Business under scrutiny By Henry J. Schumacher
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t was not exactly business as usual at Japanese companies’ annual shareholders meetings this year. A string of scandals at big corporations—from Toshiba and Fujifilm Group to Takata—spurred more investors to speak up and demand better governance. At the same time, fewer shareholders were willing to rubber-stamp management appointments.
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Corporate business is under growing scrutiny—and has nowhere to hide. There are definitely changes coming up: investors are pushing management teams more, after a revision to the stewardship code. Companies are also starting to recognize the benefits of engaging with their shareholders. It is worthwhile to follow the latest developments in management practices, from the perspectives of both executives and investors. It may also make sense to look at governance trends elsewhere in Asia, and at how individual markets stack up.
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Tuesday, July 18, 2017 Vol. 12 No. 278
Right-of-way woes, ISFs big hurdles for infra plan
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By Cai U. Ordinario
@cuo_bm
t least 509,495 informal-settler families (ISFs) and numerous right-of-way acquisition (Rowa) problems entailing some P210 billion in funding are standing in the way of the Duterte administration’s grand plan of ushering the country into the “golden age of infrastructure”, data obtained by the BusinessMirror showed.
P.U.V. MODERNIZATION PLAN PHASE 2 LIKELY DONE BY Q3
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By Rea Cu
This year’s shareholders meetings in Japan drew particular attention, as they were the first held since the new Stewardship Code was revised. The amended code calls for institutional investors, such as asset-management companies, trust banks and life insurers, to disclose how they voted on all proposals by companies for which they have voting rights and to explain why they did so. Many leading asset managers are expected to disclose this information on their web sites. A majority of asset-management companies in
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he Department of Finance (DOF) said the government is targeting to finish within the year the route-rationalization study, which is an important aspect of the Duterte administration’s Public-Utility Vehicle (PUV) Modernization Program. “By the third or fourth quarter, we will come out with the route-rationalization study, which will determine the most effective way to address the growing demand of commuters,” Finance Undersecretary Karl Kendrick T. Chua told the BusinessMirror. Chua said this is the next important step following the signing of the Omnibus Franchising Guidelines (OFG) under the PUV Modernization Program by the Department of Transportation (DOTr) and the Land Transportation Franchising and Regulatory Board (LTRFB) on June 19.
₧417.3B
The five-year funding requirement of the PublicUtility Vehicle Modernization Program The PUV Modernization Program of the government aims to enhance commuter experience by upgrading PUVs to meet safety, energy and emission standards by overhauling the publictransportation system. The OFG is the first step in implementing the PUV Modernization Program, which introduces reforms in the granting of franchises by implementing new route-planning rules and improved standards for operators and vehicles. See “PUV,” A2
PESO exchange rates n US 50.6230
509,495 The number of informal-settler families to be affected by 15 of the 164 projects under the Public Investment Program
According to documents from the National Economic and Development Authority (Neda), 164 projects in the Public Investment Program require Rowa and resettlement of ISFs. Of the 164 projects, preliminary
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Duterte’s first year: Excellent Manny Villar
THE ENTREPRENEUR
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raditionally, the first year of a new president is spent on transitioning, characterized by the shift in style of running the affairs of the government, appointing not only the members of the Cabinet but also the heads of many agencies, as well as crafting and announcing new policies. Addressing the issues raised during the campaign, or implementing the new chief executive’s platform of government, usually, does not begin until months into the first year. With a single term limited to six years, every month spent on transition is basically a month wasted.
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BMReports
Pinoys hope Duterte keeps campaign promises in Year 2 By Butch Fernandez @butchfBM & Jovee Marie N. dela Cruz @joveemarie
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Part Two
OLITICS is the art of persuasion, as they say, and there’s no venue that can vividly mimic this art than in the august halls of Congress. Lawmakers are the many who believe in this cliché. So much so that on President Duterte’s milestone first year in office, they are urging the Chief Executive to consider and express support on some measures when he outlines his priorities for the second year of his term. One of them is House Committee on Appropriations Chairman Karlo Alexei B. Nograles of Davao City. Nograles is asking the President to support several bills he said would have “long-term benefits” to Filipinos and the government. Among these measures are House Bills (HB) 5707 and HB 5590. “To bring about greater efficiency in government, we call on the Continued on A2
This July 14 photo shows workers applying fresh paint on the House of Representatives building, where President Duterte will deliver his second State of the Nation Address on July 24. Lawmakers at the Upper and Lower House are urging the Chief Executive to consider and express support on some measures when he outlines his priorities for the second year of his term. NONOY LACZA
n japan 0.4501 n UK 66.3313 n HK 6.4854 n CHINA 7.4730 n singapore 36.9376 n australia 39.5922 n EU 58.1000 n SAUDI arabia 13.4987
Source: BSP (17 July 2017 )
BMReports BusinessMirror
A2 Tuesday, July 18, 2017
Pinoys hope Duterte keeps campaign promises in Year 2 Continued from A1
P reside nt to sup por t t hese measures,” Nograles told the BusinessMirror. HB 5707 (“An Act Rightsizing the National Government to Improve Public Service Delivery”) has already been approved on second reading on May. HB 5590 (“An Act To Reform the Budget Process by Enforcing Greater Accountability in Public Financial Management (FM), Promoting Fiscal Sustainability, Strengthening Congress’s Power of the Purse, Instituting an Integrated PFM System and Increasing Budget Transparency and Participation, and For Other Purposes”) is pending before the House Committee on Appropriations.
Trimming fat
MORE than two decades ago, Alexis A. Halley of The Meridian International Institute said that “rightsizing can involve reducing the workforce [downsizing] as well as eliminating functions, reducing expenses and redesigning systems and policies [e.g., to reduce costs or reduce organizational size].” Halley, executive director of the Institute’s Washington D.C. Office, added, “Rightsizing eliminates unnecessary work and improves and prioritizes the most important work. It is a multifaceted attempt
PUV. . .
to reshape the total organization.” In his 2017 budget message, President Duterte said the national government has 186 departments, agencies and other offices, from just 176 in 2000. He added the government workforce currently stands at 1.5 million positions compared to just 1.1 million in 2000. Indeed, the bureaucracy has expanded according to the number of citizens to be served. In particular, more teachers, policemen and other population-based positions have been created. “Even so, we cannot deny that there is fat in government that we must trim,” he said. With this, the President asked authority from Congress to eliminate redundant, duplicate and overlapping functions and organization in the Executive branch. According to Nograles, this is what HB 5707 aims to address. The proposed bill seeks to clarify limits of the Executive’s budgetary powers and strengthen Congress’s power of the purse, consistent with the Supreme Court rulings on the priority development-assistance fund and the disbursement acceleration program. Duterte has noted many of the beneficial public fiscal-management reforms implemented since the early 2000s to date have yet to be completed. Those implemented,
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A budget of P494 million was proposed for the conduct of route rationalization under the PUV program under the General Appropriations Act, according to the DOF. The department estimates that the entire program will cost around P417.3 billion over the next five years. Under the budget scheme, an estimated P17.3 billion would be earmarked from the first package of the Comprehensive Tax Reform Program (CTRP); P8 billion as equity subsidy contribution of the DOTr for the procurement of new jeepneys and P3.9 billion from the Office of Transport Cooperatives; P4.5 billion for the training assistance of the LTFRB and the Technical Education and Skills Development Authority; and P332 million for the management of the program. “Unfortunately, all jeeps will not remain jeeps because that is not the best way to manage the congestion problem, some will have to convert to minibuses or buses. But the first opportunity will be given to jeepney drivers to form cooperatives so that they
PHL. . .
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In an earlier interview, Paner said the SRA expects that the Philippines would get the same quota after the US settled its trade dispute with Mexico last month. “[It] seems [the Philippines will get the] same volume unless something happens to Mexico,” Paner said when asked about the expected quota from Washington. Paner earlier told the BusinessMirror that Philippines could “definitely”fill the volume due to higher production in the current crop year, which would end on August 31. On June 30 the US Department of Agriculture (USDA) announced the fiscal year (FY) 2018 tariff-rate quotas (TRQ) for
the president added, are also not yet made permanent by a comprehensive law. According to Duterte, the gray areas and other loopholes in the country’s public fiscal-management laws had also allowed abuses in the past. He added the budget-management provisions of the Administrative Code of 1987 and other laws also need to be updated, given the many changes in the global practice of public fiscal management in the last three decades.
Upper House
AT the Upper House, Senate Minority Leader Franklin M. Drilon said the Duterte administration, for a start, “should lay down concrete plans to address pressing concerns of majority of the Filipinos as shown in various surveys. These concerns, Drilon added, include, among others, increasing worker’s pay (43 percent), controlling inflation (41 percent) and creating job opportunities (39 percent). “Second, the President should bare his plans for the long-term rehabilitation of Marawi City,” Drilon said, adding that “immediate and effective aid must come to the people of Marawi, whose lives have been affected so much by this terrible tragedy”.
Moreover, Drilon noted that “the war on drugs being the cornerstone of the Duterte administration must be explained to the public. What has the Duterte administration accomplished so far?” In the same vein, Sen. Joseph Victor G. Ejercito voiced hopes that Duterte’s Sona will spell out the administration’s strategy for economic development. “We have been hearing [about the] war against drugs the whole year; it is about time to shift focus on economic matters this time around,” Ejercito said. Sen. Emmanuel Joel J. Villanueva admitted to the BusinessMirror he has a quite long wishlist. “But, I think our priority is free techvoc [technical-vocational] education, since there is already free tuition,” Villanueva said. He explained that “techvoc targets those who immediately want to find employment and do not have the luxury to go through a four-year degree”. Vi l lanueva sug gested t hat Duterte should also certify urgent passage of remedial legislations covering “Occupational Safety and Health Standards, endo [or end of contract allowing shortened hiring of workers], as well as the Philippine Qualifications Framework that will boost our educational system at par with countries with international alignments.” To be continued
can get franchisors,” he added. The Land Bank of the Philippines (LandBank) and the Development Bank of the Philippines (DBP) will provide credit of up to 95 percent for the cost of the jeepneys, with the government shouldering 10 percent. The LandBank has already established a P1-billion credit facility to bankroll the project. “There are three things that are needed for this program to work: the first one is the OFG, [the second is] the routerationalization study, which will determine the most effective way to address the growing demand of commuters; and the third is basically we will work with the law-enforcement agencies to make sure that the jeepney drivers are also treated well, so that no one takes advantage of this complicated system,” he said. Chua added that it will take some time before the program really takes effect, as there are a lot of revisions needed to overhaul the complicated transport system in the country. “It will take a bit of time, to be honest. One way to make it fast is to go back and change all the bad rules that are creating this bad system. That’s why the LTFRB decided to issue a new OFG to replace all the complicated rules. The first
thing we need to do is clean up the rules so that no one will take advantage. Now that will not be sufficient. What will be sufficient is that, over time, we will work on the executional problems,” Chua said. But with President Duterte’s strong political will, he said the government is hopeful that overhauling the complicated transportation system in the country will happen at a much faster pace. “I saw what the President did in Davao, and I hope he can use that political will to do it for the country,” he added. At present, an estimated 220,000 jeepneys can be found within the whole country, with an estimated 70,000 coming from Metro Manila. Around 12 million people comprise the daytime population of Metro Manila. “Metro Manila is now a 12-million daytime population. What that means is that we need a public transport system that can carry half of that population every day. I would surmise that each train system, if I look at the original plan, it requires seven public mass-transit systems. So if one costs P170 billion, then we are looking at P1 trillion maybe only for public transport in Metro Manila,” Chua said.
raw cane and refined sugars. The USDA established the FY 2018 TRQ for raw cane sugar at 1.117 MMT raw value, the minimum to which the US is committed under the WTO Uruguay Round Agreement on Agriculture. This was also the same volume set by the USDA in the current fiscal year ending September 30. The US and Mexico have successfully struck a deal on June 6, settling years-long dispute over the trade of sugar between the two countries. Under the agreement, Mexico will increase the price of its raw sugar being sold at local mills by 0.05 cents per pound for raw sugar, and 2 cents per pound for refined sugar. Also, the import cap on Mexico’s refined sugar was cut drastically to 30 percent from 53 percent, while increasing its raw sugar volume to 70 percent. The agreement lowered the level of
purity at which Mexican sugar can be sold as “refined sugar” in the US. Mexico accepted the modifications in their previous trade agreement on the condition that it will be granted a right of first refusal to supply 100 percent of any “additional need” for sugar as determined by the USDA after April 1 of each year. This means Mexico would always have the first right to fill any “demand for sugar in excess of the demand the USDA had predicted for the crop year”, according to the US Department of Commerce. The SRA has been monitoring the tension between the US and Mexico over its trade agreement, as the additional quota allocation could depend on the result of their trade talks. Latest SRA data showed that, as of June 25, the country has already shipped 106,464.99 MT of sugar to the US, filling more than three fourths of the 136,201 MT allocated by Washington. Preliminary data from the SRA, a government-owned and -controlled corporation attached to the Department of Agriculture, showed that sugar production in crop year 2016-2017 has reached 2.478 million metric tons (MMT). The figure is 10.72 percent higher than the 2.238 MMT produced in the previous crop year. It is also 10.13 percent higher than the SRA’s projection of 2.25 MMT. For the current crop year, the SRA allocated 74 percent of the local sugar output for domestic demand, while 20 percent would be exported to other foreign markets aside from the US. The remaining 6 percent would be shipped to the US.
Duterte. . .
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with Duterte and dinner with the delegates at the SM Lanang Premier were Foreign Affairs Secretary Alan Peter S. Cayetano; the Mayor of National City, San Diego, Ronald Joe Morrison; Mayor of Nebraska Michael Lukes; Philippines Charge d ’ Affaires for Washington, D.C. Patrick A. Chuasoto; Consul General for Hawaii Gina A. Jamoralin; Consul General for New York Ma. Theresa B. Dizon-de Vega; Consul General for San Francisco Henry S. Bensurto Jr.; Consul General for Los Angeles Adelio Angelito S. Cruz; Consul General for Guam Marciano R. De Borja; and Consul General for Chicago Generoso D. G. Calonge.
Right-of-way. . . data showed that 15 projects would require the removal of some 509,495 ISFs. Of this number, around 193,960 households need to be relocated this year alone. Data also showed that some 93,535 ISFs need to be relocated in 2018; 88,500 households in 2019; 74,500 in 2020; 39,500 in 2021; and 19,500 in 2022. Of the 15 projects, those with the most number of ISFs involved are the Housing Program for Calamity Victims with 117,425 families and the North-South Railway Project with 100,000 households. The projects with the least number of ISFs to be relocated are the National Development Co. Industrial Estate Project, which has only three ISFs; the New Centennial Water Source-Kaliwa Dam Project with 46 households; and the Davao Food Complex Project with 85 families. Based on the initial estimates for the Three-year Rolling Infrastructure Program for 2018 to 2020, Rowa acquisition will amount to P209.38 billion. Some P201.17 billion will be needed for 2018, P5.75 billion in 2019 and P2.46 billion in 2020. In terms of relocation cost, the government will require some P657.78 million in 2018 and 2019. The bulk of the relocation cost worth P325 million would be spent in 2019 and the remaining P3.89 million in 2018. In August 2016 the interagency Infrastructure Committee instructed the Housing and Urban Development Coordinating Council (HUDCC) to come up with a plan for the relocation of residents to be affected by Rowa. Neda Undersecretary for Investment Program Rolando G. Tungpalan earlier said the plan can speed up the Rowa, which is often a cause of delay for projects. B ut re c e nt d e v e lo p me nt s showed that some agencies have partnered with other agencies for their Rowa needs. Tungpalan told the BusinessMirror that an example is the Department of Energy and the Department of Public Works and Highways’s (DPWH) memorandum of agreement on Rowa. “I think it may vary, but the HUDCC and the National Housing Authority [NHA] have taken proactive measures in obtaining resettlement needs and, therefore, plan and budget ahead, arising from implementation of major infrastructure,” Tungpalan said. NHA General Manager Marceli-
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no P. Escalada Jr. told the BusinessMirror that the agency is already in talks with other line agencies with regard to the relocation of ISFs in their projects. Escalada said the NHA will be discussing the cost and the number of ISFs to be relocated with the Department of Transportation this week. He also said the NHA will be involved in Rowa and resettlement aspects of the DPWH projects. The Duterte administration promised change and one of the ways it aims to do this is to finally put an end to the country’s infrastructure constraints through its massive infra development program. The Asian Development Bank said the country’s infrastructure constraints have hampered the Philippines’s economic development for decades. Based on the World Economic Forum’s Global Competitiveness Index, the Philippines 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). In Manila alone, traffic congestion is estimated to cost P2.4 billion, or $47.5 million, per day. In response to this, the current administration hopes to usher in a “golden age of infrastructure” that will pour in some P8.44 trillion—which is roughly the size of the country’s GDP in nominal terms —to build various roads, seaports, airports and railways. These infrastructure projects will not only improve connectivity in the archipelago, but also deliver economic opportunities to farflung areas that were left thirsty and hungry for development due to gross neglect. “While the macroeconomy appears robust, inequality across regions, besides across households, remains highly skewed, and chronic poverty persists,” Socioeconomic Planning Secretary Ernesto M. Pernia said in a recent presentation. “Infrastructure program will create mass employment, vitalize the regions and markedly reduce inequality and poverty,” he added. But before any of these projects can start and deliver on its huge promises, the government has to decide what to do with the millions of Filipinos living in areas where these projects are going to be built, as getting projects on the ground and seeing them bear fruit requires not only the movement of public funds but the physical movement of people.
Charter change. . . Last month President Duterte declared the intention of the Executive department to allot P10 billion for the rehabilitation of Marawi.
Charter change
Garcia said the 17th Congress will also convene as a constituent assembly (Con-ass) during the second regular session. “Charter change, as you know, we already passed on plenary the bill that seeks to amend or revise the Constitution through constituent assembly. We hope the Senate will be acting on a similar measure,” she said. “Of course, federalism, which has been a battle cry of our President even during the campaign days, will be of utmost importance as we focus and we hoped that we can move forward in our efforts at achieving Charter change,” Garcia added. House Speaker Pantaleon D. Alvarez has said with or without the Palace’s executive order creating the Constitutional Commission (Con-com), they will convene as Con-ass early next year. Alvarez said lawmakers are still awaiting the appointment of members of the Con-com. Last December Duterte signed Executive Order 10, creating a committee that will review the
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Constitution. The committee will be composed of 25 different experts from the country. According to Alvarez, members of the Con-com will help Congress, acting as Con-ass, in amending the present Constitution to change the present unitary from of government to a federal system.
Civil union
Garcia said a measure seeking to legalize civil union not just for same-sex couples but also for heterosexual couples will be passed this second regular session. She said the measure will promote the civil and human rights of same-sex couples and even heterosexual couples who want to live together but are not yet ready to get married. “It is also our reality of times that there are heterosexual couples that would choose to just, perhaps, stay unmarried but would live together. We need to address the changing realities of our time,” Garcia said. “Rest assured, all of these concerns—whether existing laws, such as the family code or the Constitution, would be transgressed—this will all be tackled on the committee level,” she added. Alvarez has already expressed intention to author the bill.
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PNP and DND ask Duterte to extend ML in Mindanao
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he Philippine National Police (PNP) said on Monday it has already endorsed to President Duterte the extension martial law in Mindanao as the government winds down its operations in Marawi City by clearing the remaining areas still held by the Maute-Islamic State (IS) group. “We have a position paper that we submitted last Friday expressing our stand on extending the martial law, but we did not put a period up to when. But we are for the extension,” PNP Chief Director General Ronald M. dela Rosa said on Monday. Dela Rosa said their recommendation still covers the whole area of Mindanao. Last Sunday Defense Secretary Delfin N. Lorenzana said they have also submitted their position on martial rule to Duterte, but he declined to say whether they moved for its extension, pending the Commander in Chief’s decision. Lorenzana said that they submitted their recommendation to Duterte on Thursday last week. The martial-law declaration will expire on July 23, but leaders of the House of Representatives said earlier that they were favoring for its exten-
DELA ROSA: “Number one, those identified narcopoliticans who are believed to be supporting the cause of the Maute are still at-large. We still have to account them, we should arrest them first.”
sion, even for a period of five years. Lorenzana said they were leaving it up to Duterte to decide, but assured the military can be relied upon to implement and carry out the order should Duterte moves for the extension. In recommending for the extension of martial law, dela Rosa said they enumerated several reasons. “Number one, those identified narcopoliticans who are believed to be supporting the cause of the Maute are still at-large. We still have to account them, we should arrest them first,” he said. The two arrest orders issued by Lorenzana as the administrator of the martial law identified more than 200 members, followers and supporters of the Maute-IS Group whom security forces were tasked to arrest. Rene Acosta
Poe to P-Noy: Tell all in court about Mamasapano debacle
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By Butch Fernandez
@butchfBM
en. Grace Poe on Monday said she expects former President Benigno S. Aquino III to tell all about his role in the Mamasapano massacre that resulted in death of 44 Special Action Force (SAF) commandos ambushed by Moro rebels in Mindanao during the Aquino administration.
Sought for reaction to the decision of the Office of the Ombudsman to indict the former president, along with then suspended Philippine National Police (PNP) Chief Alan Purisima for the Mamasapano debacle, Poe said the filing of the case will enable the investigation to move on. “When we conducted the Senate hearings (into the Mamasapano massacre), we wanted to find out what
really happened, render justice and ensure restoration of peace and order in the area. But none of that would happen if we don't investigate first, so we ensured that even if the President is among those to be investigated, we will be fair to all. So it is good that the Ombudsman is now elevating a case to put closure to it,” Poe said, adding it would also allow Aquino to clarify his role in the massacre.
DA orders police verification of agri product importers By Jasper Emmanuel Y. Arcalas @jearcalas
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griculture Secretary Emmanuel F. Piñol ordered on Monday the mandatory physical inspection of all registered agricultural importers in a bid to “clean” the sector from bogus entities. Piñol said the Department of Agriculture (DA) has tapped the Philippine National Police (PNP) in validating all the registered importers under the department on whether they are really “physically” existing. Piñol added that Supt. Eldy Magbanua has been detailed to the Office of the Secretary to lead the team that would physically visit one by one and check the addresses of the companies under the agency’s list of accredited importers. “They will validate all the names of the registered importers in the listing of the DA,” Piñol told reporters in an interview on July 17. “I want all of them to be validated because I have a suspicion that some companies on the list are fictitious and just trying to secure more SPS-IC [sanitary and phytosanitary import clearance],” Piñol added. The mandatory inspection shall commence on Tuesday after finalizing the team that will conduct the operation. The DA chief said if a certain registered importer is found out to be bogus, it will be automatically “banned” from the agency. “We will make a sweeping cleanup of this sector once and for all so that the only legitimate ones will remain,” Piñol said. The team that Magbanua would form would be comprised only of members from the PNP and the DA, according to Piñol. List of importers held by the DA
Editor: Vittorio V. Vitug • Tuesday, July 18, 2017 A3
I want all of them [importers] to be validated because I have a suspicion that some companies on the list are fictitious and just trying to secure more SPS-IC.”—Piñol showed that sometimes, a specific person is affiliated to more than 10 importing companies, according to Piñol. “For example in the meat imports, the MAV [minimum access volume] is being raffled. So, automatically if you have 15 companies you have higher chance to get bigger import allocation,” Piñol added. However, the agriculture chief admitted that despite the changes being imposed by the DA to remove scrupulous importers it’s not an assurance that cartels would be dissolved. But Piñol added that these cartels would have a hard time orchestrating their antics. “I will be lying through my teeth if I’ll say that our system is 100-percent fool proof,” Piñol said. “There will always be the more imaginative and enterprising people who can pull a fast one on us but it will be difficult for them.” “Because we are not favoring anybody, we are not protecting anyone. I’m just doing my job—I just want to clean the whole industry and give consumers good price [of commodities],” he added. Piñol said they will not stop the issuance and processing of SPS-ICs while the physical inspection is ongoing. “The importation is open to all, in fact, we are encouraging garlic importers from Mindanao and the Visayas to make their own importation,” he said. Piñol also issued on Monday
Administrative Order 5 imposing the “indefinite” suspension of 43 garlic importers who were not able to utilize their import permits from applying and securing new SPS-IC. “Effective immediately, the companies included in the list attached herewith are hereby indefinitely suspended and/or prohibited from applying for and securing sanitary and phytosanitary import clearance for garlic,” he said in the memorandum. “These companies failed to utilize their SPS-ICs, thereby affecting the domestic supply of garlic, which resulted in unreasonable market price increases to the detriment of the Filipino consumers,” he added. Piñol said the companies who are included in the list are required to submit a justification explaining why they failed to use their SPS-ICs before being allowed to import again. Documents given by the DA to reporters showed that from January to June this year, it issued a total of 1,420 SPS-ICs to the 43 garlic importers. The total issued SPS-ICs covered an expected total volume importation of 70,100 MT. However, the 43 garlic importers only utilized 438 SPS-ICs, or 30.84 percent of the total issued permits, bringing in 19,252.2 MT of imports during the sixmonth period.
44 The total count of SAF troopers who perished in the Mamasapano massacre on January 25, 2015
In a radio interview, Poe was asked to affirm Senate probers’ earlier findings that Aquino was provided “inaccurate information but was ultimately responsible for giving assent,” and failing to stop then suspended Purisima from usurping authority that resulted in the death of 44 police commandos. Poe, in response, clarified that their inquiry was conducted in aid of crafting remedial legislation, “to
plug loopholes in the law in order to prevent a repeat of the tragedy.” The Senate Committee on Public Accountability (Blue Ribbon), at the initiative of it’s current chairman, Sen. Richard J. Gordon, is poised to reopen their inquiry, even as Poe said the proper court is set to hear the case and it is now the judicial branch that would examine the evidence and hear from Aquino himself how the massacre unfolded. “It is now up to the court,” Sen. Poe said, to receive evidence and let Aquino confront charges of usurpation of authority which, she says, involves either by direct involvement or inducing and empowering a person to commit the act of usurpation, “knowing Purisima was suspended at that time.” Poe asserted it was clear that former President Aquino knew that Purisima was under suspension but he was still made to supervise the operation. “Purisima would not have taken that action without direct orders from Aquino,” the senator added.
Groups to experts: Consider vapes as ‘safer’ alternative to tobacco
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onsumer groups asked local health experts and antitobacco advocates to look into the findings of independent studies on electronic cigarettes (e-cigarettes or “vapes”) as safe alternative to tobacco. This after the World Health Organization (WHO) is seeking to ban indoor use of e-cigarettes, and Health Secretary Paulyn Ubial said the Department of Health is open to adopting the WHO’s recommendation. “The WHO, which believes that the only way to reduce smoking is for smokers to ‘quit or die’, should open its eyes to the evidence and consider the potential for new technologies, such as e-cigarettes, to reduce smoking-related harms,” said Tom Pinlac, president of The Vapers Philippines. “Let us provide smokers who are trying to quit with accurate information on e-cigarettes,” said Joey Dulay, president of the Philippine E-Cigarette Industry Association. T he W HO’s recommendation to ban the indoor use of e-cigarettes is based on its report on Electronic Nicotine Delivery Systems released in August 2016. The report claims, among others, that metals exposures among e-cigarette users are higher than in second-hand smoke and could be harmful to bystanders. The WHO report was analyzed and robustly criticized by the UK Centre for Tobacco and Alcohol Studies (UKCTAS), which includes as authors John Britton (head of the Royal College of Physicians Tobacco Advisory Group), Ilze Bogdanovich (Cancer Research UK), Ann McNeil (professor of Tobacco Addiction at King’s College London and Trustee of the Society for the
Study of Addiction and Healthier Futures) and Linda Bauld (professor of Health Policy at the University of Stirling). The critique relies upon evidence developed for Public Health England, an operationally autonomous executive agency of the UK Department of Health. The UKCTAS critique points to evidence set out in the recent Royal College of Physicians’ report “Nicotine without Smoke” and subsequent research which recognize that e-cigarettes are far less harmful than smoking and that smokers who find it difficult to stop should be encouraged to use them. According to the UKCTAS critique, the WHO report fails to accurately present what is already known about e-cigarettes. In particular, the report positions e-cigarettes as a threat rather than an opportunity to reduce smoking; fails to accurately quantify any risks of e-cigarettes compared with smoking and misrepresents existing evidence about any harms to bystanders. The UKCTAS critique concluded that metal emissions from e-cigarettes are unlikely to represent serious health hazards. UKCTAS, a network of 13 universities (12 in the UK, one in New Zealand) funded by the UK Clinical Research Collaboration, aims to deliver an international research and policy-development portfolio, and build capacity in tobacco and alcohol research. The center’s work includes developing strategies for behavior change in tobacco and alcohol use, assessing risks, identifying measures to reduce harm, monitoring the tobacco and alcohol industries and developing effective public policies to improve public health and well-being. PNA
Economy
A4 Tuesday, July 18, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon
BusinessMirror
FPI rejects proposal to tax SSBs
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he Federation of Philippine Industries (FPI) is opposing the Department of Finance’s (DOF) proposal to tax sweetened beverages, saying the public-health issue aspect of the measure may be exaggerated.
FPI Chairman Jesus L. Arranza reiterated the same sentiment earlier aired by detractors of the proposal. He said the measure, if approved, would likely hit the low-income segment of society. “Beverages, like the 3-in-1 coffee, are being consumed by the middleand lower-income classes. How do you tax the rest? We shouldn’t tax beverages unless you can make it equitable,” said Arranza, underlining the measure’s perceived inequity. The association head is proposing to completely scrap the measure, adding in a report that a nuanced response rather than a blanket excise tax of P10-per-liter-volume capacity on sugar-sweetened beverages (SSBs) is needed. SSB, according to the House Bill (HB) 5636, encompasses all non-
alcoholic beverages that contain caloric sweeteners, added sugar, or artificial/noncaloric sweetener (may they be in liquid, syrup, concentrate, or solid form) that is added to water (or other liquids) to make a drink. “Sugar-sweetened beverages comprise a wide scope of products with a varied level of complexity in sourcing, manufacturing, distributing and selling [of] such products,” the FPI report read. “Obesity, as the public-health issue being served as the rationale for the sweet tax, is also a complex and multifaceted, with global experts debating policy actions to curb the issue,” the report continued. According to the comprehensive tax-reform bill approved by the House, a revenue gain of P47 billion will be realized from the sugar tax.
This is to offset reforms in personal income tax the DOF is targeting to enact. A BusinessMir ror repor t quotes DOF Undersecretary Karl Kendrick T. Chua as saying the tax on SSBs at P10 per liter is a health measure helping more Filipinos to switch to eating healthier products and for the manufacturers to create healthier food and beverage alternatives. Rep. Estrellita B. Suansing of the First District of Nueva Ecija
is a principal proponent of the SSB tax and her proposal was among the 54 tax-related bills incorporated into the final version of HB 5636, or the proposed Tax Reform for Acceleration and Inclusion Act, earlier approved by the House of Representatives. Despite approval at the Lower House, Arranza expressed optimism that the Senate may look at the measure with more scrutiny and will eventually remove the provision. Catherine N. Pillas
Sugar-sweetened beverages comprise a wide scope of products with a varied level of complexity in sourcing, manufacturing, distributing and selling [of] such products. Obesity, as the public-health issue being served as the rationale for the sweet tax, is also a complex and multifaceted, with global experts debating policy actions to curb the issue.”—FPI report
TRAIN has good chance in Senate, bicam–lawmaker
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ead proponents of the Tax Reform for Acceleration and Inclusion (TRAIN) bill are optimistic the Senate version of the measure will have smooth sailing in the upper chamber when Congress resumes sessions later this month, and eventually the bicameral committee will enact it by September this year. Rep. Joey S. Salceda of the Second District of Albay, the bill’s principal author, said in about 107 presentations on TRAIN already conducted nationwide, he has answered and discussed the most asked questions about TRAIN, the Comprehensive Tax Reform Package of the Duterte administration. The discussions were held mostly with transport groups, youth groups, civil-society organizations people’s organizations and local government units (LGUs) around the country. The presentations and other related information initiatives being waged by teams from the Department of Finance (DOF) “shall have cleared the most misunderstood aspects of the proposal”, said Salceda, vice chairman of the House Ways and Means Committee. The House overwhelmingly approved the measure, which garnered 246 affirmative votes, nine negative and one abstention during its final reading on May 31. Certified urgent by President Duterte, the measure is seen to deliver a monetary impact of about P354 billion annually, resolve income inequality between the poor and the elite, and further enhance the country’s global competitiveness and credit rating. The approved TRAIN version consolidated Salceda’s original House Bill (HB) 4688; HB 4774 of Rep. Dakila Carlo E. Cua of the Lone District of Quirino; and several others. It adopted the title and most provisions of Salceda’s bill, including the Conditional CashTransfer Program, and the proposals of the DOF. Contrary to some misunderstanding and misperceptions by certain sectors, Salceda said the TRAIN measure is “decidedly pro-poor and will, in fact, deliver a total monetary impact of P354 billion annually on middle income and poorest Filipino households. The proposed scheme best balances the need to rationalize and ensure equity in the tax system, while raising much-needed revenues
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DOE ‘rebrands’ e-trike program By Lenie Lectura
@llectura
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HE Department of Energy (DOE) expects to finalize the amendments of the loan component of the electric tricycle (e-trike) program with the Asian Development Bank (ADB) within this month. “The target of the DOF [Department of Finance], ADB and DOE is to have these amendments in place before the end of July and complete roll out of units within the year,” DOE Director for Energy Utilization and Management Bureau Patrick Aquino said. It can be recalled that the agency has scaled down its e-trike project, deploying only 3,000 units at a cost of P1.73 billion. The original project scope of the project involves the deployment of 100,000 e-trike units nationwide, with a total project cost of P21.672 billion that required various arrangements involving the government, private sector and the ADB. However, there were very few takers for the units because the initial cost and maintenance was too steep for operators and charging stations in the targeted areas for deployment were still lacking. As such, the DOE decided to scale down the project, saying this was necessary in ensuring the viability of the project at a minimal cost to taxpayers. As there would be substantial changes in the project, the DOE commenced in securing amendments to the loan, Project Administration Manual and related documents with the ADB. “We’ve rebranded it. It’s now
₧21.672B The total project cost of the original e-trike program before it was scaled down to P1.73 billion
the tricycle modernization program to align it with the overall transport modernization program of the government. We are already in the advanced stages for the amendment of the loan agreement . A major change is to open it up to other channels for distribution. We’re just awaiting amendments to proceed. We’ve come out with a business model wherein we separated physical unit from the charging infra and the battery, which we feel is a viable model for duplication and sustainability,” Aquino explained. The DOE, he added, is also working with the local government units to come up with a viable financial arrangement for those that will avail themselves of the units. “For t he g uarantee, we’ve worked to have a language that softens it to be more in line with what you’re seeing in the PUJ [public-utility jeepney] modernization program of the DOTr [Department of Transportation]…wherein we offer low financing, no cash out, no down payment. “We’ve also strengthened or highlighted the vehicle useful life program component, essentially the scrapage aspect of it, and our continued push for solar charging station for the charging component, the infra side,” Aquino added.
Makati renews crackdown vs illegal biz establishments
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Rehab and reconstruction Philippine Insurers and Reinsurers Association Deputy Chairman and Fortune General Insurance Corp.
President and COO Michael F. Rellosa gestures during his talk on Financing and Insurance Mechanisms in the Context of Rehabilitation and Reconstruction organized by the Asian Institute-Zuellig Graduate School of Development Management for the city government of Makati at the Asian Institute of Management in Makati City. ALYSA SALEN
for public spending in infrastructure and in the people.” TRAIN is envisioned to transfer some P170 billion annually from the rich to the middle class and low-income households and “ultimately reduce poverty to single digit, grow the economy and transform the Philippines into an Asian economic powerhouse by 2028”, according to the lawmaker. He stressed that “TR AIN is the only tool that could make our tax system more efficient, equitable and propoor, since the government cannot exclusively tax the rich because such measure would immediately be struck down as class legislation.” The approved version includes increased excise taxes on oil and
vehicles, expanded value-added tax (VAT) base and tax on sweetened beverage and lotto winnings, but retains VAT exemptions for senior citizens and disabled persons, and on transactions by various cooperatives. It is expected to hike tax revenues that will bank roll the government’s massive development programs and generate inclusive economic growth that will ultimately benefit the poorest families. He pointed out that the measure’s comprehensive value is not just limited to improving the lives of disadvantaged Filipinos, but also the development capabilities of their LGUs, with 40 percent with of the TR AIN’s revenues going to the internalrevenue allotments of barangays,
towns, cities, provinces and the Autonomous Region in Muslim Mindanao. The measure will overhaul the country’s personal income-tax (PIT) system. Effective 2018 to 2020, taxpayers earning up to P250,000 a year will be tax exempt, while those earning up to P400,000 will pay a 20-percent tax on the excess over P250,000. People earning up to P800,000 will be taxed P30,000 plus 25 percent in excess of P400,000. Those earning up to P2 million will pay P130,000 plus 30 percent of the amount in excess of P800,000. Those earning up to P5 million will pay P490,000 plus 32 percent in excess of P2 million, while those earning over P5 million will be taxed P1.45 million plus 35 percent in excess of P5 million.
hree business establishments were ordered closed by the Makati Business Permit Office (BPO) for violating provisions of the Revised Makati Revenue Code and Republic Act (RA) 9208, raising to 230 the number of establishments ordered closed by administration of Mayor Abigail S. Binay since July last year. In a report to the mayor, the BPO named the two establishments found operating without a mayor’s permit as Dalat Authentic Vietnamese Cuisine in Barangay San Antonio and Pimentel Welding Shop in Barangay Rizal. These were closed down for violating Section 4A.01 of the Revised Makati Revenue Code, or City Ordinance 2004-A-025. On the other hand, the Loreamar Spa Services in Barangay San Antonio has violated Section 4 of RA 9208, also known as the Anti-Trafficking in Persons Act of 2003, following a raid by the Makati police on June 28, assisted by six personnel from the Makati Social Welfare Department. Upon taking office last year, Binay ordered the BPO, the city building official and other concerned city agencies to intensify efforts to crack down on businesses operating ille-
gally in the city. The present administration has taken a strict stance on the enforcement of the city revenue code “to protect the interest of legitimate businesses that have underpinned the sustained economic growth of Makati”. The imposition of the mayor’s permit and other regulatory fees by the city government to regulate any business activity or undertaking conducted within Makati is part of the police powers granted under the Local Government Code of the Philippines. Meanwhile, violation of Section 4 of R A 9208, the Anti-Trafficking in Persons Act of 2003, carries the following penalties: for individual offenders, imprisonment of 20 years and a fine of not less than P1 million but not more than P2 million. If the offender is a corporation, partnership, association, club, establishment or any juridical person, the penalty shall be imposed upon the owner, president, partner, manager and/or any responsible officer who participated in the commission of the crime or who shall have knowingly permitted or failed to prevent its commission. Claudeth Mocon-Ciriaco
Duterte may be losing green groups’ support By Jonathan L. Mayuga @jonlmayuga
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F environment and natural resources are main concerns, President Duterte may be getting a failing mark as far as his first year in office is concerned, environmental groups said on Monday. In fact, the Chief Executive may be actually losing their trust and confidence. In a news statement, Duterte’s first-year performance has suffered a steep 70-percentage-point drop in confidence among environmental groups based on the groups’ “Eco-
Challenge Report 2017”, a comprehensive assessment by the Ecological Challenge for Change Coalition of the Duterte administration’s environmental governance. They handed over the report to National Anti-Poverty Commission Secretary Liza L. Maza. The coalition conducted a presurvey focus-group discussion (FGD) among coalition members, a targeted online “Green Sentiments”, comprising a survey among environmental groups, including 10 major national and regional networks, and a qualitative assess-
ment of the Duterte government’s policies and programs. Following Duterte’s victory in the 2016 national elections, environment groups had a +60-percent net approval rating for his presidency. Duterte’s track record of decisively implementing local ordinances on environmental protection as Davao City mayor and his tough rhetoric against mining and logging presented a concrete prospect of meaningful environmental reforms. They said by the end of his first year in office, this has dropped to a
-10-percent net approval rating. This came as no surprise as eight of the nine issue themes assessed by EcoChallenge had serious problems and challenges that greatly hampered any space for pursuing meaningful reforms, the groups said. The survey respondents rated as positive only nine out of the 27 highlight environment-related actions identified in the presurvey FGD. Former Environment Secretary Regina Paz L. Lopez’s mining closure and suspension orders against 28 commercially operating big mines were rated as the Duterte admin-
istration’s best performance by 60 percent of all respondents, while the unaddressed extrajudicial killings and other human-rights violations against environmentalists were considered the worst by 65 percent of the respondents. Lopez’s closure orders of big mines that allegedly failed environmental standards based on an audit criteria, which includes environmental, social and biodiversity considerations, were seen as an indictment of the mining industry’s long-standing negligence over regulations.
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AseanTuesday BusinessMirror
Editor: Max V. de Leon • Tuesday, July 18, 2017 A5
Thailand tourism tack focuses on spending
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hailand is now so popular for holidays that almost 35 million foreign tourists— equivalent to half the country’s population—are expected this year.
As the influx gets harder to manage, the government is shifting strategy. It’s now targeting a minimum increase in tourism revenue of about 5 percent annually instead of a particular number of visitors, Tourism Minister Kobkarn Wattanavrangkul said. That means encouraging longer stays and higher daily spending, a mix the typical Australian holidaymaker exemplifies, she said. “Maybe they’re the ones who are like: this is my time—I eat, I shop, and I eat, and I shop,” Kobkarn, 56, said in an interview. Australian visitors were among the top 10 biggest spenders in terms of per-capita daily expenditure last year, forking out 5,831 baht ($172), Tourism Ministry data shows. Their average length of stay of almost 14 days was the highest in that group. Some nationalities take even longer holidays but tend to be more parsimonious. British tourists, for instance, stayed for just over 18 days on average while spending 4,376 baht daily. Tourism is a bright spot for Thailand’s economy, which faces challenges, such as political uncertainty and sluggish consumer demand. The sector makes up about 18 percent of GDP, Kobkarn said in the interview in Chiang Mai last month. “We no longer have a target for number of tourists,” she said. “We shouldn’t go beyond the limit that we can cope. But there’s no statistic on that yet. When people say that Phuket may be too crowded, or Bangkok is too crowded, we have to make sure that we are introducing new destinations too.” Arrivals from overseas more than doubled in the past decade, powered by a surge in Chinese
34.9M
Thailand’s forecast tourist arrivals this year, 7 percent higher than 2016’s actual arrivals
holidaymakers who contributed 28 percent of 1.6 trillion baht in foreign tourism receipts in 2016. Affordability is one reason Thailand has usurped Malaysia as Southeast Asia’s most popular destination, but Kobkarn said the nation must focus on quality, as well as cost to tackle emerging competitive threats from the likes of Myanmar and Vietnam. Quality doesn’t just mean targeting wealthy tourists, as Thailand needs travelers on a variety of budgets, Kobkarn said. Instead, it refers to offering good-value experiences that encourage return visits, increase the average length of stay and bolster daily spending per head, she said. Visitors from the Middle East are the biggest per-capita daily spenders, according to the Tourism Ministry data. Chinese tourists stood out for above-average expenditure and sheer number of arrivals—8.8 million, dwarfing other nationalities and making China the most important single country for tourism receipts. Thailand’s years-long tourism boom slowed somewhat in recent months. That’s partly because of terrorist bombings in resort towns in August last year and a clampdown by the military government on some operators of large Chinese tour groups, which
Singapore home sales fall 21% in June as fewer projects launched
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ingapore home sales fell 21 percent in June from the previous month, as fewer new projects were launched in the city-state. Developers sold 820 units last month, compared with a revised 1,039 in May, according to Urban Redevelopment Authority data released on Monday. A total of 159 units were offered, down from 370 in May, the data showed. Developer sales have fallen below 1,000 units for the first time in four months, following an increase after the government in March tweaked some of its property curbs. Singapore’s leaders, determined to keep a lid on home prices in the city-state, have unleashed a series of measures to cool the market since 2009. The govern-
ment in March rolled back some property-market restrictions for the first time in eight years, although it has also cautioned that those adjustments don’t signal an unwinding of the measures. Property prices have dropped for 15 straight quarters, the longest slide since the data were first published in 1975. An index tracking private residential prices fell 0.3 percent in the three months ended June 30 from the previous quarter, according to preliminary data from the authority on July 3. Home values have dropped 12 percent from their 2013 peak. Projects launched last month include The Clement Canopy, which sold 13 of 50 units marketed, while Hillion Residences sold 12 of 50 units it placed on the market. Bloomberg News
were judged to generate insufficient local spending. Arrivals are likely to pick up in the second half of 2017 as security concerns fade and Chinese visitors embrace independent travel over package tours, according to Bloomberg Intelligence. That signals more strain for the country’s airports, some of which are
already stretched beyond capacity. State-run Airports of Thailand Pcl. is planning to invest about $6 billion over a decade to try to ease the bottlenecks. Even as Kobkarn tries to focus on revenue targets rather than visitor numbers, arrivals are projected to climb, whether drawn by the allure of white-sand beaches in resorts such
as Krabi, the gastronomic delights of Bangkok or the perennially notorious sex capital Pattaya. The Bank of Thailand forecasts 34.9 million tourist arrivals this year, a climb of about 7 percent from 2016, and 37.3 million in 2018. That’s projected to help Southeast Asia’s secondlargest economy expand 3.5 percent in 2017 and 3.7 percent next year.
Thailand needs to be a quality tourism destination since a range of factors can prevent it being seen as the cheapest, such as rising wages or an appreciating exchange rate, Kobkarn said. “We’re working very hard for people not to think only of the cost,” she said. “We’re not the best. We still have many negative things. But we’re very sincere in improving ourselves.” Bloomberg News
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Tuesday, July 18, 2017 • Editor: Lyn Resurreccion
The World BusinessMirror
S. Korea makes first move, offers exchanges with North
North Korean Son Kwon Geun (center) weeps with his South Korean relatives, as he bids farewell after the Separated Family Reunion Meeting at Diamond Mountain resort in North Korea in October 2015. South Korea’s Red Cross said on July 17 it wants separate talks at the border village on August 1 to discuss family reunions. Korea Pool Photo via AP
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outh Korea proposed resuming some military and humanitarian exchanges with North Korea as President Moon Jae-in seeks to follow through on campaign pledges to pursue dialogue with Kim Jong Un.
The Defense Ministry offered talks with Pyongyang counterparts on Monday, while the National Red Cross floated reunion events for families split by decades of hostilities. The announcements came after North Korea signaled a willingness to consider Moon’s overtures, despite voicing skepticism about the prospects for a breakthrough. The South Korean president,
who took office last May 10, is looking to ease tensions over Kim’s pursuit of a nuclear missile capable of striking the US, Seoul’s primary security ally. During a speech in the capital of a reunited Germany this month, Moon repeated his openness to direct talks with the North Korean leader on everything, from weapons programs to outright peace. Seoul’s olive branch comes as
US President Donald J. Trump signals frustration with the pace of efforts by China, North Korea’s long-time ally and top trading partner, to pressure Kim back to the bargaining table. T he sta kes have r isen for Trump after North Korea’s first successful test on July 4 of a missile that could reach Alaska, if not continental America. Moon had previously offered to meet Kim “anytime, anywhere”, but said such negotiations would only be possible under the right circumstances. Last Monday’s proposals in Seoul demonstrated a willingness to make the first move. Vice Defense Minister Suh Choo-suk told a briefing that South Korea proposed a meeting last Friday at the border village of Panmunjom, with the aim of suspending “all hostility against each other that escalates tensions
at the military demarcation line”. Suh said he expected a “positive response” to the idea, without elaborating on what he meant by hostility. Separately, the Red Cross raised the possibility of a meeting with its North Korean counterpart on August 1 to discuss possible family reunions to coincide with shared holidays on October 4. North Korea didn’t immediately respond to the latest offers. On Saturday, its official Rodong Sinmun newspaper criticized Moon’s approach as a “series of sleep-talking sophistries that create even greater hurdles” to talks. Still, the paper expressed “relief ” that Moon has signaled a departure from the policies of his conservative predecessors. While humanitarian exchanges couldn’t relieve the threat of war, North Korea never supported the suspension of “inter-Korean sporting events or joint projects for human rights, aimed at removing sadness of the nation’s division,” it said. China has resisted US calls for tougher sanctions, which it fears could destabilize Kim’s regime. Beijing has been joined by Moscow in its “suspension-forsuspension” proposal, in which North Korea suspends weapons tests, while South Korea and the US defer further large-scale military exercises. Seoul and Pyongyang remain far apart on the prospects of an eventual peace deal. The Rodong Sinmun said a “fundamental shift” in policy was needed to reassure North Korea of Moon’s intentions. Meanwhile, Moon has said peace would require the complete, verifiable and irreversible denuc lea r i z at ion of t he Korean Peninsula. In his so-called Korean Peninsula Peace Initiative, Moon suggested the countries could one day connect their economies, railways and pipelines. He said now was North Korea’s last best chance to change direction. Bloomberg News
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S. Korea basic-wage hike keeps Moon on target for pay pledge S $6.60
outh Korea’s minimum wage is set to increase next year by 16 percent to 7,530 won ($6.60) per hour, the biggest jump since 2001, giving President Moon Jae-in an early victory in his push to boost incomes. Moon is seeking to nudge the economy away from its export dependence to a structure that relies more on household spending, which makes higher pay and quality jobs more important. He’s pledged to be a “jobs president” and to raise the minimum wage to at least 10,000 won by 2020. The decision over the weekend by the Minimum Wage Commission ends more than a month of tug-of-war between labor and business representatives. Labor advocates had initially requested a 55-percent hike, while business representatives suggested just 2.4 percent. About 12 percent of workers were receiving the minimum wage or lower in 2015, according to an estimate by Korea Labor Institute. The finance ministry said in a statement last Sunday that the government will give financial aid to some small-business owners to help them pay for part of pay hike. To meet Moon’s 10,000 won goal, the minimum wage will need to keep increasing by about 15 percent every year, compared with average gains of 7.4 percent over the past five years. Businesses with five or more employees increased pay to their overall work forces by an average 3.8 percent in 2016 from previous year, according to the Korea Labor Institute.
Social welfare
“For Korea, where the socialwelfare system is weak, workers are more dependent on income and a higher minimum wage is important from a human-rights perspective,” said Choi Pae-kun, an economics professor at Konkuk University in Seoul who supports the 10,000 won target.
The minimum wage in South Korea in 2018, or an increase of 16 percent
South Korea’s minimum wage started in 1988 at the equivalent of half a dollar per hour. This low start made the pace of annual increase higher than those of overall wages, but the level still lags peers in the Organisation for Economic Co-operation and Development (OECD). Comparative figures for 2016 show Korea’s minimum wage at about $5.80 per hour, similar to Israel and Poland, but lower than Japan at around $7.40 and is about half of Germany’s, according to data by OECD. Kwon Young-sun, an economist for Nomura International, said in a report on Monday that small businesses may pass on part of the burden by increasing retail prices, which adds upside potential to Nomura’s 2-percent inflation forecast next year. Kwon said higher inf lation could lead to the Bank of Korea raising its key rate sooner than Nomura’s forecast for a hike in the second half of 2018. Korea’s businesses have opposed big hikes, saying they hurt profitability and would lead to lay offs. According to a June survey by the Korea Federation of SMEs, about 90 percent of companies want raises kept below 5 percent. If it is increased to 10,000 won over the next three years, 55 percent said it might lead to their bankruptcy. The Korean Confederation of Trade Unions said in a July statement that 10,000 won is an amount that a family of two or three needs to lead a life with a “minimum of dignity”. Bloomberg News
UK seeks progress on citizens’ rights as Brexit talks resume
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rexit Secretary David Davis urged United Kingdom and European Union (EU) negotiators to push for progress on resolving thorny questions around the rights of citizens resident in each other’s nations during the second round of divorce talks starting on Monday in Brussels. “We made a good start last month, and this week we’ll be getting into the real substance,” Davis said in a statement released by his office. “Protecting the rights of all our citizens is the priority for me going into this round, and I’m clear that it’s something we must make real progress on.” Davis’s urgency has a practical reason: with the clock ticking down to Britain’s scheduled EU exit in March 2019, citizens’ rights is one of three areas, along with the Irish border and Britain’s exit bill, that EU chief negotiator Michel Barnier says need sufficient progress before he’ll discuss future ties with the UK. That relationship is crucial to determining the country’s future economic health, and clarity on it is needed to put business at ease. “It’s absolutely clear that businesses, where they have discretion over investment, where they can hold off, are doing so,” Chancellor of the Exchequer Philip Hammond said last Sunday on BBC Television’s Andrew Marr Show. “And you can understand why. They’re waiting for more clarity about what the future relation-
ship with Europe will look like.”
Squabbling ministers
Envoys will negotiate in Brussels through last Thursday. They’ll attempt to hammer out an agreement on what rights some 3.2 million EU citizens in Britain and another million Britons living in the EU will retain after Brexit. Prime Minister Theresa May’s proposals last month met a tepid reception from her EU counterparts, who said they didn’t go far enough. Davis has warned May repeatedly that the uncertain fate of the citizens was souring his meetings with member-states, two people familiar with the matter told Bloomberg this month. Even so, she rejected his pleas to make an unconditional pledge on their rights. May faces the daunting task of navigating Brexit after being stripped of her majority in the House of Commons in June’s election, while holding her Conservative government together amid squabbling ministers and talk of a potential putsch. S ome 3 0 Tor y l aw m a k e r s would back a leadership bid by Davis, the Sunday Telegraph reported, citing unidentified allies of the Brexit secretary including two former cabinet ministers. A Sunday Times newspaper story on the divisions amid positioning to succeed May was illustrated by an image of Hammond, Davis and Foreign Secretary Boris Johnson
aiming pistols at each other.
Polling woes
Capping the premier’s woes were two surveys in the weekend papers: a Survation poll for the Mail last Sunday that put the opposition Labour Party two points ahead of May’s Tories, and an Opinium survey that found 57 percent of people think May should resign before the next scheduled general election in 2022. More divisions were exposed last Sunday, when Hammond said transitional arrangements for Britain leaving the EU are likely to last a couple of years, rather than the few months suggested by Trade Secretary Liam Fox. “It depends how long we need to put in place new customs systems, new migration systems; these things can’t be magicked up
overnight,” Hammond said. “We’re not going to be talking a couple of months, we are going to be talking a couple of years.” Hammond is a leading advocate in the cabinet for a so-called soft Brexit, in contrast to campaigners for a clean break, such as Fox. The trade secretary said in a Bloomberg TV interview on July 13 that he would be “very happy” with a transition period of just “a few months”.
‘Overpaid’ workers
Speaking on BBC TV’s Sunday Politics show, Fox sought to downplay differences with Hammond. “As long as we leave in March 2019, then I’m happy, as long as we’ve got a very time-limited transitional period to make it work for business,” he said. The infighting goes further
than Brexit. The Sunday Times cited five unidentified sources as saying Hammond had described publicsector workers as “overpaid” during the cabinet meeting last week, and was criticized by Johnson for the statement. Johnson is among ministers who’ve suggested the Treasury’s cap on public-sector pay should be eased. Meanwhile, last Saturday’s Sun newspaper reported that Hammond made a sexist comment about women driving trains. “Some of the noise is generated by people who are not happy with the agenda that I have, over the last weeks, tried to advance of ensuring that we achieve a Brexit which is focused on protecting our economy,” Hammond said. There was little let-up on Monday, with the Telegraph citing an unidentified cabinet minister as accusing Hammond of trying to frustrate Brexit, and treating proleave colleagues as if they were pirates who had kidnapped him. Two reports set for release on Monday illustrate the tricky path May must navigate as she tries to balance the wishes of those who want to soften Brexit by staying in the single market and customs union, and those who are prepared for the country to drop out even if no deal on future ties is reached.
‘Massive venture’
The group Migration Watch, which argues for lower immigration,
said in a report that if the UK remains in the single market and thus subject to free-movement rules after Brexit, net migration from the EU is likely to continue at about 125,000 people a year for at least the next decade, keeping overall annual net migration at about 250,000. May has vowed to pull out of the single market and cut immigration to the “tens of thousands”. A University of Sussex study focusing on the food supply showed the potential consequences of no deal: tariffs of as much as 22 percent, the need to replace a “vast array” of food standard institutions across Europe, and tricky questions of how to replace EU subsidies and farm laborers who often take seasonal work that British citizens don’t want. The UK food system is “like the rabbit caught in the headlights, with no goals, no leadership and eviscerated key ministries”, the academics wrote. “We keep being told by our politicians that Brexit can be delivered easily,” Gus O’Donnell, who as a former cabinet secretary was once the country’s top civil servant, wrote in the Observer last Sunday. “This isn’t correct. Believe me, we are embarking on a massive venture. There is no way all these changes will happen smoothly and absolutely no chance that all the details will be hammered out in 20 months.” Bloomberg News
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Tuesday, July 18, 2017
A7
China’s econ growth sustains predictable pace
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HANGHAI—Leave it to other countries to soar and swoon in their quarterly economic performance. China prefers a steady pace, at least in its officially reported data. On Monday the country announced that its economy had expanded 6.9 percent in the second quarter, unchanged from the year-on-year growth rate in the first quarter. Powering the Chinese economy were many of the familiar sectors: brisk construction of apartment buildings; strong retail sales, especially online; and rising government-deficit spending on infrastructure, including new highways and high-speed rail lines. Much of the new infrastructure is in the sparsely inhabited western deserts, where its short-term economic usefulness may be limited. But President Xi Jinping has a strategic vision, the “One Belt, One Road” plan, to link the economies of Asia, the Middle East and much of Europe and eastern Africa to the Chinese economy. What keeps the growth rate of the Chinese economy so smooth? Accounting sleight of hand may play some role. Studies over the years have found that China’s national statisticians appear to overstate growth during periods of economic weakness and understate growth when the economy is booming. A series of recent scandals, particularly in China’s northeast, have also indicated that local officials may overreport economic activity to Beijing when local industries,
like coal mining and steel production, run into difficulty. China said last Friday afternoon that it was revising its economic output data to take better account of fast-growing sectors, like intellectual property, health care, tourism and emerging industries. But Xing Zhihong, a spokesman for the National Bureau of Statistics, said on Monday morning that this was a continuing project that had not been applied to the second-quarter growth statistics. China’s consistent growth also reflects the government’s constant intervention as officials try to reach predetermined targets for the country’s economy—currently 6.5-percent growth or better.
Keep on lending
The biggest reason the Chinese economy keeps growing quickly is that the state-controlled banking system keeps pouring in loans, although the government began tapering the flow slightly during the second quarter. Total social financing plus bonds, the broadest measure of credit, expanded 14.7 percent in June compared with the same month a year earlier. In most countries, that would be a breathtaking pace. But in China, it was a slight slowdown: Credit was up 15.3 percent in May from a year earlier. The Communist Party Congress,
sales accelerated to 11 percent in June, from 10.7 percent in May, while fixed-asset investment also picked up speed in June.
Trade sustains economy
Workers clean window panels of an up-scale shopping mall against construction buildings at the Central Business District in Beijing, on July 17. China’s economic growth held steady in the latest quarter, boosted by trade and consumer spending, despite concerns about a possible impending slowdown. AP/Andy Wong
which is held once every five years and chooses the country’s top leadership, will be in mid-autumn. So China’s leaders have been eager to keep the economy growing briskly at least until then. China has many tools for managing a debt buildup. More than half the credit in its economy consists of loans from state-controlled banks to state-owned enterprises. But Moody’s Investors Service downgraded China’s sovereign debt by a notch on May 24, expressing worry about the broader buildup of credit.
Factories and services surge
While a sizable chunk of China’s economy may depend these days on
6.9% The percentage of expansion of China’s economy in the second quarter
building roads and rail lines into the desert using borrowed money, industrial production and services are also strong. Steel demand has been vigorous, especially in residential construction. Housing prices have surged
in the past 15 months, ever since the government decided during a period of economic weakness in early 2016 to make it much easier for families to borrow for home buying. Some of the biggest cities, like Beijing, have recently tried to curb real-estate speculation with administrative limits, but these rules have had limited effect, as credit has stayed plentiful. Overall industrial production rose 7.6 percent in June from a year earlier, the government announced on Monday morning, an unexpectedly faster tempo than in May’s 6.5 percent. Year-on-year growth in retail
Part of China’s economic health in the second quarter reflected robust exports, with demand beginning to recover in Europe and particularly the US after a long period of depressed growth. But what counts in the overall economy is not the value of the exports but whether the trade surplus narrows or widens. In that respect, there were a few clouds on China’s horizon. China’s imports rose 14.5 percent in the second quarter from the same period last year, as prices soared for iron ore and other raw materials essential to Chinese manufacturing. Chinese exports rose only 9.1 percent in the second quarter. The composition of Chinese exports also changed in ways that could intensify trade friction and affect China’s trade surplus. China is becoming even more dependent on exports to the US, with sales reaching their second-highest level ever last month, trailing only September 2015. Chinese imports from the US have also risen, but most of the extra purchases have been oil and other raw materials, which create many fewer jobs than manufacturing. President Donald J. Trump promised during his campaign to create more US jobs through a more confrontational approach on trade toward China. But since taking office, he has focused more heavily on addressing North Korea’s nuclear and ballistic missile programs and on very narrow trade talks involving industries, like steel manufacturing and beef production. New York Times News Service
Oil holds above $46 as demand Trump goes on attack as Russia seen helping drain stockpiles revelations appear to take toll
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il held gains above $46 a barrel as optimism that demand will help shrink supplies outweighed an increase in US rigs drilling for crude. Futures were little changed in New York, after rising 5.2 percent last week. Stockpiles will drop at a faster pace worldwide this half of the year as demand rises and the Organization of Petroleum Exporting Countries (Opec) members comply better with an output-cut agreement, according to Haitham al-Ghais, Kuwait’s governor to the group. US drillers targeting crude added two rigs last week, the smallest increase since May. While oil advanced last week, prices in New York are still below $50 a barrel on concerns expanded global supplies will offset output curbs by the Opec and its allies as part of a deal to help rebalance the market. The group’s output climbed last month to the highest this year, as members exempt from the deal—Nigeria and Libya—pumped more and others slipped in deliver-
ing their pledged curbs. “There’s an expectation demand will pick up on seasonal factors in the third quarter,” Kim Yumi, a market strategist at Kiwoom Securities Co., said by phone in Seoul. “However, we may see bigger risks on the supply side, especially from rising US production and stockpiles, once seasonal demand wanes in the fourth quarter.”
American drilling
West Texas Intermediate (WTI) for August delivery was at $46.66 a barrel on the New York Mercantile Exchange, up 12 cents, at 1:48 p.m. in Hong Kong. Total volume traded was about 28 percent above the 100-day average. Prices gained $2.31 to $46.54 a barrel last week. Brent for September settlement added 16 cents, or 0.3 percent, to $49.07 a barrel on the London-based ICE Futures Europe exchange. Prices climbed 4.7 percent last week. The global benchmark crude traded at a premium of $2.20 to September WTI. The number of active oil rigs in the
US rose to 765, according to Baker Hughes data reported last Friday. It’s the second week of renewed growth after drillers snapped a 23-week stretch of advances at the end of June. Shale explorers have been the driving force behind a surge in US production, more than doubling the rig count from a low of 316 in May 2016. China is on pace to produce the least amount of oil this year since 2009, as a bear market weighs on domestic drilling. Hedge funds increased their WTI net-long position by 19 percent to 178,654 futures and options over the week ended on July 11, the sharpest increase in seven weeks, according to data from the US Commodity Futures Trading Commission. US imports of Saudi Arabian crude—usually medium or heavy grades—“slowed substantially” over the past five months as the Middle East nation reduced output of those varieties compared to lighter oil, analysts at Bank of America Merrill Lynch said in a note. Bloomberg News
EDMINSTER, New Jersey— President Donald J. Trump unleashed a new fusillade of tweets last Sunday morning, defending his son Donald Trump Jr., slashing the news media and tarring his long-vanquished opponent, Hillary Clinton. After a leisurely Saturday afternoon spent at a women’s golf tournament at his club here, where he waved to the crowd from a glassedin viewing stand, Trump awoke with a familiar list of grievances. “HillaryClinton can illegally get the questions to the Debate & delete 33,000 e mails but my son Don is being scorned by the Fake News media?” he tweeted shortly before 7 a.m. Forty minutes later, he posted, “With all of its phony unnamed sources & highly slanted & even fraudulent reporting, #Fake News is DISTORTING DEMOCRACY in our country.” In between those posts, Trump thanked people who had turned out to cheer him at the US Women’s Open, which was played at Trump National Golf Club despite calls from women’s groups for it to be moved because of his record of degrading behavior toward women. A small knot of protesters formed last Saturday afternoon as well, but the police kept them well away from the club. “Thank you to all of the supporters, who far out-numbered the protesters, yesterday at the Women’s US Open,” Trump wrote. “Very cool!” Trump has gone through one of the rockiest stretches of his presidency since the disclosure of a meeting in June 2016 between his son and a Kremlin-linked lawyer.
Tr u mp’s son-in-l aw, Ja red Kushner, and his campaign chairman, Paul Manafort, also attended, as did a Russian-American lobbyist, Rinat Akhmetshin. Besieged by the headlines about Russia and Trump’s eldest son, the White House planned to repackage the president’s economic message with a string of “theme weeks”. The first, this week, will be “Made in America”, focusing attention on US workers and the goods they produce. But last Sunday, the subject largely remained Russia. The top Democrats investigating Russian meddling in the 2016 election said that e-mails that Donald Trump Jr. sent about the meeting appeared to confirm that members of the Trump campaign had intended to cooperate with Russian officials. “This is about as clear of evidence you could find of intent by the campaign to collude with the Russians, to get useful information from the Russians,” Rep. Adam Schiff of California, the senior Democrat on the House Intelligence Committee, said on ABC’s This Week. Sen. Mark Warner of Virginia, the top Democrat on the Senate Intelligence Committee, said he wanted to speak with those who attended the meeting. “You saw not only willingness, but actually glee from the president’s son, as well as involvement of the campaign manager and the president’s sonin-law to say, in effect, yes, bring it on,” he said on CBS’s Face the Nation. But the president tweeted his thanks to a former campaign adviser, Michael Caputo, “for say-
ing so powerfully that there was no Russian collusion in our winning campaign”. Last Friday Caputo testified before a closed session of the House Intelligence Committee. He emerged to say that he had witnessed no collusion between the campaign and Russia. Jay Sekulow, who is part of Trump’s outside legal team, appeared on several Sunday morning talk shows to defend the president, saying that he had nothing to do with his son’s meeting. “The president has said that he was not aware of it, wasn’t involved in it, and there’s been no indication otherwise,” Sekulow said on CBS. Still, there is evidence that the drumbeat of Russia revelations is taking a toll on the president. A poll published last Sunday showed Trump’s approval ratings have eroded further in recent weeks, dropping to a level never before seen for a president during his first six months in office. T he Washing ton Post-A BC News poll said the president’s overall approval rating was 36 percent, down from 42 percent in April. His disapproval rating rose to 58 percent, and 48 percent of those polled said they “disapprove strongly” of his performance, citing a loss of US leadership abroad and the Republican health-care bill, which remains bottled up in the Senate. The release of the poll brought another broadside from Trump. “ T he A B C / Wa sh i ng ton Post Poll, even though almost 40% is not bad at this time, was just about the most inaccurate poll around election time!” he tweeted. New York Times News Service
A8 Tuesday, July 18, 2017
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In urban China, hardly anyone is using cash anymore
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HANGHAI—There is an audacious economic experiment happening in China. It has nothing to do with debt, infrastructure spending or the other major economic topics du jour. It has to do with cash—specifically, how China is systematically and rapidly doing away with paper money and coins. Almost everyone in major Chinese cities is using a smartphone to pay for just about everything. At restaurants, a waiter will ask if you want to use WeChat or Alipay—the two smartphone payment options— before bringing up cash as a third, remote possibility. Just as startling is how quickly the transition has happened. Only three years ago there would be no question at all, because everyone was still using cash. “From a tech standpoint, this is probably one of the single most important innovations that has happened first in China, and at the moment, it’s only in China,” said Richard Lim, managing director of the venture capital firm GSR Ventures. There are certain parts of the Chinese Internet that have to be seen to be believed. Coming from outside the country, it’s hard to comprehend that Facebook or Google can be completely blocked until you are forced to do without them. It’s tough to fathom how critical the messenger app WeChat is for everyday life until the sixth person of the day asks to scan your QR code—a sort of bar code—to connect the two of you. What’s happening with cash in China is similar. For the past three years, I have been outside mainland China covering Asian technology from Hong Kong, which has a very
different Internet culture from the mainland. I knew that smartphone payments were taking over in China, as the statistics were stark: In 2016 China’s mobile payments hit $5.5 trillion, roughly 50 times the size of America’s $112-billion market, according to consulting firm iResearch. Even so, the attendant cultural shift was graspable only in person. I recently moved to Shanghai and felt the change with cash acutely because my first few weeks in the metropolis of more than 20 million were spent cut out of the system. Because of an issue with my bank, I couldn’t immediately link my account to WeChat, which has become a virtual wallet for so many. That meant I had to navigate China the way I would have three years ago: with a stack of red 100-renminbi notes. At coffee shops and restaurants, I held up lines as I fumbled out my wallet and peeled off the bills to give the cashier. If I was hungry, I had to go outside and find a restaurant, while bowls of noodles, groceries and coffee materialized at our office, ordered by my colleagues and paid for on the phone. If I had to get somewhere, I couldn’t use my phone to unlock one of the ubiquitous bicycles that are a part of China’s bike-sharing craze. Even the buskers were apparently ahead of me. Enterprising musicians
Customers line up to buy breakfast at a shop that supports both WeChat and Alipay, two smartphone payment options, in Shanghai, on July 12. China is systematically and rapidly doing away with paper money and coins, turning instead to smartphone apps. Yuyang Liu/The New York Times
playing on the streets of a number of Chinese cities have put up boards with QR codes so that passers-by can simply transfer them tips directly. “It has become the default way of life now,” said Shiv Putcha, an analyst with the research firm IDC. “Literally every business and brand in China is plugged into this ecosystem.” Some Scandinavian countries have also weaned themselves from cash but still use cards frequently. In China, the change has been to phones. One friend didn’t realize how reliant she had become on mobile payments until her bank called her. She had left her automated teller machine card in the machine three weeks earlier and had not noticed its absence. In practical terms, this means that two Chinese companies— Tencent, which runs WeChat, and Alibaba, whose financial affiliate, Ant Financial, runs Alipay—are sitting atop a gold mine of staggering proportions. Both companies
$5.5T
The amount of payments made through mobile phones in China in 2016, roughly 50 times the size of America’s $112-billion market can make money off the transactions, charge other companies to use their payment platforms and all the while collect the payments data to be used in everything from new credit systems to advertising. Lim said according to recent data, Ant Financial and Tencent were set to surpass the likes of Visa and Mastercard in total transactions per day in the coming year. The key is that both companies are able to provide payments on the
Maduro foes: Over 7M vote in Venezuelan referendum
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ARACAS, Venezuela—Foes of President Nicolas Maduro said more than 7 million Venezuelans cast symbolic votes rejecting his plan to retool the Constitution in a strong, but not overwhelming, showing that left the opposition facing tough choices two weeks before the socialist leader seeks to reshape the political system. The vote was marred by violence when a 61-year-old woman was killed and four people wounded by gunfire after government supporters on motorcycles swarmed an opposition polling site in a church in western Caracas. Analysts said the 7,186,170 ballots the opposition says were cast across Venezuela and around the world last Sunday was an impressive show of support. However, it fell short of the opposition’s 7.7 million-vote showing in 2015 Legislative elections and the 7.5 million votes that brought Maduro to power in 2013. Opposition leaders said that was because it was only able to set up 2,000 polling places in a symbolic exercise the government labeled as illegitimate. Still, some supporters said they were disappointed. “I thought it was going to be more,” said Mariela Arana, a 56-year-old school counselor. “But these seven million people spoke, and it was plenty.” David Smilde, a Tulane University expert on Venezuela, said the result would likely rally the international community even more strongly against the July 30 vote Maduro has called to elect members of the assembly that will rewrite Venezuela’s 1999 constitution. The opposition says that vote has been structured to pack the constitutional assembly with government supporters and allow Maduro to eliminate the few re-
A man wearing a sunglasses with the colors of the Venezuelan flag lines up before he casts his ballot at a poll station during a symbolic referendum in Caracas, Venezuela, on July 1. AP/Ariana Cubillos
maining checks on his power, creating a Cuba-style system dominated by his socialist party. Inside Venezuela, Smilde said leaders of the 20-odd groups in the Democratic Unity opposition coalition were now faced with choosing between tactics, ranging from calling a general strike to forming a parallel government to simply working to rally international condemnation of Maduro’s plans. “Overall, this vote, I think, makes it difficult for the government to just proceed as planned,” Smilde added. “I think it’s going to embolden the international community to reject it.” Canada and Mexico were among the countries that issued statements last Sunday evening lauding the opposition exercise. Late Sunday, Foreign Minister Samuel Moncada said on Twitter that he was declaring former Mexican President Vicente Fox persona non grata and banning him from the country for conspiring to promote violence and foreign intervention. Fox traveled to Venezuela last Saturday with a group of Latin American former presidents to show support for the referendum. Moncada offered no evidence to support his accusations.
The opposition released only turnout numbers last Sunday night, not tallies of responses to those questions, although virtually all who voted were believed to have answered “yes” to the central rejection of the constitutional rewrite. Progovernment paramilitary groups attacked voters outside the Our Lady of Carmen Church around 3 p.m., according to the opposition mayor of the Caracas borough of Sucre, Carlos Ocariz. The chief prosecutor’s office said Xiomara Soledad Scott, a nurse, had been killed and four others wounded in the incident. Video posted to social media showed massive crowds outside the church, then hundreds of people running in panic outside the church as motorcycle-riding men zoomed past and shots rang out. Maduro called for an end to violence that he blamed on the opposition. “I’m calling on the opposition to return to peace, to respect the constitution, to sit and talk,” Maduro said. “Let’s start a new round of talks, of dialogue for peace.” In smaller numbers in many parts of the capital, government
supporters went to polling stations in a rehearsal for the July 30 vote. “Our president Chavez supported the poor, the people,” said Yveth Melendez, a 41-year-old homemaker waiting outside a school in the south Caracas neighborhood of El Valle, a stronghold of government support that has been weakening in recent years. “Today we’re following his legacy, with President Nicolas Maduro.... The constitutional assembly is something that benefits the people.” But Isabel Santander, a 67-yearold retired auditor, said she was voting against the constitutional assembly as a protest against the country’s economic collapse. “I signed because there’s no medicine, no food, no security,” she added. “There’s no separation of powers, no freedom of expression.” Maduro and the military dominate most state institutions, but the opposition controls Congress and holds three of 23 governorships. The country’s chief prosecutor has recently broken with the ruling party. The opposition called backers to 2,000 sites across the country to fill out ballots featuring three yes-or-no questions. Do they reject the constitutional assembly? Do they want the armed forces to back Congress? Do they support the formation of a government comprised both of Maduro backers and opponents? Opponents of Venezuela’s government blame it for turning one of the region’s most prosperous countries into an economic basket case with a shrinking economy, soaring inflation and widespread shortages. The government blames the crisis on an economic war waged by its opponents and outside backers. Clashes between protesters and the police have left at least 93 people dead, 1,500 wounded and more than 500 behind bars. AP
cheap, partly by allowing smaller vendors to make use of a simple printout of a QR code or their phone, instead of an expensive card reader. A back-end system that stores a record of user accounts, instead of having to communicate with a bank, also keeps costs down. While Tencent does not break out what it makes from mobile payments, in the fourth quarter of 2016 the “other services” item in its earnings almost tripled from a year earlier to 6.4 billion renminbi ($940 million) driven largely by mobile payments. There are some potential future problems with China’s sweeping embrace of online payments. As the country builds its entire consumer economy around two private smartphone-payment platforms, it is slowly locking out people unable to get onto those networks, and locking itself into those companies. At the simplest level, that makes life difficult for tourists and business travelers who are unlikely to
open a bank account in China and so will find it hard to turn their phones into wallets. More broadly, it means things could get harder for foreign and local businesses alike. Foreign companies hoping to sell to Chinese consumers now must deal with Alibaba and Tencent or risk being unable to take payments. Likewise, Chinese companies reliant on Alibaba and Tencent have to build out separate structures to deal with the world of Facebook, Google and credit cards that still dominate elsewhere. There is a corollary for what could happen here. In Japan in the early 2000s, flip phones could do everything from stream cable TV to pay at stores. But because the phones were so advanced, Japan was slow to adopt smartphones, and it went from tech giant to tech laggard in 15 years. Now in Japan those flip phones, which are still being used, are called Galápagos phones because they evolved perfectly for an isolated environment. No doubt aware of this, Alibaba and Tencent are pushing to expand beyond China to ensure their newest innovation doesn’t go the way of the dinosaurs. Still, competition is most likely looming. “The million-dollar question is: Will Western firms decide to build a system and compete?” Lim said. “The answer is probably yes.” Until then, new arrivals like me have to deal with being locked out of China’s online-payments infrastructure. Earlier this month, though, I lucked out using cash. As I was trying to get a pile of stuff from Ikea back to my new apartment, a cabdriver looked skeptically at the huge rolled-up mattress pad I was planning to load into the back of his car. “I’m not sure I can take you,” he said to me. “I can only take cash.” “That’s all I have,” I said to my fellow Luddite, who grumpily agreed to ferry me home. NewYorkTimesNewsService
Iran detains president’s brother, sentences Chinese-American
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EHRAN, Iran—Iran has imprisoned a Chinese-American man for 10 years after accusing him of “infiltrating” the country and detained President Hassan Rouhani’s brother over allegations of financial misconduct, authorities said last Sunday. News of the detentions comes less than two months after relative moderate Rouhani beat a hard-line opponent to win reelection by running in large part on his record of pursuing greater engagement with the West. They were announced by the Judiciary, a pillar of hard-liners’ influence. The Chinese-American dual national was identified as Xiyue Wang, a 37-year-old history researcher, according to Mizan Online, a web site affiliated with the Judiciary. He was not previously known to be among the handful of Americans detained in Iran. “It was verified and determined that he was gathering [information] and was involved in infiltration,” Judiciary Spokesman Gholamhosein Mohseni Ejehi said during a routine news briefing. Ejehi did not identify Wang by name. But hours after he spoke, Mizan published an article attributed to an unnamed source that revealed his identity and included several photos of him apparently taken from the Internet. The Mizan article said he was born in Beijing and entered Iran as a researcher. It pointed to graduate studies he did at Princeton University in 2013 and 2014, and described him as a fluent speaker of Persian. In a statement, Princeton said Wang was arrested in Iran last summer while conducting research on the 1794-1925 Qajar dynasty for his PhD
Hossein Fereidoun, brother and top aide of moderate Iranian President Hassan Rouhani, sits in a conference in Tehran, Iran, on July 3. AP/Vahid Salemi
in late-19th and early 20th century Eurasian history. “We were very distressed by the charges brought against him in connection with his scholarly activities, and by his subsequent conviction and sentence,” the statement read. The university added it’s been working with Wang’s family, the US government, private counsel and others to secure his release. It said it was hopeful he would be released upon appeal. A photo of Wang on Princeton’s history department shows him posing under a plaque at the entrance of China’s official Xinhua News Agency’s bureau in Kabul, Afghanistan. Wang was arrested on August 8, 2016, and is accused of passing confidential information about Iran to the US State Department, Princeton’s Sharmin and Bijan MossavarRahmani Center for Iran and Persian Gulf Studies, the Harvard Kennedy School and the British Institute of Persian Studies, according to Mizan. It alleged he recorded some 4,500 pages of digital documents. AP
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Govt troops kill NPA rebel in Zamboanga del Norte By Rene Acosta @reneacostaBM
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member of the New People’s Army (NPA) was killed while six others were wounded last Saturday during a clash between soldiers and rebels in Zamboanga del Norte. Col. Jacinto Bareng, commander of the 102nd Brigade, said elements of the 20th Special Forces Company were conducting security patrol when they encountered a band of rebels at around 5 a.m. at Sitio Biwa, Titik, Leon Postigo, Zambonga del Norte. The rebels were reportedly members of the NPA’s Sentrong Committee Felix B in the Zamboanga Peninsula. Bareng said another team of soldiers, who were conducting a peace and development activity nearby, provided fire support to the engaged troops. He said a driver, who was forced by the rebels to extract them away from the engagement area, informed the security forces that he saw the rebels carrying one dead body and six wounded comrades. Soldier scouring the encounter site recovered three rounds of caliber 40mm ammunition, 15 improvised explosive devices, medical paraphernalia and subversive documents. Meanwhile, another rebel surrendered to the troops of the Joint
Task Force Zampelan last Sunday afternoon. Allen Andoloy Condez alias Momar, member of the Western Mindanao Regional Party Committee, surrendered to Lt. Col. Virgilio Hamos Jr., commander of the 53rd Infantry Battalion. Brig. Gen. Joselito Bautista, commander of the Joint Task Force Zampelan, said Condez surrendered at Camp Sabido, Guipos, Zamboanga del Sur at around 1 p.m. “Condez was immediately subjected to custodial debriefing to extract actionable information that will lead us to the other CTs [communist terrorists] and their encampments," Bautista said. Condez, 23, resident of Sergio Osmena, Zamboanga del Norte, is listed under the periodic status report of the armed forces as an active member of the communist group. “I congratulate our soldiers under Joint Task Force Zampelan for their persistent effort to neutralize the communist terrorists within their area of operations,” Armed Forces Western Mindanao Command (Westmincom ) Lt. Gen. Carlito Galvez Jr. said. “ This accomplishment only proves that everyone in the team Westmincom is working doubly hard to sustain the gains and defeat the enemy, despite the present challenges the command is facing in Marawi and in other areas,” he added.
Mayor’s move spells disaster for Dagupan City residents By Ruel Camba
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AGUPAN CITY—Residents of this coastal city in Pangasinan are doomed with the move of the mayor and her allies in the city council to transfer the city hall to an area surrounded by fishponds mostly owned by the mayor’s family and siblings. Vice Mayor Brian Lim and other officials opposed to the move have warned of heavy flooding in most parts of the city with the conversion of the fishponds into commercial use, following what they call an “anomalous” approval of the new land-use plan and zoning ordinances of the city. Lim cited the worsening flooding problem in barangays Pantal, Poblacion Oeste, Barangay I, Barangay II and III, Barangay IV and HerreroPerez, all covering the city’s business center. These areas, he said, get flooded even during sunny days due to high tide. The vice mayor also cited the worsening flood problem in the southern barangays of Malued, Pogo Chico, Pogo Grande, Lasip Chico, Lasip Grande, Bacayao Sur and Bacayao Norte, following the backfilling of hectares upon hectares of productive fishponds owned mostly by the family of Mayor Belen Fernandez. “We could not imagine the devastation and the harm that the planned transfer of the city hall and the conversion of the adjoining fishponds into commercial purposes would inflict on the lives of our people, including the business sector,” Lim said, citing the importance of the fishponds as natural catch basins for rainwater and the city’s prime industry, which is bangus (milkfish) production. He said the conversion of fishponds into commercial areas stops the natural flow of water to rivers. “Our rivers are also silted, even if we have been dredging it,” he added. Lim said the flooding was also aggravated by the construction of elevated roads that impede flow of water to river systems. Seven rivers crisscross the city. “Who would like to invest in a city constantly submerged in floodwaters?” he asked.
Vulnerable
TO drive home his point, Lim cited a recent study conducted by the World Wildlife Fund (WWF) and the Bank
of Philippine Islands (BPI), showing that Dagupan City is one of the cities in the country that is most vulnerable to the impact of global warming or climate change. The study presented by Jose Ma. Lorenzo Tan, vice chairman of WWFPhilippines National Advisory Council, said Dagupan City has 6.91- percent vulnerability, a level that is considered high considering its geographical location serving as catch basin to Agno River and its grounds are below sea level. The main threat to the city is, therefore, water or rainfall, he added. Baguio City, Dagupan City and Tacloban City recorded the highest rainfalls among the other 13 cities involved in the study. George Chua Cham, who served as president of the Pangasinan Chamber of Commerce and Industry Inc., confirmed the effect of flooding in the city to the business sector, particularly to the bangus industry. He said bangus production dropped by 40 percent, from 2002 to 2010, as producers moved out of the city due to flooding. Dagupan City used to be called as “Bangus Capital of the World” after then-Mayor Benjamin Lim, father of the incumbent vice mayor, initiated the annual Bangus Festival celebration to promote Dagupan bangus as the tastiest bangus ever. “The consequent conversion of fishponds into commercial properties would spell doom for the city’s overall bangus-fishpond industry, ironically setting back the city’s campaign to strengthen its stature as the bangus capital of the world,” the younger Lim lamented.
SC to hear Gov. Marcos petition, writ of Amparo plea of ‘Ilocos 6’
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By Joel R. San Juan
@jrsanjuan1573
HE Supreme Court (SC) is expected to tackle on Tuesday the petition filed by Ilocos Norte Gov. Imee Marcos and the six detained provincial officials seeking to stop the House of Representatives’ inquiry into the alleged misuse of the province’s tobacco excise funds.
The petition is among the issues included by the Court for deliberation during its regular en banc session on Tuesday. Marcos and the six detained provincial officials sought immediate relief from the Court, including the issuance of temporary restraining order (TRO), enjoining the investigation of the House Committee on Good Government and Public Accountability on the alleged anomaly in the purchase of P66.45 million worth of motor vehicles by the provincial government. The High Court is, likewise, expected to act on the plea of the petitioners for issuance of a writ of Amparo “to protect the actual and threaten violations and infringement of their constitutionally guaranteed rights to liberty and security of person” and their plea for the 15-member bench to assume jurisdiction of the habeas corpus case of the “Ilocos Six” pending before the Court of Appeals. Section 6 of the Rules of Writ of Amparo provides: “Upon the filing of the petition, the court, justice or judge shall immediately order the issuance of the writ if on its face it ought to issue. The clerk of court shall issue the writ under the seal of the court; or in case of urgent necessity, the justice or the judge may issue the writ under his or her own hand, and may deputize any officer or person to serve it. The writ shall also set the date and time for summary hearing of the petition, which shall not be later than seven days from the date
of its issuance.” The petition was already raffled to a member in charge upon filing of the petition on July 13, as it included an urgent motion for raffle. In their petition filed through lawyers, led by former Solicitor General Estelito Mendoza, the six provincial officials who have been detained by the House for over a month now after being cited in contempt during hearing—Pedro Agcaoili, Provincial Planning and Development Office chairman; Josephine Calajate, provincial treasurer; Eden Battulayan, Provincial Treasurer’s Office staff; Encarnacion Gaor, Provincial Treasurer’s Office staff; Genedine Jambaro, Provincial Treasurer’s Office staff; and Evangeline Tabulog, provincial budget officer -- also asked the SC to order their release and assume jurisdiction on the writ of habeas corpus case pending before the CA. They elevated the case to the High Tribunal after the House repeatedly and deliberately defied the order of the CA’s Special Fourth Division for their release. The petition named as respondents House Majority Leader and Rep. Rodolfo C. Fariñas of the First District of Ilocos Norte, House Committee Chairman and Rep. Johnny T. Pimentel of the Second District of Surigao del Sur and House sergeantat-arms Roland Detabali. In seeking writ of Amparo, petitioners cited the “prolonged interrogations, indefinite detention, coerced confessions, presumption
Tax burden
Contrary to the claim of Fernandez that the transfer of the city hall to a lot owned by her brother redounds to the benefit of city residents, Lim said Dagupeños stand to lose and suffer the more as the mayor plans to borrow not less than P500 million to construct the four-story building. Lim warned that Fernandez will bury the city in debt and put heavy tax burden on the taxpayers. “I will stand up against it and the thousands of Dagupeños,” he said, adding that he will exert every effort “to put behind bars the culprit of this starkly shameful and immoral act that will only strip our city of its honor and dignity”.
Editor: Efleda P. Campos • Tuesday, July 18, 2017 A9
FIRE AND EARTHQUAKE DRILLS The Emergency Response Team of OceanaGold
(Philippines) Inc. trains students how to execute duck, cover and hold technique in cases of earthquakes at Tucod National High School in Tucod, Cabarroguis, Quirino, over the weekend. In lower photo, they were also taught how to extinguish fire in cases of actual blaze. SUZANNE JUNE G. PERANTE
of guilt and torture” employed by respondents in earlier hearings. The so-called Ilocos Six remain in detention at the House for over one month already while Marcos “has been threatened with arrest and incarceration in a ‘detention chamber’ by the respondents if she refused to participate in proceedings where her failure to answer questions in a matter satisfactory to respondents will lead to a similar fate of indefinite detention.” Petitioners also assailed the conduct of the House inquiry, saying it was railroaded and violated their constitutional rights. They cited the absence of preliminary determination on the propriety of the subject of legislative inquiry before the House Committee on Rules, and determination on jurisdiction by the investigating committee in violation of the requirements under Section 21, Article VI of the 1987 Constitution. Petitioners also told the SC that House committee has subjected the six employees to psychological torture and intimidation. The provincial officials further alleged that the probe is obviously “not in aid of legislation” as it should be, but rather a “fishing expedition to determine the guilt of respondent Fariñas’s political enemies” in violation to petitioners’ right to due process. Marcos earlier lamented that the House inquiry obviously stemmed from her political rivalry with Fariñas in Ilocos Norte as she appealed to lawmakers to spare the Ilocos 6 and “just bring the fight back to Ilocos Norte.” She also explained that the project was aboveboard, even showing to the public Commission on Audit records as proofs that “the project has fully liquidated and there’s never an anomaly or ghost project”. Meanwhile, another leader of the House of Representatives on Monday joined the calls for Ilocos Norte province to explain the nonregistration and questionable purchase of vehicles worth P66.4 million excise taxes collected from locally produced Virginia-type cigarettes. Deputy Speaker Sharon Garin of
AAMBIS-Owa Party-list, in a statement, stressed the need for Marcos to appear and testify before the ongoing probe of the lower chamber to explain the issue. She said the mystery behind the irregular deals pertaining to the 115 vehicles by the Ilocos Norte provincial government continues to deepen with the findings that the 70 units of minitrucks procured remain unregistered and were apparently acquired from questionable sources. Under RA 7171, the share of provinces from the taxes should only be used for certain projects that will promote the welfare of tobacco farmers. According to Garin, it is highly suspicious that the 70 minitrucks were all unregistered with the Land Transportation Office (LTO) and have no records proving that these were bought from any of the authorized dealers of the vehicles in the Philippines. The lawmaker said even more suspicious was that the committee learned that the minitrucks, which were supposedly of the China-based Foton brand, were neither manufactured by the company and bore another name—Forland. “Only Governor Marcos can answer the numerous questions behind the irregularities involving the acquisition of the 70 minitrucks, among other suspected anomalies in these transactions, given that the provincial employees privy to these dealings have refused to cooperate with the committee and have all suddenly forgotten about them when these happened barely five years ago,” Garin said. “Considering that the governor’s hand was in every stage of the procurement process—from the purchase request up to the signing of the checks, who else can best enlighten the public about these suspicious deals?” she asked. Ruby Grace Dimaano, the vice president for legal and compliance of United Asia Automotive Group Inc. (UAAGI) said no purchase was made by the provincial government from them. UAAGI is the exclusive distributor of Foton vehicles in the country.
A10 Tuesday, July 18, 2017 • Editor: Angel R. Calso
Opinion BusinessMirror
editorial
Manny versus the many
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espite losing his welterweight championship to Australian Jeff Horn, a loss the World Boxing Organization said was legitimate after reviewing the fight, Manny Pacquiao says he still wants to keep fighting until his passion for boxing is gone. Indeed, the present generations of Filipinos are very lucky to witness the boxing career of Pacquiao. He could very well be one of the greatest boxers of all time. Even though his best days as a boxer are clearly behind him, Pacquiao once fought the best—fighters much bigger and stronger than him—and had won an unprecedented 11 titles in eight weight divisions. But for every Manny Pacquiao who climbs into the ring all the way to glory days there are fighters like Z Gorres, whose boxing career was suddenly cut short in 2009 because of a brain injury from a fight that he won. Or fighters like Luisito Espinosa and Rolando Navarette, once glorious champions who now have little to show for their ring exploits. Or fighters like Ayon Naranjo. Four months before Manny’s reunion bout with Mexican legend Erik Morales in 2006, Naranjo climbed into a boxing ring in Japan to do battle against Jorge Linares, a promising Venezuelan fighter who since then has won the World Boxing Association and Ring magazine lightweight titles. Naranjo had no business being in the ring with Linares. Even on his best night, he couldn’t have given the Venezuelan a busy fight. Maybe he wouldn’t even have dared climb into the ring against Linares had he not needed the measly $800 purse he was promised. The Venezuelan had a 17 wins-0 loss record (with 10 wins by knockout) going into the fight, while the Filipino had fought only seven times and lost four of them. It would have been another glorified sparring session for Linares but things turned uglier than expected. Naranjo got beaten so badly during the six-round affair that he was rushed to the hospital after the fight and had to undergo surgery to ease the swelling of his brain. We don’t know how Naranjo is doing today. We hope and pray that, somehow, somewhere, he is okay. There are many Ayon Naranjos in this country, hundreds of other virtually unknown Filipino fighters who are fed into the boxing gristmill by unscrupulous promoters to serve as easy payday opponents against superior fighters just looking to rack up impressive win columns. They climb into obscure rings across the country and all over the world with no media fanfare, no entourage, no Bob Arum trumpeting their horn and certainly no Freddie Roach providing them the best training. Win or lose you won’t see many politicians flocking to their corners. Clearly overmatched, they usually get mauled by their opponents, sometimes to fatal or near fatal consequences. These fighters literally lay their lives inside the ring to put food on their families’ tables. They don’t dream about wearing any belts or earning millions from pay-per-view shares. They’re just fighting to survive, like most of the Philippine populace. Who is to blame for their plight? The promoters who take advantage of them, even dupe them of their earnings? Those who connive to pit them in a series of mismatches against top-ranked contenders just so they could earn from their blood? The boxing organizations that sanction these mismatches and give these boxers licenses? Maybe all of them and a few others are to blame. But the next time we pay homage to Manny Pacquiao, let us also remember that there is only one of him versus the many Z Gorreses, Ayon Naranjos, Luisito Espinosas and Rolando Navarettes. Let’s think about these fighters, too, and ask what the government, which now has a Senator Pacquiao in its ranks, is doing to help protect their rights and safety and help take care of them long after they hang up their gloves.
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Manny B. Villar
THE Entrepreneur Continued from A1
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his is not what happened when President Duterte came into office. He hit the ground running—starting on Day One.
He also took the bull by the horns —launching a massive campaign against illegal drugs and announcing his zero-tolerance policy on corruption—both of which were among his major promises during the campaign. Duterte was already seen as an unconventional candidate during the campaign, whose bold rhetoric was well received by the people. During his first year in office, it became obvious that the new chief executive was not the traditional politician as his predecessors, although he had been mayor for many terms and a congressman prior to running for president. He curried no favor from big businessmen or from powerful politicians; as he often said, he would stake his honor, the presidency and his life for the sake of the Filipino people. His ultimate
goal is to improve their lives. At the beginning of his term, Duterte’s critics predicted (and expected?) that he would fail, and he would lose the people’s favor. He proved them wrong. He remains popular. The latest survey conducted by the Social Weather Stations showed that 78 percent of the 1,200 adults surveyed were satisfied by the performance of the President, while 10 percent were undecided and 12-percent dissatisfied, for a personal record-high of +66 or “very good”. Some people were expecting economic growth to slow down because of his statements that they said would drive away investors. On the contrary, foreign direct investments (FDI) continued to come in, and the economy remains one of the most robust in Asia.
In a report published early this month, the US State Department said the Philippines has become a more attractive destination for FDI. The Bangko Sentral ng Pilipinas expects net FDI inflows to reach $8 billion this year, up from $7.9 billion last year. In its latest update on the country’s economic prospects, the World Bank said the Philippines remains on the strong growth path in 2017 and 2018. GDP is expected at 6.8 percent for 2017, one of the highest in Southeast Asia, and 6.9 percent for 2018. As I said earlier, the usual transition period did not happen at the start of the Duterte presidency. There was no pause in the government machinery—all of the programs, including infrastructure and public services, continued to move. After all, the changing of the guard does not mean suspending the delivery of services to the people. As I said in a previous column, he showed his boldness and decisiveness in dealing with the Maute terrorist attack in Marawi City. Placing Mindanao under martial law helped to contain the attack and prevented the terrorists from spreading their activities in other parts of the country. One area where I think the President really shone during his first year in office was in diplomacy. Because he did not hold a national office prior to his election as president, Duterte
Gonzo stock-market trading John Mangun
Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos Dennis D. Estopace
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Chairman of the Board & Ombudsman President VP-Finance VP Advertising Sales Advertising Sales Manager Group Circulation Manager
Duterte’s first year: Excellent
OUTSIDE THE BOX
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very generation or two, an author comes along that is able to provide an insight to a particular time and place, giving the reader an undiscovered perspective. Dr. Jose P. Rizal with Noli Me Tángere and American Mark Twain’s Adventures of Huckleberry Finn offer a wonderful narration of the Philippines and the US in the 1880s. Sometimes, authors who accomplish this in the process create a “new” type of writing. Truman Capote’s In Cold Blood was an accurate telling of a brutal murder of a family but was written as if it was a typical fiction novel. Hunter S. Thompson was a journalist rather than a novelist whose first work—Hell’s Angels: The Strange and Terrible Saga of the Outlaw Motorcycle Gangs—carried on this tradition. But in a piece for Rolling Stone magazine, he was assigned to provide some material about the
Mint 400 desert off-road race. Not being able to actually see the race in progress and fueled with copious amounts of LSD, amphetamines and tequila, what finally hit the page was later called “gonzo journalism”. The line between fact and fiction is heavily blurred and is told from a first-person point of view. Accuracy is only in the eye of the beholder. Were the dust clouds at the Mint 400 race the spirits of dead Native Americans as Thompson believed? Or was it the drugs? Who knows and more important, who cares? From
the author’s point of view, the spirits were real and that is all that matters. The psychology of the stock market price-movement trends from the peak of Maximum Euphoria to the bottom of Maximum Depression. At some point in the decline, the dominant emotion is “fear”—fear that the decline is real and prices will go lower. At some point after the bottom and prices begin to rise, the emotion is “hope”—hope that the rally is for real. However, at both of these points, both emotions are strong. Going down, there is the fear but also the hope that there will soon be an upside recovery. This is what keeps investors holding losing positions and not running away. Likewise, as prices begin to rise, there is hope that prices will continue going higher but also the fear that it is all a trap. That keeps investors from buying in at the beginning and missing the first wave higher. In both instances, some investors will not make any changes and eventually sell at the low and buy at the high, the worst possible scenarios. Thompson’s dust devils may or may not have been spirits of the dead.
was not seen as belonging to the same level as other world leaders. However, his bold move to adopt an independent foreign policy, with the Filipinos’ interests as the priority guiding principle, earned him recognition as an emerging leader in Asia. According to Euben Paracuelles, Nomura’s Southeast Asia chief economist, Duterte’s pivot to China suddenly looked prescient following the election of US President Donald J. Trump, who had announced plans to adopt protectionist policies. According to Paracuelles, the Philippines (under Duterte) is helping Asean to achieve its long-sought goal of becoming a more unified and integrated bloc. President Duterte has received phone calls from Trump and Chinese President Xi Jin Ping, and has met with the latter twice. He has also met with Japanese President Shinzo Abe, who also visited Duterte in his home in Davao City. I’m not saying that he solved all of the country’s problems in the past 12 months—many of these are centuries old—but nobody can deny that he confronted them squarely, while keeping the economy on the robust growth path. For all of these, I would rate President Duterte’s performance in his first year in office as excellent. For comments, e-mail mbv.secretariat@gmail. com or visit www.mannyvillar.com.ph.
But to him they were real. No one knows what he might have thought if drugs had not been involved. The Philippine stock-market index has risen from 7,300 to the current 7,900 level since the end of March. Gonzo stock-market trading is the inability to know what the reality is and to separate fact from fiction. Various experts will guarantee that the market is booming and an equal number will give you valid reasons for the coming doom. These are our stock-market drugs, which need to be avoided. Stock prices do not move with a clear trend based on events. They move on money flows that often go against what the events say the money flow should be. Not all issues go up or down together. In the current situation, after a definite bottom, go with hope and be ready to change your emotion and response based on what you see. Not on what you think you see.
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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Global Innovation Index 2017: A glimpse of PHL’s strengths Josephine Rima-Santiago
Intellectual Property Matters
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AST time, we introduced the Global Innovation Index (GII), which had the simple goal of evaluating metrics and approaches that better capture the richness of innovation in society beyond number of research articles and the level of research and development expenditure. The 2017 report was released midJune, with Switzerland leading both overall and the 48 high-income economies. For the 35 upper-middle income economies, China ranked the highest at 22nd/127 overall. Among the list of lower-middle income economies in this report, Vietnam tops at 47th/127 overall; the Philippines lags behind at 73rd/127 overall (in terms of percentile ranking, 58). Finally, Tanzania leads the low-income economies, at 96th/127 overall. As mentioned before, the GII is anchored on two subindices—the Innovation Input Sub-Index and Innovation Output Sub-Index—which are, in turn, rooted upon five and two “pillars”, respectively. Institutions, human capital and research, infrastructure, market sophistication and business sophistication make up the first, while knowledge and technology outputs (KTOs), as well as creative outputs, comprise the second. And each pillar mentioned is further subdivided into subpillars and finally indicators.
Strengths
TO fully appreciate the GII, we must look at our performance at each of the indicators studied and compare them with our past scores. For today’s article, let us focus on our strengths, as shown in the index. Our strongest indicator of innovation is research talent in business enterprise. This refers to the percentage in an enterprise of researchers “as professionals engaged in the conception or creation of new knowledge, products, processes, methods and systems, as well as in the management of these projects”. We are ranked 8th (6.3 percentile) in the world this year, a steep jump from 18/127 last year (14.1), where it was also listed as a strength, belonging to the business sophistication pillar. Next top indicator also coming from the same pillar is firms offering formal training, ranking 9th (7.1), rocketing from rank 55 (43.0) last year. It refers to “the percentage of firms offering formal training programs for their permanent, full-time employees”. This was, likewise, a strength last year. We are on the top 15 spot (11.8) for growth rate of GDP per person engaged, a KTO indicator. We ranked 2nd (1.6) among all countries included in the study last year, which measures labor productivity “defined as output per unit of labor input”. This means that for less cost, we get the job done, which translates to the growth of GDP. GDP per unit of energy use is the next strength on the list, coming from the institution pillar (16th, 12.6 percentile). The energy here refers to “oil equivalent of energy use”, and is defined as the “purchasing power parity GDP per kilogram of oil equivalent of energy use”.
The fifth strength of the Philippines is in its information and communications technology (ICT) exports (16th, 12.6; KTO). This refers to “[t] elecommunications, computers, and information services exports” (percent of total trade). This year we ranked highest in this among the Asean countries, besting Singapore. Let’s see how. Other strengths include market capitalization (17th; 13.4; market sophistication); high-tech and medium high-tech output as a percentage of total manufactures output (18th; 14.2; KTOs); graduates in science and engineering (27; 21.3; human capital and research); domestic market scale (28th; 22.0; market sophistication); and foreign direct investment (FDI), net outflows (33rd, 26.0; KTOs). These were listed as strengths too in 2016.
Snapshot of strengths—data from the GII
WE are a nation where 25.5 percent of college graduates are from science and engineering courses. They, and others more, become research talent, comprising 63.2 percent of business enterprises. In relation to this, 59.8 percent of all firms offer formal training to raise the technical expertise of its employees. The domestic market is fairly large at $801.9 billion (based on the purchasing-power-parity valuation of GDP); with high market capitalization/ value, forming 81.7 percent of total GDP. This shows that, of the domestic market, $655.2 is invested in market capitalization. We are fairly productive in providing knowledge and technology outputs. In fact, we have 0.4 percent of all manufactured items that are high- and medium-high-tech. Moreover, we are particularly strong in providing ICT services exports as it comprises 4.3 percent of the total GDP (and tops this indicator among all of Asean, besting even Singapore). Finally, the three-year average net outflow of FDI, make up 1.9 percent of our GDP. Thus, looking only at the data above, one can already see where our strengths lie and which direction we are currently heading. One can also have an idea where we need improvement. Policy-makers should constantly review our positioning in the globe and assess whether action should be made (See my article on the National IP Strategy). Once the standard has been set, the public should also take part in raising our innovativeness through their respective industries and fields. Josephine Rima-Santiago, Ll. M., is currently the director general of the Intellectual Property Office of the Philippines. She has had more than 20 years of extensive experience in IP as a public servant, educator, practitioner and researcher. E-mail: jrsantiago@columnist.com.
Impasse in the Ilocos imbroglio Ernesto M. Hilario
ABOUT TOWN
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he legal tussle between the House of Representatives and the Court of Appeals regarding the detention for contempt of six Ilocos Norte officials at the Batasan complex is far from over.
In fact, it may have become more complicated with no less than Supreme Court (SC) Chief Justice Maria Lourdes A. Sereno dipping her fingers on the issue and raising concerns over judicial meddling in the affairs of a coequal branch of government. But that’s getting ahead of the story. The controversy started when the House Committee on Good Government and Public Accountability began a probe of the use by the Ilocos Norte provincial government of its share in the excise taxes on locally produced Virginia-type cigarettes to purchase motor vehicles in 2011 and 2012, amounting to P66.45 million. These purchases were said to have been made through cash advances and without the benefit of public bidding. The cash advances involved the procurement of 40 units of multicabs worth P18.6 million, five secondhand Hyundai buses priced at P15.3 million and 70 minitrucks costing P32.5 million. Summoned to appear before the committee were six Ilocos Norte officials: the provincial treasurer and two employees at the Provincial Treasurer’s Office; the provincial budget officer; the officer in charge-
Bloomberg View
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rench President Emmanuel Macron had steamrolled every adversary in his path—until he tried to take on the military. Macron has embarked on a spell of budgetary austerity, a move that will hurt growth but is being pursued out of a misplaced desire to meet the European Union’s arbitrary 3-percent deficit target. As part of that effort, the previous government had announced cuts to the defense budget of $968 million for this year, which Macron pledged to uphold.
General Pierre de Villiers, the highly respected chief of the general staff, fought the plans. French media reported that in a closed-door hearing with the defense committee of the French National Assembly, de Villiers said, of the president and the planned budget cuts, “I’m not going to let him f_ _k me.” It’s worth noting how extraordinary this is in France, where the military adheres to a tradition of total public subservience to civilian authorities, so much so that it’s often referred to as la grande muette, or the great mute. There were other reports that de Villiers threatened to resign if the cuts went ahead.
accountant; and the chairman of the Bids and Awards Committee and the Provincial Planning and Development Office. The six all failed to attend the first hearing held by the committee on May 2, claiming that Gov. Imee R. Marcos had not issued any instructions for them to do so. When they were compelled by subpoena to attend on May 29, they refused to answer certain questions relevant to the probe. All of them said they did not remember the transactions involving the vehicle purchases. They also insisted that they should be shown the originals of the documents involved in the procurement. Piqued by the refusal of the provincial officials—now collectively known as the “Ilocos 6”—to answer questions and what appeared to be an attempt to cover up the paper trail on the irregular cash advances, the House committee cited them in contempt and ordered their detention within the Batasan complex, where they still remain to this day. The Ilocos 6 thereafter petitioned the Court of Appeals (CA) to compel the House to release them. The CA granted their petition, but the House resented what it considered the court’s lack of respect for
its prerogative to cite witnesses in contempt. It retaliated by issuing a show-cause order to CA Associate Justices Stephen C. Cruz, Edwin D. Sorongon and Nina G. Antonio-Valenzuela, the members of the court’s fourth division that ordered the release of the Ilocos 6. Sereno and CA Presiding Justice Andres B. Reyes Jr. (who has since been appointed as SC associate justice) issued statements of support for the three appellate court justices and asked the House Committee on Good Government and Public Accountability to recall its showcause order, citing “implications on separation of powers”. One of the CA justices who issued the order releasing the Ilocos 6 said they ordered the release “to determine really if the detention was legal”. But Party-list Rep. Harry L. Roque Jr. of Kabayan, a University of the Philippines Law professor, defended the power of Congress to hold witnesses in contempt. He said that rather than file a petition for a writ of habeas corpus, the six Ilocos officials should have instead filed a petition for certiorari. He added that the action of the CA to grant the habeas corpus petition of the Ilocos 6 was “objectionable” and undermines the integrity of the House as an institution. Another legislator, Rep. Salvador Paulino C. Leachon of the First District of Oriental Mindoro, emphasized that the House committee’s order of contempt is an “inherent, actual, implied and auxiliary” exercise of its legislative functions. The real issue here is the legality of the use by the Ilocos Norte provincial government of funds for the purchase of vehicles. Marcos has been invited twice to the hearings,
but has failed to do so despite given the chance to clear her name. It is said the Ilocos Norte provincial government violated at least four laws. First, the use of cash advances in government procurement violates provisions of Commission on Audit (COA) Circular 92-382. Under the circular, regular cash advances are allowed only for salaries and wages, commutable allowances, honoraria and other similar payments to officials and employees, petty operating expenses. Second, Republic Act (RA) 7171 limits the projects that can be implemented by local governments that are given a share from the Virginia-type tobacco excise taxes to cooperative, livelihood, agro-industrial and infrastructure projects. Third, Rep. Johnny T. Pimentel of the Second District of Surigao del Sur, chairman of the committee handling the probe, has pointed out that purchases were done by authority of Marcos without seeking the authority of the Sangguniang Panlalawigan, which is a violation of the Local Government Code. Finally, as there was no bidding process for the buses and minitrucks, the purchases violated RA 9184, or the Government Procurement Reform Act. The COA has authenticated copies of documents showing that it was Marcos who had requested, approved the request, attested to the availability of funds, approved the cash advance for the purchase and signed the checks for the irregular purchases. Hence, she would be the best person in authority to enlighten the House committee—and the public—about the transactions.
E-mail: ernhil@yahoo.com.
The UN resolution on state nonintervention in purely domestic affairs
incite or tolerate subversive, terrorist or armed activities directed toward the violent overthrow of the regime of another State or interfere in civil strife in another State. “3. The strict observance of these obligations is an essential condition to insure that nations live together in peace with one another, since the practice of any form of intervention not only violates the spirit and letter of the Charter of the UN but also leads to the creation of situations which threaten international peace and security. “[...] “5. Every State has an inalienable right to choose its political, economic, social and cultural systems, without interference in any form by another State. “6. All States shall respect the right of self-determination and independence of peoples and nations, to be freely expressed without any foreign pressure, and with absolute respect for human rights and fundamental freedoms. Consequently, all States shall contribute to
the complete elimination of racial discrimination and colonialism in all its forms and manifestations.” As a founding and Charter member of the UN, the Philippines has an exemplary record in the observance of, and respect for, the noble purposes and principles of this world organization, as well as in the implementation of the Universal Declaration of Human Rights. The problem in Mindanao, now under martial law, is purely an internal affair. The limitations, under which friendly states may cooperate in the solution of a domestic affair, are clear. As a UN member and as a Third World nation, the Philippines maintains friendship, understanding, support and cooperation of all other states to achieve national unity and socioeconomic development of its people, but not at the expense of national sovereignty and territorial integrity. Since it became a fully independent and sovereign nation, the country has remarkably done its domestic affairs, particularly its problems of national unity and socioeconomic development, with a balanced application of state powers, taking into full consideration the interplay of diverse ideas borne by its historical traditions and its peculiar Constitutional system. In the search of a just, fair, dignified and peaceful solution to the problems in the Southern Philippines, over which the Islamic Foreign Ministers Conference and its secretary-general have expressed concern since early-1973, the country has always adhered to the following Constitutional principles and policies: “1. The Philippines is a republican
state. Sovereignty resides in the people and all government authority emanates from them. “2. The Philippines renounces war as an instrument of national policy, adopts the generally accepted principles of international law as part of the land, and adheres to the policy of peace, equality, justice, freedom, cooperation and amity with all nations. “3. The State shall guarantee and promote autonomy of local government units, especially the barrio, to ensure their fullest development as self-reliant communities.” There are now 103,831,547 Filipinos based on the latest UN estimates, the equivalent of 1.38 percent of the total world population, and thus ranks the Philippines the 13th most populous country in the world. As a constitutional democracy, the country looks on its 1987 Constitution as the fundamental law of the land. It may be worthwhile noting that distinguished Muslim brothers from Mindanao helped in framing the Constitution. There is no official state religion in the Philippines. The Philippines has declared itself a secular state in the Constitution, or in the Revolutionary Charter of the First Philippine Republic in 1898. Since then, the fundamental freedom of religious belief and worship has been reaffirmed and enshrined in the Philippine Constitutions of 1935, 1973 and 1987. In retrospect, it’s prudent to react rationally rather than instinctively on any armed conflict, such as the Marawi City incident.
speech clearly represented a substantial climb-down for the new president—and a concession to economic and military reality. Virtually all observers of military matters agree that this is the worst possible time for budget cuts. The French military is active in many theaters in the fight against radical Islamic terrorism, especially in Africa and the Middle East, and involved in Operation Sentinelle, whereby armed troops go on domestic antiterrorism patrols. Yet, its budget hasn’t kept pace with increases in the funding of welfare programs. Worse, the proposed cuts, which would’ve postponed the purchase of much-
needed equipment, looked penny wise and pound foolish: Repairing old equipment is more expensive over the long run than replacing it with more modern kit. The French military is also woefully short on helicopters and drones, which are vital in policing an area like the Sahel, which is the size of India. The move was particularly odd for a president who has struck a hawkish tone since taking power. Macron has clearly relished the trappings of his role as commander in chief, and plainly thinks that France’s contribution to the fight against terrorism is in the interests of the country and of the West. It’s also odd because
there’s no economic rationale for deficit reduction at the moment. Macron was privileging arbitrary budget rules from Brussels over economic logic. So his concession to the military, however grudging, was a welcome one. If any part of the French government needs to be cut, it’s the bloated civil service, and a welfare sector that has grown and grown at the expense of basic government services, such as law and order. But that would be a tall order for a man who came up through the very bureaucracy that needs trimming, and who consistently defends the interests of its ruling class.
Cecilio T. Arillo
database
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HERE is no harm if the government exercises restraint in seeking help or intervention from other countries in resolving the Marawi City problem; after all, there’s a United Nations resolution on state nonintervention of purely domestic affairs. Other members of the UN are similarly reminded of UN General Assembly Resolution 2131 (XX), entitled Declaration on the Inadmissibility of Intervention in the Domestic Affairs of States and the Protection of their Independence and Sovereignty, unanimously adopted on December 21, 1965, by 109 votes to none, with one abstention, which enjoins that: “1. No State has the right to intervene directly or indirectly, for any reason whatsoever, in the internal or external affairs of any other state. Consequently, armed intervention and all other forms of interference or attempted threats against the personalities of the state or its political, economic and cultural elements are condemned. “2. No State may use or encourage the use of economic, political or any other type of measures to coerce another state in order to obtain from it the subordination of the exercise of its sovereign rights or to secure from it advantages of any kind. Also, no State shall organize, assist, foment, finance,
Macron caves to the military By Pascal-Emmanuel Gobry
Tuesday, July 18, 2017 A11
Last week Macron finally caved. After welcoming Donald J. Trump to Paris for the traditional July 14 military parade, he promised a significant increase to the defense budget for next year. In a speech announcing the boost, Macron lobbed passive-aggressive attacks at de Villiers. It was “unworthy” to “start some debates in public”, the president said in front of military officers. “I am your leader,” he added, “I need no pressure, no comment.” Implausibly, Macron also said the boost was “in no way” due to “certain comments that were made”. He obfuscated on the question of whether this year’s cuts were to go ahead, but the
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A12 Tuesday, July 18, 2017
Charter change, 2018 budget top House Legislative priorities
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By Jovee Marie N. dela Cruz
@joveemarie
he leadership of the House of Representatives on Monday identified some of the priority measures of the lower chamber for the second regular session, which will start on July 24.
In a news briefing, Deputy Speaker Gwendolyn Garcia of Cebu said topping the House agenda are the proposed 2018 General Appropriations Act, supplemental fund for the Marawi
C it y re h abi l it at ion , C h a r ter change and the civil-union bill. “[The] Duterte administration marks the most massive infrastructure program—as you know, the motto has been ‘Build, Build, Build’,
and such a massive infrastructure undertaking will need the support of a budget that will be built throughout the entire country,” Garcia added. Budget Secretar y Benjamin E. Diokno announced that the 2018 budget will be submitted to Congress on the day the President delivers his second State of the Nation Address (Sona) on July 24. President Duter te has ap proved the 2018 budget proposal of the Department of Budget and Management (DBM) amounting to P3.767 trillion, which is 12.4 percent higher than the 2017 national budget and is equivalent to 21.6 percent of GDP. Personnel services will continue to receive the largest chunk of the
₧3.767T The budget proposed by the Department of Budget of Management for 2018
pie at 29.4 percent. Infrastructure and capital outlays comes second in priority with 25.4 percent, significantly boosting the government’s Build, Build, Build campaign. This was followed by local government units at 16 percent and maintenance at 14.5 percent. Debt burden and government-owned and -controlled corporations will obtain the lowest allocations at 9.8 percent
Business under scrutiny Japan belong to leading financial groups. There are persistent concerns that they give special consideration when voting on proposals of group companies or business partners in which they have stakes. Making the voting process more transparent will allow investors to put pressure on asset managers should these concerns prove accurate. Investors are really turning up the heat, and this should be a very good example
for companies all over the world, including the Philippines, to become more transparent, to liaise with stakeholders and investors more regularly and strictly follow the guidelines laid down by organizations, like the Institute of Corporate Directors, the Center of Strategic Reforms and the Integrity Initiative. Jointly, we have to show the youth the way we do business! In the Integrity Initiative, we have always been clear how business
and 4.5 percent, respectively. The education sector remains to be the top recipient of the national budget, while the Department of Public Works and Highways maintains its spot as second priority. Garcia also said the approval of the supplemental fund for the rehabilitation of Marawi City will be prioritized. “With the armed conflict in Marawi City transforming into a humanitarian crisis, and even an infrastructure crisis, restoring nor ma lc y in the lives of displaced residents, reviving local commerce [and] rebuilding homes in the city have become a necessity for the Executive and Legislative branches,” she added. See “Charter change,” A2
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should be done: Integrity is honesty; selflessness (in the sense that a decision is based on public/institution interest and not on private interest); objectivity (a decision is based on merit); transparency (no under-the-table deals) and accountability (those who break the law must pay the price). Ultimately, the Integrity Initiative hopes to build trust in government, a more equitable society and fair market conditions. This
will result in improved competitiveness and increased business confidence, which will be evident with the increase in domestic and foreign investments, and more employment generated for Filipinos. It will provide better services and products to every Filipino. In order to succeed, more sectors of society have to get involved, such as the court system (we need convictions), academe, civil society and—above all—the youth.
Duterte hosts his first Ambassadors’ Tour PHL keeps US sugar allocation
By Ma. Stella F. Arnaldo
@akosistellaBM Special to the BusinessMirror
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HE annual Ambassadors’ Tour brought its participants to Davao City for the first time for an audience with President Duterte last Friday. The 11th edition of the tour, which took place from July 11 to 16, attracted some 200 FilipinoAmericans, eager for a taste of the different tourist sites in Metro Manila, northern Philippines and Davao City. In an interview with the BusinessMirror, Tourism Undersecretary for Public Affairs, Communications and Special Projects Katherine S. de Castro said, “I am confident that we were able to achieve what the 11th Ambassadors’ Tour was meant to do, that is, to market the Philippines as a safe and robust tourism destination in the Southeast Asian region.” She added, “The tour surely enticed Filipino-Americans to see and visit both Metro Manila and Davao and experience, personally, the dynamism of the uniquely diverse Filipino culture in the two destinations.” It is the first Ambassadors’ Tour hosted by the Philippine government under Duterte. Due to last year’s transition from the administration of former President Benigno S. Aquino III, the tour didn’t push through. The Department of Foreign Affairs (DFA) usually cohosts the tours with the Department of Tourism and its marketing arm, the Tourism Promotions Board. Duterte, in his prepared speech, expressed hope that the delegates would “become Filipino Ambassadors who shall carry a fresh perspective of the new and improved Philippines when you go back to the US. You shall bring with you the message to the rest of the world that the Philippines has made significant strides in developing its trade, investments,
By Jasper Emmanuel Y. Arcalas
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Museum, the Mind Museum, the American Cemetery and various sites in the walled city of Intramuros, also the Malacañang Museum and the Metropolitan Museum. In Davao, aside from having dinner with Duterte, the participants also toured the Malagos Garden Resort, the Philippine Eagle Center, Hijo Resorts, Mount Apo, Crocodile Park, Tribung K’Mindanawan and a Durian Candy Factory. Inbound travels were arranged by Rajah Tours, with hotel stays at Nobu, Makati Shangri-La and Marco Polo Davao. For an additional fee, the participants were able to join the post-tours to Boracay, Cagayan de Oro and Camiguin Island, CebuBohol, Laoag-Vigan and Palawan. Unlike previous years though, there were no br iefings conducted by the Board of Investments, Philippine Retirement Association, nor by commercial banks usually promoting their investment products. Present at last Friday’s meet-and-greet
ollowing the resolution of the trade dispute between the United States and Mexico, Washington granted the same sugar quotas to developing countries, including the Philippines, for fiscal year (FY) 2018. The Office of the US Trade Representative (USTR) on Thursday announced the tariff-rate quota (TRQ) allocations for the next fiscal year, which will begin in October. The Philippines was given a sugar imports quota of 142,160 metric tons raw value (MTRV) for FY 2018. “These allocations are based on each country’s historical shipments to the United States,” the USTR said in a statement on July 13. Countries authorized by the US to export sugar under the TRQ scheme may do so at lower duties. T he Philippines was given the third-largest allocation of the total 1.117 million MTRV in-quota quantity of the TRQ , next to the Dominican Republic and Brazil, which received 185, 335 M T RV a nd 152,691 MTRV, respectively. T he TRQ is the minimum amount to which the US is committed under the World Trade Organization (WTO) agreement. Sugar Regulatory Administration (SRA) chief Anna Rosario V. Paner said the recent trade talks between the US and Mexico could have affected the chance of Manila receiving a higher allocation for next fiscal year. “It really depends on Mexico,” Paner told the BusinessMirror, when asked about her outlook on the sugar allocation of the Philippines from the US for FY 2018.
See “Duterte,” A2
See “PHL,” A2
President Duterte shares a light moment with delegates attending the reception for participants of the 11th Ambassadors’ Tour at the SMX Convention Center in Davao City on July 14. Malacañang Photo
tourism and cultural sectors and in making our country a safer and a more secure place to live.” The President also urged the tourists, mostly of Filipino ancestry, to continue in helping promote the Philippines “as an ideal location for business to thrive, and as a great destination for tourists to experience”. In his trademark tough talk, Duterte also regaled the tour participants with stories about his background as mayor, his crackdown on drugs and crime, as well as took digs on how health care in the Philippines is so expensive, and at Obamacare, the healthcare program framed by former US President Obama. During her speech, de Castro informed the delegates that the first year of Duterte’s presidency “may just be the most prolific times as far as tourism is concerned. This year we recorded the biggest number of tourist arrivals. The first quarter of this year recorded some 1.7 million visitors, an 80.3 -percent increase” compared to the first quarter visi-
tor arrivals reached by the Aquino administration in 2011. As of end-May, foreign visitor arrivals, she said, “almost breached the 3-million mark”. She attributed the rising number of foreign tourists in the country as a “clear indication Philippines remains to be a safe haven for residents and visitors alike”, and that the attendance of the Ambassadors’ Tour delegation “is your way of showing your support to our government’s firm resolve to maintain long-lasting peace, especially here in Mindanao.” The Ambassadors’ Tour (formerly, t he A mbassadors a nd Consuls General Tour) has been held every year since 2005, the brainchild of the DFA during the term of then-President Gloria Macapagal-Arroyo. Most of this year’s participants paid for a basic tour package of $790 per person for a six days and five nights, which took them to various destinations in Metro Manila, such as Bahay Tsinoy, the National Museum, the UST
@jearcalas
www.businessmirror.com.ph
Duterte seeks reboot of BBL amid attacks in Mindanao
We have a greater chance of having the Bangsamoro bill passed this time. We have all things going for us now. We have a president from Mindanao, and even Congress leaders from Mindanao.” —Santiago
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resident Duterte is seeking to revive a peace accord—known as the Bangsamoro basic law (BBL)—aimed at ending decades of insurgency in Mindanao in the southern Philippines, where government troops have battled Islamic State (IS)-linked militants for two months. As much as 30 percent of the bill that Duterte’s predecessor failed to pass has been revised, with the draft now providing for other Muslim groups to be included in the process, Moro Islamic Liberation Front chief peace negotiator Mohagher Iqbal said on Monday at a forum in Manila. Mineral deposits in Mindanao, a region that holds half of the country’s reserves, will be comanaged by the government and the Muslim autonomous region, he added. The proposed BBL was set to be submitted for Duterte’s approval at the presidential palace on Monday afternoon, his spokesman Ernesto C. Abella said at a briefing. Duterte, who was mayor of Davao City for two decades before becoming president, will also push for the measure in a meeting later on Monday with lawmakers. The heads of the Senate and House of Representatives are both from Mindanao. The government is targeting to pass the bill in the first quarter of 2018, its chief negotiator Irene Santiago said. Duterte, who has been grappling with the standoff between the army and militants in Marawi City, could potentially use the peace accord as a lever for other rebel groups to lay down their weapons. An end to the insurgency could also help unlock investment in the south. As many as 200,000 people have been killed in four decades of rebellion.
‘Greater chance’
“ W e have a greater chance of having the Bangsamoro bill passed this time,” Santiago said at the forum in Manila. “We have all things going for us now. We have a president from Mindanao, and even Congress leaders from Mindanao.” The Moro National Liberation Front, a separate rebel group founded by Nur Misuari, is expected to submit its own version of the bill, presidential peace adviser Jesus Dureza said last week. Misuari’s group, whose siege of Zamboanga City in 2013 led to the deaths of at least 203 people, was excluded from peace talks under then-President Benigno S. Aquino III. Misuari has offered to help the government fight the Maute militants linked to IS in Marawi, where more than 500 people have died since clashes started on May 23. Aquino, who signed a pact with the Moro Islamic group in March 2014, failed to get the Mindanao bill through parliament before he left office, hindered by a public backlash over a botched antiterrorism raid in early 2015 where Muslim rebels killed 44 police commandos. “I never doubted that President Aquino was serious and committed in having the bill passed,” Iqbal said. “I see the same thing with President Duterte. The only difference is that Aquino is from Luzon and President Duterte is from Mindanao.” Bloomberg News