Issuu

MEDIA PARTNER OF THE YEAR

BusinessMirror

UNITED NATIONS

2015 ENVIRONMENTAL MEDIA AWARD LEADERSHIP AWARD 2008

A broader look at today’s business

www.businessmirror.com.ph

Wednesday, July 20, 2016 Vol. 11 No. 284

SENATE CAUCUS TO DETERMINE MODE OF AMENDING CHARTER

Econ Cha-cha high on Senate agenda

INSIDE

@butchfBM

ENATORS indicated that they will prioritize the socalled economic Charter change (Cha-cha) to relax the Constitution’s 60-40 rule limiting foreign ownership, a perennial plea of the business sector in previous administrations, although they have yet to firm up a consensus on whether to do it via constitutional convention (Con-con) or constituent assembly (Con-ass).

WHY MILLENNIALS STILL PREFER MAKATI

PROPERTY

By Butch Fernandez

Sen. Grace Poe said she would support a motion during their caucus to put the proposed amendment high on their priority list of measures to be tackled when senators convene regular sessions next week. “Yes, we should prioritize a House proposal to amend the restrictive economic provisions of the Constitution by See “Cha-cha,” A2

REACHING FOR THE SKIES BY GOING GREEN

By Jonathan L. Mayuga

@jonlmayuga

HE Philippine Wood Producers Association (PWPA) on Tuesday welcomed the new environment secretary’s pronouncement to help the wood industry by ensuring supply of raw materials to feed the local wood industry. PWPA Executive Director Maila R. Vasquez said the wood industry supports Environment Secretary Regina Paz L. Lopez’s idea of increasing the country’s wood-production base with the establishment of more plantation forests, but said “ease of doing business” is needed. Lopez earlier said she would allow access to public lands for the purpose of establishing more plantation forests using open, degraded and denuded areas, but would strictly regulate or limit harvesting to just 10 percent of

and Resort Corp. Antonio O. Cojuangco (from left), Tiger Resort Leisure and Entertainment Inc. COO Takahiro Usui, and Tiger Resort President Steve Wolsetnhome propose a toast, as they announce the opening of the 44-hectare Okada Manila within the year. Story on B1. NONIE REYES E2

BMReports

DISCOVER THE HEIGHT OF CITY LIVING AT VERTIS NORTH

PHL electric-vehicle dream running on borrowed time By Manuel T. Cayon | Mindanao Bureau Chief Lenie Lectura, Lorenz S. Marasigan & Cai U. Ordinario

PROPERTY

PWPA ready to invest in plantation forests

the area developed after a certain period of planting. “We like it…plantations…. As what we’ve been saying before, many are willing to invest, but [back out] when they find out, first, the stability of policies and, second, the ease of doing business,” Vasquez, a forester by training, told the BusinessMirror. She said industry players are willing to invest in plantation forest with a more stable and businessfriendly policy environment in place that will encourage stakeholders to invest in plantation forestry. “Before an investor go into plantation, there are a lot of requirements. You need to survey the area, secure permits. There are opportunities for the industry under the new administration, such as the adoption of the project portfolio approach,” she said. “By making project portfolios ready and available Continued on A2

SEARING HEAT WILL MAKE IT TOO HOT TO WORK–U.N.

A TOAST FOR OKADA MANILA President of All Seasons Hotel

PROPERTY

P25.00 nationwide | 5 sections 32 pages | 7 DAYS A WEEK

Conclusion

AVAO CITY AND MANILA—Carlo Bultron pointed the electric tricycle (e-trike) he was driving to Uyanguren Street in the busy Chinatown of Davao City. As the e-trike cruised to a speed of 30 kilometers per hour, he told the BusinessMirror he would earn an av-

PESO EXCHANGE RATES n US 46.7570

erage of P800, minus P120 for daily “boundary.” The latter amount would serve as the “rent-to-own” fee of having the vehicle. The financial arrangement would allow Bultron to own the vehicle in three years. After that, he would take home the full P800 as earnings for the day. The e-trike Bultron drove can sit six persons, but the vehicle is designed to carry 250 kilos, according to Rojeto Quimco, area manager of Lvjia Sales and Marketing (LSM) Corp. LSM is the sales and marketing arm of the Dumaguete City-based Racal Group of Cos., Continued on A2

E A R ING temperat u res caused by climate change may cost global economies more than $2 trillion by 2030, restricting working hours in some of the poorest parts of the world, according to United Nations (UN) research. As many as 43 countries, especially those in Asia, including China, Indonesia and Malaysia, will experience declines in their economies because of heat stress, says Tord Kjellstrom, a director at the Health and Environment International Trust, based in Nelson, New Zealand. As a result, China’s GDP would be reduced 1 percent and Indonesia’s by 6 percent by 2030. Extreme heat in Southeast Asia already curbs annual working hours by 15 percent to 20 percent, and that figure could double by 2050, as climate change progresses, according to the paper published in Asia-Pacific Journal of Public Health on Tuesday. The study was one of six papers published by the UN university in Kuala Lumpur, detailing the

We’ll see reduced speed of work and more rest in labor-intensive industries.” —Kjellstrom

impact of climate change on human health. From 1980 to 2012, it said about 2.1 million people worldwide died as a direct result of almost 21,000 natural catastrophes, such as floods, mudslides, extreme heat, drought, high winds or fires. The cost of those disasters exceeded $4 trillion, a sum comparable to the current GDP of Germany. “With heat stress, you cannot keep up the same intensity of work, and we’ll see reduced speed of work and more rest in laborintensive industries,” Kjellstrom See “Searing heat,” A4

n JAPAN 0.4405 n UK 61.9904 n HK 6.0303 n CHINA 6.9767 n SINGAPORE 34.6991 n AUSTRALIA 35.4886 n EU 51.7927 n SAUDI ARABIA 12.4715

Source: BSP (19 July 2016 )

BMReports BusinessMirror

A2 Wednesday, July 20, 2016

www.businessmirror.com.ph

PHL electric-vehicle dream running on borrowed time Continued from A1

manufacturer of the e-trikes plying the city of Davao. “It can run on sloping roads, too, because it has low and high gears,” Quimco said, adding that the low gear is equivalent to the second gear of a regular motorcycle. Bultron said the e-trike he’s driving has three battery packs. He would charge each battery for four hours, and it would be good for one day of driving around the city limits. Not bad, actually, he said, when his electric bill now runs to nearly P1,000 a month, when he was paying only half of that amount before he acquired the vehicle. “What I earn is now much more than to pay it,” he told the BusinessMirror. When he has fully paid for the e-trike, Bultron said he gets to keep the three battery packs.

Lobby

THE Electronic Vehicles Association of the Philippines (Evap) estimates e-trikes to number to 1,500 in Davao City by 2018. Evap believes this could be achieved with an enabling policy environment. Quimco said he would make a courtesy call on Mayor Sara Duterte-Carpio, daughter of President Duterte, to request the city “to acknowledge our vehicles as our

Cha-cha. . .

Continued from A1

lifting the 60-40 rule,” Poe told the BusinessMirror. The senator asserted that lifting the restrictive economic provisions would

contribution to a cleaner environment and give us a permit to ply just the interiors, the subdivisions.” He believes it would not be difficult to persuade the mayor, whom he said advocates for proliferation of e-vehicles (EV). The Racal Group of Cos. is into tiles and automotive parts and hardware, and ventured into the e-vehicle three years ago. “As a social advocacy of the owner, he wanted more people, notably the disadvantaged pedicab and tricycle drivers, to shift to the eco-friendly vehicles,” Quimco said. He cited a pedicab driver who previously earned only P150 a day, but doubled that after shifting to use of an e-trike.

Review

THE Department of Energy (DOE) is currently assessing the e-trike project before plans to push for another round of bidding happen. “If we see that the government serves as a catalyst in this industry, then maybe we could go for another round,” Energy Undersecretary Donato Marcos told the BusinessMirror in an interview. “However, if the DOE does not feel the presence of these e-trikes, then we might, as well, consider putting up another type of e-vehicle, like jeepney or buses.” certainly “encourage greater foreign direct investments [FDI].” Poe explained that increasing FDI would “help us meet capitalization requirements for infrastructure projects and for public utilities; spur modernization, technology transfer and innovation; and

The DOE has issued a notice of award to Uzushio Electric and local partner Bemac for the production of 3,000 units of e-trikes and deploy these within the year. These units will be rolled out in the National Capital region and regions 4A and 4B. In a recent visit to the country, Uzushio Electric Co. President Masato Oda said the company is very serious in its EV business in the country, and is looking at possibilities of introducing more variants, including four-wheeled EVs. The bid was carried out in May last year, with Bemac coming out on top of over four other companies. After rounds of price negotiations, the final price was settled at around $30 million for the production, delivery and servicing of the e-trikes. Marcos said the lone bidder is expected to provide a five-year warranty and conduct regular maintenance work on all units.

Light

SOME e-trikes can now be seen in many places in Luzon, as well as in the Visayas. The Calinan, Davao City, office of the Dumaguete Citybased Racal Group of Cos. serves as the only one in Mindanao. Since five months ago when it established office, Lvjia Sales and promote competition and dismantle oligarchic economic structures.” “So far, restrictive economic provisions have caused our industries to be captive to a few dominant local players, fewer job opportunities, and fewer choices and higher prices for our

Marketing Corp. has distributed 145 units of e-trikes already. Each unit costs P98,000, with two 60-volt lead-acid batteries imported from China, including the motorcycle. Each battery, charged for eight hours, could cover 33 kilometers, according to Quimco. A charged battery is neither heavy on electricity, he said, adding that one sequence of charging is equivalent to only 0.25 kilowatt, or less than a liter of gasoline. Quimco said he would ask the owner to allow him to distribute the units to Tagum City and Panabo City, both in Davao del Norte, to Digos City in Davao del Sur, and General Santos City in South Cotabato.

modernizing jeeps for 2016 to 2018, when e-jeeps will be integrated with local automotive industry.

Opposition

SECRETARY Arthur P. Tugade, newly appointed chief of the Department of Transportation and Communications (DOTC), said his department is still studying the specifics of the plans toward the full adoption of EVs, especially e-jeepneys in the country. “I want them on the road—that is my direction on e-jeeps,” Tugade said in an interview. Data from Evap showed that 500 e-jeeps began operating in 2014, from 250 in 2013. Last year 1,000 units were set to be deployed for the third phase of

HOWEVER, the e-jeepney doesn’t sit well with some groups, like the Pagkakaisa ng mga Samahan ng Tsuper at Operators Nationwide (Piston). Piston President George F. San Mateo said the modernization program of the DOTC, first presented by then-Secretary Joseph Emilio A. Abaya, would affect more than 600,000 drivers and 250,000 operators. “We are not against modernization of jeepneys,” San Mateo said. “But we are opposing the mandatory replacements of current jeepneys to the supposedly new imported e-jeeps or even the new Euro 4-type jeeps, which are very costly and expensive.” San Mateo also believes the state of the country’s roads would not make e-jeepneys last. Deeper holes and insufficient, easily clogged drainages on the roads, he said, would only break the e-jeepneys, such as the City Optimized Managed Electric Transport, which has smaller wheels and lower platforms. “Electronic jeeps cannot be used for commercial use in the country, as they could not adapt to the mountainous terrain and flood-prone

consumers,” Poe pointed out. In filing Joint Resolution 1 for approval of the 17th Congress set to convene next week, Sen. Richard J. Gordon proposed “amendments to or revisions of the economic provisions of the Constitution,” including doing away with the 60-40 rule. Gordon asserted that “existing economic provisions of the Constitution need to have flexibility to allow the Philippines to properly adopt to the changing global economy through appropriate economic laws and policies enacted by Congress.” T he comebac k ing senator added there are “restrictive and anti-competitive economic provisions of the Constitution that need to be amended or revised to allow more investments in the country and better efficiency in the economy.” Gordon a l so c ited a r t ic le XVII, section 1 of the Constitution, which provides that “any amendment to, or revision of, the

Constitution may be proposed by Congress upon a vote of threefourths of all its members.” Senator Juan Edgardo M. Angara told the BusinessMirror he was leaving it up to the incoming Senate leadership to decide, after consulting other senators, if the upper chamber would give priority to a House-initiated proposal to amend the 60-40 rule. Angara admitted, however, that he was “in favor of relaxing some of the rules and inserting the phrase as may be determined by law into the constitutional provisions so we will have flexibility in adjusting the rules.” Incoming Senate Majority Leader Vicente C. Sotto III, in an interview, said a decision to give priority to amending the 6040 rule would depend on the chamber’s agenda, which the leadership has yet to approve in an upcoming all-senators caucus. Sotto acknowledged that he favored an elected Con-con to pass the amendment, saying this is the

Direction

cities of Metro Manila,” San Mateo said. “It has been proven many times that e-jeeps cannot [traverse] steep roads and high-level floods. Second, there are no infrastructure for their maintenance and charging.”

Plans

ACCORDING to Marcos, the DOE plans future projects and bids to further replace 17,000 additional vehicles with e-trikes. At the same time, Bemac is looking to expand to other markets in the Association of Southeast Asian Nations region, expecting demand for its e-vehicles to grow. “But everything depends on the outcome of the first batch of e-trikes,” Marcos said. Our goal is really for the government to serve as catalyst. The deployment of the first batch must have an impact.” Marcos, however, did not say when the DOE “will assess” the impact of the first batch of e-trikes expected to be delivered in September. The Philippines is home to over 3.5 million gasoline-fueled tricycles, a vehicle most commonly used as public transportation over short distances. In an effort to reduce the environmental impact of these tricycles, the government announced in 2012 a project to replace 100,000 units with e-trikes. mode “acceptable to the people.” Sen. Ralph G. Recto said he wou ld prefer “amend ing t he Constitution surgically.” “That can be done through Con-ass only,” Recto said, recalling that he had earlier filed a resolution endorsing this mode. Poe said in her opinion, “a Conass or Congress acting as a constituent assembly, will be more efficient than a constitutional convention,” even as she insisted that Chacha should be confined “only for economic provisions.” “It [Con-ass] is less costly and speedier. Since we are focusing only on economic provisions, there may be no need for more exhaustive processes under the Con-con,” she added. “However, we should bear in mind that we have other equally pressing concerns, such as reducing corruption, improving the ease of doing business, and increasing access to quality health care and education. These areas can be redressed without need for a Cha-cha.”

PWPA ready to invest in plantation forests Continued from A1

nationwide, entrance of private investors into the wood industry becomes easier and faster, encouraging them to proceed with assurance that they can start their projects in a timely manner,” she said. Under the project-portfolio mechanism, the government identifies the sites, and paves the way for potential investors to come less the hassles of setting shop and doing business under the project the proposed project-portfolio approach, Vasquez said. Meanwhile, Vasquez reiterated the PWPA’s appeal for a review of production outputs of various Department of Environment and Natural Resources programs, such as the Integrated Forestry Management Agreements (Ifmas), Socialized Industrial Forestry Management Agreements (Sifma) and Community-based Forest Management Agreement (CBFMA). Director Ricardo L. Calderon of the Forest Management Bureau (FMB) said there are around 140 Ifmas covering 1,005,000 hectares; 1,529 Sifma covering around 32,000 hectares; and 1,884 CBFMA covering 1,615,000 hectares. He added that, under the National Greening Program, the DENR is eyeing to increase their coverage. Calderon said it takes around 60,000 mature forest a year to cover

the wood industry’s wood-supply needs, including exports currently estimated at 5.3 million cubic meters of wood. Vasquez, however, placed it at around 500,000 hectares—to ensure a sustainable supply of wood that would cover even the country’s exports requirement. While the Philippines is also exporting wood, the country’s current wood-production capacity is 1 million cubic meter, while 4.3 million cubic meter of wood are imported. However, Vasquez said many of these areas remain unproductive. Many Ifmas have been performing below expectations when they could have been good sources of the industry’s legitimate raw materials, she said. Vasquez added that only a few Ifmas belong to members of PWPA. “A review of the production outputs to maximize our production in those areas is needed,” she said. Aside from increasing domestic supply of wood, PWPA has prepared a wish list, which the members would present to Lopez, given the chance for a scheduled dialogue. Among the opportunities under the Duterte administration, the PWPA is pushing for the enactment of two proposed laws that would help improve the local wood industry—the National Land Use Act and the Sustainable Forest Management Act (SFMA).

According to the PWPA, it is high time both bills are revived to update Presidential Decree 705, which was enacted in 1975. The proposed measures, it believes, could be the unmoving reference points for issuing of stable policies, regulations and measures for all wood-based sectors in developing an industry roadmap ensuring the different subsector’s sustained growth and development. The PWPA is also pushing for a more business-friendly policy that would ensure competitiveness of the local wood industry for the economy to enjoy “a fair share of local and foreign investments projected to flow into Asia.” “Policies, regulations and measures adopted must, likewise, use economics, science and technology as basis so as not to be too prohibitive and restrictive for business growth,” Vasquez stressed. The PWPA is also reviving the idea of establishing a “Timber Industry Board” that would allow regular meetings of concerned government agencies related to the wood industry and forestry sector. Last, the PWPA believes that, with the increasing shift to outsourcing raw and finished wood products, there is a need for effective control measures to ensure correctness of duties and declarations to contribute further to the improvement of the economy.

BMReports BusinessMirror

news@businessmirror.com.ph

Wednesday, July 20, 2016 A3

Private sector to shoulder Miss U costs–DOT By Ma. Stella F. Arnaldo

Special to the BusinessMirror

HE private sector will be stepping in to help fund the costs of the Miss Universe beauty pageant, if and when President Duterte does approve of holding the event in Manila next year. This was the statement made by the Tourism Secretary Wanda Corazon T. Teo, after meeting with reigning Miss Universe Pia Alonzo Wurtzbach at her office on Monday. About five major tourism destinations are being considered by the Department of Tourism (DOT) to be featured in the prepageant portions to be shown during pageant night, the date of which has yet to be finalized, another tourism official confirmed. In a news statement, Teo said: “We are really hopeful that the President will grant our request, especially now that the private sector has come together to shoulder the production costs of Miss Universe.” She added: “I’d like to emphasize that this undertaking would practically entail no expense on the part of the government.” The DOT, however, declined to name the possible sponsors to the event pending Malacañang’s approval of the event. Hosting the Miss Universe in the Philippines

is estimated to cost about $10 million to $12 million, aside from the franchise fee that the host country has to pay the US organizers. In the Philippines the Miss Universe franchise is owned by Stella Marquez-Araneta, chairman of Binibining Pilipinas Charities Inc. The current Binibining PilipinasUniverse is Maxine Medina, an interior designer. Teo, herself a former beauty queen, praised Wurtzbach for spearheading efforts to hold the globally watched beauty pageant in the Philippines. “Indeed, she has taken up the cudgels and leadership to make this happen. If this translates into reality, our tourism industry stands to gain tremendously,” the tourism secretary stressed. Tourism Undersecretary for Media Affairs Katherine de Castro said, in principle, Mr. Duterte has already approved the holding of the Miss Universe 2017 contest in Manila. “He knows that it will bring in tourists,”

she told the BusinessMirror, but “the President needs to assess it first. The President’s Office will announce this week if it’s a go [through an executive order].” Wurtzbach, along with Teo and other DOT officials, paid a courtesy call on Duterte on Monday. If Duterte approves, it will be the third time the Miss Universe contest will be held in the Philippines. The first was in 1974, at the Cultural Center of the Philippines, and the second was in 1994, at the Philippine International Convention Center. She added the DOT wants to showcase Davao, Cebu, Boracay, Palawan and the Ilocos region as among the out-of-town sites for some prepageant events, like the swimsuit competition. “As of now, we are eyeing the MOA [Mall of Asia Arena]” as venue for the pageant proper, she said. In a separate interview, Tourism Promotions Board (TPB) COO Domingo Ramon C. Enerio III said because of the tight schedule of the Miss Universe contest, there could only be a short opportunity to showcase Philippine destinations. “With about 80 to 100 contestants, and say, 10 contestants per destination, we will only have about eight minutes to showcase each destination. We can’t feature as many destinations as we want, based on the airtime allotted.” As such, he said, they must home in on the audience that will watch the contest; in this case, the US market. He cited studies that have shown that the Miss Universe beauty pageant, although beamed live

Miss Universe Pia Alonzo Wurtzbach (right) pays a courtesy call on Tourism Secretary Wanda Corazon T. Teo at the latter’s office in Makati on Monday. Wurtzbach and Teo are spearheading efforts to convince President Duterte to approve the hosting of the Miss Universe contest in Manila next year. Teo believes the pageant would help drive more foreign tourists to the Philippines. Photo courtesy Department of Tourism

around the world, is mostly watched in the US, because it is a pageant organized and produced in the US. On the other hand, the Miss World contest, he said, is more popular in the European market, because it is produced in the United Kingdom. Enerio also suggested mostly the

same destinations as the DOT’s de Castro, for feature in the pageant, along with Bohol and Iloilo. All these destinations, he said, are international gateways, and have access to and from countries abroad. “The program will be mostly watched in the US market, so we

can promote a mixture of luxury and adventure destinations, and cultural destinations,” he explained. He also suggested Vigan, “even if it’s not an international port of entry, it’s a cultural destination that would appeal to the US market.” Vigan is a Unesco World Heritage Site. The TPB is the marketing arm of the DOT. In her press statement, Teo said the Miss Universe pageant “would be a big boost to business and the livelihood of millions of people, in line with our ‘shared tourism’ program. That means it is our goal to include and involve every Filipino.” She said the dream of inclusiveness in the tourism sector “is within our reach, and there’s no better time to seize the opportunity than now. We at the DOT are committed to extending the genuine Filipino hospitality, and offer the best place for a perfect getaway to our visitors. We’re telling the world now, we long to have you in Philippines.” For her part, Wurtzbach said it has always been her dream to be an ambassador for the Philippines and to promote tourism. She continues to pursue that goal, she added, even as she visits different countries during her reign as Miss Universe. “I don’t think it’s a secret; it’s public knowledge that it is my personal dream, and I think the dream of a lot of Filipinos, the majority of Filipinos, that someday we’ll see the Miss Universe pageant to be held here. And we are keeping our fingers crossed,” Wurtzbach said in the DOT press statement.

BMReports BusinessMirror

A4 Wednesday, July 20, 2016

www.businessmirror.com.ph

Coal-fired power plants definitely not out

By Lenie Lectura

@llectura

“strategic” energymix policy is now being crafted by the Department of Energy (DOE) following President Duterte’s pronouncement that his administration will not honor the December 2015 Paris Agreement on climate change, which the Philippines adopted along with 200 countries.

The mix would definitely include coal, as Energy Secretary Alfonso G. Cusi said the country needs diversified energy sources to support a growing economy. “The DOE is formulating a strategic fuel policy mix to propel the country’s growing economy,” Cusi said. “While we signed the Paris Agreement last year, committing ourselves to limit our carbon emissions, we cannot ignore the fact that our level of economic develop-

ment at this point does not allow us to rely completely on renewableenergy sources or clean energy,” the energy chief commented. “We need to build more baseload power plants while also aggressively pushing for clean energy,” Cusi added. The DOE, he said, is working with the National Economic Development Authority, the Department of Environment and Natural Resources and Climate Change Commission to

develop a balanced and sustainable energy-policy framework. “We will chart our own course insofar as energy is concerned to ensure energy-supply security, considering that developing countries, like the Philippines, have low carbon emissions. President Duterte is correct in saying that the country is still in the process of industrialization. We must, therefore, use whatever energy resources are available and affordable for power generation,” Cusi said. Cusi’s predecessor, Zenaida Y. Monsada, was earlier pushing for the industry to source 30 percent of its energy requirements from coal, 30 percent from renewable energy and another 30 percent from natural gas. The remaining 10 percent will come from oilbased power plants. Monsada, when she was still the DOE secretar y, was hoping that the new administration would push for the legislation of a power-mix policy. Just recently, Aboitiz Power Corp. stressed the need for a balanced mix of power—including coal—to ensure reliable and

affordable power supply. “Recently, there has been a lot of discussion about coal and whether we should be building additional coal capacity. However, technology and best practices of clean and responsible coal are available today. In fact, if you visit these modern coal plants, you will see that the host communities are thriving and unaffected negatively by these power plants,” Aboitiz Equity Ventures (AEV) President and CEO Erramon Aboitiz said. AEV’s power arm, AboitizPower, supports renewable energy. While it strongly encourages the use of renewables, “we cannot be totally dependent on them.” Renewable energy, he said, is intermittent and dependent on the availability of the resource used, whether it be the sun, rain or wind—let alone the cost of impact. “As a developing country sourcing approximately 40 percent of our power requirements from renewable sources and a carbon footprint much lower than the developed world, with a need to be globally competitive to protect our jobs and our economy, we

should be careful not to get ahead of ourselves and cognizant of the increased cost in adopting renewables. Bottom line—we need to have a balanced mix of responsible power,” he said. Coal, as source of power, is cheaper than renewable energy. This is the reason more coal plants are put up by power firms. “Affordability is, indeed, top of mind for our regulators and the community at large; but in times of shortage, we all realize that the most expensive power is ‘no power.’ While I totally agree that the role of regulators is to protect the consumer and ensure the power he is paying is reasonable and competitive, the other equally important responsibility is to make sure power capacity is built as required and the only way this will happen is if

developers get a reasonable return on their investment,” he said in a recent forum. The DOE, Cusi said, stands firm in promoting energy efficiency and conservation to complement the thrust for clean-energy development, following the country’s Intended Nationally Determined Contributions on climate-change mitigation efforts. “We will continue to adhere to internationally accepted environmental standards in our energy use,” Cusi said. President Duterte said the Paris Agreement on climate change is “blocking the progress of developing countries, like the Philippines,” and that the industrialized countries are “dictating the destiny” of developing ones by requiring them to cut carbon emissions.

We need to build more baseload power plants while also aggressively pushing for clean energy.”—Cusi

Shell’s import facility in Cagayan de Oro seen Chamber of Mines confident lowering fuel prices in Visayas and Mindanao members will hurdle DENR’s

AGAYAN DE ORO—Prices of petroleum products sold by Pilipinas Shell Petroleum Corp. (PSPC) here would be cheaper after the completion of its $80-million expansion of North Mindanao Import Facility (NMIF) strategically located at the port of Cagayan de Oro. After Tuesday’s inauguration of the 90-million-liter capacity NMIF, Shell Philippines Chairman Edgar Chua said the completion of the new fuel facility will translate to cheaper pump prices of Pilipinas Shell fuel products since there will be a reduction in shipment costs. Transportation cost is included in the computation of petroleum products sold to consumers, he said, adding that fuel supply would come all the way from Batangas before it is distributed in the Visayas and Mindanao. The NMIF, he said, will cater

Searing heat. . . Continued from A1

said. “Rich countries have the financial resources to adapt to climate change.”

$80M

to the growing power and energy needs of millions of residents, motorists and consumers in the Visayas and Mindanao. Department of Energy (DOE) Director for Oil Industry Management Bureau Melita V. Obillo, who was present during the inauguration, agreed that prices of petroleum products sold here and nearby areas would definitely be much cheaper. “Of course, it’s going to be cheaper. It won’t be that much of a reduction, but it is a fact that it would get cheaper because of the

facility’s strategic location,” she said when sought for comment. Energy Undersecretary Donato Marcos, who delivered the speech of Energy Secretary Alfonso G. Cusi, said the agency commends Pilipinas Shell for this feat of building its largest terminal outside Luzon to serve Mindanao’s 62.46 thousand barrels per calendar day (MBCD) demand and the Visayas’s 49.88 MBCD oil demand. The total petroleum demand for Mindanao now stands at 16 percent, while the Visayas accounts for 13 percent. “This investment will not only augment Mindanao’s energy supply, but also provide more employment and livelihood opportunities for the people here,” Marcos said. According to Cusi’s speech, the new administration has vowed to accelerate economic and social progress in Mindanao. “We have to attract sustainable energy in-

vestments in Mindanao region to achieve the objective of inclusive growth under the Duterte administration. It is true that sustained economic growth requires the provision of adequate energy for homes, commerce and industry. Mindanao definitely needs a vibrant and dynamic energy sector to bring about sustained economic growth. And I must congratulate Pilipinas Shell for its full support for the government’s policy thrust under the recently updated Philippine Development Plan to attract more energy investments,” the speech read. Pilipinas Shell Cagayan de Oro terminal commenced its operations in 1968, or almost 50 years ago. With this new facility today, the NMIF has evolved into an import terminal for gasoline, diesel and LPG products with a total storage capacity of 688.26 MB. Previously, only 38.6 MB of various petroleum products could be stored here. Lenie Lectura

In 2030, in both India and China, the GDP losses could total $450 billion, Kjellstrom said. The impact could be reduced by making major shift in working hours and changing how new factories are built to require less power to cool.

Low- and middle-income countries are more likely to lose productivity from heat, even though they contributed little to the causes of climate change in the form of greenhouse-gas pollution, the report said. Richer countries will

largely avoid losses from heat, the study found. Russia, Norway and Sweden may see productivity dip as a result of colder weather in winter. Heat stress is more likely to restrict low-paid and low-skill jobs, such as heavy labor, farming and manufacturing. That has the potential to increase the gap between rich and poor. Demand for air conditioning in offices, shopping malls and homes is likely to soar as temperatures rise, placing a strain on power supplies, according to the paper. A city the size of Bangkok may require as much as 2 gigawatts of generation for each increase of 1 degree Celsius in temperature, the study concluded. More than 190 nations agreed in Paris last December to take steps toward limiting global warming to “well below” 2 °C (3.6 degrees Fahrenheit) since the pre-industrial times. For the Paris deal to enter into force, at least 55 countries representing 55 percent of the world’s greenhouse-gas emissions must ratify the agreement by 2020. UN officials expect the deal to come into effect this year. “We need to think more carefully about patterns of urban development,” said Anthony Capon, a professor at the UN university. “As it is, high-income countries have more capacity to insulate their people from health impacts of climate change. People in the poorer countries are the most effected.”

The cost of expansion of PSPC’s North Mindanao Import Facility

Bloomberg News

airtight mining-audit criteria By Jonathan L. Mayuga @jonlmayuga

arge-scale mining companies belonging to the Chamber of Mines of the Philippines (COMP) are ready for the “airtight mining audit” ordered by Environment Secretary Regina Paz L. Lopez. This, as the COMP expressed confidence that the conduct of the mining audit would be transparent and would help identify gaps that both the mining companies and the government as partners in mineral-resource development need to better help uplift the lives of Filipinos. “We welcome a technical, environmental and social development audit on our members,” Nelia Halcon, COMP executive vice president, said in a statement on Tuesday. COMP has a total of 21 members, representing some of the country’s top producers of gold, copper and nickel. The group was reacting to Lopez’s Memorandum Order 201601, which, aside from a imposing a moratorium on the approval of new projects, calls for a mining audit to determine whether the mining companies are operating responsibly to be allowed continuous operation. Two other criteria being pushed by Lopez, an environmental advocate, for inclusion in the rating system are beyond the usual “technical audit”—social and environmental aspects. Lopez had earlier vowed to issue a stop order on mining operations that cause environmental destruction and people in host communities to suffer. There are currently 40 large-scale mines operating in various parts of the country. Most of these operating mines have been found to violate mining and environmental laws, but were considered “minor offenses” that are technical in nature, such as failure to put signage and simple housekeeping rules, according to an earlier interview with Director Leo L. Jasareno of the DENR’s Mines and Geosciences Bureau (MGB). So far, the DENR-MGB had suspended three mines under Lopez’s watch. Two are in Zambales and one in Palawan. Halcon expressed confidence that its members, most of which have secured the International Organization for Standardization (ISO) 14001 certification, as required by DENR Administrative Order 2015-07, would pass the mining audit. Halcon is optimistic that the audit would reveal the highly positive and significant contributions of COMP members to their respective host communities, as most of them have been doing

programs and projects beyond compliance with the rules and regulations of the Philippine Mining Act of 1885 and other relevant laws. She said all COMP members have committed to the government’s National Greening Program (NGP) and boasts of planting over 20 million trees from 2011 to 2014. Only recently, Carmen Copper planted 1,500 seedlings in a mineralwaste dump in Toledo City, Cebu. In recognition of its contribution to the NGP and for its good practices, the mining firm is a recipient of the Gawad Tugas award in responsible mining. TVI Resource Development has planted over 416,000 trees in Canatuan, Siocon, Zamboanga del Norte, and has planted 173,000 trees to date in Tubay, Jabonga and Santiago in Agusan del Norte. “The majority of our members are already ISO 14001 certified and have been submitting timely reports to MGB on their operations,” Halcon added. According to COMP, several monitoring teams that include representatives from the local government units, nongovernmental organizations and other line agencies have been conducting quarterly, semi-annual and annual monitoring and assessing developments in the social-development management programs (SDMPs) of mining companies. SDMP is a program, which is planned and budgeted, on a five-year cycle. Mining companies are obliged to allocate 1.5 percent of their total operating costs to social development in their host and neighboring communities. An interagency audit team from the central office of DENR-MGB evaluates on a yearly basis the various aspects of mining operations from safety and health to environmental and social-development programs, including solidwaste management. She noted that part of the outcome of the yearly mining audit is the Presidential Mineral Industry Environmental Award. The award gives a weight of 50 percent for rehabilitation and environmental protection; 20 percent for safety and health; 20 percent for social- and community-development programs; and 10 percent for information, education and communications. “COMP assures that our members continue to adhere to the law and are helping ease the sufferings of our countrymen where our areas of operations are,” she added. “ This is the reason we have been reiterating our call to the government to put a stop to irresponsible mining that affects responsible mining operations. It is the proliferation of these illegal operations, which bring suffering.

AseanWednesday BusinessMirror

news@businessmirror.com.ph

Editor: Max V. de Leon • Wednesday, July 20, 2016 A5

Singapore, Malaysia in bullet-train deal

sia is embracing bullet trains like never before. Singapore and Malaysia are set to sign an agreement on Tuesday that will bring a high-speed rail link to Kuala Lumpur one step closer to reality. That follows a $5.5-billion project already under way in Indonesia, while India last year chose Japan to build a $15-billion network, its first. Asian nations are modernizing their transport infrastructure, while China has set up the world’s biggest high-speed rail network. Japan has been running bullet trains for more than five decades now. As countries embrace the latest technology, it’s also pitting Chinese and Japanese manufacturers of superfast trains against rivals, such as Siemens AG and Bombardier Inc. “It’s a good sign, because, generally, investors are looking to see more interconnectivity across Southeast Asia,” said Alan Richardson, a Hong Kong-based fund manager at Samsung Asset Management. That “will help to provide greater resilience to, or less reliance on other developed

economies and also, should provide a more stable geopolitical environment with increasing interconnectivity,” he said.

regarding the rail line, Malaysia’s foreign ministry said in an e-mailed statement on Monday. Singapore Prime Minister Lee Hsien Loong will be visiting his Malaysian counterpart Najib Razak. The agreement will pave the way for final negotiations on the development and execution of the 300-kilometer (185 miles) line connecting Singapore and the Malaysian capital, the New Straits Times reported this month. Last year Singapore and Malaysia said they would reassess the 2020 target for the completion of the project because of the scale and complexity of the venture. Leaders of the two countries had announced in 2013 the rail link may be completed by the end of this decade, with Najib calling it a “huge game changer” that will transform the way the neighbors do business. “The high-speed rail [HSR] is a key bilateral project for both countries,” Lee’s office said in a statement on Monday. “The two governments’ commitment to this project is a reflection of our strong bilateral ties and our continued efforts to deepen relations. When completed, the HSR will boost connectivity, strengthen economic ties and forge closer people-to-people linkages.”

Final negotiations

Shorter journey

300 km The length of the proposed rail project linking Singapore and Kuala Lumpur

Singapore and Malaysia will sign a memorandum of understanding

The high-speed rail line will trim the land journey between the two

Southeast Asian cities to 90 minutes, from about five hours now. It will also challenge budget carriers, such as AirAsia Bhd. and Singapore Airlines Ltd.’s Tiger Airways, which fly passengers from Singapore to Kuala Lumpur in about an hour. “The Singapore-Malaysia sector has among the largest airline capacity within the region,” said John Mathai, Bloomberg Intelligence’s Singapore-based transport analyst. “A high-speed rail could service some of the traffic within that segment, reducing congestion at airports.” Asia’s appetite for high-speed rail has also pitted Chinese rail giants, such as CRRC Corp., and Japanese

Indonesian militants killed in shootout

Exporting technology

Japan, which built the world’s first high-speed train more than half a century ago, is stepping up efforts to export its bullet-train technology to meet a pledge by Prime Minister Shinzo Abe to triple infrastructure exports to ¥30 trillion ($284 billion) by 2020. China, home to the world’s biggest high-speed rail network, has identified the sector as one of 10 focus industries in a blueprint for economic development. Japan aims to sell bullet trains to

Bloomberg News

Vietnam faults as ‘untruthful’ China’s claims on sea ruling

ndonesian police say they killed two militants in a shootout in a remote jungle area of Sulawesi and will carry out forensic tests to determine if one of the men is the country’s most wanted Islamic radical. National Police Spokesman Maj. Gen. Boy Rafli Amar said one of the bodies had characteristics including a goatee and a facial mole similar to Santoso, who leads the East Indonesia Mujahideen militant group that has claimed allegiance to the Islamic State group. “We don’t want to speculate. We need to scientifically prove that it was Santoso who was shot dead,” Amar said. The shootout occurred early on Monday evening and three other militants, including two females, escaped into the jungle. Santoso has eluded capture for more than five years. Like many other Indonesian extremists, his No. 1 enemy became the police following the breakup of a training camp in a remote mountainous jungle in Aceh in 2010 by the police antiterrorism squad Detachment 88. Dozens of suspected militants were killed and more than 100 others arrested in the raid. Cabinet Secretary Pramono Anung on Tuesday said the police have informed President Joko Widodo about the possibility Santoso was killed. He said the second of the men might be Santoso’s deputy Basri, who escaped from prison in 2012. He was imprisoned in 2007 for beheading three Christian students. More than 2,500 security forces personnel, including elite army troops, intensified their operations this year in Poso, a mountainous district of Central Sulawesi province considered an extremist hotbed, to try to capture Santoso and his followers. AP

manufacturers Hitachi Ltd. and Mitsubishi Heavy Industries Ltd., against European rivals.

the project and the government supports bids by its companies, Transport Minister Keiichi Ishii said last December. The country beat China to secure a $15-billion rail project in India. Chinese Premier Li Keqiang is leading his nation’s overseas push by train equipment makers as part of the government’s broader strategy to turn the country into an advanced industrial nation. He has targeted emerging markets in Africa, Latin America and Southeast Asia for rail-related orders, while also bidding for high-profile contracts in the developed world. Last October a subsidiary of China Railway Group Ltd. partnered with local companies to win the rights to build a $5.5-billion highspeed railway line in Indonesia, the country’s first. Malaysia and Singapore received close to 250 submissions after calling for a request for information for the project, and 98 were shortl isted, the New Straits Times reported last December. Fourteen foreign entities among the 98 were asked to present their views, including France’s Alstom, Germany’s Siemens AG, Spain’s CAF and Talgo SA, Canada’s Bombardier, a group led by China Railway, as well as consortium from Japan and South Korea, the paper reported, without saying where it obtained the names.

KEY IN INDONESIA

New Zealand’s Prime Minister John Key (right) and Indonesian President Joko Widodo inspect an honor guard prior to their bilateral meeting at Merdeka Palace in Jakarta, Indonesia, on Monday. Key is currently on a three-day visit in the country. AP

Asean urged to build united front based on South China Sea ruling

head of the 28th Asean Summit in Vientiane, Lao PDR next week, an independent think tank said the Philippines should take advantage of the favorable ruling from the Permanent Court of Arbitration in setting the standard for maritime interactions across the region and building a united front in engaging China. “For all our differences, the Philippines and its Asean partners have all had one thing in common: We all know what it is like to be small and exploited,” said Dindo Manhit, president of the Stratbase Albert del Rosario Institute (ADRi). Manhit made the comment at the forum “Renewing the Multilateral Response: Building an Asean Coalition,” organized by the ADRi in partnership with Asia Society Philippines in Makati. Following the ruling, the Philippines should actively present its case as a legal precedent for Asean claimantstates to further clarify their respective maritime entitlements and boundaries, he said. The ruling—and the moral high ground it gives the Philippines—will be key in aligning each country’s respective domestic policies on fishing

The Philippines and its Asean partners have all had one thing in common: We all know what it is like to be small and exploited.” —Manhit

rights, and mineral and oil and gas explorations with the provisions laid down by the United Nations Convention on the Law of the Sea (Unclos), he added. Synchronizing the country’s defense plan with fellow Asean maritime powers, such as Vietnam, Indonesia and Malaysia, to prevent undue incidents and come up with a unified maritime front should also be considered. “This can deter and even effectively repulse Chinese encroachments in territorial waters and EEZs [exclusive economic zones],” he said.

The Philippines can even invoke its active 1951 Mutual Defense Treaty with the United States, in addition to strengthening military partnerships with Japan, South Korea, Australia and the European Union, all of which have expressed support for the Philippines’s case. This setup could even lead to the creation of defense economic zones in the Philippines, which could be the hub for naval/coast guard ship manufacturing industries, Manhit said. Despite Beijing’s refusal to acknowledge the arbitration results, the landmark case will still stand as legal basis for future maritime delimitation and resource-sharing agreements not only among Asean claimant-states, but also between Asean clamant-states and China. Manhit cited the success story of the 2014 delimitation agreement between the Philippines and Indonesia on overlapping EEZs in Mindanao and Celebes Sea. “The Philippines must build on its political capital by sending a stern message in these upcoming regional fora that China, as a rising power, must play a constructive, rather than destabilizing, role in the region,” he said.

ietnam criticized as “untruthful” Chinese state media reports that Prime Minister Nguyen Xuan Phuc respected his Communist neighbor’s position on last week’s landmark South China Sea ruling and was interested in advancing two-way talks on the disputed waterway. Phuc told Chinese Premier Li Keqiang in Mongolia last week that he didn’t endorse China’s stance on the international tribunal’s ruling, the Vietnamese government said in a statement late on Monday. Phuc reiterated Vietnam’s welcoming of the court’s decision, which found no legal basis for China’s claim to “historic rights” to resources in the area. Vietnam “declares it refutes untruthful coverage by Chinese media regarding the East Sea issue from the meeting” between Phuc and Li, the government said, using Vietnam’s preferred term for the South China Sea. The Vietnam rebuke comes as China touts what it says are dozens of international backers for its stance on the South China Sea, as it seeks to show at home it has widespread support after the ruling went against it. It highlights the difficulty for China in walking a line between President Xi Jinping’s “neighborhood diplomacy” and in continuing its assertions to sovereignty—and its military buildup—in the waterway. The risk now is China receives further public rebuttals.

‘Stands ready’

China’s official Xinhua News Agency on Thursday cited Phuc as saying “Vietnam respects China’s stance on the arbitration” and that “Vietnam stands ready to push forward the mechanism of bilateral maritime negotiations and properly manage differences with China, so as to contribute to regional peace and stability.” While the ruling resulted from a Philippines challenge, Vietnam has been a critic of China’s overlapping claims to more than four-fifths of the South China Sea. The Vietnamese statement follows remarks by other governments criticizing official Chinese sources for misrepresenting their remarks over the South China Sea case. China’s Foreign Ministry said on July 9 that Sri Lanka “understands and applauds” China’s stance on the waterway, citing a meeting between the countries’ foreign ministers in Colombo. But Sri Lankan Prime

Minister Ranil Wickremesinghe said in an interview in Singapore on Sunday that use of “applaud” was not correct. “We understood, I think they just corrected to say we understood.” Fiji issued a statement in April rejecting another Chinese ministry release asserting support from the tiny South Pacific nation. Cambodia, Poland and Slovenia have also denied Chinese claims of backing, according to the Asia Maritime Transparency Initiative, a unit of the Washingtonbased Center for Strategic and International Studies. India, whose support China also claimed, published a statement on the day of the ruling “urging all parties to show utmost respect” for the United Nations Convention on the Law of the Sea. The diplomatic dust-ups over language are among several repercussions, as the region digests the ruling, which China has rejected as unfair and motivated by US efforts to rally allies against the rising power. China has welcomed Philippine President Rodrigo R. Duterte’s offer for two-way talks on their sea disputes. Still, Philippine Foreign Affairs Secretary Perfecto R. Yasay Jr. rejected Chinese Foreign Minister Wang Yi’s position that any bilateral negotiations must disregard the tribunal’s ruling. That was “not consistent with our constitution and our national interest,” Yasay told the ABS-CBN News Channel. On Monday Vietnam called on China to “seriously” implement “agreements and mutual understandings of senior leaders, including the agreement on basic principles guiding settlement of sea issues between Vietnam and China.” The countries must “avoid further complicating the situation,” it said. For now, China has said it has no plans to tone down its actions in the area. Its air force recently conducted a combat air patrol in the South China Sea, an exercise that will become a “regular” practice in the future, Xinhua reported on Monday. China will also conduct military drills off its island of Hainan. Chheang Vannarith, Phnom Penh-based chairman of the Cambodian Institute for Strategic Studies and a former government adviser, said Cambodia would probably remain sympathetic to China’s position on the sea disputes, but must also take into account the views of the other nine members of the Association of Southeast Asian Nations. Bloomberg News

The W

Business

Wednesday, July 20, 2016 • news@businessmirror.com.ph

Donald Trump supporters, foes hold dueling rallies in Cleveland

Elan Stoltzfuz stands during a rally for Republican presidential candidate Donald Trump at Settlers Landing Park on Monday in Cleveland. AP/John Minchillo

Protesters yell during a rally against Republican presidential candidate Donald Trump on Monday in Cleveland. AP/Patrick Semansky

LEVELAND—With the police on edge in this summer of bloodshed, hundreds of Donald Trump supporters and foes held dueling rallies a half-mile apart on Monday in a tense, but mostly peaceful, start to the four-day Republican National Convention.

About 600 Cleveland officers were assigned to convention security duty along with thousands of officers from other agencies. Among them: Homeland Security investigators, Customs and Border Protection personnel, Coast Guard members and the Ohio National Guard. Among those at the pro-Trump rally was Joel Ameigh, of Hershey, Pennsylvania, who had a Smith & Wesson handgun on his belt. “We’re not here to be dangerous people. We’re not here to intimidate anyone. There are laws against that sort of thing,” he said. The president of the police union on Sunday asked Ohio Gov. John Kasich to suspend the law allowing gun owners to carry firearms in plain sight. But the Republican governor said he didn’t have the authority. The request came as the deadly truck attack in France and the ambush killings of five police officers earlier this month in Dallas and three more in Baton Rouge, Louisiana, over the weekend heightened fears of bloodshed in Cleveland.

So far, so good.” –Cleveland Police Chief Trump’s campaign manager, Paul Manafort, said disruptions by protesters could work to the candidate’s political advantage. “Frankly, that impact will probably help the campaign because it’s going to show again, you know, lawlessness, a lack of respect for political discourse,” he said shortly before the convention officially began. There was at least one dust-up, involving right-wing religious demonstrators who got into a shouting match with some of the anti-Trump protesters. And the police arrested one woman on an outstanding warrant after she jumped on a public stage downtown and grabbed a microphone from a speaker, according to city officials. Williams said the woman was also being charged with resisting arrest and obstructing official business.

On the anti-Trump side, several hundred people chanted “Dump Trump now!” and held signs saying things like “No racism, no fascism, no Trump” as they marched through the streets. Many were upset with the Republican presidential candidate’s stand on immigration, including his proposal to build a wall at the Mexican border and his call for barring Muslims from entering the US. The demonstrators also decried what they called racist police practices. Jezell Gaines, of New York City, marched through the streets with anti-Trump protesters who chanted, “Black lives matter!” “Trump is bad news,” she said. “He’s preaching hate. It’s not cool, because we’re trying to overcome hate.” Officers on bicycles and Indiana state troopers on convention security duty stood off to the side while

a black speaker complained about police mistreatment. Cleveland patrolman Bohdan Roshetsky, an eight-year veteran, said that after the recent shootings, “our awareness is extremely high.” He said he was surprised by an outpouring of support from people on Monday, including hugs and requests for pictures. “I’ve been brought to tears numerous times riding around on the bike, seeing them cheering, clapping, thanking us for being there,” he said. Even protesters complaining about police tactics were being respectful, he said. “Nobody’s been nasty to us,” he said. Across town, the rap metal supergroup Prophets of Rage played a 30-minute concert for a sparse crowd in Cleveland’s Public Square to protest the “racism, sexism and imperialism” in the Republican platform. “Out here, human rights, respect for the planet and resistance to oppression is what we sing about,” the group’s Tom Morello told an audience of about 200. AP

About a dozen Trump backers showed up with handguns strapped to their belts as allowed under Ohio law. Blocks away, protesters shouted about police mistreatment. People along the streets showered police officers with applause, hugs and a few insults. No major clashes were reported between pro- and anti-Trump forces during the two biggest demonstrations on Monday’s schedule or at ral-

lies held in the later afternoon and early evening. “So far, so good,” Cleveland Police Chief Calvin Williams said at a Monday night press briefing. Williams said there had been no violence and no property damage. Concrete barricades blocked key streets and intersections downtown, fences surrounded the arena where delegates assembled, and police helicopters flew over the city.

Biden meets Australia prime minister, talks up military ties

Some Melania Trump speech lines mirror Michelle Obama speech

YDNEY—Vice President Joe Biden met with Australia’s prime minister and other leaders on Tuesday, amid America’s continued push to boost its presence in the Asia-Pacific region. Biden, who is in Australia as part of a tour of the Pacific, also met with troops aboard an Australian navy ship, where he shook hands with veterans of Middle East conflicts and thanked Australia for being a close military ally. Biden’s visit comes five years after President Barack Obama announced that US marines would begin rotating through the Australian port city of Darwin as part of the US military pivot to Asia. “Thank you for having America’s back and we will always have your back,” Biden told the troops gathered on the flight deck of the HMAS Adelaide. “We are a Pacific power, we are here to stay, and thank God we have you to lead us and to be with us.” Later, Biden met with Prime Minister Malcolm Turnbull and other government leaders, with Turnbull praising the vice president for his push to accelerate research efforts toward a cure for cancer. Earlier this week Biden announced that the US and Australia would share the genetic information of around 60,000 cancer patients to help researchers better understand what causes particular cancers. AP

LEVELAND—Melania Trump’s well-received speech on Monday to the Republican National Convention contained two passages that match nearly word-for-word the speech that First Lady Michelle Obama delivered in 2008 at the Democratic National Convention. The passages in question focus on lessons that Mrs. Trump, the wife of presumptive Republican presidential nominee Donald Trump, said she learned from her parents and the relevance of their lessons in her experience as a mother. They came near the beginning of her roughly 10-minute speech, which was otherwise distinct from the address that Mrs. Obama gave when her husband, then-Sen. Barack Obama, was being nominated for president. In Mrs. Trump’s speech in Cleveland, she said: “From a young age, my parents impressed on me the values that you work hard for what you want in life, that your word is your bond and you do what you say and keep your promise, that you treat people with respect. They taught and showed me values and morals in their daily life.” In Mrs. Obama’s 2008 speech in Denver, she said: “And Barack and I were raised with so many of the same values: like, you work hard for what you want in life, that your word is your bond, that you do what you say you’re going to do, that you treat people with dignity and respect, even if you don’t know them and even if you don’t agree with them.” Another passage with notable

Melania Trump, wife of Republican presidential candidate Donald Trump, speaks during the first day of the Republican National Convention in Cleveland on Monday. AP/Carolyn Kaster

similarities that follows two sentences later in Mrs. Trump’s speech addresses her attempts to instill those values in her son. “We need to pass those lessons on to the many generations to follow,” Mrs. Trump said. “Because we want our children in this nation to know that the only limit to your achievements is the strength of your dreams and your willingness to work for them.” In the first lady’s 2008 speech, she said, “Barack and I set out to build lives guided by these values and to pass them onto the next generation, because we want our children—and all children in this nation—to know that the only limit to the height of your achievements is the reach of your dreams and your willingness to work hard for them.” Trump’s campaign responded in a statement that said her “immigrant experience and love for America shone through in her speech.” The statement didn’t mention Mrs. Obama. “In writing her beautiful speech, Melania’s team of writers took notes on her life’s inspirations, and in some instances included fragments that reflected her own thinking,” Trump Spokesman Jason Miller said. White House officials did not immediately respond to requests for comment late Monday evening. In an interview with NBC News taped ahead of her convention appearance and posted online early Tuesday, Mrs. Trump said of her speech, “I wrote it.” She added that she had “a little help.” AP

World

sMirror

Foreigners gorge on rupee bonds in longest buying run since 2015

verseas holdings of Indian bonds are rising at the fastest pace in 17 months as a rally that sent sovereign yields to three-year lows lures global funds. Ownership of rupee-denominated government and corporate notes increased by 61.8 billion rupees ($920 million) in the last eight days, the longest stretch since February 2015, National Securities Depository Ltd. data show. Foreigners have turned net buyers in July after paring holdings in the last two months amid speculation that a successor to Reserve Bank of India Governor Raghuram Rajan will be more dovish as strong monsoon rains improve the inflation outlook for Asia’s third-largest economy. “Foreigners are returning, given India’s growth profile and macro stability,” said Bhupesh Bameta, head of research for currencies and rates at Edelweiss Financial Services Ltd. in Mumbai. “We feel the flows should continue before the markets start factoring in the odds of a US interest-rate increase.” At 7.28 percent, India’s 10-year sovereign bonds offer the highest yield among major Asian markets, data compiled by Bloomberg show. That’s even as the yield has dropped 17 basis points this month, putting the notes on course for their best month since September. It fell two basis points as of 10:59 a.m. in Mumbai on Tuesday. Bloomberg News

These Sicilian mortgages show how difficult it is to rescue Italian banks

own the cobbled streets of Palermo, past baroque churches and gothic palaces, a lesson is lurking for Italy’s government as it hatches a plan to save the country’s banks. Sicily’s biggest city is the focal point of a 2007 securitization of nonperforming loans, or NPLs, that shows just how long it can take to resolve soured loans in the country. The deal, known as Island Refinancing, should also act as a warning for investors of the dangers of buying similar securities, as Italian banks gear up to sell more of them. The Island bonds are backed by two portfolios of NPLs originated by a Sicilian bank that’s now a subsidiary of UniCredit SpA. Just under half of the loans originated in the 1990s and they include residential mortgages, as well as loans financing hotels and industrial buildings. Unlike other asset-backed securities, where interest and principal are paid through cash flows from mortgage or auto credit borrowers, investors in NPL securitizations depend on getting money back from soured loans—typically through the courts. Bloomberg News

Wednesday, July 20, 2016 A7

Brexit bargains scented by Asia’s rich investors after pound’s plunge

is set to end the year at $1.27 before recovering to $1.34 in 2017, according to analysts’ median estimate.

‘Good opportunity’

Brexit hasn’t dimmed the allure of owning property in London as it “remains a key financial hub and a desirable destination,” said Jason Wang, CEO of Stamford Management in Singapore. Some of his larger property-investment clients see the current pound’s depreciation as a “good opportunity to pick up some prime London properties,” Wang said. Family offices are typically tailored to both investment and personal needs, including estate planning, philanthropy and maintaining homes. The pound’s weakness is an advantage for the biotechnology companies Vulpes plans to put more money into, Diggle said. “We have great confidence that the current low level of sterling will be a direct and significant benefit to the bottom-line of these US dollarearning companies,” said Diggle, who set up Vulpes in 2011. “From there, it is easy to extrapolate that other companies in the UK will have similar economic effects, so we have gone looking for bargains. UK service companies that sell to the US are the most obvious.”

Pound premium

BLOOMBERG

tephen Diggle, whose Singapore-based hedge fund made a profit of $2.7 billion in the depths of the global financial crisis, plans to boost his family office’s investments in biotechnology companies in the United Kingdom after Brexit sent sterling tumbling to a 31-year low. His Vulpes Investment Management is also seeking to pour money into other UK industries that can benefit from a weaker pound, Diggle said in an e-mail last week from Italy’s Umbrian hills, where he owns a house. His firm, with about $250 million, owns stakes of as much as 22 percent in six British biotechnology

firms through its life sciences fund, and more than 2,000 apartments in Germany, Diggle said. “I’m still in Italy, and I’ve a steady stream of shocked English people visiting,” said Diggle, an Oxford University graduate who worked at Lehman Brothers Holdings Inc. before cofounding a hedge fund that

Theresa May should provide some pragmatic leadership in steering the UK through a manageable Brexit.”—Wang made $2.7 billion in 2007 and 2008. “We are regarding this as a buying opportunity in sterling assets, especially for businesses, which benefit from sterling being near a multidecade low against the US dollar.” Diggle is just one of the wealthy Asia-based investors keen to take advantage of the pound’s 11-percent decline since British voters decided on June 23 to leave the European Union. UBS Group AG, the world’s biggest private bank, and Stamford Management Pte., which oversees $250 million for Asia’s rich, said some of those they advise are preparing to snare realestate bargains. UBS’s clients have been paying

back their pound mortgages following the currency’s drop, said Simon Smiles, the bank’s chief investment officer for ultra-high-net-worth individuals. Its wealthiest clients are also looking to snap up assets at distressed prices, as UK property funds began offering buildings for sale after investors sought withdrawals on concern Brexit would cause property prices to fall. “Clients I have been speaking to were asking when to buy the pound post its Brexit fall, not selling it,” said Smiles, who is based in Zurich, via e-mail. Sterling fetched $1.3220 at 6:30 a.m. in London on Tuesday, after reaching $1.2798 this month, the weakest level since 1985. The currency

While options traders are more pessimistic on the pound than any of its developed-market peers, they’re paying less to bet on its decline than they did last month. The premium for three-month contracts to sell sterling versus the dollar over those to buy has narrowed to 1.72 percentage points, compared with 6.39 percentage points on June 14, risk-reversal prices compiled by Bloomberg show. Sterling gained 1.8 percent last week, its strongest weekly performance since March, as the appointment of Theresa May as Prime Minister returned a sense of political stability to the UK and the Bank of England unexpectedly kept interest rates unchanged. “Theresa May should provide some pragmatic leadership in steering the UK through a manageable Brexit,” said Stamford Management’s Wang, who holds a degree from the London School of Economics and once worked as a hedge-fund manager in the British capital. “Sterling’s recent rebound reflects that confidence in her political ability.” Bloomberg News

Zinc climbs to highest in more than a year on shortage worries Ericsson plans more cost cuts

as sales trail analysts’ estimates

inc extended its advance to the highest level in more than a year on concerns over a looming supply deficit. The metal used to galvanize steel rose as much as 1.2 percent to $2,244 a metric ton on the London Metal Exchange, the highest since May last year, and traded at $2,229.50 by 12:56 p.m. Shanghai time. It added as much as 2.4 percent to 17,340 yuan ($2,589) on the Shanghai Futures Exchange. Zinc has rallied 39 percent this year, outperforming other base metals, amid forecasts for a global shortage after supply cuts and mine closures. Zinc may rise to $2,500 over the next six months as production trails demand, Goldman Sachs Group Inc. said last week. Stockpiles in warehouses tracked by the LME fell to 438,275 tons as of Monday, down more than a quarter from a peak of about 617,000 tons last September. “Zinc has been resilient, given ore supply tightness, which still hasn’t eased after the price rally,” Wei Lai, an analyst with Cofco Futures Ltd., said by phone from Shanghai. “But with prices above 17,000 yuan, it might be time to be a bit cautious.” Nickel fell from the highest close in almost nine months, even

The Philippines is the world’s biggest supplier of nickel ore to China. BLOOMBERG

as the new Philippine administration shows signs of delivering on its vow to crack down on the mining industry, shuttering producers that don’t meet environmental standards. The country is the

world’s biggest supplier of nickel ore to China. The metal that’s used in stainless steel declined 0.8 percent to $10,465 a ton after jumping as much as 1.1 percent earlier. On

Monday it gained 2.6 percent to $10,545, the highest close since October 28. In Shanghai prices climbed 1.3 percent, paring an earlier advance of 3.6 percent. Bloomberg News

ricsson AB said it will double its cost-cutting plan after posting second-quarter sales that missed analysts’ estimates as carriers in Europe, Russia and Brazil curbed investments in wireless gear. Sales fell 11 percent to 54.1 billion kronor ($6.3 billion), the mobile-network equipment and software maker said in a statement on Tuesday. Analysts predicted a 9-percent drop to 55.2 billion kronor on average. The company will reduce research and development spending and try to reap efficiency gains from a new company structure. Ericsson is trying to sell more TV and cloud software to cope with intense rivalry from Huawei Technologies Co. and Nokia Oyj. Under CEO Hans Vestberg, the Stockholmbased company has sought to boost the share of software and services in its sales mix to reduce exposure to hardware and make revenue less volatile. The wireless-equipment market is set to shrink 5.5 percent this year to $67.8 billion, according to IHS, making Vestberg’s task all the more difficult. “The negative industry trends from the first quarter have intensified impacting demand for mobile broadband, especially in markets with a weak macroeconomic environment,”

the company said in the statement. The adjusted gross margin, the share of sales left after subtracting the cost of production, shrank to 33.2 percent. Analysts predicted 33.3 percent on average. Vestberg has made acquisitions to accelerate a push beyond wireless hardware. Ericsson bought Telcordia Technologies for $1.15 billion in 2012 and Mediaroom for about $200 million to tap into new growth streams, such as billing and Internet-based TV. The company partnered with Cisco Systems Inc. to sell more complete networks and compete with Finland’s Nokia, which agreed to acquire hardware rival Alcatel-Lucent SA last year to add gear used to transmit landline and Internet traffic, giving it a more complete offering. Carriers are restraining investments after spending billions of dollars building fourth-generation systems, so users can stream music and video on phones and tablets. Mobile data is expected to soar tenfold over the next six years, as users turn to services such as Netflix, but Europe’s biggest phone companies have warned that investments in a faster fifth-generation networks may be held back by regulations on so-called net neutrality. Bloomberg News

The World

A8 Wednesday, July 20, 2016 • Editor: Lyn Resurreccion

Pakistan army rescues chief justice’s son naBBed in June

SLAMABAD—In a predawn operation near a tribal region, the Pakistani army and paramilitary troops on Tuesday rescued a chief justice’s son kidnapped last month in southern Sindh province by a splinter group of the Taliban, the army spokesman said. Awais Shah was being transported by his captors in the northwestern town of Dera Ismail Khan, when Pakistani troops and Paramilitary Rangers, acting on intelligence, swooped in and rescued the young man, a lawyer in his late 20s. “Three terrorists were killed” in a shootout with the militants, including the driver of the car, said the Spokesman Lt. Gen. Asim Saleem Bajwa. He added that Shah is now safe and has been brought by plane to the port city of Karachi. Pakistani TV later broadcast footage showing Shah arriving at his family home in Karachi. Bajwa declined to elaborate or name the splinter group of the Taliban that he said was behind the abduction. Shah’s father Sajjad Ali Shah praised the rescue. Such operations are not uncommon in the region, located near the South Waziristan tribal area, which has seen scores of military offensives against militants. And in May, in neighboring Afghanistan, a joint US-Afghan forces’ raid on Islamic militants unexpectedly found and rescued the son of a former Pakistani prime minister who had been abducted three years ago. At a news conference in the garrison city of Rawalpindi, the army spokesman described a dramatic operation that led to Shah’s rescue. Once the troops had killed all the militants and approached the car, they found a person sitting in the back, wearing a burqa—the full-length robe commonly worn by conservative Muslim women. Bajwa said the person then identified himself as the son of the chief justice of Sindh’s High Court. AP

I.S. group claims responsibility for train attack in Germany

ERLIN—The Islamic State (IS) group has claimed responsibility for an attack on a train in Germany that injured at least five people. The claim was posted on the group’s Aamaq news agency on Tuesday. It came hours after a 17-year-old Afghan asylum-seeker attacked passengers with an ax and knife on a train near Wuerzburg-Heidingsfeld on Monday night, before he was shot and killed by a special police unit which happened to be nearby. The statement says the attacker was “a member of the Islamic State” group and carried out the attack in response to the militant group’s calls to attack countries that are members of the anti-IS coalition. “Even during the first emergency call, a witness said that the attacker was shouting ‘Allahu akbar’ on the train,” Joachim Herrmann, Bavaria’s interior minister, told ZDF Television. “Also, during the search of his room, a hand-painted IS flag was found.” Herrmann said it was too early to draw conclusions about the attacker’s motive. The attacker, who was not identified by the authorities, came to Germany two years ago as an unaccompanied minor, and applied for asylum in March of last year. He lived in a home for young refugees until two weeks ago when he was placed with a foster family in the Wuerzburg area. Investigators were talking to the foster family, witnesses and the attacker’s friends. The attacker injured at least four people on the train near WuerzburgHeidingsfeld on Monday night, and also a woman outside the train as he fled. Witnesses said the interior of the train was covered with blood and looked “like a slaughterhouse,” the German news agency dpa reported. About 30 passengers were on the train at the time; more than a dozen were treated for shock. AP

BusinessMirror

Seoul says North Korea fired 3 missiles into sea

news@businessmirror.com.ph

26 are reported killed as Taiwan tour bus bursts into flames

AIPEI, Taiwan—A tour bus carrying visitors from mainland China burst into flames on a busy highway near Taiwan’s capital on Tuesday, killing 26 people, Taiwanese media said. The accident took place on the No. 2 national highway in Taoyuan county, south of Taipei, the official Central News Agency and others reported. The web site of Taiwan’s China Times newspaper said those aboard were tourists from China’s Liaoning province, but officials have not confirmed that. The paper said no one aboard made it off the burning bus. The Central News Agency and others reported that the bus apparently smashed into a roadside barrier and caught fire, although the exact sequence of events wasn’t immediately clear. Photos from the scene showed flames and thick black smoke pouring from the cab of the bus. Taoyuan Fire Department Official Zeng Hao said by phone that the total number of dead and injured was still being compiled. AP

Unique Zika case of Utah caregiver under investigation

South Korean protesters hold signs during a rally denouncing a plan to deploy an advanced US missile defense system called Terminal High-Altitude Area Defense, or Thaad, near US Embassy in Seoul, South Korea, on Tuesday. AP/Lee Jin-man

EOUL, South Korea—North Korea on Tuesday fired three ballistic missiles into its eastern sea in an apparent protest of South Korea’s decision to allow the deployment of an advanced US missile defense system in the country, Seoul officials said.

The missiles launched from a western North Korea town flew across the country before crashing into the waters off its east coast, Seoul’s Joint Chiefs of Staff said in a statement. Two of them flew about 500 kilometers to 600 km (310 miles to 375 miles), displaying a sufficient range to reach entire South Korea, JCS Spokesman Jeon Ha-gyu said. He said South Korea’s military was analyzing how

far the third missile flew. An earlier JCS statement said all three flew about 500 to 600 kilometers. A statement from the Pentagon said that US Strategic Command systems tracked “what we assess were three North Korean missile launches.” It said two were presumed to be Scud tactical ballistic missiles, followed by the presumed launch of a Rodong intermediaterange ballistic missile.

It said the missile launches did not pose a threat to North America. North Korea routinely tests short-range missiles and artillery systems, but the latest launches came days after the country warned of unspecified “physical counteraction” over the deployment of the Terminal High-Altitude Area Defense, or Thaad, system in the southern town of Seongju. Jeon said South Korea “strongly condemns” the launches that he described as an “armed protest” against the Thaad deployment. In Tokyo Defense Minister Gen Nakatani said the launches were “an act of provocation that undermines regional and international security....We absolutely cannot accept it.” North Korea has already deployed a variety of missiles that can reach most of South Korea and Japan, including American military bases in those countries. The country is also pushing to develop a long-range nuclear-tipped missile that can strike the mainland US, but South Korean defense officials believe the North does not possess

such a weapon. Analyst Kim Dong-yub at Seoul’s Institute for Far East Studies said the North appears to have demonstrated its ability to strike southern South Korean targets, including an area where a Thaad battery is to be placed by the end of next year. A Rodong missile is known to have a maximum range of 1,300 km (800 miles). One of the missiles launched in March flew about 800 km (500 miles), according to Seoul’s Defense Ministry. Seoul and Washington say they need the Thaad system to better deal with what they call increasing North Korean threats in the aftermath of its fourth nuclear test and long-range rocket launch earlier this year. The Korean Peninsula remains in a technical state of war because the 1950-1953 Korean War ended with an armistice, not a peace treaty. About 28,500 US soldiers are stationed in South Korea to deter possible aggression from North Korea; tens of thousands more are stationed in Japan. AP

Florida club gunman told bosses taunts led to false terrorist claims

RLANDO, Florida—Coworkers who “ganged up” to tease him about being Muslim prompted the gunman who opened fire at a Florida gay nightclub to pretend he had terrorist ties to get them off his back, according to a letter he wrote his bosses. In documents released on Monday, Omar Mateen said taunting at his job as a security guard in the St. Lucie courthouse led him to say he had connections to terrorists and a mass shooter, but he later told his bosses he made that up, and the Federal Bureau of Investigation (FBI) determined he was not a threat. His remarks prompted an FBI investigation in 2013 and caused enough concern with the St. Lucie County Sheriff’s Office that officials there asked employer G4S Secure Solutions to have him

reassigned, away from the courthouse. But in addition to Mateen’s explanation to his bosses that he had made the story up, the documents show the FBI didn’t believe he was a terrorist, and an agent told a sheriff’s office major that he didn’t think Mateen “would go postal or anything like that.” “I love the United States. The boasting I did is just to satisfy the gang of coworkers who ganged up against me,” Mateen wrote in a letter to his bosses at G4S Secure Solutions, according to the documents released by the sheriff’s office. “I’m 1,000-percent pure American.... I’m against these terrorists, anyone of them.” Mateen opened fire at the Pulse nightclub in Orlando during “Latin Night” on June 12 in a rampage that left 49 victims dead and 53 wounded. It was the worst mass shooting in modern US history.

Mateen, who pledged allegiance to the Islamic State group during a call with police dispatchers amid a three-hour standoff, died in a hail of gunfire after the police stormed the venue. Mateen was born in New York and his family came from Afghanistan. According to the records, he told his bosses that when he first started working at the Courthouse, one guard told deputies that he was “a Muslim extremist and potential terrorist.” When boxes were delivered to the courthouse, another guard often said, “We have to be careful, Omar may send us a bomb and he will get his 72 virgins,” Mateen wrote, according to the records. Another time, a deputy teased Mateen that his fingers had pork oil on them and he was going to rub them on Mateen’s shirt, according to Mateen. Observant

Muslims don’t eat pork because it is considered unclean. Mateen told his bosses that in response to the taunting, he told coworkers he had ties to the Boston Marathon bombing suspects and Nidal Hasan, a former US Army major who was convicted and sentenced to death for the 2009 shooting at Fort Hood in Texas that left 13 people dead and 31 wounded. The FBI investigated Mateen again in 2014 because of his ties to a Syrian suicide bomber who went to the same mosque, but that case also was closed without the agency taking action. FBI Spokesman Amy Pittman on Monday referred questions to the FBI’s Miami office. Miami Office Spokesman Michael D. Leverock said he could not comment because the case was still under investigation. AP

ALT LAKE CITY—Health authorities in Utah are investigating a unique case of Zika found in a person who had been caring for a relative who had an unusually high level of the virus in his blood. Exactly how the disease was transmitted is still a mystery, though the person has since recovered. The elderly relative who died after contracting Zika abroad had amounts of the virus in his blood more than 100,000 times higher than other samples of infected people, according to the Centers for Disease Control and Prevention (CDC). Though the tropical mosquito that mainly spreads Zika isn’t typically found in Utah, officials haven’t ruled out the possibility that the man brought a mosquito back with him from an area where he caught the virus, perhaps in a suitcase, according to the CDC. “The new case in Utah is a surprise, showing that we still have more to learn about Zika,” CDC medical epidemiologist Dr. Erin Staples said. Authorities did not give further details about either patient, citing health privacy laws. The new case was discovered after a doctor noticed the caregiver’s Zika-like symptoms, which include rash, fever and pink eye, officials said. He or she had cared for the older man both at home and in the hospital. That man died in late June and was the first death of a Zika-infected in the continental US. His age and another health condition made his exact cause of death unclear. The caregiver did not travel to an affected area. Health workers are testing other people who had contact with the first patient. Officials are trapping mosquitoes in Utah to test them, though the species that spread the disease don’t usually live in the state’s high altitude and cold winters. The CDC did not immediately revise its advice to health-care workers or caregivers after the new case emerged. “Based on what we know, so far, about this case, there is no evidence that there is any risk of Zika virus transmission among the general public in Utah,” said Dr. Angela Dunn, deputy state epidemiologist at the Utah Department of Health. Signs of Zika have been found in blood, urine, semen and saliva. There’s no evidence, yet, that the Zika infection in this case is an unusual mutation, but researchers are exploring that possibility through genomic analysis. The virus causes only a mild illness in most people. But during recent outbreaks in Latin America, scientists discovered that infection during pregnancy has led to severe brain-related birth defects. AP

ExportUnlimited BusinessMirror

news@businessmirror.com.ph

PEDP Strategy 6: Exploit current opportunities and explore new ones

Editor: Efleda P. Campos • Wednesday, July 20, 2016 A9

Exporters warned against cybercrime

By Rafaelita C. Castro Chief, Market Innovation Division DTI’s Export Marketing Bureau

Business Beyond Borders

N 2015 the Philippines’s top 3 export markets were Japan, China and the United States. These three markets contributed 47 percent to total exports. Other markets in the top 10 ranking were Hong Kong, Singapore, Germany, South Korea, Thailand, Taiwan and the Netherlands. Together, these top 10 markets comprised 83 percent of total Philippine exports. The Philippine Export Development Plan (PEDP) 2015-2017 addresses this need to diversify and expand export markets. Market diversification has become even more imperative today with the current global economic slowdown. This is embodied in Strategy 6, which aims to take advantage of the opportunities brought about by Association of Southeast Asian Nations (Asean) integration, free-trade agreements (FTAs) and other preferential trading arrangements (PTAs). At present, aside from its FTA with the nine member-states of Asean, the Philippines is a signatory to Asean’s FTA with China, Japan, South Korea, India, Australia and New Zealand. The Philippines also has a bilateral agreement with Japan, and recently signed an FTA with the European Free Trade Association (Efta), composed of Iceland, Liechtenstein, Norway and Switzerland, which is still undergoing ratification. These FTAs provide for market access for Philippine goods and services. The Philippines also enjoys preferential tariffs for certain goods under the Generalized System of Preferences (GSP) granted by donor-countries, which include the European Union (EU) and the US. In December 2014 the EU included the Philippines in its GSP+ scheme, which grants zero tariffs to 6,274 products. Last year the US reinstated its GSP, which eliminated duties on about 5,000 products coming from the Philippines. As more than half of Philippine exports are with FTA partners and GSP donor-countries, exporters are encouraged to make use of these preferential arrangements to make their products more price-competitive and to expand their shares in these markets. Exporters are also being alerted

to prepare for market openings to be brought about by other FTAs currently being negotiated by the Philippines, like the Regional Comprehensive Economic Partnership Agreement, or RCEP, which is with Asean and its six partner-economies (China, Japan, South Korea, India, Australia and New Zealand), and the Philippines-EU FTA. Information on these preferential trading schemes is being made available to stakeholders by the Export Marketing Bureau of the Department of Trade and Industry, through its Doing Business in Free Trade Areas (DBFTA) program. The DBFTA is a business-education program that aims to inform businesses of the benefits of FTAs. It has recently expanded to include sessions on Asean integration and GSP schemes. In addition to these preferential trading areas, the PEDP also targets the development of new and upcoming exports markets, like Iran, Israel and South Africa, to increase exports. Rafaelita Castro obtained her Master’s Degree in Public Management and Bachelor of Science Degree in Business Economics from the University of the Philippines. She was a member of the Philippine team that negotiated the Asean-Australia-New Zealand Free Trade Agreement (AANZFTA) and attended the seminar on ChinaAsean Free Trade Area in Beijing, China. She is the division chief of the Market Innovation Division of the Export Marketing Bureau, which spearheads the implementation of the Doing Business in Free Trade Areas, or DBFTA, a DTI advocacy program that encourages businesspeople to avail themselves of the benefits of free-trade agreements, which the Philippines has entered into.

upcoming events Compiled by Louise Kaye G. Mendoza | DTI-EMB Knowledge Processing Division

JULY 19

Event: DBFTA Info Session, Resource Speakers and Rapporteur: Sue Guro, Justinne Santos, RD Velasco, Gina Verdelor Venue: Agusan, Surigao del Sur

JULY 22

Event: DBFTA for DLSU College of Business, Speaker: AD Agnes Legaspi Venue: Yuchengco Auditorim, DLSU, Taft Avenue, Manila

JULY 18-July 20

Event: Halal Advocacy Caravan for Zamboanga City Speaker: Albin Ganchero Venue: Dipolog City Zamboanga Sibugay, Zamboanga del Norte

JULY 20

Time: 6 p.m.-7:30 p.m. Event: Radio Guesting Negosyo at Iba Pa Topic: Philippine Export Development Plan Guest: Director Senen Perlada and Undersecretary Nora Terrado Time: 10 a.m. SIAL OBM Meeting Attended by: DC Rorie Castillo, AD Anthony Rivera Venue: DTI International Building, Makati City

JULY 22

Event: DBFTA for 2016 MSME Provincial Conference Speaker: Vic Soriano, Knowledge Division Chief Venue: Zamboanga Sibugay

JULY 28

Time: 1 p.m. to 4:30 p.m. Event: Session1:2to2:30p.m.OverviewofEMBServicesandExportProcedure Session 2: 2:30 to 4 p.m. Self-Certification under the Asean Trade in Good Agreement Venue: Penthouse, Fifth Floor, DTI International Building, 375 Sen. Gil Puyat Avenue, Makati City.

FRANCIS Señora, an investigative agent II of the National Bureau of Investigation, discusses how to avoid cybercrime in export transactions during the Philippine Export Competitiveness Program seminar series for exporters held on July 14 at the DTI International Building in Makati City. ROY DOMINGO

By Leandro Anton Castro | Special to the BusinessMirror

N a forum hosted by the Department of Trade and Industry (DTI) on July 14, an agent from the National Bureau of Investigation (NBI) warned local exporters against cybercrime that can potentially harm their businesses.

During the forum organized by the Export Marketing Bureau (EMB) under the DTI, Francis Señora of the NBI’s Cybercrime Division warned local businessmen who aspire to venture and those currently venturing in export against cybercrime. Señora said millions of pesos are on the line during cybercrime attacks against businessmen. These attacks are usually in the form of e-mail spoofing, fraud or phishing. E-mail spoofing refers to forgery of a header so as to make an e-mail appear to come from a particular source. Señora said cyber criminals usually spoof e-mails to make it appear to come from a legitimate source. E-mail fraud or phishing is the practice of acquiring important information, such as usernames and passwords, from Internet users by creating a web site that masquerades as a legitimate one.

DTI-EMB to hold DBFTA in Caraga

HE Export Marketing Bureau (EMB) of the Department of Trade and Industry (DTI) is conducting a series of seminars on Doing Business in Free Trade Areas (DBFTA) and the Generalized Scheme of Preferences (GSP) from July 19 to 21 in Agusan del Sur, Surigao del Sur and Agusan del Norte, respectively. The DBFTA program is an initiative that aims to increase the awareness of Filipinos regarding the benefits of free-trade agreements (FTAs) and GSP. Exporters, would-be exporters, entrepreneurs, government agencies, local government units, faculty members and students are encouraged to attend the sessions to learn more about the preferential tariff treatments enjoyed by the Philippines. Discussions will also highlight export opportunities and consumer trends in the European Union, the United States, Canada and other FTA trading partners of the Philippines. The speakers for the DBFTA sessions are Suraida U. Guro, assistant chief from the EMB; Justinne Marie D. Santos and Rudolph Jay D. Velasco, Trade and Industry Development specialists from the EMB. For more information and inquiries regarding the Caraga DBFTA, please contact EMB at (02) 4653300 and look for Gina Verdeflor (local 208) or Justinne Santos (local 222). Justine Marie D. Santos

A 2014-2015 report by the Department of Justice said cybercrime attacks in 2014 more than doubled, with 614 recorded cases, compared to 288 cases recorded in 2013. It said 22 percent of the recorded cybercrime cases came from Internet fraud, making it the most rampant. However, the investigative agent said only 2 out of 10 of these cases,

especially those concerning local exporters, are solved. “First of all, jurisdiction is a hindrance. Most of these transactions, since exports, ang ka-transact ninyo ay nasa ibang bansa. Ang pera niyo ay napunta sa ibang bansa. How can we compel foreign banks, if our jurisdiction prevents us so?” Señora said. “Nobody controls the Internet. That’s the anonymity of the Internet. It has no jurisdiction; it’s a cyberspace,” Señora added. He cited the Bank Secrecy Act, which has also been an obstacle to their investigations. The act prohibits banking institutions from disclosing information on deposits made to them. However, the investigative agent said cybercrime attacks can be prevented. He said the creation of “super passwords” is one of many security measures businessmen can take. Señora urged the exporters to

deviate from creating passwords that have personal associations to them, such as birthdates or names, and use mnemonics and numbers, instead. He also said the longer the password, the safer it is from being cracked by hackers. More so, he said businessmen should also start investing in information-technology (IT) security by availing themselves of paid e-mail services, instead of the free ones, and acquiring the best firewall and antivirus software available. Señora also stressed the creation of IT infrastructure plans, especially for large companies. “They should have an IT infrastructure plan. Mayroon dapat kayong guide on how to use your electronic devices sa loob ng offices,” Señora said, adding that, even the use of the smallest devices, such as flash drives, must be monitored.

A10 Wednesday, July 20, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

‘Pokémon Go’: Harbinger of something great

ou’ve heard of Pokemon Go by now, yes? It’s the pervasively viral, madness-inducing, privacyinvading, weirdly alarming, metaphysically destabilizing new mobile-phone game from Niantic. It’s potentially worth $1.8 billion a year. And it just may herald an important technological shift.

Conceptually, the app is fairly simple. Looking through their phones, gamers can see Pokémon characters superimposed on the world around them. The idea is to “catch” the creatures, and to pursue different varieties. The kids love it. But it isn’t just a game: It’s a rudimentary use of something called augmented reality (AR). Using cameras and sensors, more sophisticated AR can project computer-generated graphics on a user’s field of vision, typically through specialized goggles or visors. It can also show what the user is seeing to remote collaborators, who can, in turn, manipulate what graphics are displayed. For industry, that’s a powerful combination. Factory workers are experimenting with headgear that displays safety alerts and instructions for machinery. Engineers are using the gadgets to help repair equipment. Rather than pore through technical manuals, they can peer through headsets that recognize what they’re looking at and indicate what needs to be done. As such gear improves, it should cut costs, increase accuracy, save time and make workplaces safer. It also seems likely to spread. Lockheed Martin is using AR to assemble fighter jets. One day, it may prove useful in hospitals or on construction sites. Microsoft’s AR system, called HoloLens, was sent aboard the International Space Station, so that mission control might help with future repairs by dropping annotations into an astronaut’s field of vision. Even for the technically inept, AR could simplify tasks like assembling furniture or fixing a flat. In each case, AR’s power is to project the limitless data of cyberspace onto the physical world. That will give people more information about their environment, new ways to manipulate it, and a promising new venue for collaboration. In short, it will turn people into cyborgs, but in a good way. For all that, “Pokémon Go”—like its predecessor in awkward virtualphysical collisions, Google Glass—suggests some looming conundrums. As with everything in the digital age, it will surely erode privacy. How might advertisers make use of such gear? And how do you keep everyone from wandering into traffic, getting robbed or falling off cliffs? Those questions and many more will probably become more urgent as this thrilling, alarming technology takes off. Meantime, enjoy your weird game, Pokémon enthusiasts. You’re playing with the future. And it should only get better from here. Bloomberg editorial

Since 2005

BusinessMirror A broader look at today’s business ✝ Ambassador Antonio L. Cabangon Chua Founder

Publisher Editor in Chief Managing Editor Associate Editor News Editor City & Assignments Editor Senior Editors

T. Anthony C. Cabangon Jun B. Vallecera Max V. de Leon Jennifer A. Ng Dionisio L. Pelayo Vittorio V. Vitug

Ruben M. Cruz Jr. Angel R. Calso

Creative Director Chief Photographer

Eduardo A. Davad Nonilon G. Reyes Judge Pedro T. Santiago (Ret.) Benjamin V. Ramos Adebelo D. Gasmin Frederick M. Alegre Marvin Nisperos Estigoy Aldwin Maralit Tolosa Dante S. Castro

BusinessMirror is published daily by the Philippine Business Daily Mirror

HOM

Publishing, Inc., with offices on the 3rd floor of Dominga Building III 2113 Chino Roces Avenue corner De La Rosa Street, Makati City, Philippines. Tel. Nos. (Editorial) 817-9467; 813-0725. Fax line: 813-7025. (Advertising Sales) 893-2019; 817-1351, 817-2807. (Circulation) 893-1662; 814-0134 to 36. E-mail: news@businessmirror.com.ph.

www.businessmirror.com.ph

regional offices n DXQR -93dot5 HOME RADIO CAGAYAN DE ORO E-MAIL ADDRESS: homecdo@yahoo.com ADDRESS: Archbishop Hayes corner Velez Street, Cagayan de Oro City CONTACT NOs.: (088) 227-2104/ 857-9350/ 0922-811-3997 n DYQC -106dot7 HOME RADIO CEBU E-MAIL ADDRESS: homecebu@yahoo.com ADDRESS: Ground Floor, Fortune Life Building, Jones Avenue, Cebu City CONTACT NOs.: (032) 253-2973/ 234-4252/ 416-1067/ 0922-811-3994 n DWQT -89dot3 HOME RADIO DAGUPAN E-MAIL ADDRESS: homeradiodagupan@ yahoo.com ADDRESS: 4th Floor, Orchids Hotel Building,

Rizal Street, Dagupan City CONTACT NOs.: (075) 522-8209/ 515-4663/ 0922-811-4001 n DXQM – 98dot7 HOME RADIO DAVAO E-MAIL ADDRESS: home98dot7@gmail.com ADDRESS: 4D 3rd Floor, ATU Plaza, Duterte Street, Davao City CONTACT NOs.: (082) 222-2337/ 221-7537/ 0922-811-3996 n DXQS -98dot3 HOME RADIO GENERAL SANTOS E-MAIL ADDRESS: homegensan@yahoo.com ADDRESS: 2nd Floor, Penamante Clinic Tiongson Street, General Santos City CONTACT NO.: 0922-811-3998 n DYQN -89dot5 HOME RADIO ILOILO E-MAIL ADDRESS: homeiloilo@yahoo.com

ADDRESS: 3rd Floor, Eternal Plans Building, Ortiz Street, Iloilo City CONTACT NOs.: (033) 337-2698/ 508-8102/ 0922-811-3995 n DWQA -92dot3 HOME RADIO LEGAZPI E-MAIL ADDRESS: homeradiolegazpi@ yahoo.com ADDRESS: 4th Floor, Fortune Building, Rizal Street, Brgy. Pigcale, Legazpi City CONTACT NOs.: (052) 480-4858/ 820-6880/ 0922-811-3992 n DWQJ -95dot1 HOME RADIO NAGA E-MAIL ADDRESS: homenaga@yahoo.com ADDRESS: Eternal Garden Compound, Balatas Road, Naga City CONTACT NOs.: (054) 473-3818/ 811-2951/ 0922-811-3993

Printed by brown madonna Press, Inc.–San Valley Drive KM-15, South Superhighway, Parañaque, Metro Manila MeMBer of

Susie G. Bugante

All About Social Security

ith modern technology, it is now possible for Social Security System (SSS) pensioners to comply with the Annual Confirmation of Pensioners (Acop) program wherever they are in the world. The Acop is the SSS’s way of ensuring that the rightful beneficiary continues to enjoy his or her pension benefit by making an appearance once a year during his or her birth month at the nearest SSS branch or at his or her depository bank.

For pensioners living or residing abroad, it could be very difficult to comply with this requirement. Thankfully, there is Skype, a free application that enables anyone to do video calls for free. Using Skype, SSS pensioners abroad can now comply with Acop through videoconference. During the birth month of the retiree pensioner or the deceased

member, in the case of the deathpension beneficiary, the pensioner living abroad must first make an appointment for a voice conference by sending an e-mail to ofw.relations@sss.gov.ph or to member_relations@sss.gov.ph indicating “Skype (ACOP), pensioner’s name and SS number” as the subject of the email. The pensioner should have

a Skype account and provide the account information to the SSS. Among the other pieces of information to be provided in the e-mail should include retiree pensioner’s or deceased member’s name; social-security number; date of birth; guardian’s name, if retiree or death beneficiary is incapacitated; dependent’s name, if any; contact information (e-mail address, mobile number and landline); complete address (local and abroad); user name to be used in videoconference; and preferred schedule of videoconference, based on Philippine time (Monday to Friday, from 12 a.m. to 11 p.m.). An e-mail will be sent back to the pensioner confirming the appointment for the Acop voice conference together with a reference number. On the appointed date and time, an SSS agent will make a video call during which time, the pensioner must present the reference number and valid IDs. After the videoconference, the pensioner will receive an e-mail

confirming his or her compliance with the Acop. The identification documents that the pensioner must present during the videoconference may be any of the following: SSS unified multipurpose identification (UMID) card; or passport; or any two valid IDs issued by the host country governmental unit showing the photo and signature of the pensioner. Indeed, it is a lot easier now for pensioners living abroad to comply with the Acop. Through online videoconferencing, they can transact with the SSS right at the comfort of their homes! For more details on SSS programs, members can drop by the nearest SSS branch, visit the SSS web site (www.sss.gov.ph), or contact the SSS call center at 920-6446 to 55, which accepts calls from 7 a.m. on Mondays all the way to 7 a.m. on Saturdays. Susie G. Bugante is the vice president for public affairs and special events of the SSS. Send comments about this column to susiebugante.bmirror@gmail.com.

Dilemmas and conflicts over our row with China

Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos

Online Editor Social Media Editor

Chairman of the Board & Ombudsman President VP-Finance VP-Corporate Affairs VP Advertising Sales Advertising Sales Manager Group Circulation Manager

Skype for SSS pensioners

Michael Makabenta Alunan

on the contrary

ur recent victory at the United Nations Permanent Court on Arbitration (PCA) in The Hague over our conflicts with China is now putting pressure on everybody on what to do next, thus triggering a host of inherent dilemmas and conflicts among the stakeholders locked in dangerous political skirmishes with each other.

n Damned either way. How we play our role strategically, tactically and diplomatically will be crucial. If the Duterte administration softens too much, it gets criticized by hotheads, who already interpret Foreign Secretary Perfecto R. Yasay Jr.’s call for calm and sobriety as being soft. They probably expect a president oozing with machismo to be more combative against China in the same passion as his antidrug campaign. On the contrary, if we flaunt the decision and taunt China into provocative moves, the more China would tend to dig in, China expert Chito Sta. Romana says, citing several instances in China’s history. There must be a win-win situation for China to back out without losing face, which is one dilemma and challenge. However, we did the right thing by going to international arbitration, as previous bilateral talks and multilateral moves with Asian neighbors led nowhere. There is no way a David-like flyweight Philippines can win against heavyweight China, which will tend to throw its weight and influence around. Former President Benigno S. Aquino III was, thus, right in elevating the case

for arbitration on the United Nations Convention on the Law of the Sea (Unclos), to which China is a signatory. n China’s dilemma. China was caught by surprise by this legal offensive from the flank. If China attends, aware it had no chance of winning anyway, it will give credence to the arbitration. On the contrary, if it boycotts, world opinion will be against it for its arrogance and noncooperation. China’s bigger dilemma is its inherent natural direction as a superpower, which runs smack into conflict with another superpower, which became aggressive lately, even preceding China’s intrusion into our waters, through President Barack Obama’s Asian pivot, a euphemism for American hegemony over Asia. To protect its interests of about 40 percent of over $5-trillion trade passing through these waters, China is forced into expansionism, although it is ironic, as Chinese President Xi Jinping himself was quoted as saying, “It is not in China’s DNA to seek hegemony.” Even Deng Xiaoping told the UN that “if China turns into a tyrant or bully one day, rally with the Chinese people to oppose it.”

n Beware the “Thucydides Trap.” Both powers have paraded their power, almost taunting, but skirting each other. They have been joined by Australia’s air force and last week by France’s navy. This situation only invites increasing friction and possible skirmishes that could escalate into bigger conflicts, thus transforming the area into a volatile “powder keg” that could burst into the classic, but stupid “Thucydides Trap,” triggering the 27-year-long Peloponnesian Wars that brought down the Greek civilization. Thucydides, a military general and historian from Athens, said, “The rise of Athens and the fear it created in Sparta made war inevitable.” The Thucydides Trap phrase, popularized by Prof. Graham Allison of the Harvard Kennedy School, stresses the stupidity of wars, resulting from big-power arrogance or hubris, or fear and honor. It is said that Spartan King Archidamus warned his people to be prudent and cautious against the power of Athens. Unfortunately, Sthenelaidas, an ephor or magistrate who shared his powers, rallied the Spartans to go to war over honor. On the seventh year of war, Athens won victoriously, and Sparta offered peace to avoid revenge. But due to arrogance, Athens’ leader Cleon made unreasonable demands, which were met by mindless emotions, triggering the war again. n Folly of the myopic kibitzer. Perhaps, as a people we care less about many things being fatalistic, probably after over 350 years of virtual convent life under Spanish colonization; and fairly mischievous as voyeurs, who love pitting and watching fights, having been exposed too much to Hollywood, that we treat problems like the movies, and go “bahala na,” regardless of consequences. With these characteristics, right or wrong, we have been partly blinded to

be Sino-phobic, and love Americans, that we only see China’s faults. We may not realize it, that we have escalated the tension between the two superpowers by allowing the worst foreign incursion in our midst, through the Visiting Forces Agreement (VFA) and recently the Enhanced Defense Cooperation Agreement (Edca) as a result of Obama’s Pivot to Asia. We may be likened to some descendants of American Indians, also influenced by Hollywood that they root for the cowboys against Indian villains. Locally, we are the idiomatic “bird perched on a carabao,” who thinks he is big enough to pick fights. In short, we cannot be kibitzers and voyeurs wanting to see fights between our big brother America and China if we are right in between their cannons. n Can’t go bigger being a beggar. As we aim to be an economic giant, we can never grow bigger, if we lamentably remain as mendicants. Without even being sweet-talked, we figuratively opened up our arms and legs for free, and allowed the Americans the use of eight of our military bases with Edca. At least, before the US built military bases and still paid rentals. Worse, our government has bent laws and Article XVIII, Section 25 of the Constitution, banning foreign bases, “except under a treaty concurred by the Senate and, if so requires, be ratified by the people.” Edca didn’t get the Senate’s approval, but was implemented anyway. Even the Supreme Court declared it unnecessary, claiming Edca is just an implementing agreement of the 1998 VFA, which, in turn, is already an implementing agreement of the 1950 Mutual Defense Treaty. n W hy not st ay neut ra l? Must we play the deterrence game,

See “Alunan,” A11

opinion@businessmirror.com.ph

Opinion

First olive, first kiss, sex

Understanding negotiation

BusinessMirror

Teddy Locsin Jr.

Cecilio T. Arillo

database

Free fire

HINA has greeted with joy the designation of former President Fidel V. Ramos as Philippine special envoy in the bilateral talks that China always wanted—in order to keep a home-court advantage instead of fighting it out in The Hague. That is why it refused to take part there. President Duterte has made a good choice—but only as a starter. Someone said Ramos lost Mischief Reef in his term. I don’t think that makes more than a small dent in his eminent qualification. This guy broke the PLDT monopoly. No succeeding president did anything like it. Heck who even knew we had Mischief Reef to lose? Not me; I doubt if he knew. But he did lose Mischief Reef. It is said “it could have been worse.” But what could have been worse than losing Mischief Reef? We might have lost Palawan or Zambales with Dick in it. But we did not. And because we did not, it is illogical to say of the loss of Mischief Reef that it could have been worse. For a thing to be worse than another, the other must have happened, as well. How else can we compare? We cannot compare something with nothing. We cannot compare what

Alunan. . .

continued from A10

believing hook, line and sinker that US military presence is beneficial being a deterrent to China and a better substitute than spending more on our own defense. On the contrary, deterrence is like playing with fire, as it becomes a magnet of friction as the probability of accidents and people losing patience are high. Similar to how World War I started, one blunder from a hothead could spark a military conflict that could trigger the worst “Thucydides Trap,” a global thermonuclear war that can wipe out human civilization in an hour.

actually happened with something worse that might have but did not happen. “Might have” just won’t cut it. And now Ramos is going to China to sit across some pretty slim customers who happen to have the second-biggest military establishment on the planet and an economy second to none but that of the United States. And Ramos goes as the guy who lost Mischief Reef to them. What does that do for our prospects? It makes it harder for Ramos to get a good hearing, let alone a good deal from China. Why? The Chinese believe the same as us: after pulling out the first olive, the rest of the olives just spill out of the bottle. The Chinese also believe the same thing about a first kiss: after the lips the genitals follow. Instead of arming more to build deterrence, why not go neutral, like Switzerland, Sweden, Vatican, Finland, etc., and push both superpowers to back off, but engage them in joint development. Justice Carpio says joint development with another country is disallowed on resources exclusive to Filipinos, but we can hire a foreign private contractor. Isn’t this the same or are we making a mockery of ourselves? Will a higher provision in the Constitution for the common good be enough to justify diverting defense spending to development and poverty eradication in partnership with the same superpowers?

E-mail: mikealunan@yahoo.com.

Part Three

HERE are many ways to get through each of the six barriers. Actually, it depends on what type of people you are negotiating with, individually or collectively; their interests, their frame of mind, their mandate, their apprehensions and their fears, among others. One of the most instructive in dealing with these barriers is that of Dr. William Ury, cofounder of Harvard’s Program on Negotiation and author of the best-selling book Getting Past No, whose analogy from sailing will help explain his breakthrough strategy of indirect action. In sailing, he said, you rarely, if ever, get to your destination by heading straight for it. “You need to tack and zigzag your way to get to your destination, because in between you and your goal are strong winds and tides, reefs and shoals, not to speak of storms and squalls,” he said. The same is true in the world of negotiation. Your desired destination is a mutually satisfactory agreement. The direct route, focusing first on interests and then developing options that satisfy those interests, seems straightforward and easy. Breakthrough negotiation can be used with anyone: an irascible boss, a temperamental teenager, a hostile coworker, or an impossible customer. Diplomats trying to stave off a war, lawyers trying to avoid a costly court battle, or spouses trying to keep a marriage together, can use it. Every person and every situation is different, and because of this, you will need to marry the six breakthrough principles with your own knowledge of the particulars in order to create a strategy that works for you. Dr. Ury’s timeless advice on this is certainly instructive: There is no magic recipe that will guarantee your success in every negotiation. In the real world of strong reactions and emotions, rigid positions, powerful dissatisfactions and

aggressions, you often cannot get to a mutually satisfactory agreement by the direct route. Instead, you need to navigate by tacking and taking an indirect route. As Ury explained, “you are required to do the opposite of what you naturally feel like doing in difficult situations. When the other side stonewalls or attacks, you may respond in kind. Confronted with hostility, you may argue. Confronted with unreasonable positions, you may reject. Confronted with intransigence, you may push. Confronted with aggression, you may escalate. But this just leaves you frustrated, playing the other side’s game by their rules.” Your single greatest opportunity, therefore, as a negotiator is to change the game. Instead of playing their way, let them have your way, the way of joint problem-solving. As in the Japanese martial arts of judo, jujitsu and aikido, you need to avoid pitting your strength directly against your opponent’s. Since efforts to break down the other side’s resistance usually only increase it, you try to go around their resistance. That is the way to break through. According to Ury, breakthrough negotiation is the opposite of imposing your position on the other side. Rather than pound the table with a new idea from the outside, you encourage them to reach for it from within. Rather than telling them what to do, you let them figure it out. Rather than pressuring them to change their mind, you create an environment in which they can learn. Only they can break through their own resistance; your job is to help them.

Wednesday, July 20, 2016 A11

Their resistance to joint problemsolving stems from the six barriers described in Part Two of this series. Your job as a breakthrough negotiator is to clear away the barriers that lie between their no and their yes of a mutually satisfactory agreement. For each of the six barriers, there are corresponding steps in the strategy (five suggested by Ury and the sixth by Salacuse): n Step one. Since the first barrier is your natural reaction, the first step involves suspending that reaction. To do this, you need to regain your mental balance and stay focused on achieving what you want. A useful image for getting perspective on the situation is to imagine yourself standing on a balcony looking down on your negotiation. The first step in the breakthrough strategy is to go to the balcony. n Step two. The next barrier for you to overcome is the other side’s negative emotions—their defensiveness, fear, suspicion and hostility. It is all too easy to get drawn into an argument, but you need to resist this temptation. Just as you’ve regained your mental balance, Ury said, you need to help the other side regain theirs. To create the right climate for joint problem-solving, you need to defuse their negative emotions. To do this, you need to do the opposite of what they expect. They expect you to behave like an adversary. Instead, you should take their side by listening to them acknowledging their points and their feelings, agreeing with them and showing them respect. If you want to sit side by side facing the problem, you will need to “step to their side.” n Step three. Now you want to tackle the problem together. This is hard to do, however, when the other side digs into their position and tries to get you to give in. It’s natural to feel like rejecting their position, but this will only lead them to dig in further. Ury’s advice is to do the opposite. Accept whatever they say and reframe it as an attempt to deal with the problem. For example, take their position and probe behind it: “Tell me more. Help me understand why you want that.” Act as if they were your partners genuinely interested in solving the problem. n Step four. While you may

The illustrious roots of National Life Insurance Company Atty. Dennis B. Funa

INSURANCE FORUM

he National Life Insurance Co. (NLIC) has been successfully rehabilitated by the Insurance Commission with the sale of its common shares and its debts to a holding company through a competitive bidding process. It is, so far, the biggest rehabilitation program under the auspices of the Insurance Commission. It has been an arduous journey from the time it was first placed under conservatorship in 2006. With its operations soon to restart, it may well be appropriate to recall the illustrious beginnings of the company. It was founded by leading men from the government and business sectors.

NLIC was established in 1933 by prominent Filipino business leaders, led by former Secretary of Finance Miguel Yulo Unson, Leopoldo Ramos Aguinaldo, Eulogio Rodriguez Sr., Wenceslao Trinidad, Jose “Pepito” de Leon y Joven, Vicente Villanueva, Cesar Ledesma, Fulgencio Borromeo, Jose Hilario, Isaac Ampil, Arsenio Bartolome, Jose Paez, Paciano Dizon and Jose C. Abreau. It was registered with the Securities and Exchange Commission on August 1, 1933. Its corporate existence was extended on November 5, 1975. Unson served as its first president. Under him were Trinidad as vice president, Joven also as vice president, Hilario as medical director, Hipoutu Barrenengoa as production manager, Exequiel S. Sevilla as the actuary and Arsenio N. Luz as the first general agent. It held office at the third floor of the Regina Building along Escolta Street, Manila, where it would stay until 1978. Sevilla would later become

president of NLIC and pass away in 1985. Luz served as director general of the Philippine Expositions Inc. and as director of the Manila Hotel. He also served as chairman of the Board of Information under President Jose P. Laurel. He is also a charter member of the Boy Scouts of the Philippines. He is the first Filipino president of Manila Rotary. Unson served as secretary of finance from July 18, 1928, to December 13, 1931, under President Manuel L. Quezon; he later served as the first president of NLIC. Unson, born in Molo, Iloilo, in 1877 and a graduate of the University of Santo Tomas, was a prominent bureaucrat who had been a provincial treasurer, as well as an undersecretary of finance. He later served as chairman of the Government Survey Board in 1936; then appointed member of the Council of State by Laurel in 1943. He is noted for having been the first to introduce the budgetary system in the Philippines.

Aguinaldo was a prominent businessman, and together with Vicente Madrigal, Toribio Teodoro and Gonzalo Puyat, they were at that time known as the “Big Four” of the Philippine business world. He was president of the Luzon Surety Co., director of the Manila Railroad Co., director of the Manila Hotel, director of the Philippine Carnival Association, president of Club Filipino and president of the Philippine Chamber of Commerce. He owned the Aguinaldo Department Store which, in the 1930s, was the biggest department store in the country. It was along Juan Luna Street in Binondo. He was born on November 15, 1885, in Manila and was the son of Anastacio and Marcela Ramos Aguinaldo. Together with Unson, Trinidad, Joven, Borromeo and Hilario incorporated Mapfre Asian Insurance Corp. on September 1, 1934. Eulogio Rodriguez Sr. was, of course, elected Senate President on May 20, 1953, and continuously served for 10 years. Trinidad served as the collector of internal revenue during the American period. He was later appointed by Quezon as member of the Government Survey Board on February 14, 1936. Industrialist Joven is from Bacolor, Pampanga. He is the only son of Pampanga’s first multimillionaire industrialist Jose Leoncio “Pitong” de Leon y Hizon and the Chinese mestiza heiress Regina Joven y Gutierrez. Pitong established the Pampanga Sugar Development Co. (Pasudeco) in 1918 and which started operations in 1921. His fortune established the de Leon-Joven family of Bacolor. Pitong would die from a gunshot wound in 1939, after a heated dispute with sugar planters and millers at the Pasudeco office. Pepito passed away in 1974. An account of the incident was narrated

by Alejandro S. Camiling, thus: “In 1939 the sugar planters’ association, led by the Timbol brothers [Gregorio and Carmelino], were negotiating with the management of Pasudeco to increase by 10 percent [from 40 percent to 50 percent] the planters/ farmers’ share from sugar produced. When the management of Pasudeco failed to accommodate the planters’ demand, the Timbol brothers assassinated the Chairman of the Board Don Jose de Leon and the Treasurer Don Augusto Gonzalez at the plant’s Administration Building in Santo Niño, San Fernando, Pampanga. Captain Julian Olivas of the Philippine Constabulary, who was trying to mediate between the two parties, was also shot to death. The entire nation was shocked and mourned the death of the company’s two executives and the Philippine Constabulary officer. After a long trial, the Timbol brothers were convicted for the crime they committed.” Borromeo was an incorporator of Ortigas, Madrigal y Cia, S. en C. (sociedad comanditaria por acciones), which was established on January 20, 1920, with the purpose of acquiring Hacienda de Mandaloyon, which was part of the estate of the Augustinians. The property consisted of 4,033 hectares bordering San Juan, Pasig and Quezon City. The other incorporators were Francisco Ortigas, Vicente Madrigal, B.C.M. Johnston, Borromeo and Clyde A. Dewitt, who were designated as general partners (socios gerentes colectivos), while then-Senate President Quezon was listed as a limited partner (socio comanditario). The company had intended to divide the large tract into residential and commercial subdivisions. He was later appointed by President Sergio

Osmeña as director of the National Development Co. and the Manila Railroad Co. Hilario was a former deputy collector of internal revenue under Quezon. Ampil is the owner of Pineda & Ampil Manufacturing Co. Paciano Santos Dizon was first Filipino auditor general of the Commission on Audit and was later appointed by Osmeña as director of the National Development Co. and the Manila Railroad Co. He hails from Porac, Pampanga. Abreu served as judge and was one of the first members of the Commission on Elections appointed in 1940. With the start of the second World War, NLIC was initially forced to stop its operations. It resumed a year later in 1942 servicing all policyholders. In 1945 NLIC obtained a loan from Rehabilitation Finance Corp. (later the Development Bank of the Philippines) to meet the financial difficulties caused by the war. In 1947 its President Unson passed away. He was succeeded by Aurelio B. Montinola Sr. until his appointment as secretary of finance by President Elpidio Quirino on January 1951. He was succeeded by Serafin Lazatin of Pampanga until his death on February 12, 1952. Joven then assumed the presidency of NLIC in 1952. Montinola is a prominent businessman and lawyer. He founded Amon Trading in 1945, a company dealing with construction materials. On January 1, 1951, he was sworn in as secretary of finance. During the same period, he was the presiding officer of the Monetary Board, member of the Council of State, chairman of the National Economic Council and of the Fund Release Control Committee, and chairman of the Committee on the Revision of the Trade Agreement with the US. He passed away in November 1985.

now have engaged the other side in joint problem solving, you may still be far from reaching a mutually satisfactory agreement. The other side may be dissatisfied, unconvinced of the benefits of agreement. You may feel like pushing them, but this will only make them more resistant. So do the opposite. In the words of the Chinese sage, “build a golden bridge” from their position to a mutually satisfactory solution. You need to bridge the gap between their interests and yours. You need to help them save face and make the outcome look like a victory for them. The fourth step is to build them a golden bridge. n Step five. Despite your best efforts, the other side may still refuse to cooperate, believing they can beat you at the power game. You may be tempted at this point to escalate. Threats and coercion often backfire, however, and lead to costly and futile battles. n Step six. Ideology, Salacuse said, is deadly serious. Whether it is communism or capitalism, or Islamic fundamentalism, ideology gives authoritative answers to some basic questions. For instance: How should the means of producing goods and services be organized and governed? What should be the role of the state in the lives of its people? What should be the relationship between the individual and the community? The basic strategy is to use the power to educate, not to escalate. Enhance your negotiating power and use it to bring them back to the table. Show them that they cannot win by themselves but only together with you and others in your team. The essence of the sixth step is the use of power to educate. Breaking through actually creates a new paradigm in managing negotiation and mediation, as it embraces other disciplines in social and behavioral sciences—psychology, sociology, politics, economics, cultural anthropology, philosophy, physics—in planning, implementing, and controlling to accomplish predetermined objectives or goals. In physics, for instance, we learn that “for every action, there is an equal and opposite reaction.” “Isaac Newton’s law, however, applies to objects, not minds. Objects react. Minds can choose not to,” Ury said.

By 1955, Sevilla assumed presidency, whereas Joven assumed the chairmanship until his retirement in 1963. Julio V. Macuja assumed as chairman in 1963 and serve until 1987, for a total of 24 years. On the same year, celebrating its 22nd anniversary, its official publication, The Beacon, was launched. In the 1950s NLIC would launch pioneering products, such as the Endowment Amenity, Family Plan, Teachers Group Insurance and the Agents’ Provident Plan. In 1966, celebrating its 33rd year, NLIC inaugurated its new building along Ayala Avenue in Makati City, the Sikatuna Building. It is significant that in 1969, NLIC declared its first cash and stock dividends after 36 years. Julio Macuja would later be governor and chairman of the Development Bank of the Philippines from January 10 to March 5, 1970. He is a grandfather of renowned ballerina Lisa Macuja. He previously served as general manager of Pasudeco. He passed away in 1987. In 1974 its Founder Joven passed away. Sevilla retired as president. Its Treasurer Benjamin de Leon, son of Jose de Leon, succeeded as president. Benjamin first joined NLIC in 1957 as assistant to the president. In 1980 NLIC inaugurated its National Life Building along Ortigas Avenue in Greenhills, San Juan. In 1988 Ernesto O. Escaler was elected chairman of the Board of Directors, where he served until his passing in 1994. Benjamin de Leon was elected as chairman. Escaler is one of the founders of the Philippine Investment Management Consultants Inc. and Bacnotan Consolidated Industries. Escaler was married to Luisa de Leon, daughter of Joven.

Dennis B. Funa is currently the deputy insurance commissioner for Legal Services of the Insurance Commission. E-mail: dennisfuna@yahoo.com.

First we gave you the Harvard Business Review Monday Morning Then came the Turning Points Philippine Edition On August 2, you will start receiving every Tuesday our latest collaboration with The New York Timesâ€Ś

BusinessSense

The only one in Asia, the BusinessMirror/New York Times BusinessSense brings together select articles, images and infographics from The Economist, NYT DealBook, HBR Wake-Up Call and HBR Monday Morning in a four-page pullout.

BusinessMirror www.businessmirror.com.ph