge), while others may be for speculation. Forwards is a contract between the parties where the payment is set at a specified time in the future and with a predetermined price. It is only traded over-the-counter. Futures, which is a common type of derivative, is a contract to buy or sell an asset in the future at a price

Dennis B. Funa is the current insurance commissioner. Funa was appointed by President Duterte as the new insurance commissioner in December 2016. E-mail: dennisfuna@yahoo.com.

dawns, and so we won’t get carried away here. For all the relative optimism of the past few years, inflation is still short of the Bank of Japan’s 2-percent target. As a consequence, the BOJ is resisting any underlying change to its ultraeasy monetary policy, a stark contrast to the other Group of Seven central banks. The Tankan doesn’t change that. It’s entirely possible that population decline explains at least part of the boost to corporate capital plans. If the country’s pool of labor is dwindling, employers face of the choice of hiring from abroad or investing more in robots and other forms of artificial intelligence. Immigration is a bit of a third rail in parts of Ja-

pan. On a December 2016 visit to Kadoma, a city near Osaka that was once an industrial powerhouse, several employers told me they would rather have robots than foreign workers. I didn’t hear one manager say they favored immigration over machines as a way to overcome labor shortages. As that visit attested, the desire to spend more on robots isn’t something suddenly bursting on the scene. It may be part of the investment surge, but not all of it. The strong numbers are even more mysterious given the context of global fears about trade war between the US and China. (And between the US and everyone else.) If that is such a threat, the outlook for corporate Ja-

pan would be dire. But the numbers don’t show a collapse in sentiment. Perhaps the hit to growth would not be as great as feared. Economic isolationism also cannot explain Japan’s strong numbers at this moment. The nation is no longer a free-trade recalcitrant. Japan was a leader in reviving the TransPacific Partnership sans America. Separately, Asian trade ministers met in Tokyo this week in an effort to fashion what could be the world’s biggest trading bloc—including China but, again, without the US. Whatever the motivation for capital investment, the unwillingness of companies to cower at today’s trade tussles is a refreshing note of optimism. Good for Japan.

Dennis B. Funa

INSURANCE FORUM

erivatives are one of the three main classes of financial instruments or securities, together with stocks (or equities) and debt (bonds and mortgages). However, it was only in 2015, through Circular Letter 2015-56, when it was recognized as an investment product for insurers by the Insurance Commission.

Japanese. . .

continued from A6

is destroying every aspect of every economy on the planet. The Tankan suggests that Japan’s contraction in gross domestic product earlier this year was probably a blip. It’s true that overall confidence among large manufacturers slipped, though the guts of the report were upbeat and not just on capital spending. Production capacity is tight. Capital Economics notes that price pressures are the highest in a decade and that firms’ financial positions are the most favorable since 1989. Japan has had its share of false

specified at present. The futures contract is drafted by an exchange. Options is a contract where the owner is given the right, not the obligation, to either buy (call option) or sell (put option) an underlying asset. Swaps is a contract to exchange at a specified future date based on the value of the underlying asset. A swap may either be an interestrate swap or a currency swap. The Insurance Commission only allows forwards and swaps. Derivatives may be traded in exchanges (or intermediaries) or over-the-counter. Exchange-traded derivatives are derivative instruments traded through exchanges. One such exchange is the Chicago Mercantile Exchange, which was formed after a merger between the Chicago Board of Trade and the New York Mercantile Exchange. OTC derivatives are traded privately, and directly between the parties, without intermediaries. Most derivatives (95 percent) are traded OTC and are, therefore, largely unregulated. This makes the Master Agreement prepared by the International Swaps and Derivatives Association very important.

2nd Front Page BusinessMirror

A8 Wednesday, July 4, 2018

www.businessmirror.com.ph

Con-com approves federal constitution draft

By Bernadette D. Nicolas

@BNicolasBM

HE President’s 22-member Consultative committee (Con-com) on Tuesday voted unanimously in its 15th en banc session to approve the entire draft of the federal constitution.

The draft constitution, which adopts a federal-presidential form of government,isexpectedtobesubmitted to the President on July 9 to give the Chief Executive time to review the draft before his State of the Nation Address (Sona) on July 23. Results of the nominal voting also showed eight members voting in the affirmative but with reservations and one member voting yes with concern. Con-com members who voted with reservation were Prof. Eddie M. Alih, Atty. Ali Balindong, Atty. Roan I. Libarios, Atty. Randolph C.

Parcasio, Atty. Aquilino Q. Pimentel Jr., Retired Associate Justice Bienvenido L. Reyes, and Atty. Victor de la Serna and Atty. Laurence B. Wacnang. Con-com member and Chairman of Subcommittee on Economic Reforms Arthur N. Aguilar voted yes with concern on the structure of the federated regions not granting more power for the current local government, as well as on restrictions on land ownership. The cryptic wording of the Constitution on the economy could be construed as a move toward socialism and give

“If the allocation of powers is wrong, you can expect a failure on the part of the federal government that we established.” —Puno

a wrong message to the business community, in his view. The President handpicked the Con-com members in a bid to shift the form of government from unitary to federal. Federalism advocates believe that this form of government will spur economic growth across all regions and not just in “imperial Manila.” Con-com is hoping that the President will endorse their draft during his Sona. However, Con-com Chairman and retired Chief Justice Reynato S. Puno said as of this writing he is still not sure whether the draft will be approved in totality by the President because he said they were just told to give their best efforts

to craft it. “We did, so we tried our best. But with respect to its approval, I am not sure,” Puno told reporters in a chance interview. Asked which of the provisions he is most proud of, Puno pointed to the allocation of powers between the federal and regional government, especially the division of the taxing powers. “This is the most important because it will spell the success or the failure of federalism that we installed in our constitution,” he said. “If the allocation of powers is wrong, you can expect a failure on the part of the federal government that we established.” Puno reiterated that the Concom’s work is just recommendatory, as this will still pass the critical eye of the President and Congress, but he said he is confident that Congress will consider well their recommendations. “We did our best for the country. We have been submitting these various recommendations to the people, to the media and so far, the

NutriAsia, 5 contractors clear ‘endo’ probe, but must regularize 80 workers

HE Department of Labor (DOLE) has ordered NutriAsia Inc. (NAI) to regularize 80 more contractual workers after the DOLE found they were victims of the illegal laboronly contracting (LOC) practice by a service contractor . DOLE Central Luzon Director Zenaida Angara-Campita ordered NAI last week to absorb the workers previously employed by one of its contractors, AsiaPro Multi-Purpose Cooperative (AMPC), in its plant in Bulacan.

Campita said she made the decision after their labor inspectors found AMPC did not own equipment and machinery for its operations, solely exercising control and supervision over its contracted-out workers. "The inspectors also noted AMPC workers were engaged in quality control and research and development, activities all directly related to NAI's main business," Campita said, adding all the factors are illegal LOC practices as defined by Article 106 of the Labor Code.

Campita also issued a cease-anddesist order against AMPC to effectively stop it from operating.

P200-M losses Meanwhile, a NAI official confirmed the company has lost at least P200 million during the 31-day strike that paralyzed the company. Thelma Meneses, NAI spokesperson and head of its human resources department, also told Bulacan-based media people on Tuesday that hundreds of NAI’s

regular employees and those from their service providers, totaling around 1,400 individuals, have not been paid since the labor unrest commenced. The company implements a “no work, no pay” policy, she said. NAI’s five other service contractors in its Bulacan plant—B-Mirk MultiPurpose Cooperative (BMPC), Fast Services Corp., Bison Security and Investigation Agency, City Service Corp. and Manchester Engineering—were allowed to continue their operations after being found to be compliant with labor regulations. BMPC employees initiated a protest in front of NAI's plant in Bulacan last month, claiming the company violated labor regulations. DOLE declared BMPC compliant with general labor standards after it refunded its unauthorized deductions for uniforms totalling P806,353.11 from the salary of its 519 workers on March 15, 2018. NAI said it plans to appeal the case to Labor Secretary Silvestre H. Bello III. Also, Assistant Labor secretary Benjo Benavidez clarified in a text message that the latest regularization order issued for NAI's Bulacan plant was separate from that of its Laguna plant. Last February, Campita, who was then the regional director of DOLE-4A, ordered NAI to regularize 1,000 workers in its Laguna plant in Southern Luzon.

NAI expresses solidarity with workers, service providers MEANWHILE, NAI on Tuesday expressed solidarity with all its workers and the six service providers affected by the labor unrest. NAI also welcomed the decision of the DOLE in Region 3, which confirmed the company and its service provider BMirk are not involved in “end of contract” practice. Endo involves terminating contractual workers at the end of their contract period to avoid regularizing them and giving them benefits. The company through Meneses, NAI’s official spokesperson and head of human resources, appealed to all parties to put an end to the labor dispute. “Through our collective prayers, we humbly ask that all parties put this difficult chapter behind us so we can all move forward.” The six service providers of NutriAsia called on striking employees to return to work. Meneses expressed high hopes the operation of NutriAsia will normalize again once the striking employees return to work. As part of its humanitarian efforts, NutriAsia will provide financial assistance to help employees affected by the dispute. NAI said it would work hard to bring the labor dispute to a peaceful resolution.

With reports by Samuel P. Medenilla, Kristen Roz Mateo

reaction is positive on the part of the public,” he said. Puno expects the plebiscite to be held by middle of 2019. But he said he prefers that the plebiscite be held separately from the 2019 midterm elections so that the people will have time to understand the new constitution. “Although the finance managers will always be thinking of the extra cost, as far as I am concerned, the best method is to have people ratify this constitution on a standalone basis,” he said. Presidential Spokesman Harry L. Roque Jr. said in a briefing on Monday that the President, as PDP-Laban chairman, will transmit the draft of the federal constitution to his party mates. “And he will encourage his party mates to study it very closely, and if possible, to pattern the proposed revisions after what the Commission has recommended. But ultimately, of course, it is the members of Congress who will approve whether or not they will adopt the proposed revisions,” Roque said. “But we recognize that the decision ultimately

will lie with the individual members of the House of Representatives and the Senate,” he added. Under the draft federal constitution, Con-com is proposing the following: self-executing anti-political dynasty provisions, ban on political turncoatism, elevation of Philippine Competition Commission and Commission on Human Rights as constitutional commissions, voting in tandem for the president and vice president, mandatory appointment of the vice president in the Cabinet, two senators to be elected per region, increasing the members of House of Representatives to 400, establishment of a Federal Supreme Court, Federal Constitutional Court, Federal Administrative Court and Federal Electoral Tribunal, keeping the ban on foreign ownership of land and allowing Congress to liberalize foreign ownership restriction, among others. The 78-page draft constitution approved by the Committee consists of 22 articles. The 1987 Constitution now in effect consists of 18 articles.

TAIWAN ‘ALMOST’ SURE OF EXTENDING VISA-FREE STATUS FOR FILIPINOS By Recto Mercene @rectomercene

AIPEI is almost certain of extending the July 31st deadline to provide visa-free access to Taiwan for Filipinos, according to Deputy Minister James Chu of the Taiwan Economic Cooperation Office (Teco). “We are 95 percent sure the deadline would be extended,” Chu said during an ambush interview in a hotel in Makati. The visa-free program started in November last year. He said since the program started, there were 290,000 Filipinos who visited Taiwan, or 68 percent more compared to 2016. “During the first quarter of 2018, Filipino arrivals in Taipei rose by 73 percent compared to the first quarter last year.” On the other hand, there were 60,000 Taiwanese who visited the Philippines during the first three months of 2018, Chu said. He added that Taiwan will review whether the policy of providing visa-free status to Filipinos is good or not and whether to extend or terminate it. “The decision is going to be publicized before the end of this month.” “But looking back on the

l a st n i ne mont hs, we see many, many, positive developments, so that we don’t concern ourselves too much about national security.” Asked how much income Taiwan is losing from the cancellation of payments for the visa application of Filipinos, Chu said: “It is huge but we don’t see the monetary return because we much value the understanding between two peoples.” The BusinessMirror asked Chu if the estimated income loss is the equivalent of P450 million a year, and he agreed. “We lost some revenue but it’s quite valuable if we can enhance the understanding and the friendship between Taiwan and the Philippines. It’s much, much, more important than the income.” Meanwhile, he said, “We hope that the Philippines would reciprocate by providing visa-free visitors for Taiwanese coming to the Philippines as tourists but mostly businessmen,” Chu said. According to Chu, Taiwan has tried to persuade the Philippines to provide visa-free access to Taiwanese visiting the Philippines. He said they approached the Manila Economic Cooperation Office, the Department of Foreign Affairs, some Cabinet members and other institutions.

TAX REFORM ONE REASON BEHIND S&P’S ‘POSITIVE’ OUTLOOK ON PHL Continued from A1

This is higher than the BSP target range at 2 to 4 percent for 2018. Central Bank officials expect inflation to rise further to peak around the third quarter of the year. For local growth, meanwhile, S&P said a pace above 6.5 percent is “very easily achievable” in the next two years. S&P Asia-Pacific economist Vincent Conti attributed that, in turn, to “the very favorable demographic trends that continue to benefit the Philippines particularly through providing

a very mobile and effective labor force that has generated a lot of investments and consumption onshore. And this story has been around for a while.” He added, “The infrastructure program, or the ramping up of the infrastructure program, is one of the new, relatively newer additions to the policy tool kit. And that’s actually a positive, in that it can generate even further potential growth farther into the future. So overall, the growth outlook in the Philippines is pretty strong,” he added.