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Thursday, July 6, 2017 Vol. 12 No. 266

igher consumption and the real-estate boom would allow the Philippine manufacturing sector to create over a million jobs in the next five years, according to a local think tank. At the sidelines of the First Metro Investment Corp. (FMIC) and University of Asia and the Pacific (UA&P) Midyear Economic and Capital Markets Briefing,

Managing the talent exodus

Rene E. Ofreneo

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LABOREM EXERCENS “Filipinos have done great around the world, and I think that as an economic model, it’s really good for individual people and families. But I think you need to try to get more people to come home.”—Former US President Bill Clinton, speech introducing the US “Millennium Challenge” to combat global poverty, Manila Hotel, November 10, 2010.

The number of jobs created by the Philippine manufacturing sector in the past five years

years and is expected to grow faster at 10 percent annually in the next few years. “It’s going to accelerate. In the past five years, it created 100,000 jobs per year. But it’s going to accelerate to 120,000 to 150,000 annually.”

local economist Victor A. Abola said the manufacturing sector is experiencing resurgence. The sector has expanded by 8 percent annually in the past five

Continued on A2

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Manufacturing resurgence to add more than 1M jobs By Cai U. Ordinario

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ormer United States President Bill Clinton gave an apt summary of our situation in the global war for talents. Filipino skills, talents and professional expertise are helping sustain growth in many countries around the world. Some airports in the Gulf Area will grind to a halt without the Filipino pilots, engineers, ground crew technicians and service personnel. And so are some hospitals in North America without the Filipino doctors, nurses and orderlies. Continued on A11

Tax-reform program seen triggering inflation uptick 3.1 percent T he National Economic and Development Authority (Neda) warned that the price of certain food items could increase once the government implements the Comprehensive Tax Reform Program (CTRP). In a statement, Neda Undersecretary for Policy and Planning Rosemarie Edillon said this is one of the “transitory impacts” of the CTRP. The first phase of the Duterte administration’s taxreform program is expected to be implemented in January. On Wednesday the Philippine

AIMING FOR SUSTAINABLE GROWTH Rahul Hora (left), president and CEO of AXA Philippines, and Thomas Buberl, group CEO and director of AXA, answer questions during a news briefing held at a Makati City hotel. Buberl recently visited Manila to reinforce the insurer’s business strategy in Asia and the Philippines, while Hora noted the company is on track to achieving the targets under a five-year strategic plan aimed at sustaining growth amid a challenging economic environment and adapting to rapidly evolving customer needs. NONIE REYES

PHL, Germany ink maritime pact By Lorenz S. Marasigan

@lorenzmarasigan

IES between the Philippines and Germany have strengthened further, after the Filipino transportation

depa r t ment a nd its Ger m a n counterpart signed a cooperation agreement on maritime transport late Wednesday. The Letter of Intent (LOI) on Cooperation in Maritime Transport— signed by Transportation Secretary

PESO exchange rates n US 50.5390

Arthur P. Tugade and German Federal Ministry of Transportation and Infrastructure (BMVI) State Secretary Michael Odenwald—seeks to modernize and upgrade the Philippine maritime sector. See “Maritime pact,” A2

The average rate of price hikes in the first six months of 2017

Statistics Authority (PSA) disclosed that inflation in June 2017 was at 2.8 percent. This is lower than the 3.1 percent in May 2017 but higher than the 1.9 percent posted in June 2016. “ The government needs to communicate well to the public the CTRP’s benefits, especially in

terms of productivity improvements, which, in effect, will eventually result in lower inflation,” Edillon said. Ateneo de Manila EagleWatch senior fellow Alvin Ang agreed, and told the BusinessMirror that the CTRP will likely increase the prices of food, such as canned goods and noodles. This will have a significant impact since inflation is computed using the Consumer Price Index (CPI). Based on the CPI, food and nonalcoholic beverages make up Continued on A12

The next economic powerhouse? Poland.

f getting rich is hard for individuals, it is harder still for nations. Of more than 190 countries tracked by the International Monetary Fund (IMF), fewer than 40 count as wealthy or advanced economies. The rest are known as emerging nations, and many of them have been emerging forever. The last large country to make it into the advanced class was South Korea, 20 years ago. The next major nation likely to join that club could be Poland, an under-the-radar economic star that President Donald

Slow and steady growth has positioned Poland to jump ahead of China and India as the most likely candidate to become a wealthy nation. J. Trump will visit this week on his second overseas trip in office. Trump will meet with leaders of the ruling Law and Justice party, who are thrilled that he has chosen to visit Warsaw before Berlin, Paris or Brussels, and participate in a meeting to promote regional

economic ties in Eastern Europe. Other European leaders are unnerved by how Trump’s populism echoes the right-wing nationalism of his Polish hosts—both have been attacked as illiberal threats to the postwar Western order. See “Economic powerhouse,” A2

n japan 0.4462 n UK 65.3166 n HK 6.4735 n CHINA 7.4317 n singapore 36.5562 n australia 38.4096 n EU 57.3567 n SAUDI arabia 13.4778

Source: BSP (5 July 2017 )

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A2 Thursday, July 6, 2017

Manufacturing resurgence to add more than 1M jobs Continued from A1

“It could double by the end of the Duterte administration. But it’s only the direct effects. It will still have indirect effects,” Abola told the BusinessMirror. He said the demand for furniture and fixtures, as well as chemicals, in the country is increasing mainly because of new real-estate developments nationwide. The need to furnish these units is boosting the growth of manufacturing sectors, particularly the production of high-quality furniture and paint, according to Abola. The failure of Chinese manufacturers to make quality furniture, he said, is also proving to be a boon for local factories. “One of the fastest growing is furniture, [particularly] in the last five years. Why? Residential construction is booming, so many units need to be furnished,” Abola said. “A nd t hen in t he high- end

furniture market, it is doing very well because earlier, the buyers went to China but they realized that while they can copy [the designs], the quality was not there. So they came back [to the Philippines],” he added. Apart from furniture and chemicals, Abola said other manufacturing industries, such as shipbuilding and steel, are expected to grow further in the coming years. The UA&P economist said the country has barely scratched the surface when it comes to shipbuilding. The plan of Steel Asia Manufacturing Corp. to build a steel mill in the country would not only create more jobs, but also make construction materials cheaper. Steel Asia’s operations would be supported by the government’s “Build, Build, Build” infrastructure program, which boasts of over 50 big-ticket transportation projects. This is part of the Duterte administration’s push to boost public spending to P8.44 trillion

Economic powerhouse. . .

But so far, two years of populism has not derailed a quarter century of steady economic progress in Poland. The IMF has a complex definition of “advanced”, but a common thread is that all the nations have a per-capita income of at least around $15,000. Since Poland completed the transition from communism to democracy in 1991, its economy has been growing at an average annual rate of 4 percent and, remarkably, has not suffered a single year of negative growth. In those 25 years Poland’s average income has risen to near $13,000, from $2,300, and it is now on pace to pass the $15,000 mark by the turn of this decade. This is testimony to the longterm fiscal sobriety of Poland’s

Continued from A1

leaders and its sharp break with communism. After the collapse of the Soviet bloc, Poland set out to distance itself as far as possible from Russia, and adopted the financial discipline and institutional reforms required to join the European Union. In the last decade, Warsaw emerged as the conservative opposite of decadent Moscow. Its staid tycoons are almost incapable of the flashy selfpromotion common among the Russian oligarchs, and they have embraced American-style entrepreneurship with an enthusiasm rarely found elsewhere in Europe. This pro-American, anti-Russian streak runs deeper than the current populist mood, making Poland a natural and increasingly potent American ally. In the past, the re-

to address the country’s infrastructure constraints and grow the economy by 7 percent to 8 percent annually. The increase in spending for infrastructure couldn’t come sooner, so any shortfall on public spending is met with much pessimism. Data from the Department of Budget and Management showed that infrastructure spending in the first quarter of the year fell short of the government’s target. This was the main reason the Capital Markets Development Initiative of FMIC and UA&P had to cut its growth forecast for the country this year. The institution said GDP is now expected to grow by 6.5 percent to 7 percent in 2017, lower than the 7 percent to 7.5 percent forecast it made in January. Infrastructure spending, the think tank said, is expected to go up by 4.5 percent to 5 percent of GDP. This, however, is lower than the target of 5.3 percent of GDP in 2017. “We expect the Philippine economy

lationship has focused on military ties and geopolitics, but Poland is already one of the few North Atlantic Treat y Organization (Nato) members meeting its commitment to spend at least 2 percent of GDP on defense. This meeting shifts the focus to the regional economy at its breakout moment. Since World War II the few poor nations that made it rich tended to do so in regional clusters, starting with Italy, Spain and other countries in Southern Europe, and then East Asia. Japan, South Korea and Taiwan went unheralded for years before they were recognized as the “Asian miracle” economies. Now Eastern Europe is rising, just as quietly, with small nations like the Czech Republic leading the way. Poland is close on its heels. With a population of nearly 40 million and a half-trillion-dollar economy that is already the world’s

Maritime pact. . .

to grow at a slower pace, if government spending does not accelerate before the end of the year,” First Metro President Rabboni Francis B. Arjonillo said. “However, if the ‘Build, Build, Build’ campaign of the Duterte administration, create jobs and strengthen the investment climate would move at a faster pace, we would still be able to reach the earlier forecast of above 7-percent growth,” he added. Earlier the Asian Development Bank (ADB) said the lack of infrastructure is one of the most significant constraints to the Philippines’s growth prospects. Also, in the latest Global Competitiveness Index of the World Economic Forum, the Philippines was ranked 95th out of 138 countries in terms of infrastructure quality. This is well below other Southeast Asian countries, such as Malaysia (24th), Thailand (49th) and Indonesia (60th).

24th largest, it is now big enough to put all of Eastern Europe on the global economic map. Poland is working its way up just as the Asian miracles did, as a manufacturing power, even though this path is much harder now. Manufacturing is declining as a share of the global economy, and with China taking much of this shrinking pie, few other major manufacturing nations are still expanding their share of global exports. That select group of around half a dozen includes South Korea, the Czech Republic—and Poland. No other sector has as much impact as manufacturing in generating the jobs and productivity gains that can make a nation rich. With its cheap currency and relatively low wages—still one third those in Germany—Poland is more than competitive with the Asian manufacturing powers. Exports

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The pact will result in the following cooperation activities: conducting regular talks to d i sc u ss proposa l s; t he development and implementation of certain projects of mutual interest and the organization of training courses in the field of business and maritime transport. Manila and Berlin would also exchange information concerning the investigation of marine accidents, cooperate in marine-pollution prevention and cooperate in the field of ports and maritime equipment, research, training and staff development in the field of maritime transport. “This document has been pending for a number of years, and after that, lo and behold, after barely three months we will sign the letter of intent,” Tugade said. The pact came about after a meeting between Tugade and Odenwald earlier this year, when the Philippine official promised a corruptionfree and level playing field. Describing it as a “meeting directly based on sympathy”, Odenwald said he and Tugade

from manufacturing account for 33 percent of GDP in Poland, well above the average for emerging nations of 22 percent. Moreover, the secret to getting rich is less about speed than stability. Many emerging economies have managed to generate spurts of rapid growth, often well above Poland’s 4 percent average, only to lose all their gains by running up debts and heading into a crisis— like Brazil and Mexico in the early 1980s, and Indonesia and Thailand in the late-1990s. Other emerging economies remain unstable, partly because they still rely on exporting raw materials like oil or soybeans, and thus, tie their fate to volatile swings in the global commodities market. Among the leading oil exporters, 90 percent are no richer today relative to the US than they were the year they started

Continued from A1

share the same interests in discussing projects and fostering productive relations between their two nations. “I am convinced that we can now have a new start. That we can build on a very solid and good foundation. And you can see by the size of the delegation that I have brought with me that we are very willing to promote economic ties with added Philippines,” Odenwald added, as he described the newly signed pact as “the new basis for maritime-transport relations”. The German official also said his country is willing to help the Philippines in improving and developing its airport and railway sectors. “We are more than willing to share our knowledge and expertise in the field of railway sector. And I think that we should also continue this cooperation. In my delegation, we also have representatives that have a lot of expertise in the field of railway construction,” he added. Diplomatic relations between the Philippines and Germany date back to 1954. producing oil. Most are poorer. Today, of the 13 middle-income countries with average incomes of $10,000 to $15,000, nine are still dependent on commodity exports, including Brazil, Russia and Argentina. The other four are all in Eastern Europe, led by Poland. No ne o f t he c o m mo d it y dependent economies are likely to grow steadily enough to become the next rich country, certainly not for long. Countries, such as Argentina and Venezuela have, in the past century, become almost as rich as the US, only to tumble after serial crises. Exportmanufacturing prowess can stabilize a rising economy by generating reliable foreign revenue, allowing countries to invest heavily without running up huge debts. This is what happened in Poland. An exception is the manufacturing giant of China. In a headlong effort to fuel growth after the 2007 financial crisis, the Chinese government has encouraged a domestic-lending boom that has driven up debts to nearly 300 percent of GDP, a risk that reduces China’s chances of becoming the next rich country. If there is a threat to steady growth in Poland, it is its recent autocratic turn. Poland’s government has drawn fire from top EU officials for interfering with the courts, cracking down on the news media and dissent and refusing to accept Muslim refugees. When Law and Justice took office, however, the concern was that it would derail growth by meddling in the private sector and trying to fulfill costly populist promises. While it has fulfilled pledges to lower the retirement age and subsidize families with two or more children, so far these policies have not caused much harm. The deficit and public debt remain manageable. The currency remains stable, exports continue to boom and the trade balance is in surplus. Since its winning streak began in 1991, around 80 percent of Poland ’s growth has been delivered by the private sector, and the momentum there remains strong. So look beyond China and India, Russia and Brazil. Poland, rising the old-fashioned way, through manufacturing, is likely to be the next rich nation. And, as Trump will see, Poland is a vital ally not only on the Nato front line but also as a leader of the world’s most vibrant economic bloc. Ruchir Sharma, author of The Rise and Fall of Nations: Forces of Change in the Post-Crisis World, is the chief global strategist at Morgan Stanley Investment Management and a contributing opinion writer. New York Times News Service

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Alvarez rallies Asean leaders to unite against drug trafficking By Jovee Marie N. dela Cruz @joveemarie

he leadership of the House of Representatives on Wednesday urged Asean memberstates to unite against illegal drugs, as drug trafficking has remained a major security concern in the region. In his welcome remarks at the opening of the 13th meeting of the Asean Inter-Parliamentary Assembly (Aipa) Fact Finding Committee (Aifocom) to Combat the Drug Menace in Pasay City, Speaker Pantaleon D. Alvarez said leaders of Asean should unite in addressing the menace of illegal drugs in the region. According to Alvarez, the region has become a major transshipment hub for illegal drugs by transnational organized crime groups to meet the demand of an increasingly growing international market for illegal drugs. Alvarez is the incumbent president of the Aipa. “I take this opportunity to urge you to do the same. With political will and cooperation, we will dismantle the massive illegal drug trade apparatus,” he said. “We cannot ignore the impact of drug use on society—especially to the family and the youth. Financial difficulties are just some of the challenges a family may face. We simply cannot stand idly by as our region succumbs to the debilitating effects of illegal drugs,” he added. Alvarez said the Asean community

has already made initial moves to face the problem with the adoption last year of the Asean Work Plan on Securing Communities against Illicit Drugs 2016-2025. “As legislators, we support this vision by introducing measures that could strengthen mechanisms to stop the production, trafficking and abuse of illicit drugs in our countries,” Alvarez said. Meanwhile, Alvarez asked Aipa member-states to enhance cooperation in the field of law enforcement and the criminal justice system, to raise awareness and educate all sectors of society, especially the youth, and engage local communities, schools and the media to support the realization of a drug-free Asean.

War on drugs

AT the 13th Aifocom meeting, Nacionalista Party Rep. Robert Ace S. Barbers of the Second District of Surigao del Norte said the present administration’s war on drugs has resulted in the voluntary surrender of more than a million drug users. “They can now take advantage of drug-rehabilitation services and be restored to their families and communities. Within less than a year, the government has closed down several illegal-drug laboratories, seized methamphetamine hydrochloride worth P12.49 billion and brought down the crime rate by almost 30 percent,” Barbers said.

Foreign fighters helping IS militants in Marawi–AFP

By Elijah Felice E. Rosales

@alyasjah

he spokesman of the Armed Forces of the Philippines (AFP) on Wednesday confirmed the military has recently encountered foreign fighters in the conflict in Marawi City, Lanao del Sur. AFP Spokesman Restituto F. Padilla Jr. told a news briefing government troops were able to recover two cadavers, which they conclude to be of foreign nationality, in their recent takeover of a Maute Group stronghold in Marawi City. “There were two foreign-looking cadavers that were recovered also [in the area],” Padilla said. “Initially, they said [these were] the remains or could be the remains of a foreign fighter and allegedly a Singaporean. [However], we don’t have yet enough proof to validate this information and we are working to do that along with the police,” Padilla added. Padilla said this development

only strengthens the government’s claim that there are foreign fighters on the side of the Islamic State (IS) militants in Marawi City. Defense officials have earlier reported there were eight foreign fighters killed by security forces in its offensives in Marawi City. It was later confirmed the slain foreign fighters were from Malaysia, Indonesia, Yemen, Saudi Arabia and Chechnya. Defense Undersecretary Ricardo A. David Jr. in June speculated the foreign fighters might have joined the ranks of the IS militants through backdoor channels in the Sulu and Celebes Seas. “They have a backchannel corridor in our country, probably in the area of Sulu and Celebes Seas,

BI chief bans passenger VIP treatment in airports By Joel R. San Juan

@jrsanjuan1573

ureau of Immigration (BI) Commissioner Jaime H. Morente on Wednesday directed immigration personnel to strictly enforce its policy against providing VIP treatment to airport passengers. Morente reminded immigration officers that unauthorized people should not be given access to immigration areas in all the international airports nationwide. The BI chief directed BI Port Operations Division (POD) Marc Red Mariñas to strictly implement the policy and to discipline those who defy the order. In particular, BI officers are barred from escorting or facilitating arriving and departing passengers, either personally or via text messaging or phone calls, for the purpose of expediting the conduct of immigration formalities by immigration

Thursday, July 6, 2017 A3

officers in the counters. The BI chief also reiterated that only BI employees who are on duty, and those who have travel orders, are allowed to be present in or at the premises of any international port of entry at any given time. Morente issued the orders after receiving reports that a well-known personality who arrived on Monday night from Bangkok at the Ninoy Aquino International Airport (Naia) was seen being escorted by a retired policeman. The said escort allegedly wore a passfrom the airport’s pass-control office when he met and accompanied the passenger and escorted him up to the immigration counter of the Naia Terminal 1. Morente said he would ask Naia General Manager Ed Monreal to investigate the incident and take appropriate action to prevent its recurrence.

Meanwhile, in a letter to Morente released to the media on Wednesday, Mariñas identified the passenger as businessman Charlie “Atong” Ang but said no BI immigration personnel escorted him and his companions upon his arrival at the Naia Terminal 1. Ang arrived together with movie personality Gretchen Barreto and company on July 2, at around 7:28 p.m. from Thailand. “Per investigation conducted by terminal concerned, no immigration officers nor any POD or BI employee escorted or assisted said subject on his arrival,” the letter read. Mariñas, however, identified a certain retired SPO4 Ciriaco Peralta, now a media practitioner, as the one who escorted Ang and his companions. Peralta, according to Mariñas, is also reported to be an employee of the Rustan’s retail store.

[through which] they can proceed to Mindanao and link with the terrorist units in the area,” David said. The collapse in security in Mindanao has raised alarm among Southeast Asian nations, as IS militants are purportedly accelerating efforts to establish a caliphate in the region. The Philippines, Indonesia and Malaysia have since then entered into a trilateral maritime patrol to foil further terror attacks and activities within the three countries. Meanwhile, Padilla reported the military has regained Dansalan College in southwest of Marawi City, which was a strategic position previously held by the Maute Group. The school, situated above hills, provides a clear vision of the conflict zone, tactical for sniper positions. Padilla added the takeover of Dansalan College was an operation carried out with extreme caution. “This was a sensitive offensive because government troops had to clear the buildings of any kind of explosives and traps that may have been left by the enemy,” the military spokesman said. On top of this, Padilla confirmed communist rebels are also targets of the martial-law declaration in Mindanao due to the Communist

Party of the Philippines’s (CPP) order to its armed troops to heighten offensives. The CPP instructed the New People’s Army (NPA) to accelerate attacks and recruitment days after Mindanao was placed under military rule. “It’s a tit-for-tat. Why would we not forewarn our men, like what [Defense] Secretary Delfin N. Lorenzana has mentioned, if we know that they [NPA] are leaning forward to attack and destroy our forces?” Padilla said. However, Padilla noted this would not in any way affect the resumption of peace talks between the government and the communists. “It would have been more desirable to have a silencing of the guns while the peace talks is ongoing, but the commitment to continue with the peace talks is there,” the military spokesman said. Fighting between the military and IS militants in Marawi City has been ongoing for more than a month now, with 467 people dead and more than 300,000 residents displaced. Lorenzana on Monday said the military aims to finish the job before President Duterte delivers his second State of the Nation Address on July 24.

Senators support martial-law extension in Marawi By Butch Fernandez @butchfBM

enators signified support for a possible extension of martial law in Marawi should government forces need more time to effectively crush Maute terrorists and restore order in Lanao province. Senate Majority Leader Vicente C. Sotto III, however, clarified the extension will require Congress approval, with members of the Senate and the House of Representatives convening in joint session. For his part, Sen. Joseph Victor G. Ejercito admitted he is “inclined” to support such an extension on condition government forces can accomplish their mission within the timeframe. “If they can guarantee that they will finish the operations in a month or two we can grant it,” Ejercito said, adding, “I am inclined to vote for [an extension].”

Sotto told Senate reporters on Wednesday that should President Duterte decide to extend martial law in Marawi beyond the 60-day period, “then he will have to go to Congress” adding, if that happens lawmakers would need to “have a very wide perspective of why we have to do so and why we need to approve such an extension”. The Senate majority leader also affirmed the possibility that senators and congressmen will be called to convene in joint session, as spelled out in the Constitution’s provision on martial-law options, adding he does not see an extension of the limited martial-law declaration in Marawi being thumbed down. But he said it will depend on how the Executive will present the basis for such an extension. Sotto added, “There is also the possibility… and I’m looking at the possibility that, yes, we might extend but it could probably be limited to Lanao del Sur.”

Aguirre orders NBI to investigate illicit-drug trade inside NBP

USTICE Secretary Vitaliano N. Aguirre II has directed the National Bureau of Investigation (NBI) to look into the reported resurgence of illegal-drug operations at the New Bilibid Prisons (NBP) in Muntilupa City. In his Department Order 457 dated July 4, Aguirre directed NBI Director Dante Gierran to conduct a probe and case build-up on

the resurgence of drug trade and file administrative and criminal charges against those responsible if evidence warrants. “We wanted to get to the bottom of the reported resurgence of the drug trade in the NBP. We acted after verifying raw information provided by concerned individuals. I have said it before and I will say it again, we shall be relentless in fighting and eradicat-

ing the drug menace,” Aguirre said in a statement. Aguirre added he issued the order pursuant to the provisions of Republic Act (RA) 10867, also known as the National Bureau of Investigation Reorganization and Modernization Act, which authorizes the President or the secretary of justice to direct the NBI to undertake investigation of any crime

when public interest so requires. The DOJ chief also directed Gierran to submit an update report on the investigation. Aguirre earlier said he was looking into the possibility that some members of the Special Action Force (SAF) are involved in the resurgence of the illegal-drug trade inside the NBP since they have been guarding the penitentiary for six

months and may have already become familiar with the inmates. Aguirre said the DOJ is eying to change the guards at the NBP by end of July. He said he already talked to SAF Director Benjamin Lusad to change the SAF contingent inside Bilibid, following information that there is a resurgence of illegal-drug trade. It can be recalled that more than

300 SAF men were deployed at the NBP last year in a bid to curb illegaldrug trade inside the facility where 70 percent to 75 percent of the illegal drugs were reportedly being trafficked to various parts of the country. He noted that the resurgence constitutes only about 5 percent to 10 percent as compared to the extent of the previous illegal-drug operations. Joel R. San Juan

Economy

A4 Thursday, July 6, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

DOTr remits P6-B dividends to National Treasury

IVIDENDS remitted to the national coffers from the transportation department amounted to almost half of the total government earnings in May. Of the P14.02 billion transmitted by all government-owned and -controlled corporations, the Department of Transportation (DOTr) turned over more than P6 billion to the National Treasury. The Manila International Airport Authority, the Civil Aviation Authority of the Philippines (Caap) and the Philippine Ports Authority transferred a total of P2.26 billion, P1.98 billion and P1.95 billion worth of dividends, respectively. The figure is around seven times higher than the 2015 remitted dividends. Transportation agencies Cebu Port Authority, which transmitted P295 million, and the Mactan Cebu International Airport Authority, P170 million, are also among the top-remitting corporations for the month. “We are not just a policy-making agency. We are also generating revenue contributing to the National Treasury in order to help fund projects and programs of the administration,” Transportation Secretary Arthur P. Tugade said. He added that his department is determined to transfer all due funds, as he cited the successful remittance of the Caap, which previously failed to transfer P6 billion worth of dividends from 2011 to 2015, as an example of this commitment. “ The DOTr has one of the biggest appropriations and we have some of the most ambitious projects. But, what others do not know is that we are also contributing to the government in every way we can,” Tugade said. In 2016 the DOTr remitted a whopping P25.78 billion to the National Treasury, a bulk of the dividends coming from the the Land Transportation Office’s P 21.35 billion transfer. Lorenz

Christoffer S. Marasigan/Renee Cuisia

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MICT girds for holiday season cargo traffic

he Manila International Container Terminal (MICT) is ready to handle the expected surge in container volume in the upcoming peak season, a senior official assured on Wednesday.

Christian R. Gonzales, senior vice president of the International Container Terminal Services Inc., said he is confident of MICT’s capacity to keep up with development in rising global container traffic. “Global container traffic is slowly

recovering. As a matter of fact, Southeast Asia and North America have posted the highest average growth at 7 percent during the final quarter of last year,” he said. The increase in volume is brought about by the advanced entry of imports before the holiday season.

61% The port-yard utilization as of May this year, which is 9 percentage points below its ideal percentage. Crane productivity maintained an average of 32 moves per hour

The Philippine Ports Authority confirmed that volume growth has been on an upward path since 2015, with utilization and productivity on healthy levels alongside it. Port congestion is not going to be an issue, he said, as MICT saw the congestion problem in 2014 as an avenue to seek long-term solutions for these challenges. The Metro Manila Development Authority’s truck ban in 2014 prevented these vehicles’ movement in major thoroughfares in the Metro. This resulted in a surplus of containers stocked in the terminal. Yard utilization at the port was at 61 percent as of May this year, which

Cimatu order restores ECC processing function to DENR regional offices By Jonathan L. Mayuga

@jonlmayuga

Steel mosaic A group of workers lays down columns of reinforced steel bars, which, after the pouring of high-grade cement, will serve as the columns and foundations to an earthquake-resilient skyscraper in Mandaluyong City.

NONOY LACZA

Modified Adda set for implementation today, MMDA says

DA’s Piñol proposes creation of world food bank in FAO meet

raffic enforcers of the Metropolitan Manila Development Authority (MMDA) are all set to apprehend drivers violating the modified Anti-Distracted Driving Act (Adda), which will take effect today, Thursday. Victor Nuñez, MMDA legal officer, said that they will use high-definition closed circuit television (CCTV) cameras in the performance of their duties, adding that their traffic enforcers were properly trained and briefed on the provisions of the law. The MMDA has more than 300 CCTV cameras installed in major thoroughfares all over Metro Manila. Nuñez also said the MMDA will also utilize its nocontact policy using CCTVs installed in strategic places all over Metro Manila in apprehending violators. Nuñez added the first offense has a fine of P5,000, the second offense goes up to P10,000, while P15,000 for the third offense, including suspension of the driver’s license for three months and P20,000 for the fourth offense, including revocation of the driver’s license. The Metro Manila Council, the MMDA’s policymaking body, in 2002 approved Resolution 02-49, citing the need to improve the system of apprehending traffic violators by way of adopting a no-contact policy in apprehending traffic violators through the use of digital cameras. Under the Adda, motorists are not allowed to use their mobile-communication devices, electronic entertainment and computing gadgets or devices, while vehicles are in motion or temporarily stopped on a traffic light or an intersection. The law prohibits acts, like making or receiving calls, writing, sending or reading text messages, playing games, watching movies, performing calculations, reading e-books and browsing the Internet. Motorists are allowed to use hands-free applications, like Waze, Google Maps and Spotify or gadgets, like dash cams, as long as these do not interfere their line of sight. There are heavier penalties that will be imposed for public-utility vehicle drivers, drivers of school-service vehicles or drivers of a common carrier of flammable or toxic materials. Those caught in violation within a 50-meter radius of a school will be fined P30,000 and driver’s license suspension for three months. PNA

he Philippines has proposed to the members of the United Nation's Food and Agriculture Organization (FAO) the establishment of a food trade system that allow countries to sell their surplus to nations with commodity shortage Agriculture Secretary Emmanuel F. Piñol made the pitch of creating a world food bank, wherein food surplus-producing countries could “deposit” their excess output, while developing countries could “loan out” these produce, during the 40th session of the FAO conference. “The Philippines has proposed the establishment of a unique bank, the World Food Bank, which could receive agricultural products as ‘deposits’ which, in turn, could be ‘loaned out’ to countries suffering from food shortages and famine,” Piñol, who chairs the 40th session of FAO Conference this year, wrote in his Facebook post on Tuesday. “In the concept which I presented, any country producing a food commodity in excess, like wheat, corn, cassava or rice, could submit their excess products inventory to the World Food Bank, which could loan these out to countries where people are suffering from hunger or famine,” Piñol added. Piñol said the food bank would help farmers of countries with surplus production to earn additional income. “For example, Filipino farmers who are producing cassava and corn in excess of what the Philippines need, could be assured of ready market for their products. The government, through the National Food Authority, could buy these products, which, in turn, will inform the World Food Bank of the available stocks,” he said. “Countries suffering from food shortages, on the other hand, would be temporarily relieved of their problem of feeding their hungry population. This early the idea is gaining interest from different

is 9 percentage points below its ideal percentage. Crane productivity maintained an average of 32 moves per hour. “We resolved the issue by putting in place new technologies that would not only upgrade the terminal, but would make MICT a sustainable business factoring in the quality of life of our hinterland communities and immediate environs,” Gonzales said. The planned expansion and capacity improvement efforts for MICT in 2020 are also expected to contribute to volume growth and more efficient operations, with bigger ships expected to unload cargo in the port. Lorenz S. Marasigan, Beatriz Zamora

By Jasper Emmanuel Y. Arcalas @jearcalas

groups which see a lot of benefits both for the food-producing country and the countries suffering from food shortages,” he added. The agriculture chief said FAO Secretary-General Louis Gagnon “promised” to refer the proposal to the technical people of the organization for further study and deliberation. “The idea of the World Food Bank is not a new as this was already discussed in the past, but it was formally presented to the plenary of the 40th Session of the FAO as the world's leaders raised alarm over the increasing number of hungry people in the world,” Piñol said. During the opening of the biennial conference, FAO Director General José Graziano da Silva said the number of hungry people in the world has increased since 2015, reversing years of progress. Da Silva noted that almost 60 percent of the people suffering from hunger in the world live in countries affected by conflict and climate change. “Today more than 800 million people are still chronically undernourished... and, unfortunately, the number has started to grow again,” he said in a statement on Monday. Around 155 million children under 5 are stunted—close to a quarter of the total, while 1.9 billion people are overweight, of which at least 500 million are obese and 2 billion suffer from micronutrient deficiency, he added. Meanwhile, International Food and Agriculture Development President Gilbert Houngbuo warned that “at the current pace, quite frankly the international community is not on track to meet its commitment to Zero Hunger by 2030”. However, Houngbuo added that the goal is still achieveable if nations would act to establish an inclusive and sustainable food systems across the world. “Hunger is often due to poverty and inequality. It is the result of the exclusion of small-scale producers from large-scale food

systems,” Houngbuo said. World Food Programme Executive Director David Beasley echoed da Silva’s sentiments, adding that the achieving zero hunger by 2030 “has zero chances of succeeding in the environment we are living in today.” “Governments have to take actions to reduce conflicts, which are man-made dead-ends on the road to Zero Hunger,” he said. The Zero Hunger Challenge is one of the 17 sustainable development goals set by the UN that aim “to end hunger, eliminate all forms of malnutrition and build inclusive and sustainable food systems” by 2030. The goal outlines that by 2030, the global community must end hunger and ensure access by all people to nutritious and sufficient food all-year round. In addition to this, the world must double its agricultural productivity and incomes of small-scale food producers by 2030. “By 2030 ensure sustainable foodproduction systems and implement resilient agricultural practices that increase productivity and production, that help maintain ecosystems, that strengthen capacit y for adaptation to climate change, extreme weather, drought, flooding and other disasters and that progressively improve land and soil quality,” the UN said. The FAO conference is the organization's highest governing body which reviews and votes on the program of work and budget and discusses priority areas related to food and agriculture. FAO’s top priorities for the next two years include promoting sustainable agriculture, climate-change mitigation and adaptation, poverty reduction, water scarcity, migration and the support of conflictaffected rural livelihoods, as well as ongoing work on nutrition, fisheries, forestry and Antimicrobial Resistance. This is the first time that the Philippines will spearhead the biennial conference.

nvironment Secretary Roy A. Cimatu has given back to Department of Environment and Natural Resources (DENR) regional offices the power to undertake the processing of environmental compliance certificates or ECC, a reversal to former Secretary Regina Paz L. Lopez’s order that centralizes ECC processing to the central office. Department Administrative Order (DAO) 2017-18 signed by Cimatu on Monday aims to address the problem brought about by Lopez’s order as part of a review process covering over 800 ECCs granted or approved by DENR regional offices prior to her appointment as secretary. “In the interest of service and in order to expedite the issuance of ECC in the regional level consistent with the directive of the President to fast-track the issuance of government permits and licenses, DAO 2017-04 is hereby suspended indefinitely,” Cimatu’s order read. This is also the first DAO signed by Cimatu who replaced Lopez after her rejection by the Commission on Appointments recently. With Cimatu’s order, the processing of pending ECC online and/or manual applications can now proceed pursuant to Administrative Order 42, Series 02 and DAO 2016-07. The order also tasked the Environmental Management Bureau (EMB), which is processing the ECC applications to undertake further review of the environmental impact assessment procedures and policies and to recommend to the DENR secretary possible amendments or revisions. To recall, Lopez signed on February 15 DAO 2017-04, titled “the amendment of DAO 201607 dated May 19, 2016 on manual of authorities on technical matters”, which centralizes the processing of all ECC applications. Under the order, the project proponent, specifically of environmentally critical projects, as well as nonenvironmentally critical projects but are situated in environmentally critical areas, needs to get the approval of the Office of the DENR secretary. Hundreds of ECCs are filed every year for various development projects since an ECC is a prerequisite before it can do business or operate. An ECC certifies that the proposed project under consideration will not bring about unacceptable environmental impacts. It also sets conditions which project proponents need to follow. Lopez’s order also highlighted that specific conditions should first be met by project proponents before they are issued ECCs. An official who spoke on condition of anonymity said Cimatu’s order is expected to fasttrack the approval of pending ECCs through the DENR’s regional offices which was the usual practice before Lopez came in.

You can just imagine the burden of reviewing all these ECCs by the DENR central office. The order has caused too much delay to various development projects. Even projects to start a restaurant or canteen business were delayed by Secretary Lopez’s order.”—DENR official

The Regions BusinessMirror

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Editor: Efleda P. Campos • Thursday, July 6, 2017

Telco to build ₧3-B Internet project in ARMM

By Manuel T. Cayon

@awimailbox Mindanao Bureau Chief

AVAO CITY—An AustralianFilipino telecommunications company said it will pursue its P3-billion telecommunications carrier project in the Autonomous Region in Muslim Mindanao (ARMM), which was stopped by the Marawi City crisis, from where it was supposed to start with a rollout project. The ARMM’s Regional Board of Investments (RBOI) said the TierOne Communications International Inc. (TierOne) told the agency it was starting the project still with the rollout activity in Marawi City, but to be done alongside the government’s multibillion-peso rehabilitation of this interior city in Lanao del Sur. Lanao del Sur is one of the two mainland provinces of the ARMM. The other three provinces are the southwestern Mindanao island provinces of Basilan, Sulu and Tawi-Tawi. The ARMM said TierOne “had to reevaluate its business plan” following the Marawi City crisis, triggered by the armed assault on the city on May 23 by Islamic militants led by the Maute Group. While the government was gaining headway in pushing back the attackers, the crisis remained with massive destruction already noted in the city. “Company officials said the rollout program in Marawi City would still be implemented, but in coordination with the rehabilitation and reconstruction program of the government,” the ARMM said.

In the revised plan, the company said it would pilot an interconnection program “by building telecommunication facilities in the ARMM compound in Cotabato City that would serve the regional agencies”. TierOne would eventually cover the entire region “with its P3billion investment, noting there remains a provision for expansion and infusion of additional capital as needed,” the RBOI said. The ARMM said it earlier approved TierOne’s cellular service projects “in 2G, 3G, 4G, LTE and broadband wireless Internet to homes and enterprises, as well as Wi-fi for public or common areas”. ARMM Gov. Mujiv Hataman lauded both the RBOI and TierOne “for pushing forward the project despite the frustrations and setbacks”. “Since the Regional Telecommunications Commission is directly under the Office of the Regional Governor, we would work to make the project a reality in the ARMM,” Hataman.said Lawyer Ishak Mastura, chairman and managing head of RBOI, said the telecommunications

project “particularly the Internet, [should be] a big enabler for private enterprise and provides many job opportunities.” “In today’s interconnected world with the rise of social media, Webbased businesses and a global supply chain using the Internet, such investment in telecommunications by TierOne in the ARMM would make the region more integrated and plugged into the rest of the country, while allowing the region to access and compete in the burgeoning economy of the Asean,” he said. The ARMM said TierOne is 70-percent owned by Filipinos and 30-percent owned by Australians. It obtained a franchise to operate as a telecommunications-service provider from the Regional Legislative Assembly of the ARMM a few years back. “In previous years, we were not able to get a spectrum from the Regional Telecommunications Commission since the National Telecommunications Commission had not allocated the same for the ARMM,” the ARMM Bureau of Public Information quoted Jonathon Bentley Stevens, TierOne president, as saying. “We did not start commercial operations in the region even though we had already put up the initial facilities, such as transmission towers. However, we believe that with the oft-expressed desire of President Duterte to open up the telecommunications sector in the Philippines, this is the right time to restart the project,” he said. The company said it would provide fast Internet service of up to 3,000-kilobytes-per-second download speed. This would allow it to provide coverage for Voice Over Internet Protocol services. The company said the project would also harness the latest technology, such as fiber optics and satellite relay with international gateway facility.

East West Seed conducts media farm tour to showcase assistance to farmers By Verna Mae Barrozo and Mariel Amor Vargas Special to the BusinessMirror

ILIPINO farmers perform the most back-breaking type of labor in the country, but are the second-poorest work force next to fishermen. These reasons alone cause the current generation to avoid pursuing careers in agriculture, thinking that the intensive effort does not amount to the expected monetary reward. Recent data from the Philippine Statistics Authority showed that poverty incidence among farmers hardly see any movement at 38 percent. In 2006 it was at 38.5 percent, 38 percent in 2009 and 38.3 percent in 2012. Despite these, there is profit to be made in vegetable farming, with the Asia-Pacific vegetable market valued at $2 billion and is expected to grow to $3 billion by 2021. There is a huge potential in the agriculture sector, given the global demand for food simultaneously increases with the world’s population growth. Just last year, the world’s population reached 7.3 billion and is expected to reach 9 billion by 2050. To secure global food security, smallholder farmers play an important role of producing 85 percent of the world’s food. Yet, they continue to practise traditional farming that confines their productivity and generation of income. Behind Japan and Vietnam, the Philippines lacks the production volume to supply vegetables in the local market. The question is: How do we capacitate smallholder farmers? Since time immemorial, Filipino farmers have been struggling out of the poverty trap, constantly burdened by the many dimensions

of poverty reinforcing each other, burying them deeper and deeper into destitution. Many still do not own their land; there are inadequate infrastructures to connect them to the market; they remain vulnerable to the vagaries of middlemen and to whims of nature, among many other challenges.

High-yielding quality seeds

THE country’s traditional farming technique does not intend to stay primitive, with companies, such as East West Seed Co., equipping farmers with innovative and efficient methods in agriculture. Founded in 1982 in the Philippines, East West Seed is an integrated vegetable-seed company that strives to rectify these shortcomings by providing high-quality seeds and teaching modern techniques to smallholder farmers. The company produces tropical vegetable varieties of hybrid and pollinated seeds that guarantee the best results for farmers. East West Seed is one of the 10-largest seed companies in the world, ranked first last year in the “Global Index for Vegetable Seed Companies” and “Regional Index for Eastern Africa” by Access to Seeds, an independent organization that scores and ranks seed companies according to their seeds’ quality. East West Seed General Manager Mary Ann Sayoc said the country continues to import vegetables because the vegetable productiongrowth rate fails to meet the local market’s demand for vegetables. “The country’s annual growth for vegetable production is close to 2 percent, not enough to meet even the local demand for vegetables. That is why we still need to import more than $3 million worth of vegetables, which could ideally be supplied by our local farmers,”

she said.

Aid to farmers

EAST WEST currently has three major research stations in the country, with the main office in Luzon and an extensive seed-distribution and farmer network across the country. The company is partnered with roughly 5,000 farmers in the Philippines being assisted through its Knowledge Transfer Program. “Hindi kami nagtatapos by selling. Tinuturuan namin sila sa pests and diseases, modular management. We do recommendations of fertilizer kapag may pests ka [We do not end with selling. We teach the farmers about pests and diseases, modular management. We do recommendations of fertilizer if they have pests],” Farm Ready Business Manager Eduardo Arro said. Farm Ready is a subsidiary of East West Seeds responsible for aiding farmers through growing seedlings in their greenhouse nursery and researching on pests and diseases.

Research and development

THE company has 15 research-anddevelopment (R&D) establishments and 10 seed-processing facilities in seven countries. Its research combines traditional breeding techniques with new technologies in breeding and developing better seeds. In 2016 they invested 12 percent of the company turnover to R&D efforts. “We do a lot of trials on seedling growing, seedling health and seedling quality,” Arro said. Asked what products they would most likely develop the soonest, Arro said they are seeing grafted watermelon in a year or two, and that hopefully, they may be able to introduce grafted tomato indoor within this year.

FISH FEEDING AT HINATUAN ENCHANTED RIVER The staff of the Enchanted River does the regular noontime

feeding of the fishes, the highlight and a public spectacle in the popular river resort park in Hinatuan, Surigao del Sur. The only one of its kind in the country, it is a 40-meter deep abyss-like blue-green spring river brackish water, which has an assortment of fish species and rocks. Known officially as the Hinatuan Enchanted River Underground System, it was closed by the municipal government for two months for cleanup and rehabilitation with the help of the Filipino Cave Divers. Since reopening, swimming at the river’s main pool has been prohibited to ensure its sustainability. The featured destination of the “Anak” television advertisement of the Department of Tourism, Enchanted River is the top tourist attraction of Surigao del Sur, which draws more than 300,000 guests annually. LUALHATI PEREZ

Agbiag party-list solon files bill creating postharvest facilities in PHL towns, cities By Jovee Marie N. dela Cruz @joveemarie

PARTY-LIST lawmaker is pushing for a measure proposing the construction of postharvest facilities in every riceproducing municipality and city in the country. Filing House Bill (HB) 5916, Party-list Rep. Michelle Antonio of Agbiag said the construction of postharvest facilities, such as warehouses and rice mills, is a big help to farmers. Aside from the construction of warehouses and rice mills, HB 5916 also seeks to provide these facilities with the necessary equipment and machinery to make them

fully operational. Under the bill, all of these will be sold to accredited farmers’ cooperatives, which will be given 25 years to amortize the facilities without interest. Antonio, citing a 2010 study conducted by the Philippine Center for Postharvest Development and Mechanization (PhilMech) and the Philippine Rice Research Institute (PhilRice), said 16.47 percent of grain losses are incurred during postharvest activities. In order to reduce t hese, she said Filipino rice farmers must replace traditional methods, like highway drying, with more advanced procedures like

Bodies of 2 Vietnamese seamen found in Basilan

ILLAGERS found on Wednesday the decapitated bodies of two Vietnamese in Sumisip, Basilan, after they were left by unknown suspects, the military reported. Armed Forces Western Mindanao Command (Westmincom) Spokesman Capt. Jo-Ann Petinglay said the bodies, found in Barangay Tumahubong, were identified as those of Hoang Thong and Hoang Va Hai. The victims were among the six crew members of the Vietnamese MV Royal 16 cargo vessel forcibly taken on November 11, 2016, in the seawaters southeast of Sibago Island. “ T he bodies were found at 5:40 a.m. by a member of the local populace,” said Colonel Juvymax Uy, commander of the military’s Joint Task Force (JTF) Basilan. “The cadavers will undergo forensic exams as coordination with the Vietnamese embassy is also simultaneously done.” As of this writing, soldiers and policemen in Basilan were still getting additional information about the incident. “We grieve as we strongly condemn the barbaric beheading of two more kidnap victims in Basilan province. For months now, many sectors in society, including the Armed Forces of the Philippines and the Philippine National Police, exhausted all efforts to rescue these kidnap

victims who were still in the hands of the ASG[Abu Sayyaf Group],” Westmincom commander Lt. Gen. Carlito Galvez Jr. said. “Westmincom commiserates with the bereaved family and friends of the victims. In no way does the Abu Sayyaf Group represent our Muslim brothers who are true followers of Islam,” he said. Aside from Thong and Va Hai, the other crewmen kidnapped by the ASG were identified as Pham Minh Tuan, Do Trung Hieu, Hoang Vo and Tran Khac Dung. Last month operating troops from JTF Basilan rescued Vo, 28, at Sitio Kumonal, Sampinit Complex, Sumisip. The whereabouts of the three remaining Vietnamese remains unknown and is the subject of the ongoing rescue operations by troops in Basilan. Meanwhile, a combined team of the military and the police seized on Wednesday five high-powered firearms and arrested members of the Bangsamoro Islamic Freedom Fighters (BIFF) during an hour-long clash at Barangay Mangadeg, Datu Paglas, Maguindanao. Col. Bismarck Soliba, commander of the First Mechanized Infantry Brigade, said the operation was launched to protect villagers from the atrocities of the BIFF. Rene Acosta

mechanized drying and harvesting. “Farmers remain the poorest in our society. It is high time we give them the assistance they need by making appropriate technologies and facilities available to them at every stage of rice production, and this necessarily entails providing them postharvest support,” Antonio said. Antonio added that her proposal encourages the farmers to form cooperatives that will eventually own and control the postharvest facilities. “The farmers’ control and ownership of these facilities will increase their income significantly,” she said.

Seven soldiers slain in NPA ambush in Compostela Valley

HE New People’s Army (NPA) killed seven Army soldiers in an ambush staged by guerrillas in Sitio Quarry Benguet, Barangay Salvacion, Monkayo, Compostela Valley, on July 1. Roel Agustin II, spokesman of the NPA-Compostela Valley-Davao East Coast Sub-Regional Operations Command, said a company of NPA fighters clashed with a scout platoon of the 25th Infantry Battalion (IB) of the Philippine Army, killing seven soldiers and wounding several others. “The NPA confiscated one R4 assault rifle, seven military packs, one military Riflescope and hundreds of rounds of ammunition for M60 and K3 machine guns,” Agustin said. On June 12 NPA guerrillas also blasted the detachment of the 25th IB in Barangay Rizal and demolished a detachment of the 72nd IB in Sitio Dipo, Barangay Upper Ulip, on June 22. “In retaliation, the military immediately shelled the civilian areas with 105-millimeter howitzer rounds for two straight days. MG-520 attack helicopters also conducted bombing runs on nearby villages six times, while Army soldiers burned nine houses of peasants and Lumad in Sitio 56, Barangay Rizal,” Agustin said. Marvyn N. Benaning

TheBroa

Business

Thursday, July 6, 2017

Will th advert copycat step

By Roger Pe

Valeriy Kachaev/dreamstime.com

ACK in the early ’90s, when Philippine advertising entered a new phase and ads that were called malinis—clean, produced with polish but not exactly compelling—were no longer potential award winners, ad agency people shelled out cash every payday.

They made payments to a “Mrs. Salta,” a businesswoman who peddled rare-to-find advertising creativity books. Mrs. Salta became a fixture in the Philippine Madison Avenue firmament during that time. She made glossy, imported books affordable by offering “6-drops,” or installment, relative to one’s capacity to pay. It was safe to say that most people who worked in an advertising agency knew Mrs. Salta. The security guards, receptionists, accounting people, people in the creative department, including secretaries and, yes, even the suits and industry chi-chi crowd, knew of her. She was completely the antithesis of the ambulant tocino suki (regular customer of preserved sweet pork) who visited Makati offices often. She dressed to the nines and did it with style. She had a bodyguard who always carried bags of them, and she had a shimmering white van parked somewhere near her place of business.

Best-seller mobile

CREATIVE department secretaries would suddenly seek Mrs. Salta upon the request of concept teams who were experiencing a drought of ideas. For those who had plenty of cash to spare and wanted tomes of them, she would gladly escort them to her splendid vehicle, to let them see her other stuff not available in any bookstore in the Philippines. Mrs. Salta became a buzzword so much so that she was made into a character, a parody account in an advertising rant site “Café Creatives.” Though people forgot her given name and remembered only her family name, she became more popular than the advertising association’s president. Her best sellers included The Art Directors Annual, which was very thick, one could knock an unusually big rat out using it. There’s also The One Show, a copywriter’s dream; Epica, for those who wanted to poke their noses on what’s hot in Europe; and, the Communication Arts series—they bombed but made most art directors drool. As soon as the security guard at the lobby hollered, “Mrs. Salta is in the building premises, show up or hide now!,” people reached for their pagers, the communications gadgets before the cell phone entered the market.

God’s gift

MRS. Salta’s goods sold more than hotcakes.

Whether a few months delayed, or hot off the press, they brought some kind of approval from industry colleagues. They made the guy next to your cubicle envy, a magnet to many: the cantankerous, introverts and other characters inhabiting the creative department. A product of Mrs. Salta on your table erased people’s initial impression of you: that you were not a run-of-the-mill hire and you had taste in your bones itching to surface. Some say Mrs. Salta was advertising God’s gift to advertising. “When all you see were tiring product freights and boring manufacturer’s copy lines, ‘Mrs. Salta’ was an oasis in the middle of a creative desert. You call her and she brings in books, pronto,” a former copywriter, now a top creative director, said. “Her wares inspired many. Sadly, some creative people ended up copying stuff from the books she sold.” When the Internet got a little faster and www.adsoftheworld.com and its derivative sites entered the scene, Mrs. Salta’s books faded into the night. They became remnants of the past and gathered dust, along with the old trophies of the Ad Congress. She, too, gently exited out of the picture.

Giants’ shoulders

SOME of us have been in advertising long enough to see the many transformations in the industry. Though the digital divide may have rendered some of us into dinosaurs, many have crossed over and felt like a digital native. In a volatile industry where innovation and change continue to alter our landscape, one thing remained constant. Agency old timers, and even the millennial generation, were taught to value creativity and honor—expressing disdain from copying one’s work, confusing the public and misleading consumers. Some would invoke the adage “Great minds think alike,” and believe in the spin that people have put into an idea as “innovation.” In David Kord Murray’s book Borrowing Brilliance, the author revealed: “Brilliance is borrowed and that in order to create, first, you have to copy.” Many famous men were accused of ripping other people’s work—Newton, Shakespeare, Helen Keller, J.K. Rowling, T.S. Eliot, Jane Goodall, Bill Gates, Steve Jobs, the guys from Google. Their ideas were alleged to have been

constructed from borrowed ideas. Even Newton admitted guilt, saying to “see farther,” he stood “on the shoulders of giants and built on the ideas of others.”

Valuable asset

CREATIVITY for brands is a valuable asset. Though philosophers have time and again argued that “ideas give birth to other ideas,” one is tempted to ask: “Does that give license to one to copy someone else’s work?” The term Renaissance during the 14th century means creative explosion. Artists during the earlier part of this wonderful period were obligated to improve the original, to give a rebirth of some sort to the stale status quo. Innovation and collaborative efforts in which one idea was copied and given with enhancements were the rule of the day. Copying was understood and expected. But soon after, the free-market economy began to develop and artists began to break away from their patrons and sell their artwork independently. Michelangelo and Da Vinci, among them, signed their masterpieces against copycats and frauds. Copying and plagiarism were now condemned. Furthermore, Murray explained, “We are forced to conceal or disguise the source of our ideas for fear of social or legal retribution. No one wants to admit for fear of being labeled as a plagiarist or idea thief.” Today, whether one is an advertising industry veteran or greenhorn, one can see a virtual rip-off, tweaked or derived from another idea within the universe that he or she moves. One gets queasy and, much more, dismayed at the sight of an ad with an uncanny similarity to the one that you once encountered. In an industry that honors creativity and originality, we are often silent about the latter.

Déjà vu

RECENTLY, we had a spate of déjà vu. Take a Vodafone TV commercial in 2014 for one. Touching and emotional, this one from Jung von Matt advertising agency in Germany manages to be moving without being mushy. A young girl crosses items off her grandfather’s bucket list and, through the magic of her Vodafone, takes them to a bird’s-eye view of her jumping in a swimming pool diving platform, eat-

aderLook he next rtising t please p up?

sMirror

Alexandr Sidorov/dreamstime.com

www.businessmirror.com.ph | Thursday, July 6, 2017

ing creepy bugs and testing her land-speed record. The granddaughter lets grandpa know she’s been enjoying every second of her trip. The bucket list “crossing out” scene is the highlight of the ad as it is repeated at least four times as the commercial progresses. In a recent local television commercial, a sense of déjà vu creeps in. Except for the change of characters, the story is virtually the same. The granddaughter now becomes a young man. The elderly man becomes an elderly woman. The opening shot is basically the same (guy in the mountain). The “crossing out” scene is there all over. Another is the corporate brand identity of a UK company (2014), which has a triangular shape and the color elements of the logo are in bright primary and secondary colors. Two years later, we see a corporate brand identity of a highprofile local company an almost exact replica of the UK firm’s logo. Likewise, a fast-food TV commercial in 2007 is echoed in a fastfood TV commercial a decade later.

Ekaterina Muzyka/dreamstime.com

Theft, coincidence

WHERE’S the line between theft and coincidence in similar creative ideas? Recently, some ad veterans were noticing—and lamenting— the similarities between Nike’s 1995 “If You Let Me Play” ad and Kaiser Permanente’s (KP) “My Future” ad that ran during the recent summer Olympics. Yes, the two commercials have much in common. And the Kaiser ad is many degrees inferior to the Nike spot. For those of you who weren’t in this business 20 years ago, it’s hard to overstate how admired, lauded and inspirational the Nike “If You Let Me Play” ad was, not just for its intended audience but to the ad industry as a whole. It’s one of the ads that made me want to get into the business and attempt to do that caliber of work. So for advertising people of a certain generation, alarm bells went off when watching the Kaiser spot. Was the latter a blatant ripoff, a heartfelt homage or a mere coincidence? This writer doesn’t claim to know how this happened; he’s been in advertising long enough to know that ad ideas often share attributes with work that’s been previously done. The writer is likewise not interested in assigning blame here. He’s much more interested in the nuances of the decision-making process involved because it’s a window into the current state of creativity in advertising and marketing.

Not easy

DID somebody know about the similarities in the KP spot before it got filmed? By “somebody” means anyone including the creative team, creative directors, account executives, agency management, producers, directors and all those associated in the layers of client marketers. There are only three basic scenarios to explain what happened: First, somebody knew there was a similarity and didn’t speak up. The KP piece was a TV spot running during the Olympics. There’s a lot at stake for all involved. “Let’s hope no one really notices” is a quiet thought in the minds of many ad professionals when they’re pursuing an idea that could backfire. Someone could’ve also noticed similarities a little further down the timeline—after concepts were approved, budgets were determined, and the production hairball began rolling down the mountain. Is it better to remain silent than be the voice that derails a major project? You try putting on the brakes with millions of dollars involved: It’s not easy.

Post-It note

A SECOND scenario could be that somebody knew there was a similarity and did, in vain, speak up. “You know, that idea kind of reminds me of….” I’ve heard that a bunch and have said so sometimes, too. That kind of reservation can fall on deaf ears. Perhaps a less forceful team member who voiced objections was slapped down and told to shut up. We cannot underestimate the collective power of a bunch of people in a conference room to justify bad decisions or pretend the elephant in the room doesn’t really exist. And don’t underestimate the power of a C-level client executive who says, “You know, I’d love to do a spot like this one,” as he or she sends YouTube links out to underlings and the agency. For client-side marketers, their careers go merrily on even when encouraging or approving derivative advertising. Faced with a similar situation, many people in our business would state out loud that they don’t care if a proposed ad resembled an older one. Think of how easily it could be justified: a change in target audience or product category could be enough differentiation in their eyes. It’s no wonder the advertising industry’s code of ethics would fit on a Post-It note. A third scenario could be nobody knew there was a similarity between the Nike and the KP ads. Were the entire team of agency and client folks working on the

KP ad simply unaware of the Nike spot? It might sound far-fetched but, yes, it’s possible.

Chuck Berry

THIS writer has taught aspiring copywriters who knew next to nothing about the ad industry and its history. Hell, they didn’t even watch Mad Men. Don’t assume that junior creatives have ever perused the dusty copies of the Communications Arts and One Show annuals Mrs. Salta sold and line the bookshelves in the remote corners of agencies. Plus, our digital world has left old-school advertising uncatalogued. While YouTube is a good repository of many old commercials, there’s no organization to it. Good luck trying to find high-resolution images of old print ads the ad world used to celebrate. Many people currently working in advertising and marketing simply don’t bother to learn about anything that was produced even a few years ago. If they do learn, the old work is deemed not sacrosanct that it couldn’t be copied in some regard. And there are, of course, degrees of rip-off: a copy line, unique visual, commercial plot, app idea, style, film technique or strategy. Some people merely look at ads from today and no matter how small the detail, it reminds them of some ad long forgotten by much of the world. This doesn’t just happen in advertising. All art forms have this type of conflict. Just ask Chuck Berry.

No penalties

WE’RE in an era in which many new marketing firms have popped up—content marketing firms, consultancies, digital and social-media companies, etc.—whose leaders regularly disdain the very idea of “advertising” and declare that it’s dead. For them, even a vaunted Nike ad isn’t a sacred cow. So what happens now with this particular Kaiser Permanente spot? A whole lot of nothing, that’s what. Other than the kangaroo court of advertising insiders as jurors, there is no real punishment for ripping off someone else’s advertising unless there’s a legitimate copyright issue. And these are rare. Unfortunately, there will never be a consensus as to what a rip-off is or what’s fair game for appropriation. Crying foul will only generate crocodile tears. So we’ll continue to see new work that feels familiar or derivative. Even if it means producing a commercial that recalls a great Nike spot. Because some people just get away with it when they just do it.

Thursday, July 6, 2017

The World BusinessMirror

India’s Modi seeks to break barriers in trade and history in Israel visit

ERUSALEM—Prime Minister Benjamin Netanyahu has long argued that, far from being diplomatically isolated because of its policies toward the Palestinians, Israel is constantly being courted by countries seeking help in technology, intelligence and counterterrorism.

That narrative was reinforced on Tuesday when Prime Minister Narendra Modi of India arrived in Israel for a three-day visit—the first by an Indian premier in the 25 years since the two countries established full diplomatic relations. “We’ve been waiting for you a long time. We’ve been waiting nearly 70 years, in fact”, since the state of Israel was established, Netanyahu said in his welcoming remarks at the airport. Israel and India already share extensive defense ties, and India recently agreed to buy about $2 billion worth of Israeli missiles and air-defense systems, the largest order in Israel’s history, experts said. The two countries are now looking to expand trade and cooperation in areas, like agriculture and water management. India has long embraced the Palestinian cause and kept its distance from Israel to protect its interests in the Arab world. But Modi seems as eager as Netanyahu to delink Israel from the Palestinian question and, notably, will not be combining his trip with a courtesy visit to the Palestinian Authority. Hundreds of guests were invited to greet Modi at a red-carpet ceremony at the airport. Netanyahu has described him as “my friend”, and both have hailed the visit as “historic”. Israel, a sliver of a country, has a population of 8.5 million, while India is a vast land with a population of 1.3 billion. Despite the apparent mismatch, both have developed as vibrant democracies in adverse conditions and have many joint interests.

$1B The amount of weapons procurement India makes from Israel each year

“We have the same enemy— radical Islam,” said Efraim Inbar of the Begin-Sadat Center for Strategic Studies at Bar-Ilan University near Tel Aviv. “Like us, they live in a difficult neighborhood,” he added, alluding to Pakistan and China. Inbar said Indian weapons procurements from Israel amounted to more than $1 billion a year, and that the countries make “good partners” in other areas of security and innovation. “ The sky is the limit in this relationship,” he added, with India now an economic power and the strength of the Arab world declining. “We are just scratching the surface.” For India, the visit is the culmination of a gradual policy pivot. P.R. Kumaraswamy, a professor of international affairs at Jawaharlal Nehru University in New Delhi and the author of India’s Israel Policy, compared it to a clandestine love affair that has, at last, been brought out into the open. “You have a relationship, but you are not ready to admit it in public,” Kumaraswamy said. “If

Indian Prime Minister Narendra Modi (left) and Israeli Prime Minister Benjamin Netanyahu embrace during a welcome ceremony upon Modi’s arrival in Ben Gurion airport near Tel Aviv, Israel, on July 4. AP/Ariel Schalit

I’m going to have an affair with a woman, I’m not going to make her part of all my decision-making. But if you marry a person, it’s the whole package: Where you want to live, how you see your life 20 years from today.” India’s position traces back to the last days of the British R aj, when its nationalist leaders saw common cause with the post colonial Arab world. With independence came a far more practical consideration: The ruling Indian National Congress party was desperate to secure the loyalty of India’s large Muslim minority, which was also being wooed by the Muslim League. New Delhi did not recognize

the Jewish state until 1950, two years after its establishment. The militaries of the two countries steadily built ties starting in the 1980s, as India sought suppliers outside the Soviet bloc, but the two governments did not establish full diplomatic relations until 1992, under Prime Minister P.V. Narasimha Rao. “When the Cold War ended, India had to say, ‘I know there is a new world,’ and the most effective way of doing this is establishing relations with Israel,” Kumaraswamy said. “By changing the relations, he said, ‘I am breaking from the past.’” For Mod i , t h i s v i sit ser ves a si m i l a r pu r pose. Un l i ke it s

nemesis, the socialist Congress Par t y, his Hindu nat iona l ist par t y has a lways arg ued for bet ter rel at ions w it h Israel. Kumaraswamy added Modi hopes his v isit w il l a l low India to gain access to both civ ilian and militar y technolog y. “At a much larger level, by coming out into the open, by visiting Israel and not Palestine, he is going to communicate the message that Israel is part of the Middle East,” he said. “He is normalizing Israel as part of the larger Middle East.” Modi met the Palestinian president, Mahmoud Abbas, in New Delhi in May, and assured him of India’s “unwavering support” for the Palestinian cause and for the “realization of a sovereign, independent, united and viable Palestine, coexisting peacefully with Israel”. Modi ’s first stop, after the airport, was an Israeli floriculture farm in exports cut flowers to more than 60 countries. He was then expected to visit Yad Vashem, Israel’s official Holocaust memorial. At a large event on Wednesday for the Indian community in Israel, Modi was expected to meet Moshe Holtzberg, an Israeli boy who, as a toddler, was spirited out of the Chabad-Lubavitch Jewish center in Mumbai by his Indian nanny during a deadly terrorist attack in 2008. Moshe’s parents, who operated the center, were killed along with four other hostages. Moshe and his nanny came to live in Israel. K abir Taneja, an associate fellow at the Observer Research Foundation, a New Delhi think tank, said the meeting was likely to be significant because the siege on the Chabad center “cemented a certain narrative between India and Israel on counterterrorism”. Shortly before Modi landed, Israeli police announced they had thwarted an attack after arresting six Palestinian suspects in a vehicle at a West Bank checkpoint. The police said a bag in the vehicle contained knives, stun grenades and materials for firebombs, and that the suspects had been heading for Jerusalem. New York Times News Service

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briefs Laptop ban on flights to US lifted at Istanbul airport

ANKARA, Turkey—Turkish media reports said a ban on carrying electronic devices on flights from Istanbul to the US has been lifted. The state-run Anadolu Agency reported last Wednesday that passengers were allowed on board a New York-bound Turkish Airlines flight carrying their laptops and other devices. Turkish officials had said last Tuesday that the ban would be lifted after a delegation of US security officials carried out inspections. Last week Turkey began using hightechnology tomography devices to scan luggage at Istanbul’s Ataturk International Airport. It was not immediately clear what other security measures were taken. The US imposed the laptop ban in March on flights from Istanbul and nine other airports in the Middle East. AP

China invites foreign experts to treat Nobel laureate Liu

BEIJING—China has invited liver-cancer experts from the US, Germany and other countries to join a medical team treating imprisoned Nobel Peace Prize laureate Liu Xiaobo, authorities said last Wednesday. The judicial bureau in the city where Liu is being treated said Liu’s medical team agreed to a request by Liu’s family members for foreign experts to be consulted. Liu, China’s best-known political prisoner, is being treated at a Shenyang hospital for late-stage liver cancer diagnosed in late-May. The bureau added in an online statement that the invited experts were “the most authoritative liver-cancer treatment experts”, but gave no other details. AP

300 I.S. fighters holed up in Mosul

MOSUL, Iraq—An Iraqi commander says he believes some 300 Islamic State (IS) fighters remain in the small patch of territory still controlled by the group in Mosul’s Old City. Lieutenant General Sami al-Aridi of Iraq’s special forces said last Wednesday that the militants are confined to a 500-square-meter area. He spoke the day after Iraq’s Prime Minister Haider al-Abadi congratulated the armed forces on a “big victory” in Mosul, despite ongoing clashes. The IS captured Mosul in a matter of days when it swept across northern and central Iraq in the summer of 2014. Iraqi forces backed by a US-led coalition launched a major operation to retake the city in October. AP

Floods kill 20 in India, leave thousands homeless

GAUHATI, India—Heavy rains since the start of India’s monsoon season have triggered floods and landslides in parts of India’s remote northeastern region, causing at least 20 deaths. The Assam state Disaster Management Authority says people have drowned or suffered fatal injuries from collapsed homes. AP

Iraq’s PM commends troops In Syria’s Raqqa, Old City wall a testament to glorious days on ‘big victory’ in Mosul B

OSUL, Iraq—Iraq’s prime minister on Tuesday congratulated his fighters on “the big victory in Mosul”—even as fighting with Islamic State (IS) militants continued in Mosul’s Old City neighborhood where Iraqi forces are about 250 meters from the Tigris River and facing increasingly fierce resistance. Haider al-Abadi spoke during a news conference in Baghdad, less than a week after he declared an end to the IS’s selfstyled caliphate after Iraqi forces achieved an incremental win by retaking the landmark al-Nuri Mosque in the Old City. “Praise be to God, we managed to liberate [Mosul] and proved the others were wrong, the people of Mosul supported and stood with our security forces against terrorism,” al-Abadi said. H i s re m a r k s c a m e o n t h e t h i rd anniversary of IS leader Abu Bakr alBaghdadi’s sermon at the al-Nuri Mosque, from where he declared an Islamic caliphate on IS-held lands in Syria and Iraq. Also during the news conference, alAbadi added he has given instructions to rebuild and stabilize areas of the city already freed from the militant group. Inside Mosul’s Old City, civilians fleeing Iraqi advance are increasingly desperate. The elderly and weak are carried across mounds of rubble in blankets. Soldiers—increasingly fearful of the Old City’s inhabitants after a string of suicide bombings—hurry the groups along.

A middle-aged woman with a gaunt, pale face fainted as she fled past the destroyed al-Nuri Mosque. Two soldiers carried her to the roadside and tried to revive her with cold water. Largely cut off from food and water for months, humanitarian groups are reporting a spike in the number of displaced people suffering from malnutrition and dehydration. “None of the previous battles were like this,” said Iraqi Major Faris Aboud, working at a small field hospital just outside the Old City. “In a single day we received 300 wounded,” Aboud, a father of three, continued. “For me, seeing the wounded children is the hardest. We see children who have lost their entire families under the rubble, they have no one now.” L i e u te n a nt g e n e ra l Ab d e l G h a n i al-Asadi, of Iraq’s special forces, said earlier in the day that Iraqi forces are just 250 meters from the Tigris River, in the western half of Mosul. The Tigris divides the city roughly into its western and eastern half, which was liberated from IS militants back in January. IS militants who remain trapped in just a few hundred meters of territory in the Old City are now in a “fight to the death”, al-Asadi said, adding IS fighters are increasingly resorting to suicide bombings and that he expects the fighting to get even heavier as they are pushed closer to the river. AP

EIRUT—The Old City wall of Syria’s Raqqa that was the scene of intense fighting last Tuesday in the battle against the Islamic State (IS) group was once a testament to the golden age of Islamic civilization, when the city on the banks of the Euphrates River was the capital of the famed caliph Harun al-Rashid. The 1,300-year-old structure was breached by US-backed Syrian opposition forces trying to capture Raqqa, who brought the fight closer to the heart of the ISheld city. The IS militants fortified their positions, booby-trapping the 2,500-meter-long Old City wall—or the Rafiqah Wall—to protect their de facto capital. The US military said warplanes hit “two small portions” of the wall to allow allies from the Kurdishled Syrian Democratic forces to push through. The wall was built to protect R afiqah, or “Companion” in Arabic—an 8th-centur y garrison tow n built in the late-1700s next to the city of R aqqa, on t he road bet ween Da m a sc u s and Baghd ad. T he tow n was modeled after Baghdad, then the newly built capital of the Abbassid Dynasty. “The wall and the gate are major surviving monuments dating back to [Raqqa’s] great’s Islamic

This image posted online on March 22, 2015, by the Islamic State group, shows the Old City wall of Raqqa. The wall built around Rafiqah, the 8th-century garrison town built next to Raqqa, was breached by US-backed Syrian fighters on July 3. Islamic State media via AP

past,” said Amr Al-Azm, a former Sy rian antiquit y official who currently teaches Middle Eastern history at Shawnee State University in Ohio. The horseshoe-shaped town with its wall on the southern edge of Raqqa was chosen as the imperial residence of al-Rashid, the fifth Abassid Caliph well known for his “One Thousand and One Nights” tales. Al-Rashid built a complex of palaces to the north and several canals, and held horse races at Raqqa’s hippodrome. The famous Raqqa pottery thrived to serve the new residents.

Al-Rashid ’s predecessor had ordered the building of a garrison town to protect the Abbasid dynasty from the Byzantine Empire. It was also at an important crossroads between the Euphrates and the Khabur River, which originates in Turkey. Originally stretching 5,000 meters, now only half of the wall remains. According to archeologists, the Old City had three gates and multiple defensive layers, including a wide moat, an outer wall and another inner one. On Tuesday US-backed fighters entered through the Baghdad Gate, while others deployed

around the area of Qasr al-Banat, or Girls’ Palace, in the Old City, checking for land mines and IS m i l it a nt s. Little is known about the Girls’ Palace or when it was exactly built. The UN Educational, Scientific and Cultural Organization calls it “enigmatic”, and archeologists disagree over when it was built, some saying around the 12th century. The Old City was destroyed by the attacking Mongols by mid13th century and never regained its past glory. Most of the remaining wall and the gates have been extensively restored in modern day Syria, according to Al-Azm. AP

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Thursday, July 6, 2017

US confirms N. Korea fired ICBM S

EOUL, South Korea—The Trump administration on Tuesday confirmed North Korea’s claim that it had launched an intercontinental ballistic missile (ICBM), and it told Pyongyang that the United States would use “the full range of capabilities at our disposal against the growing threat”. The administration followed up that warning on Wednesday morning with a joint military exercise in which US and South Korean forces fired ballistic missiles in the waters along the Korean Peninsula’s east coast. But North Korea reaffirmed on Wednesday that it would never deviate from its determination to bolster its nuclear and missile capabilities as long as the US’s “hostile policy” and “nuclear threat” persisted. The North’s state-run Korean Central News Agency (KCNA) said its new ICBM, the Hwasong-14, was capable of hitting the “heart of the United States” with “large, heavy nuclear warheads”. The launch, according to the agency, successfully tested the functions of the missile’s two propulsive stages and the warhead’s ability to endure the intense heat and vibrations as it entered the Earth’s atmosphere. On Wednesday morning North Korea’s leader, Kim Jong Un, taunted the US, saying the launch was a Fourth of July “gift” to the Trump administration. The KCNA said the country’s citizens were happy with the “great timing” of their leader’s decision to “hit the arrogant Americans in the nose” by conducting the first ICBM test to coincide with Independence Day. “The American bastards must be quite unhappy after closely watching our strategic decision,” the news agency quoted Kim as saying after watching the missile test on Tuesday. “I guess they are not too happy with the gift package we sent them for the occasion of their Independence Day. We should often send them gift pack-

578 miles The distance the North Korean missile flew before landing in the sea between North Korea and Japan ages so they won’t be too bored.” Kim made those remarks “with a guffaw”, the news agency said. The joint missile exercise by the US and South Korea was first proposed by the South Korean President Moon Jae-in and endorsed by President Donald J. Trump, Moon’s office said. Acting on a US request, the UN Security Council, which has repeatedly penalized North Korea over its violations of a ban on nuclear and missile testing, was set to meet in an emergency session on Wednesday afternoon. UN Secretary-General António Guterres sharply criticized the North Korean launch. “This action is yet another brazen violation of Security Council resolutions and constitutes a dangerous escalation of the situation,” he said in a statement. Guterres called on North Korea to “cease further provocative actions and comply fully with its international obligations”. The North Korean missile departed the Banghyon airfield in the northwestern town of Kusong and flew 578 miles before landing in the sea between North Korea and Japan, the South Korean military said in a statement. The US military said it remained aloft for 37 minutes. While the North has made sig-

This image made from video of a news bulletin aired by North Korea’s KRT on July 4 shows what was said to be the launch of a Hwasong-14 intercontinental ballistic missile in North Korea’s northwest. KRT via AP Video

nificant progress in its weapons programs, experts believe it cannot make nuclear warheads small enough to be mounted on ICBMs. Still, US policymakers have long seen just the development of an ICBM as a critical threshold the North should not be allowed to cross. The missile test adds a volatile new element to the Trump administration’s efforts to curb North Korea’s nuclear ambitions, which have included naval drills off the Korean Peninsula and pressure on China, Pyongyang’s longtime ally. In a blunt phone call last Sunday, Trump warned President Xi Jinping of China that the US was prepared to act alone against North Korea. If the missile took 37 minutes to f ly 578 miles, that would mean it had a high trajectory, probably reaching an altitude of more than 1,700 miles, said David Wright, codirector of the Global Security Program at the Union of Concerned Scientists. Such a missile would have a maximum range of roughly 4,160 miles, or 6,700 kilometers, on a standard trajectory, he said. North Korea said the missile flew for 39 minutes. “That range would not be enough to reach the lower

48 states or the large islands of Hawaii, but would allow it to reach all of Alaska,” Wright wrote in a blog post. But analysts also cautioned that although they had been impressed by the rapid and steady progress in the North’s missile programs, the long flight time itself did not suggest that North Korea had mastered the complex technologies needed to build a reliable nucleartipped ICBM, like the know-how to separate the nuclear warhead and guide it to its target. By lofting some of its recent missiles to higher altitudes and letting them crash toward the Earth at greater speeds, North Korea has claimed that it tested its “reentry” technology, which can protect a nuclear warhead from intense heat and vibrations as it crashes through the atmosphere. North Korea announced the missile launch in a broadcast on state television after a series of patriotic music videos. “As a proud nuclear power that possesses not only nuclear weapons, but also the most powerful ICBM that can target any part of the world, North Korea will root out the United States’s threat and blackmail of nuclear war and solidly defend the peace and stability

After years of growth, carmakers are cutting US jobs

ETROI T—A f ter a pro longed recovery that culminated in two years of record sales, the American auto industry is slowing down, with fewer buyers in dealer showrooms and fewer workers on the factory floor. Automakers said this week that sales dropped in June for a sixth consecutive month, falling by 3 percent from a year ago, a trend that analysts do not see letting up anytime soon. And as demand falls, there is less work in the nation’s auto-assembly plants—primarily those that build traditional passenger cars. Last year those plants hit a peak of 211,000 workers, a 55-percent increase since the depths of the recession in 2009. That figure has dropped by more than 2 percent so far this year, to 206,000 workers in April, according to the Bureau of Labor Statistics, and could shrink further as sales continue to fall. “There’s been a consistent reduction in plant output in the last six months, and what is ahead in the next six months could be pretty startling,” said Ron Harbour, an auto manufacturing expert at the consulting firm Oliver Wyman. The decline signals at least a pause in Detroit’s resurgence from the dark days of the financial crisis, which General Motors and Chrysler survived only through bankruptcy and bailouts.

It’s happening despite President Donald J. Trump’s promises to pressure automakers to save and create good-paying US factor y jobs. Industry analysts said consumers might be pulling back on spending because of tighter credit conditions and more expensive vehicle loans. “Higher interest rates and uncertainty around fiscal policies will slow economic growth, and may become headwinds for auto sales,” said Charlie Chesbrough, an economist for the research firm Cox Automotive. The impact on employment is uneven, however, reflecting the evolving tastes of US car buyers. With low gas prices motivating buyers to trade in traditional cars for larger models, factories making trucks and sport utility vehicles are humming, with some producing around the clock on three shifts. Even as overall vehicle sales declined in June, sales of trucks and sport-utility vehicles (SUVs) rose about 4 percent from a year earlier. That consumer trend is playing out in the opposite direction at plants building small and midsize cars, which are scaling back or shutting down entirely while they are converted to produce trucks and SUVs. What none of the automakers are doing is building new plants

or adding a significant number of new jobs anytime soon. “The industry has dramatically expanded employment in the United States in the last several years, but the growth is just not there anymore,” said Harley Shaiken, a labor professor at the University of California, Berkeley. And companies are increasingly looking to build their less profitable car models outside the US. Ford Motor, for example, said in June that it would move production of its Focus sedan to China from Michigan. The company had previously planned to move the car to a new plant in Mexico, but canceled the project after meeting stiff opposition from Trump. Ford’s China move will not cost any US jobs, because Focus production in Michigan will be replaced by trucks and SUVs. But the decision could inflame trade tensions. And if falling sales overall in the US continue to cut employment in US plants, it could spur protectionist measures by the Trump administration, like imposing border taxes on imported vehicles. Scaling back jobs in car plants is part of a newfound discipline among automakers to avoid bloated payrolls and inventories when sales start slipping. T hat is a big change from prerecession times, when the

domestic automakers were too often awash in overproduction, or saddled with union contracts that funneled idled workers into so-called job banks with nearly full pay and benefits. That program was eliminated in subsequent labor pacts with the United Automobile Workers. Moreover, the Detroit companies have also hired large numbers of lower-wage, entry-level employees with less costly unemployment benefits. Those moves have made it easier for the companies to scale back production based on changes in the market. GM, for example, has reduced the number of shifts at several of its domestic plants, the most recent reduction being its announcement of cutbacks at a factory in Kansas that makes the Chevrolet Malibu midsize sedan—a segment that is rapidly declining as more buyers gravitate to SUVs. “These decisions are always tough,” said Alan Batey, the president of GM’s North American operations. “But at the end of the day we have to be disciplined about our production plans.” Fiat Chrysler, for its part, has eliminated production of compact and midsize cars altogether at factories in Michigan and Illinois, temporarily laying off workers as it retools the plants to produce SUVs and trucks. New York Times News Service

of the Korean Peninsula and the region,” its statement said. North Korea called the test “a momentous event in the history of the country”. Before the announcement, Trump had noted the missile launch on Twitter, suggesting that it was time for China to act decisively against the North and “end this nonsense once and for all”. On Tuesday Chinese officials criticized the missile test, saying it violated UN rules. But the Chinese government offered no signs that it was preparing to take more drastic action against the North, urging a return to diplomatic talks instead. “I have to reiterate that the current situation in the Korean Peninsula is complicated and sensitive,” Geng Shuang, a spokesman for China’s Foreign Ministry, said at a regular news conference in Beijing. “We hope all sides concerned can remain calm and restrained so that tensions can be eased as soon as possible.” Later in Moscow, where Xi was visiting, President Vladimir Putin of Russia said both had agreed to advance a joint proposal to settle the Korea crisis by simultaneously freezing the North’s nuclear and missile programs

and the joint military drills by the US and South Korea. Russia, which like China borders North Korea, has repeatedly called for a diplomatic solution. Deputy Foreign Minister Sergei Ryabkov warned that the launch would give “more arguments to those who seek pretexts for new escalation of tensions”, according to the Interfax news agency. Trump is to meet this week with both Putin and Xi at the Group-of-20 meeting in Germany, and Cheng X iaohe, an associate professor of international relations at Renmin University in Beijing, said the missile test would force them to find some kind of common ground on North Korea. He did not specify what that might be, but he suggested that it would now be more difficult for Xi to stand by Pyongyang. “Certainly, the test will change the game,” Cheng said. “The business-as-usual situation is over.” Other ana lysts said the launch would put Trump’s administration in a precar ious position, given that it had indicated that such a missile, capable of reaching parts of the US, was a critical threshold. In Januar y Trump declared on Twitter, “It won’t happen!”; the message set off a cascade of speculation on what exactly he meant. “The important thing is that Donald J. Trump doesn’t let himself be backed into a corner and that he understands that there are long-term options to contain, constrain and deter the regime,” said Adam Mount, a senior fellow at the Center for American Progress in Washington. The US had hoped that North Korea would stop short of developing a long-range missile that could reach its shores, Mount said. Now, he said, the US and its allies would have to compromise on any expectation that North Korea will ever give up its nuclear program, he added. “Talks can’t proceed from the presumption of denuclearization,” he said. “And we can’t coerce North Korea back to the negotiating table to prevent them from crossing a threshold they have already crossed.” New York Times News Service

May’s election woes opened door to biz-friendly Brexit

.K. Prime Minister Theresa May’s disastrous performance in last month’s election handed Britain’s business leaders greater leverage to lobby for a softer Brexit, according to the Institute of Directors. “The election has upside for the business community,” Barbara Judge, chairman of the industry lobby group with about 35,000 members, said in an interview in Geneva. “It’s opened the door for us.” Business Secretary Greg Clark, Brexit Secretary David Davis and Chancellor of the Exchequer Philip Hammond are among the ministers canvassing business for ideas and solutions, said Judge, after addressing the British-Swiss Chamber of Commerce. About 60 percent of the institute’s members said in response to a recent poll that the rights of European Union citizens in the UK was their top priority, while 72 percent said the government’s main challenge was to negotiate a new trade agreement with the bloc. May’s government has struck a softer tone since the election, which deprived it of a parliamentary majority. Hammond told business leaders on Monday they must help make the case to Europe for a smooth Brexit. The chancellor also has argued that leaving the

Brexit talks without a deal, as some, including May have threatened, would be a “bad outcome” and that immigration should be managed rather than “shut down”. “We’ve been arguing for this position on immigration from the beginning, but we weren’t being heard,” Judge said. “There will be a problem for industry if we don’t have immigration; we need talented, skilled labor.” There are signs that others are working to get May to rethink her approach to the breakup. The UK should be working toward a “bespoke agreement” that comes close to replicating the single market, Judge added. “Perhaps you find something that is the moral equivalent, but doesn’t use the words, or maybe that has some differences—something that’s not the full Monty, but close enough to approximate the benefits of the single market,” she said. The voice of business leaders will gain greater weight if the economy is buffeted by fallout from the Brexit vote, she said. “When we see inflation going up, when we see the pound going down, when we see the difficulties that will happen when a lot of companies start to move into the EU, then business will have examples of why it needs to be heard,” Judge added. Bloomberg News

A10 Thursday, July 6, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Level playing field and midnight deals

hen President Duterte was sworn in as the country’s 16th president, he promised to lead on a platform of eradicating criminality, illegal drugs and corruption in the government. He said he does not tolerate shenanigans in any public office, thus assuring investors that government regulators will not whimsically change the laws, regulations, or contracts governing an investment in a way that adversely affect an investor’s financial returns. In other words, all contracts with the government will be respected and investors are assured of a level playing field. Amid the Duterte administration’s efforts to create a level playing field for industry players, a storm is currently brewing in the power sector. The issue swirls around allegations of certain interest groups questioning the seven power supply agreements (PSAs) of the Manila Electric Co. (Meralco) that are pending with the Energy Regulatory Commission (ERC) since April 2016. Last week members of civil society and representatives of communities and consumers affected by the operations of coal-fired power plants filed before the ERC separate petitions for intervention regarding Meralco’s PSA applications. These PSAs with seven power-generation companies cover a total of 3,551 megawatts. Riding on the issue, Party-list Rep. Carlos Isagani T. Zarate of Bayan Muna filed a House resolution seeking to look into the PSAs, alleging that those were midnight deals. The House Committees on Good Government and Public Accountability and Energy on Tuesday held a joint hearing on the alleged midnight deals between the ERC and Meralco. What’s baffling as far as Meralco is concerned is the fact that there are more than 90 PSAs that were filed by different distribution utilities and electric cooperatives following the ERC resolution restating the effectivity of the Competitive Selection Process (CSP). But out of these 90 PSAs, only the seven Meralco PSAs were curiously singled out for inquiry by the two House committees. It is on record that Meralco was not among those that asked the ERC to restate the effectivity of the CSP mandate. At the joint hearing, Meralco categorically denied that the seven PSAs were midnight contracts that will result in “costlier and dirtier energy from coal”. Such allegations are baseless and totally unsubstantiated, Meralco said, adding that the seven PSAs were legally filed in accordance with the rules and regulations of the ERC with the objective of ensuring adequate and reliable power supply at least cost to its more than 6 million customers. “Each of these PSAs had undergone a very rigorous, lengthy and, at times, contentious negotiation process with the generation companies, which actually took many months and years before these agreements were signed and filed with the ERC. Negotiation for one PSA actually started way back in 2012 and was only concluded and signed in 2016. There is therefore absolutely no factual basis to claim that these are midnight contracts, said Atty. William S. Pamintuan, Meralco first vice president and head of Legal and Corporate Governance. “Meralco negotiated these PSAs in utmost good faith and the resulting rates and other terms and conditions that were filed before the ERC are very competitive and favorable to the consumers.” Meralco said the approval of the seven PSAs will not result in “dirtier energy from coal”, considering that the generation companies contracted to supply power to its customers will be using state-of-the-art technology with high efficiency and low-emission power plants. The utility firm said the country’s first power plant to use Ultra Supercritical technology, which is used in countries like the US, China, Japan and Germany, will be among the plants that will supply lower emission and more fuel-efficient power to Meralco’s customers once the PSAs are approved by the ERC. “In order to sustain the growth trajectory of the Philippine economy and promote inclusive growth, it is critical to note the importance of building more power plants in a timely manner to ensure the country’s energy security, especially as we support the ‘Build, Build, Build’ agenda of President Duterte. At the end of the day, we need power if we want to build. Otherwise, economic growth cannot be supported or sustained,” Meralco said.

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Explaining stock-price analysis John Mangun

OUTSIDE THE BOX

uman thinking often tends to bounce between the extremes of complex answers to simple questions or simple answers to complex questions. “I ask what time it is and you tell me how to build a clock.” Or, “What is the meaning of life? To get more sleep.” When analyzing the stock market, most people make the same mistake. The key to the deal is found from English Franciscan friar William of Ockham—Ockham’s razor— which is usually misinterpreted as “simple is better”. What he actually proposed was that when you have to figure out something, keep the assumptions you have to make to as few as possible. One stock analysis centers on the idea that price should/will reflect corporate value most easily from profit. The Price Earnings Ratio (PER) is used to determine what the price should be. But using PER is completely subjective. Is a stock

that is priced at 30 times its profit per share too high? Is a PER of 10 too low? Nobody can answer those questions. Except, by looking historically at a company’s PER, we can determine what the market—actual buyers and sellers—thought was an economically viable PER. Technical analysis that looks at price movement comes in three broad categories. Chart price patterns— ‘Cat’s Ears’, ‘3 Rickshaws Parked At the Brothel’ or ‘The Burping BatShark’—use the same techniques as meteorologists use to predict the weather and that is a compliment. Patterns of behavior in stock price —or clouds—lead to results that can

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can be useful, but the serious mistake that investors make is believing there is a “normal” one-size-fits-all method. One size of clothing does not fit all if you care about optimum comfort and attractiveness. Parameters for technical indicators are individually tailored and must be adapted. However, there is one simple, basic and foolproof question to identify if a price will go higher or lower in the future. Is the stock under accumulation or under distribution? Investors can be buying an issue without an increase in price or in trading volume. Likewise a stock can be under distribution without a price fall. We think that there is an unlimited supply of money to buy and a relatively unlimited supply of stocks to sell. But there is a huge difference between “I have no more shares/money” and “I have no more shares for sale [or money to buy]”. Shares under accumulation will go higher; shares under distribution will go lower. Guaranteed. Just give it some time.

E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

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be forecasted with a high degree of predictability. Stock prices historically tend to stop going up and stop going down at particular levels, and again also tend to do this in patterns. This is all about price support and price resistance, whether measured by “Moving Average”, “Fibonacci sequences” or “waves”. It is the ebb and flow as the market trades when thinking that the price is too high or too low at any given time. The third broad group more specifically combines price action with the amount of trading volume. This creates a measurement of momentum of price movement higher or lower. Looking at the speedometer of your car only gives a snapshot of current speed, but gives no indication if the car will be going faster or slower in the future. A stock price can be going higher but also be losing momentum, just like a car slowing down when you take your foot off the accelerator. Measured over a comparatively long period of time, technical indicators like “Relative Strength”, “Stochastics” and “Rate of Change” can help determine if the “foot is on the gas” or not. All methods of technical analysis

Cecilio T. Arillo

database Part Five

HEN Enrile arrived home in Makati, Executive Secretary Ernesto Maceda was on the telephone, informing him of the President’s wish that he should meet with the crowd at Agrifina Circle. “I told Secretary Maceda that I would not, and that should the President insist that I had to, the President would have my irrevocable resignation on his desk in the morning. President Marcos did not insist.” Midnight of October 8, 1969, just over a month before the presidential election, 10 men were massacred on a deserted road between Capas, Tarlac, and the US naval radio station at Camp O’Donnell in Pampanga. The victims were civilian security guards of the radio station, except the driver of their transport vehicle. The Liberal Party blamed the military for the massacre, and asked President Marcos to disband a paramilitary group called “Monkees”, who were identified with the Philippine Constabulary. Four days later, on October 12, Alejandro Melchor, undersecretary in the Department of National De-

fense, asked me to join him and Chino Roces for a trip to the town of Tarlac to hear three alleged massacre survivors, who were with Max Llorente, a lawyer. Chino Roces was a part owner and publisher of the powerful and influential Manila Times, which at the time was the leading newspaper in the country. “As I listened to the alleged survivors. I was struck by the similarities and flaws in their individual version of the event. I developed doubts in their veracity, but I kept the matter to myself. I invited them to go with me to Manila to make their sworn statements, but they declined. I assured them that the Department of

Justice would protect them should they agree to become witnesses,” Enrile said. In the afternoon of the following day, the alleged survivors with their lawyer, Llorente, arrived onboard two private planes at the Hacienda Luisita hangar in the domestic airport in Pasay City. Sen. Benigno Aquino and the media with their television cameras met them. Senator Aquino also invited me to be there. With great fanfare in front of a big crowd at the Hacienda Luisita hangar, Aquino demanded the arrest of Geronimo Foronda—a man alleged to have flagged down the vehicle carrying the massacre victims before they were gunned down by five fatigue uniformed men. He also demanded the ouster of the Philippine Constabulary men in the province of Tarlac. “Senator Aquino turned over to me the alleged survivors as his witnesses to the massacre. I received them and kept them onboard a Philippine Navy ship with my instruction to the naval commander never to allow anyone to see them without my written permission, except their lawyer and next of kin,” Enrile said. Meanwhile, the NBI arrested Serafin Agustin and Jose Santos for interrogation. During a lineup at the NBI compound on Taft

Avenue in Manila, the three alleged survivors—Hernandez, Lakandula and Belmes—readily identified Agustin and Santos as among the perpetrators of the massacre. According to Enrile, he was not satisfied with the result of the investigation. “My doubt regarding the veracity of the alleged survivors still lingered. To avoid an injustice and to satisfy myself, I ordered the NBI to conduct a polygraph or lie-detector test on the alleged survivors and on the two arrested suspects, Agustin and Santos.” The result of the lie-detector test confirmed Enrile’s suspicion. The three alleged survivors turned out to be false witnesses, while Agustin, Santos and Foronda were found innocent. Enrile met Alejandro Melchor and Chino Roces at the Manila Yacht Club and informed them about the result of the lie-detector test. “Both were shocked and speechless with disbelief. We hurriedly called Senator Aquino who was in the Senate and informed him about the result of the polygraph test. He disclaimed knowledge of the falsity of the witnesses. He simply and curtly said, “Bahala na kayo diyan!” To be concluded To reach the writer, e-mail cecilio.arillo@ gmail.com.

opinion@businessmirror.com.ph

Opinion

Managing the talent exodus

Joy in a compassionate Lord

BusinessMirror

Msgr. Sabino A. Vengco Jr.

Dr. Rene E. Ofreneo

Alálaong Bagá

LABOREM EXERCENS Continued from A1

ur skilled overseas Filipino workers (OFWs) happen to be the big foreign-exchange remitters too. Their families are the leaders in sustaining the consumption-led economy at home—buying up units in the numerous condominium buildings sprouting in the metropolis, sending their children to the private schools and universities, patronizing the malls and supermarkets that now encircle the entire archipelago, and so on and so forth. T he problem is that OFW remittances are not enough to push the Philippines into the ranks of developed countries as outlined in National Economic and Development Authority’s AmBisyon 2040. We need to strengthen and grow our manufacturing base, revive and modernize our agricultural sector and diversify an economy based mainly on OFW remittances and call center-business-process outsourcing services. For this, we need the skills, talents and professional expertise of the best and the brightest among the Filipinos, many of whom are being recruited and pirated by other countries. Bill Clinton’s nudging the Philippines to entice these talented OFWs to come home is obviously in support of the idea that sustainable development is not possible in an economy whose industrial and agricultural base is weak. Clinton’s position is also inspired by the book written by his former US Labor Secretary Robert Reich. In The Work of Nations (1991) Reich argued that America’s leadership in the global economy depends on her ability to keep the best and the brightest within American shores. These include research scientists, design engineers, software engineers, biotechnology engineers, investment bankers, management consultants, financial consultants, energy consultants, agricultural consultants, management information specialists, organization development specialists, strategic planners, system analysts, advertising executives, marketing strategists, production designers, publishers, television and film producers, university professors and so on. Reich called these workers the “symbolic analysts” who “solve, identify and broker problems” in the various disciplines and in the economy as a whole. The symbolic analysts are a distinct class from the other two categories of workers: 1) the “repetitive workers” who do assembly-line work, such as tightening screws in automobiles or packaging hamburger sandwiches; and 2) the “in-service workers” who render work in a person-to-person arrangement, such as providing sales or massage service to individual clients. To Reich, American success in the global market will depend on the ability of American symbolic analysts to maintain America’s lead in various industries and technologies through problem-solving innovation and entrepreneurship. Hence, Reich’s major policy recommendation: invest heavily on the continuous upgrading of America’s school system, skills development and university research to be able to produce as many symbolic analysts as possible. However, Singapore, Australia and Canada are doing things better. Their continuous school upgrading program is paired with the policy promoting the liberalized entry of migrants possessing the skills, talents and professional expertise in select industries being nurtured at home. Where will Singapore be if it is not able to recruit and even pirate the best and the brightest from the Philippines and other others countries? Incidentally, the United Kingdom and other European countries are in a serious dilemma. Their governments have difficulty containing the rising populist xenophobia against foreigners because of widespread unemployment and fears of “terrorist attacks”. And yet, they know fully

In the Philippines there is no clear policy to keep the best and the brightest at home. In fact, the government, through the Philippines Overseas Employment Administration, has been advertising the list of “indemand skills and hard-to-fill-in jobs” for both land-based and sea-based sectors. well that the skilled migrant population are major contributors to their own drive to spur national innovation and competitiveness. But here in the Philippines, there is no clear policy to keep the best and the brightest at home. In fact, the government, through the Philippines Overseas Employment Administration, has been advertising the list of “in-demand skills and hardto-fill-in jobs” for both land-based and sea-based sectors. The “hot jobs” list is fairly long, indicating a diverse range of occupations for various industries in the labor-receiving countries, such as professionals and technical workers for the information technology and health industries, administrative and managerial workers for the hotel and restaurant industry and so on. In 2006 when the Fair Trade Alliance and a number of industries complained to the Department of Labor and Employment (DOLE) on the deleterious impact on domestic industry of the exodus of “missioncritical personnel”, the official answer given is that labor mobility is a human right. However, the DOLE promised the imposition of more requirements for departing professionals, such as certifications, that ample or longer notices have been given to their respective employers in the Philippines. And yet, no publicized report that this is being monitored or observed. With the unregulated outflow of talents and the hands-off policy of the government, desperate human-resources (HR) managers of affected industries have adopted new programs in their HR menu— “talent management” and “talent preservation”. To offset the higher compensation packages offered by global poachers, these HR managers focus their efforts on making these professionals feel their importance as company stakeholders or as corporate family members. They are consulted on how they can grow the company and how to share the gains from higher productivity. They also impose “training bonds”, which are hardly complied with because of the higher cost of litigation. Of course, the downside in the talent poaching phenomenon is that more and more domestic companies have stopped investing on training for the gains in added knowledge are harvested by overseas recruiters and employers, not by the local investors. The old thinking that the ideal HR development is a joint partnership of industry and the educational system is subverted by the changing realities in a borderless labor market. In the end, therefore, the ultimate policy challenge to the government is how to craft a program for national industrialization and agricultural modernization that will entice skilled and talented Filipinos to stay at home and work for the nation’s progress. The road map for this remains to be written or fleshed out.

E have been told not to be afraid however daunting our mission seems to be, and also to be totally committed to Jesus so that we love no one more than him. This is because as the little ones we have for our Lord one who is gentle and humble of heart (Matthew 11:25-30).

Thanking God for the little ones Jesus was pained by the absence of understanding and faith among those who took offense at him, disregarding his call to repentance and rejecting his preaching (Matthew 11:20-24). But compensating for the rejection by “the wise and the learned” were the “childlike” ones who welcomed him. They occasioned his prayer of thanksgiving to God. To these merest children God has revealed his wisdom, hidden from the clever ones who prided themselves in their mastery of their law, which seemed to have closed their hearts to the words of Jesus. In the absolute gratuity of the gift

of faith, the little ones could divine in Jesus the one sent by the Father and entrusted with His words. These childlike ones accepted Jesus as the one who knows the Father and they were attracted to Him and listened to Him with wonder and fascination. Jesus intimately called God “Abba” (Father) in a unique relationship where “No one knows the Son except the Father, and no one knows the Father except the Son.” Jesus is echoing in His person the wisdomimage of God’s goodness and the reflection of eternal light (Wisdom 7:22-30). Since “all things have been handed over” to Him by his Father, Jesus is contradicting the traditional

Thursday, July 6, 2017 A11

claim that God’s revelation is fully contained in the law and the prophets. Indeed this revelation of God in Jesus means release from the law on the part of all who believe in Him.

My burden is light

IT is a lighter load to follow Jesus, than to adhere to the law. Jesus’ warm and pressing invitation to all the little ones who labor and are burdened is because “His yoke is easy and His burden light”. In claiming to be the real and definitive wisdom, Jesus is the “source of joy”, satisfying the thirsty soul more than gold (Ecclesiastes 6:25; 51:27). Unlike the Pharisees, who “tie up heavy burdens and lay them on men’s shoulders” without lifting “a finger to move them” (Matthew 28:4), Jesus calls followers to himself and offers his own yoke and example of accepting and submitting totally to the Father’s will. His yoke is what his gospel comes down to: love of God and love of others in imitation of the Father who loves the little ones. Love is demanding but not burdensome; in fact, it lightens the load one must carry. The compassion of Jesus makes being His disciple a relationship of joyful fellowship and privileged service. He is “gentle and humble of heart”.

He is the mighty one who is most considerate of the weak ones; He is the Son of the Most High always in loving consciousness of His heavenly Father. That is why the evangelist saw in Jesus what was spoken of through Isaiah (42:1-4): “Behold, my servant whom I have chosen, my beloved in whom I delight. I shall place my spirit upon him.... A bruised reed he will not break, a smoldering wick he will not quench” (Matthew 12:17-20). Alálaong bagá, we are followers of a just and peaceful Lord, gentle and humble of heart. To all of suffering humanity, oppressed by violence, arrogance and selfishness, Jesus offers rest, the rest with God who on the seventh day sees the goodness of creation complete, the restful joy when our true nature is realized. As Saint Augustine pointed out, our hearts are restless until they rest in God. We have to yoke ourselves to Jesus, learning from Him through a process of discipleship how to live in harmony with ourselves, our neighbor, nature and God. In loving communion His burden is light, His yoke easy. Join me in meditating on the Word of God every Sunday, from 5 to 6 a.m. on dwIZ 882, or by audio streaming on www.dwiz882.com.

Espenilla takes over BSP reins amid political noise, threat to democracy Val A. Villanueva

Businesswise

he baton has been passed. Keeping the country’s economic boat afloat, amid political noise which generally affects the Philippine economy more than the soundness of its fiscal fundamentals is now in the capable hands of former Bangko Sentral ng Pilipinas (BSP) Deputy Governor Nestor A. Espenilla Jr. Espenilla is taking over the BSP at a time when the country’s metropolis chokes on daily traffic that wastes P2.4 billion daily in likely revenues. The horrendous traffic mobbing eats up time, which could have been used in profitable trade and industry. He is taking over against the backdrop of mounting deaths caused by President Duterte’s controversial war on drugs, which to date has killed more than 9000 people, majority of whom belong to the poorest of the poor. The first day of his governance comes at the time of the looming terrorist threat from the extremist militant group Islamic State in Iraq and Syria—in connivance with the local Maute and Abu Sayyaf groups—which is trying to gain a foothold in Southeast Asia by making the Philippines its nesting ground. As of this writing, the death toll in the Marawi City crisis has risen to more than 300 as security forces marched toward “inner enclaves” held by the Maute terrorist group. The death toll: Government casualties, 82; civilians killed by terrorists, 39 and around 317 terrorists killed, with at least 1,545 civilians entombed in conflict zones. Any war is costly, and the Marawi conflict is frittering away millions of pesos daily. Espenilla is taking over when most

of Duterte’s campaign promises have remained unfulfilled promises. Most important, he is taking over the BSP as the spectre of a country fast losing its democratic ideals is rising. We witnessed how House Speaker Pantaleon D. Alvarez threatened to impeach Supreme Court (SC) Justice Maria Lourdes A. Sereno because of the political infighting between Duterte supporters PDP-Laban Rep. Rodolfo C. Fariñas of Ilocos Norte and Ilocos Norte Gov. Imee R. Marcos. The governor purportedly misused provincial tobacco funds. Sereno was dragged into the fiasco when she allegedly coaxed Court of Appeals justices who favorably ordered the provisional release of the six Ilocos Norte officials who were being detained at the House since May 29 for refusing to cooperate with the House investigation. This is the same Alvarez who vowed to tear down any SC decision that will invalidate the martial-law declaration (the SC just ruled in favor of its legality) in the entirety of Mindanao. And here comes the President himself giving blanket authority to the police to kill in the name of his antidrug war. None of them will be put behind bars, Duterte vowed, even if they commit wrongful deaths. Quo Vadis, rule of law? The BSP governor does not only look at the financial spread sheet. He is

duty-bound to take into account events, political or otherwise, which have the potential of tearing the country from its financial moorings. It will be interesting to see how he will maneuver the country’s fiscal ship under these conditions that his predecessor fortunately did not experience. But Espenilla is built of sterner stuff, and this could be his main weapon in ensuring that the country’s pockets will not be empty. After all, he has played in the past the role of BSP’s “bad cop”. “Nesting”, as he is known to family and friends, was most effective in strictly enforcing BSP’s regulatory powers which sought to punish banks found to have been in violation of banking rules. It was he who shut down the operations of Banco Filipino (BF) in 2011, after his team discovered indications of depositors’ money being funnelled into groups controlled by BF’s owners and officers. The bank is a midsized Aguirre family-owned bank, which threatened regulators with legal action if it would not receive emergency loans to keep it alive. Espenilla is expected to pursue the three foundations of central banking: price stability, financial stability and a reliable and efficient system for payments and settlements. The Philippines has to steer the financial bus over undefined and complex global market humps. The interest rate hikes in the US should be carefully weighed, together with volatile capital flows and low commodity prices. We’ve already seen the peso hovering to levels unheard of for the longest time. Espenilla also needs to focus on overcoming isolationism, which is becoming a global threat. Its adverse effect on the Philippines’s and other countries’ trade and overseas workers’ remittances is a potential hotspot which has to be closely monitored and immediately restrained. He has to be proactive in this regard. Luckily for the Philippines, the

RMC and the other addressee: The taxpayer Atty. Jared C. Vicencio

Tax Law for Business

evenue memorandum circulars, or RMCs, serve important functions in the orderly administration of the Tax Code. One of which is clarifying certain issues when it comes to ambiguities arising from interpreting the Tax Code, especially in relation to other laws that affect it. Another is it provides guidelines on implementation of the Tax Code to government personnel, for the efficient administration of the tax laws. However, ambiguity arises as to the nature of the RMC, as it is, technically, an internal memorandum addressed to the Bureau

of Internal Revenue (BIR) staff, but has implications for taxpayers, as well. An example of this is RMC 31-2013, the subject of controversy in CTA Case 9081, decided on June 8. The said RMC, among others, provided guidelines as to collection of income tax from salaries of local

Asian Development Bank employees. Although addressed to the BIR personnel, the issuance definitely affects the taxpayer. The Court of Tax Appeals, in the said case, resolved the conflict by treating the RMC similar to actual legislation. The Court applied the principle of nonretroactivity on the said issuance. This means that its effects may not prejudice the taxpayer prior to its issuance. Such a treatment shows that RMCs, despite being addressed to BIR personnel internally, establish rules that are mandatory for taxpayers, as well. As such, it cannot be isolated as an issuance meant to affect the BIR solely. This viewpoint is further expounded in the dissenting opinion of the Honorable Senior Associate Justice Juanito Castañeda, where he elaborated that RMCs are of the nature of interpretative rules that clarify the application of the law. Thus, the issuance is actually

prev ious administration has bequeathed the current administration with enough financial cushion to nourish Duterte’s economic team. We have enjoyed more than 18 years of unimpeded growth and endured controllable inflation, which allowed policy settings to remain as is since September 2014 when there was a 25 basis-point hike in rates. But even if our growth forecasts remain optimistic, Espenilla shouldn’t let his guard down. He has to be ever wary of latent susceptibilities to ensure that our economy stays buoyant. He is well aware of the likely problems ahead. He warned of “the potentially farreaching impact of advanced economies’ exits from their accommodative monetary policies”. He says: “We have to be prepared for the seemingly imminent wind-down of ultra-easy monetary policies in advanced economies.” Consider these: The US Federal Reserve has been raising rates and finding ways to start reducing its massive balance sheet. At the same time, the European Central Bank and even the Bank of Japan are cautiously looking to end monetary easing. Global markets were spooked by the Federal Reserve’s first hint that it might taper its monetary expansion policy in 2013. That so-called taper tantrum sent bond yields soaring sharply and sowed turmoil in world markets from Rio de Janeiro to Jakarta. “We need to be mindful of such events and their potentially far-reaching consequences, since these could undermine our economic performance and disrupt our carefully laid plans,” Espenilla says. It is fortuitous that Espenilla’s experience has given him the much-needed awareness of the subtleties and dynamics of the domestic and global issues. This will serve him well as BSP governor.

For comments and suggestions, e-mail me at mvala.v@gmail.com

an instruction as to how the law should be enforced. It should come as no surprise, therefore, that when dealing with the BIR, the more conservative approach will always be to follow guidelines stated in RMCs. Despite its function as an internal issuance for the guidance of BIR personnel, it is actually the bureau’s determination as to how the law should be implemented.

The author is a junior associate of Du-Baladad and Associates Law Offices (BDB Law), a memberfirm of WTS Global. The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at jared.vicencio@ bdblaw.com.ph or call 403-2001 local 370.

2nd Front Page BusinessMirror

A12 Thursday, July 6, 2017

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2018 debt-to-GDP ratio seen falling further to 39.7% on revenue increase

By Rea Cu

@ReaCuBM

he government is projecting a debt-to-GDP ratio of 39.7 percent in 2018, with the higher revenue collection seen offsetting an in increase in national government debt to P7.054 trillion.

This is well within international standards capped at 50 percent. According to National Treasurer Rosalia V. de Leon, the nominal national government debt for 2016

was at P6.51 trillion, which was 42.18 percent of GDP, while for 2017 the government is looking at P6.47 trillion, or about 40.76 percent of GDP.

“For 2018 it’s at P7.05 trillion,” de Leon told financial reporters. De Leon added that the decrease in national government debt projection for 2018 is due to expectations of increased revenue collections, both from the Bureau of Internal Revenue and the Bureau of Customs, among others. According to Finance Undersecretary Gil S. Beltran, a high level nominal debt does not necessarily translate to a high level of actual debt, since debt is subject to inflation. “It’s just a number; actually it’s nominal, so even if the number increases, the value of that debt decreases because over time it’s

₧7.05T The projected national government debt next year

subject to inflation. So the best measure is actually percent of GDP, because that is the level of resources that a country generates. Payments come out from production of the goods and services. It is always measured in terms of percent of GDP, and it is going down,” Beltran said. Moreover, Beltran pointed out that the national government debt

of the Philippines will eventually go on an increasing trend, since funds need to be used for the development of infrastructure in the country. He added that as long as production costs do not rise faster than real income, it would positive for the government. “It has to increase because we are building infrastructure. And savings have to be used for production, which means that you set aside a certain percentage of income for investment in goods that will allow us to produce more, like building roads, airports, bridges,” he added. Finance Undersecretar y Karl Kendrick T. Chua earlier told the BusinessMirror that the

government intends to generate P366 billion annually from the five tax-reform packages of the Duterte administration, the first of which is targeted to be implemented by January. “Package 1 covers around half of what we need, because Packages 2 to 5 have lesser revenue; they are more about fixing inherent problems. So the estimate we have for Package 1, the DOF estimate, is around P157 billion per year. House version that was passed is P133 billion. So our challenge is to make sure the Senate listens and pass the DOF version. Packages 2 to 5 will contribute the balance, which we will present in the coming months through December,” Chua said.

SLOWER INFLATION EASES PRESSURE ON BSP OFFICIALS TO RAISE KEY POLICY RATES

BEAUTIES FOR A CAUSE Forty Miss Philippines Earth 2017 candidates pose for the media during their presentation at the Diamond Hotel Manila on Wednesday. ALYSA SALEN

Globe blames residents for poor mobile services in posh Dasmariñas Village These people who oppose F Odas in Dasmariñas should be IVE of 10 households in Dasmariñas Village in Makati City do not have decent mobile signal due to the residents’ opposition to Globe Telecom Inc.’s Outdoor Distributed Antenna System (Odas) network, according to the Ayala-led company. Based on Globe’s data, 56 percent of households in the posh village are without a good mobile coverage, hence they find it hard to avail themselves of the telco’s services. The installation of the Odas in the village was Globe’s supposed solution to the poor telecommu-

considerate of other residents’ need for connectivity and reliable mobile services within their villages.”—Globe

nication signal reported by some members of the community. Odas is provided by Globe as an alternative to towering cell sites. It aims to provide stronger mobilephone signals by bringing radio

signal closer to end-users. Recently, Globe has filed a civil lawsuit worth P5 million against Betty Aw, a resident of Dasmariñas Village, who has been vocal about rejecting the system. Globe

claims that Aw’s opposition is a violation of human rights, citing the United Nations’s declaration on the Internet. “ T hese people who oppose Odas in Dasmariñas should be considerate of other residents’ need for connectivity and reliable mobile services within their villages and allow telecommunication operators like Globe to improve mobile services with the installation of additional equipment and infrastructure, such as Odas, cell sites and fiber optic cables,” the company said.

onsumer price pressures dectelerated for the second Espenilla: “The consecutive time in June, the lower inflation Philippine Statistics Authority (PSA) is partly driven said on Wednesday, allowing the Cenby lower fuel tral Bank room to manage the policy prices and settings amid the ebb and flow of local power rates.” and overseas economic events. On Wednesday, the PSA said inflation averaged 2.8 percent in June, decelerating further from 3.1 percent reported the previous month, bringing inflation in the first half of the year to 3.1 percent. This puts the average six-month inflation right smack in the middle of the official 2-percent to 4-percent target range for this year. This was also only the second time inflation hit the 2-percent territory this year, next to January’s 2.7 percent. This was, however, still faster than the year ago acceleration averaging only 1.9 percent. The PSA said the deceleration resulted mainly from food price movements during the month, the food index having slowed further to 3.6 percent in June, from 3.8 percent in May. Electricity and fuel prices also slowed during the period. For the Bangko Sentral ng Pilipinas (BSP), the easing of price pressures is a welcome development for the $292-billion economy. “This is welcome news but not unexpected. The further deceleration in inflation in June is in line with our forecast. The lower inflation is partly driven by lower fuel prices and power rates,” Central Bank Governor Nestor A. Espenilla Jr. said. He further said the within-target inflation bodes well for the monetary-policy makers as this gives them room to asses all possible moves as the macroeconomic environment changes. “This validation gives us the space to carefully consider our policy options with respect to fine tuning deployment of our monetary instruments to further the market-based development of the domestic financial market,” Espenilla said. In its last monetary-policy meeting, the BSP kept the rate on its borrowing or overnight reverse repurchase (RRP) window at 3 percent. The corresponding interest rates on its overnight lending and deposit facilities were also kept steady. The reserve requirement ratios were similarly kept unchanged. The BSP previously forecast inflation this year at 3.1 percent, lower than the original projected rate of 3.4 percent. The BSP also earlier said the weaker peso should not derail the projected inflation path for the year. Nevertheless, the think-tank IHS Markit reported in June the recent peso depreciation translates to higher costs and an issue that must be watched closely. On Wednesday the local currency hit a new 11-year low as it closed the day’s trade at 50.60 per dollar, 8 centavos than the previous day’s 50.52 per dollar rate. The total traded volume during the day aggregated $507 million, down from the previous day’s $540.4 million.

Faye Almazan

Tax-reform program seen triggering inflation uptick 38.98 percent. Any change in the prices of these commodities will heav ily inf luence the growth of the country’s inflation rate. However, since the CTRP is not similar to sin taxes, where the cost of higher taxes are passed on directly to consumers, there could be some variation in the consumption of certain goods, depending on the elasticity or demand for these products. “Inflation is about 40-percent food, although these items are probably about 5 percent of the total. But it depends, maybe people

will shift, so it [the impact] could not be that high [on inflation],” Ang said. Edillon said this means the government needs to put in place safety nets that will “mitigate the short-run effects of the taxreform program”. Apart from the CTRP, Edillon said other factors that could push up inflation include the normalization of interest rates in the United States. The US Federal Reserve is expected to make another upward adjustment in interest rates this year. This is part of global expec-

tations that Fed rates will adjust three to four times this year and will be repeated in 2018. “On the external front, domestic prices may be affected, as global financial-market conditions adjust in response to the faster monetarypolicy normalization in the United States,” Edillon said. The Neda said inflation has also been relatively benign in the first semester of the year at 3.1 percent, well within the Central Bank’s inflation expectations of 2 percent to 4 percent this year. Core inflation, which excludes

select volatile food and energy prices, eased to 2.6 percent in June 2017, from 2.9 percent. The Neda said this reflected the general price stability across goods and services. “Slower price adjustments in both food and nonfood commodities contributed to the easing of inflation in June 2017,” the Neda said. Data showed that for food and nonalcoholic beverages, inflation slowed to 3.5 percent in June, from 3.8 percent the previous month. Likewise, nonfood inf lation slowed to 2 percent in June 2017

from 2.5 percent in May. This follows the significantly slower year-on-year increase in domestic petrol prices during the period, particularly unleaded gasoline (5.1 percent, from 9.9 percent), diesel (5.3 percen,t from 13.6 percent) and kerosene (3.0 percent, from 9.6 percent). “The significant decline in the probability of extreme weather disturbances due to El Niño and La Niña until the end of 2017 bodes well for agricultural production and commodity prices moving forward,” Edillon said.

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She, however, added that the government should take advantage of good weather conditions to accelerate the implementation of climate-change adaptation measures. These include investing on infrastructure like catchment basins, advance atmospheric moisture extraction and promoting watersaving technology. Edillon also said there is a need to rehabilitate damaged irrigation systems and conduct periodic maintenance to ensure the disaster and climate resiliency of the agriculture sector. Cai U. Ordinario