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Thursday, July 20, 2017 Vol. 12 No. 280

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resident Duterte has modified alternative procurement procedures in a bid “to streamline, expedite and make more efficient” processes involved in government projects and transactions.

Agrarian crisis: Winning, losing under globalization

EO 34

Rene E. Ofreneo

LABOREM EXERCENS

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The directive issued by the President that specifies the changes in approving government contracts Under Executive Order (EO) 34, state agencies are no longer required to obtain the approval of the Government Procurement Policy Board Continued on A2

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Duterte streamlines rules for approval of govt deals By Elijah Felice E. Rosales

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lobalization is war. Those who are well armed in terms of technology, government support and a clearcut national trade strategy to conquer the global market while preserving their own domestic market win. This observation is particularly true in the case of agriculture. This is also eloquently articulated by no less than Charlene Barshefsky, the US Trade Representative who represented America in the intense negotiations in the World Trade Organization (WTO) on the implementation of the Agreement on Agriculture (AoA) in the mid-1990s. She bared the American trade position during a congressional hearing conducted by the US House Subcommittee on Trade as follows: Continued on A11

BMReports Pinoys hope Duterte keeps campaign promises in Year 2 By Butch Fernandez @butchfBM

AMERICA’S FIRST FEMALE SECRETARY OF STATE Former US Secretary of State Madeleine Albright discourses matters spanning international diplomacy and global political affairs with broadcaster Karen Davila for the ANC Leadership Series at the Sofitel Hotel on July 19. Albright said that, despite the world being in a present state of “mess”, she banks on the youth of today to undo the chaos and improve on the status quo. MICHAEL B. POLICARPIO

CA trashes Sunvar plea on ‘Mile Long’ ruling By Joel R. San Juan

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@jrsanjuan1573

HE Court of Appeals (CA) has affirmed its ruling issued in January that gave the government the upper hand in its bid to regain possession of the 2.9-hectare “Mile Long” properties in Makati City from Sunvar Realty Development Corp., a real-

estate firm owned by the Rufino and Prieto families. In a six-page decision penned by Associate Justice Jose Reyes Jr., the CA’s Former Fifth Division denied the motion for partial reconsideration filed by Sunvar seeking the reversal of its January 26, 2017 decision, which dismissed its petition for injunction filed before the Regional Trial

PESO exchange rates n US 50.7590

Court (RTC) in Makati City Branch 59 for lack of jurisdiction. “In this case, we adhere to our earlier finding that the RTC in Makati City, Branch 59 has no jurisdiction to take cognizance of the petition for injunction to enjoin the implementation and execution of the decision of the MeTC [Metropolitan Trial Court] in Makati Continued on A12

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Part Four

ROM the most urgent to the long term, lawmakers have a long wish list of matters they hope President Duterte would include in his State of the Nation Address (Sona) on July 24, so they can be on the national agenda and get priority attention and resources. The most urgent concern for senators is ensuring immediate and effective aid to the more than 200,000 residents forced to flee Marawi City after it was laid siege to by the Maute Group. Beyond that, they hope to see a concrete blueprint for the longterm rehabilitation of one of Mindanao’s most progressive cities. The city of Marawi was heavily damaged by air strikes and fierce,

A security personnel walks a K-9 on the grounds of the House of Representatives building at Batasan Pambansa, Quezon City, on July 13. The bureaucracy is preparing for the second State of the Nation Address of President Duterte on July 24. Nonoy Lacza

nonstop exchanges between government troops and the extremists, who include the group of Abu Sayyaf subleader Isnilon Hapilon. Then, there is the long view for

progress in the rest of the country, by way of ensuring a firm synergy between the ambitious “Build, Build, Build” infrastructure-development Continued on A2

n japan 0.4530 n UK 66.1999 n HK 6.5035 n CHINA 7.5223 n singapore 37.1534 n australia 40.1757 n EU 58.6622 n SAUDI arabia 13.5361

Source: BSP (19 July 2017 )

A2 Thursday, July 20, 2017

BMReports BusinessMirror

Pinoys hope Duterte keeps campaign promises in Year 2 Continued from A1

plan and the need to create jobs, boost social services and cut poverty levels. Asked what they hope to hear in t he President ’s upcom ing Sona, Sen. Juan Edgardo M. Angara said Duterte can also opt to unveil his administration’s plans for education, as well as job creation. Angara asserts the Duterte administration should address the need to create more jobs, since it has been a perennial problem. “We have the highest unemployment in Southeast Asia,” the senator said, even as he acknowledged there has been some “ improvements made in battling underemployment”.

Gordon’s list

FOR his part, Sen. Richard J. Gordon listed 13 “key points” for inclusion in the President’s Sona. On top of Gordon’s list is Marawi’s rehabilitation and redevelopment, including the development of Lake

Lanao area as a tourism zone, to generate employment and livelihood opportunities, saying this would “stimulate again the commercial instincts of the Maranao”. Second in the senator’s list is tax reform, saying it “must be reasonable but adequate enough to support investment in infrastructure required to ensure that the country is competitive and productivity loss minimized due to nonavailability of adequate infrastructure, leading to high costs and slow movement of people and goods.” He also endorsed the adoption of a “National ID System”, including a facial-recognition system, to minimize cr imina lit y and terrorism, as well as subscriber identity module (SIM) card registration, mandating all SIM cards to be registered to minimize human trafficking, including child prostitution and terrorism; discourage sex tourism, particularly foreign pedophiles, who are registered sex offenders in their own country; drug trafficking; and money laundering

Gordon also proposes inclusion of the postponement of the Marawi Barangay Elections and holdover of incumbent barangay officials until October 2018 to enable village officials to “help address the ongoing armed conflict in Marawi and the prevalence of illegal drugs”.

Peace, order

GORDON said the President could also endorse passage of the Campaign Finance and Election Automation Law intended to “level the playing field for all candidates by encouraging national debates on the candidates’ political and policy platforms.” Gordon also listed modernization of the Philippine National Police and the Armed Forces in terms of equipment, training and for defense and law enforcement to ensure peace and order. He also proposes amending the Motorcycle Law to require bigger license plates to ensure that numbers can be recorded on closedcircuit television and/or seen by

witnesses, as well as facilitate identification of witnesses. The senator, likewise, batted for reforms in the Internal Affairs Service (IAS) and special courts for the police by having a civilian head of the IAS; special courts for police cases so that disciplinary action is fast for all concerned. Gordon f ur ther sug gests refor ms to cover sa l a r y a nd t ra i n i ng of teac hers, say i ng this will encourage good teachers through competitive salaries and continuous training, especially in this time of rapid technological change. Next in Gordon’s list is to step up government drive to increase foreign direct investments. He said reforms should also cover domestic investments and tourist visits. He also prodded concerned authorities to address the worsening traffic problem. Last, Gordon suggests that Air Transport officials should move to “optimize the use of Clark and Subic”. To be concluded

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BoP deficit widened to $569M in June By Bianca Cuaresma

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@BcuaresmaBM

he country’s balance of payments (BoP) deficit expanded to $569 million in June, the largest recorded by the Philippines this year, according to data from the Bangko Sentral ng Pilipinas (BSP). Data from the BSP showed that the June deficit is larger than the $59 million posted in the previous month, and a reversal of the $418 million surplus chalked up a year ago. Central Bank Deputy Governor for the Monetary Stability Sector Diwa C. Guinigundo said the development was due mainly to higher corporate demand for dollars that affected the foreign-exchange operations of the BSP. The large demand was coupled with debt payments by the national government to further drove the deficit during the month. Guinigundo said the deficit could have been larger, if not mitigated by the national government’s deposits with the BSP and inflows from the BSP’s investment income from abroad. “Although trade data are not yet

$418M The BoP surplus posted in June 2016

available for June, we surmise that while exports continued to recover, the expanding economy pushed imports higher, particularly of capital goods and raw materials,” Guinigundo told reporters. “This contributed to the recent downtrend of the peso against the US dollar, even as the overall macroeconomic fundamentals remain robust,” he added. In January to June, the BoP deficit reached $706 million, a reversal of the $216-million surplus recorded in the same period a year ago. Earlier, the BSP said it expects the country’s BoP to register a deficit of $500 million by the end of the year. The Central Bank was more optimistic last December, when it announced that the country would record a $1-billion surplus this year. The BoP is the country’s summary of transactions with the rest of the world.

Duterte streamlines rules for approval of govt deals Continued from A1

(GPBB) should they decide to tap into alternative methods of procurement. Government projects and transactions usually undergo public bidding, but State agencies are permitted to make use of alternative procurement procedures under certain conditions. The head of the procuring entity is mandated by Section 4 of EO 432, Series of

2005, to secure the approval of the GPPB before resorting to alternative methods of procurement for government contracts amounting to at least P500 million. To this, Duterte said in EO 34, “The requirement of GPPB determination and approval as to the appropriateness of the alternative methods of procurement to be adopted adds to the total procurement process and timeline and defeats

the very purpose of resorting to alternative methods of procurement, which is to promote economy and efficiency”. It is for this reason Duterte has decided to relax Section 4 of EO 432 to streamline present procurement procedures with the objective of achieving “a more optimal and expedient procurement system”. Under D uter te’s a mended procurement order, the head of

the procuring entity may proceed with the alternative methods of procurement as supervised by existing rules and regulations. For government projects and transactions amounting to at least P500 million, the head of the procuring entity must issue a certification under oath vouching that the contract falls within the exceptions of public bidding to ensure faithful compliance with applicable laws.

“ E x c e p t f o r g o v e r n m e nt contracts required by law to be acted [upon] and/or approved by the President, the head of the procuring entity shall have full authority to give full approval and/or enter into said government contracts through alternative methods of procurement allowed by law and applicable rules and regulations upon issuing the [certification], when applicable,” the amended EO 423 read.

The head of the procuring entity may delegate in writing this full authority to give final approval or to enter into government contracts through alternative procurement procedures. However, the head of the procuring entity cannot pass on the authority to certify under oath to another person. Duterte’s procurement order also requires the head of the procuring entity to submit to the National Economic and Development Authority (Neda) within seven days a complete report on the vouched procurement contract. Government contracts submitted to the Neda shall be accompanied by a complete execution copy of the contract, related agreements, annexes, other approvals and permits, including a detailed summary of the pertinent laws, rules and regulations.

Amla. . .

Continued from A12

of the 17 priority measures of the Duterte administration. Under the law, casino refers to a business authorized by the appropriate government agency to engage in gaming operations. On the other hand, an Internet-based casino is a gaming site in which players make use of remote communication facilities, such as, but not limited to, Internet, telephone, television, radio or any kind of electronic or other technology for facilitating communication. Central Bank Governor Nestor A. Espenilla Jr. welcomed the development, saying the law is crucial for the Philippines’s battle against dirty money. “This is a very welcome development. It plugs a critical gap in our legal framework. It will significantly strengthen our ability to prevent the entry of illicit money into our economy,” Espenilla told reporters on Wednesday. The governor also said the AMLC Secretariat is already in the process of building up its manpower, in line with the expanded scope. Espenilla said the implementing rules and regulations (IRR) for the revised Amla is expected to be fast tracked and would be in place by year-end, at the latest. “The IRR will be developed in coordination with casino regulators notably Pagcor [Philippine Amusement and Gaming Corp.].”

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The Nation BusinessMirror

Editor: Vittorio V. Vitug • Thursday, July 20, 2017 A3

Police, BI bust foreign KFR group; 45 suspected kidnappers arrested

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OINT operatives of the Bureau of Immigration (BI) and the Philippine National Police-Anti-Kidnapping Group (PNP-AKG) arrested on Tuesday 45 foreign nationals believed to be members of a kidnap-for-ransom (KFR) group victimizing high-roller casino players in the country.

Their arrest came following a rescue operation of one of victims of the group identified as Wu Yan, a female Singaporean national. Based on the report submitted by the BI’s Fugitive Search Unit to the Department of Justice (DOJ), the victim was forcibly taken by three men and a woman at Solaire Resort and Casino in Pasay City and brought at Room 301 of the nearby Bayview International Towers.

The report added that the victim was beaten and threatened by her kidnappers, who demanded $180,000 for her release. During the operations, authorities rounded up 26 foreign nationals, who all failed to present any immigration documents and refused to disclose their identities. However, Wu was able to positively identify three of the 26 foreign nationals to be her kidnappers.

The three were Malaysian nationals Ng Yu Meng and Goh Kok Keong, and Chinese national Zhang Fuxing, the alleged leader of the group. A follow-up operation led to the arrest of 19 more foreign nationals believed to be members of the KFR group. The arrested 45 foreign nationals were brought to the PNP-AKG headquarters at Camp Crame in Quezon City.

The report also said two officers from the Ministry of Public Security of the People’s Republic of China and Chinese Interpol assisted in the investigation and also served as translators. The arrested foreign nationals are still undergoing further investigation, and will be subjected to inquest proceedings by DOJ State Prosecutor Richard Anthony D. Fadullon. Joel R. San Juan

Duterte outlines ‘threats’ to justify martial-law extension in Mindanao By Jovee Marie N. dela Cruz @joveemarie

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resident Duterte has told Congress that active terror groups and recruitment from other lawless armed elements have prompted him to ask Congress to extend until December 31, 2017, the proclamation of martial law and the suspension of the privilege of the writ of habeas corpus in the whole Mindanao. In his letter to Congress dated July 18, Duterte said the rebel groups’ leadership largely remains intact despite the considerable decline in the number of rebels fighting in the main battle area. According to the President, the rebel groups, including the Maute Group and elements of the Abu Sayyaf, the Ansarul Khilafah

Philippines and the Bangsamoro Islamic Freedom Fighters, continue to offer armed resistance in Marawi City and other parts of Western and Central Mindanao. Parts of Marawi City, comprising around four barangays, are still under the control of the rebels, he said. “ The city’s commercial districts, where about 800 structures are located, are found within these areas. The rebels have, likewise, holed up in mosques madrasahs and hospitals, thereby restricting the government troops’ offensive movements, as they have to consider the safety of civilian hostages and trapped residents nearby,” Duterte said. Despite the progress and significant strides that the government has achieved, the President

said the rebellion persists and a lot more remains to be done to bring back public order and safety in Mindanao. He said from May 23 to July 10 the military had neutralized 379 out of estimated 600 rebels and had recovered 329 firearms. “Terrorist groups from various parts of Mindanao espousing or sympathizing with the same ideology remain active and are ready to reinforce Isnilon Hapilon’s group or launch diversionary attack and similar uprisings elsewhere,” Duterte said. “ There are also indications that the rebels are vigorously recruiting from other lawless armed groups, terrorist elements and their families and supporters to add to their ranks and replace those who have been killed and

arrested,” he added. Also, the President said the rebels have been found to possess high-powered and military-grade weapons, such as rocket-propelled grenades and large supply of ammunitions. “There have reported entries of reinforcement, weapons, ammunitions and other logistical supplies from outside Marawi City through clandestine routes. Private armed groups and supporters of some sympathetic local politicians are likely to continue extending their assistance,” he said. “Other Islamic State-inclined armed groups, which are capable of perpetrating atrocities and violent attacks against vulnerable targets, remain scattered in various areas in Mindanao. Sev-

eral ports consistently indicate that these local terrorist groups are pursuing offensive actions and conspiring to attain their overall objective of establishing a wilayat or caliphate in Mindanao,” Duterte added. Also, the President said key leaders of the rebellion, namely, Hapilon; the Maute brothers Abdullah, Omarkhayam and Abdulasiz, alias Madie; and foreign terrorist Mahnud bin Ahmad remain at large. “Despite the arrest of key personalities, like Ominta Maute, support structures have been continuously sustained, with the emergence of such new replacements as Adel Sarip Maute, who was recent ly apprehended in Taguig City,” he said. For all these reasons and as

public safety clearly requires it, the President said the proclamation of the martial law and the suspension of the privilege of the writ of habeas corpus in the whole Mindanao need to be extended until December 31, 2017, or for such period of time as Congress may determine. Meanwhile, Speaker Pantaleon D. Alvarez said he expects Congress to grant Duterte’s request for the extension of martial law in the entire Mindanao to address the ongoing threat posed by the Maute terrorist group, said to be affiliated with the Islamic State. The President requested Congress to hold a joint special session on Saturday to decide on his request for the extension of his proclamation placing the entire Mindanao under martial law.

Economy

A4 Thursday, July 20, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

Competition Law needs further refinement–PIDS Policy Note

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By Cai U. Ordinario

@cuo_bm

he landmark passage of the country’s Competition Law in 2015 cannot guarantee the end of cartels and abuse among natural monopolies, according to the Philippine Institute for Development Studies (PIDS).

In a Policy Note, PIDS Senior Research Fellow Erlinda M. Medalla said there are a number of ways companies can continue anticompetitive practices. These anticompetitive practices include barriers to entry, such as predatory pricing and “exclusionary behaviors”, or outright refusal to deal. “It’s passage is only the first step toward creating a working competition policy regime and a fairly competitive environment,” Medalla said. The PIDS senior fellow added that predatory pricing occurs when a company decides to deliberately underprice products temporarily to prevent competing firms from entering the market. Exclusionary behaviors, such as refusal to deal, Medalla said, happens when “excluded” firms are barred from accessing input supplies, raw materials, facilities and/ or markets causing them to spend

more and eventually cause their removal from the market. She said this is also evident among cartel agreements where rival firms arrive at a consensus of not competing with each other. These firms agree to set a higher price on their goods and services. Medalla added that cartels will divide the market among themselves to enable them to sell at high prices, even if the products and services they peddle are sometimes of lower quality. “Firms exercising these abuses would likely be incumbent monopolies, already, or with dominant market positions trying to maintain or enhance their market dominance,” Medalla said. A sim i l a r inst a nce occ u rs among natural monopolies or those firms that operate businesses that have high barriers to entry, such as public utilities. Medalla added when a firm

holds a dominant position in a market, it can affect selling prices, and the volume of the products or amount of services it supplies. She said this leads to higher prices as well as lower quality and quantity of goods and services available to the consumers. It can also lead to excess profits or monopoly rent. “The competition law should then define what are considered anticompetitive acts accordingly. Having clear and transparent provisions on prohibited acts can level the playing field and, hopefully, prevent firms from committing errant behaviors,” Medalla said. Medalla added the main functions of the Competition Law should include preventing firms from dominating markets and abusing, it as well as set preemptive measures through clear rules for mergers and acquisitions (M&As). For natural monopolies, she said, the government can enforce competition rules through

regulations that produce competitive outcomes. This can be done by increasing access to facilities, such as transmission lines for electricity, allocating frequencies for telecommunications and unbundling services. “Indeed, regulatory reforms that promote competition have the most pervasive benefits because they affect public utilities,” Medalla said. In 2015 the Aquino administration passed the 20-year-old competition bill in Congress into a law or the Philippine Competition Act. The law enabled the creation of the Philippine Competition Commission (PCC) which has quasi-judicial powers focusing not only in affordable prices and quality products but include M&As. The PCC, which is under the Office of the President, is led by a chairman and commissioners. The chairman has a fixed seven-year term without reappointment.

The competition law should then define what are considered anticompetitive acts accordingly. Having clear and transparent provisions on prohibited acts can level the playing field and, hopefully, prevent firms from committing errant behaviors.”—Medalla

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DA may avail of Budapest loan offer for water-treatment projects By Jasper Emmanuel Y. Arcalas @jearcalas

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anila is eyeing to tap a $500-million P25.46 billion credit facility from Budapest that would be utilized in establishing water-treatment facilities in the country. Ag r icu lture Secretar y Emmanuel F. Piñol said Hungarian Ambassador to the Philippines Jozsef Bencze informed him about the available loan from the European country during a courtesy call on Wednesday. Piñol added he is now discussing with Finance Secretary Carlos G. Dominguez III on how the P25.46-billion loan would be transferred to the Philippines. “I have requested Secretary Carlos G. Dominguez of Department of Finance [DOF] to assist us in exploring how we could tap the credit facility they have offered,” Piñol said in a news statement issued on Wednesday. The Department of Agriculture (DA) chief said the loan would be utilized to establish water-treatment facilities across the country. “With funds available, [the] DA is looking at Laguna Lake as a pilot area. Once the project has been set up, Laguna fishers should manage the operations of the treatment facilities,” Piñol said. Piñol added while the credit facility could be managed by Land Bank of the Philippines, the fishermen of Laguna Lake will be the one to manage the operations of the treatment facilities. In May Piñol wrote in his Facebook page that the Hungarian government has committed to provide Manila with a €20-million grant (around P1.12 billion) to fund the conduct of

Survey shows hospitality shone bright in 2016

The amount of credit facility offered by Hungary to the Philippines

a comprehensive study on the clean up Manila Bay and Laguna Lake. The DA chief said the fund was offered during a meeting in end-May with Hungarian Foreign Minister Peter Szijjarto. “Szijjarto said the grant and the credit facility is part of the Eastern Shift policy of Hungary, which includes strengthening relations with the Philippines and other countries in East and Southeast Asia,” Piñol said in his Facebook post on May 25. Piñol added Szijjarto assured him that the credit facility offered by Hungary, one of the members of the European Union, comes with no strings attached. “The Hungarian foreign minister emphasized that the credit facility and the Laguna Lake and Manila Bay cleanup-study fund are offered without any attached conditions, which would be perceived as interference in the internal affairs of the Philippines,” he said. “We respect the sovereignty of your country, and you must be allowed to run your own affairs without interference from other countries,” Piñol added, quoting Szijjarto. President Duterte earlier pronounced that he will decline aid that comes with conditions from the EU, as the Philippines seeks to ensure the independence of its internal affairs.

‘PHL is no longer sick man of Asia’

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ore Filipino households received visitors in 2016 compared to 2012, according to the Philippine Statistics Authority (PSA). Based on the 2016 Household Survey on Domestic Visitors (HSDV), the PSA said there were round 15.3 million households who received at least one visitor in 2016 compared to 11.4 million in 2012. In 2016 some 15.25 million households in the Philippines received visitors. Of this number, some 1.07 million households received visitors in select National Capital Region (NCR) cities. “About two-fifths of the domestic visitors intended to go for pleasure or vacation, while 3 in 10 were visiting friends or relatives, and 6 percent went on religion or pilgrimage trip,” the PSA said. PSA data showed that 61.3 percent of Philippine households received day visitors only, while 11.8 percent and 26.9 percent of households had overnight guests and day and night visitors, respectively. The same trend was observed in select NCR cities, where 69.8 percent received day visitors, some 10.6 percent had overnight guests and 19.5 percent had guests staying day and night. Around 5.91 million overnight guests were received by households. Of this number, around 323,000 were received in households in Metro Manila. Majority, or 93.3 percent, of them were Filipinos and only 2.8 percent were foreigners, while the remaining less than 5 percent are composed of Filipinos residing abroad and foreigners living in the Philippines. The HSDV is the fifth in the series since 2005. It aims to gather updated household and individual level data on domestic and international visitors for policy-making purposes. This includes determining the volume of domestic and international visitors and the profile and travel characteristics of domestic and outbound visitors The survey also aims to identify the travel patterns of the household members 15 years old and over, and estimate the extent and economic contribution of domestic and international visitors in the country. Cai U. Ordinario

$500M

Pricey clothing Exhibitors of a bazaar in Makati City neatly fold a collection of garments and blankets hand woven by craftsmen from Abra who inherited their weaving skills from their forebears. The price for each finished product range, from P2,000 to as much as P15,000. ALYSAS ALEN

Connectivity a must in ‘golden age of infrastructure’

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he Philippine government would be the “third” telecommunication company (Telco) within the next three to four years, competing with giants, such as Globe Telecom and PLDT-Smart, in providing the country fast, efficient and reliable connectivity. This is envisioned in the government’s National Broadband Plan (NBP) which is being fast-tracked to build the corresponding network infrastructure for the country under the Duterte administration. National Telecommunications Commission (NTC) Commissioner Gamaliel Cordoba said the NBP would require an estimated allocation of P77 billion to P199 billion to make the plan a reality before this decade ends. Cordoba explained during the recent Philippine Telecoms Summit that all other Asean countries have telecom networks that are either wholly owned, partly financed, or operated by their respective governments. It is only in the Philippines that the broadband networks are constructed, owned and

operated by private companies. Cordoba said the lack of infrastructure for telecommunications makes the Philippines lag behind the connectivity factor, as compared to neighboring countries, where their governments constructed and funded their respective national broadband network infrastructure. The implementing agency for the NBP is the newly formed Department of Information and Communications Technology (DICT) headed by Secretary Rodolfo A. Salalima. Last month the DICT announced they are planning to tap a third-party firm, and the assistance of the US and Japanese governments for a feasibility study to be undertaken for the implementation of the NBP. The NBP serves as the blueprint for broadband infrastructure to interconnect government offices in the country, as well as to enable Internet access of individuals in unserved and underserved areas. According to Salalima, the NBP is establish-

ing broadband infrastructure from the northern to the southern parts of the country with a goal to deliver telecommunications services to areas in the countryside without access to the Internet. He added they prefer the option to build a broadband infrastructure that will be operated and managed by the government through the DICT. Apart from the unveiling of the NBP, the DICT said it will also reintroduce the free Wifi project called Pipol Konek, and launch the National Government Portal or gov.ph. In order to implement the plan, the DICT needs operational telcos, like PLDTSmart and Globe Telecom, to participate in the program. However, the existing telcos—PLDTSmart and Globe Telecoms—might be affected by the aggressive intervention of the Philippine Competition Commission (PCC) in the work, decisions and actuation of both the NTC and the DICT.

AGAYAN DE ORO CITY—The Philippines is no longer the “sick man of Asia”, as the country’s growth has sustained its momentum, Socioeconomic Planning Secretary Ernesto M. Pernia said on Tuesday. Speaking before government officials and other stakeholders at a hotel here for the launch of the Philippine Regional Roadshows as part of the Philippine Development Plan 2017-2022, Pernia added the country’s growth trajectory “has been on a sharp consistent uptrend”. This present environment is a perfect setting for the implementation of Philippine Development Plan (PDP), the socioeconomic blueprint of the Duterte administration, he said. The country’s economy, Pernia added, is undergoing structural transformation or qualitative change, it is no longer (driven) by consumption but by investment, not just service sector but by industry, including manufacturing. He also emphasized that the PDP and the Regional Development Plan are people’s plan, not the members of Duterte’s Cabinet’s plan and even by the National Economic and Development Authority. Northern Mindanao’s progress and development, Pernia said, will make the region the perfect area to boost its economy further. He added the region contributes an average of 4 percent to the country’s GDP, and about 26 percent to Mindanao’s gross regional domestic product. The National Spatial Strategy foresees Metro Cagayan de Oro, the region’s capital city, to become the fourth metropolitan center by 2025, based on its projected population growth and functional role as a principal gateway and transshipment hub in Northern Mindanao. It will also remain as a key educational center in the region. To realize its vision of becoming an important converge point for socioeconomic activities and as a leading industrial core and trade center in the southern Philippines, Pernia said it is imperative for Northern Mindanao to implement its strategic interventions, called “Gateway”. PNA

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The Regions BusinessMirror

Plan to build hydropower using water from Laguna de Bay nixed

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he Pambansang Lakas ng Kilusang Mamamalakaya ng Pilipinas (Pamalakaya) on Wednesday nixed government’s plan to construct hydropower plants that will use water from Laguna de Bay. Pamalakaya believes the proposed construction of hydropower plants that draw water from the country’s largest freshwater lake will adversely affect the livelihood of small fishers. As it is, Laguna de Bay is already besieged by numerous problems, ranging from pollution to overexploitation of surface area for aquaculture production and infestation of invasive alien fish species. The Laguna Lake Development Authority (LLDA) has been tasked by President Duterte to dismantle illegal fish cages outside designated areas to allow small fishers greater access to their traditional fishing grounds. After a one-year moratorium, and with the dismantling operation gaining ground, the LLDA, led by its General Manager Jaime C. Medina, is now preparing to accept applications to allow fish-cage and fish-pen operators to resume their operation next year. The Laguna de Bay is also besieged by the dreaded knife fish, an invasive alien species that feed on bangus and tilapia and is reportedly causing fish-cage and fish-pen operators to lose 50 percent to 60 percent of potential revenues. According to Pamalakaya, the proposed hydropower project will worsen the economic condition of fishermen who are dependent on the lake’s bounty. “Based on our initial studies on the environmental cost of hydropower project, it would basically cause ecological disturbances and disruptions, like fish kills, because the water that it would gush out back to the lake will be relatively warmer compared to its original temperature,” Jamjam Pinpin, public information officer of Pamalakaya told the BusinessMirror. He also said the turbine to be constructed to generate electricity could not assure that it would spare fish and other species when it sips water from the lake. Pamalakaya issued a statement in reaction to news reports that the Department of Energy (DOE) has already accepted six project proposals that seek to use water from Laguna de Bay to produce power using pumpedstorage hydroelectricity. According to reports, “the process generates electricity from the release of pumped and stored water in a reservoir.” The process would require pumping water from Laguna de Bay and

storing it in a reservoir at a higher elevation. The stored water will then be used to generate electricity through turbines. All six projects could generate 3,000 megawatts of electricity. Pamalakaya, in a statement, said the proposed hydropower projects will be “disastrous” to the livelihood of the people living around the lake. The group said they are now consulting with environmental groups to know more about the projects’ potential impact to Laguna de Bay’s environment. “We are still consulting with environmentalist colleagues regarding the environmental effects of this project. But, generally, our position is that it will further privatization and conversion of Laguna de Bay,” he said. T he proposed hydropower projects would entail “the total privatization of the country’s largest lake on which 4.9 million fishers and urban poor families depend on its aquatic resources,” Pamalakaya said. “We vehemently oppose this new face of corporate takeover that will further the privatization and conversion of Laguna Lake. The hydropower projects disregard the traditional use of the lake as a fishing ground and source of livelihood for small fisherfolk,” Pamalakaya said. “Aside from socioeconomic cost, this project threatens the environment and aquatic life of Laguna Lake because it will likely pollute its water after using it as a power source,” Fernando Hicap, Pamalakaya chairman, said in a statement. The group said that, since Laguna de Bay had been subject to conversion and the Napindan Hydraulic Control Structure had been built to desalinate the lake, various government and private projects have taken place and the traditional use of the lake as a fishing ground has been set aside. The conversion of the lake also causes the disappearance of several fish species and fish-catch depletion, the group said. Pamalakaya claimed that past and present administrations consistently prevented the entry of salt water into the lake in order to cool down thousands of commercial and industrial establishments situated around Laguna de Bay. “Still the reason Laguna de Bay is now on its deteriorating stage is because of past and present conversion projects. The lake had been always healthy and abundant before until a facility that prevents the salt water to enter has been built. Laguna de Bay is brackish water, thus the presence of salt water is highly essential to maintain its ecological balance and nutrients for the fish species to thrive,” Hicap said. Jonathan L. Mayuga

Jobstart Program helps jobless youths become employable By Manuel T. Cayon @awimailbox

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AVAO CIT Y—T he government-supported Jobstart Program in Davao del Norte’s capital of Tagum City would help 320 jobless youths become productive and employable. The city information office said the jobs program would be worked out by the Tagum City Public Employment Services Office, which rolled out a four-day registration for applicants that will end on July 21. “With the help of various business firms in the city, the program aims to help local jobseekers improve their skills,” the information office said. The office opened 320 slots for program participants, “which, is more than twice the slots allotted when it first started in April 2014”. Selected participants would undergo three phases of training, from five to eight months, depending on their performance. The information office said

the first phase is the Life Skills Training, “to help them during job interviews, constructing of resume or application letter, and personality enhancement”. The second phase is the Technical Skills program, “where they would be taught skills and how to perform their chosen jobs”. The third phase involves internship in their chosen company, which would determine “if they would be absorbed as regular employees”. Each trainee would be given P200 training allowance every day during the first phase, and P255 every day during the second and third phase of training. K a ren Bag u hin, of f icer in charge of the program, said, “The duration of the program might be long but the lessons and training that they would receive would give them a better chance at landing a good job.” The types of jobs include entrylevel employment, such as waiter, cashier, sales associate, call-center agents and many more.

Editor: Efleda P. Campos • Thursday, July 20, 2017 A5

Rainwater harvesting eyed to avert water crisis in PHL I

By Jonathan L. Mayuga

@jonlmayuga

S there a way to avert water crisis in the country?

An official of the Department of Environment and Natural Resources (DENR) is pushing for the revival of the alulod system to harvest rainwater for nonpotable household use. In a statement, DENR Undersecretary for Policy and Planning Service Corazon Davis said although the Philippines is known for its abundant water resources, it is also experiencing water scarcity due to factors that revolve around increasing demand and unsustainable use of water, such as urbanization, population growth, and wasteful use of water, a precious economic resource. “Although the Philippines is known for its abundant water resources, we are now experiencing scarcity of water due to rapid urbanization, increasing population, indiscriminate use and management of waste, and water pollution,” Davis said. Davis was among the resource speaker during the last presummit meeting on water held at a hotel in Ortigas on July 12.

Davis said our ancestors have always managed to find a way around water shortage using the most practical and reliable methods—the alulod water collection system. Under this traditional system, people harvest rainwater by simply placing a drum or basin at the end of the alulod for domestic uses, like flushing the toilet, watering the garden and washing clothes. It does not cover supply for drinking, food preparation or personal hygiene. “Modern Filipino homes may be worth redesigning using alulod again,” Davis added. “During the old days, the old folks use alulod to collect rainwater and divert it into the banga or the tapayan, where it is stored for future use,” she said. The proposal is consistent with one of the recommendations during the presummit meetings, which is to ensure increased rainwater harvesting through strong and innovative government regulations. Examples of these regulations are the introduction of a new pro-

vision in the building code that would require rainwater harvesting system for new buildings, and mandating all government offices to use only water-efficient structures like waterless urinals and shower facilities, which will catch the used water for rechanneling functions, like toilet flushing. In a statement, Sevillo David Jr., NWRB executive director, said there is a need to review the government’s water-catchment strategies. “We will have to increase our strategies so that rainwater can be useful, instead of letting it flow back to the sea. Once we had the water stored in the catchment, people can use the water in a number of beneficial ways,” David said. The DENR has long been pushing for the establishment of smaller water-impounding dams in upstream portions of the country to serve as an immediate solution to flood disasters and to enable irrigation in downstream areas during the dry season. To prevent further damage to the country’s water resources, the DENR is intensifying its massive reforestation program in watershed areas. The agency is currently reviewing the policies in implementing the National Greening Program to encourage farmers to plant more trees to bolster water security in the

Inmates get Tesda-certified training in Davao prison

“Learners” in the Davao Penal and Prison Farm attend the training sessions for the Inmates Farm Training and Exposure Program designed by the Technical Education and Skills Development Authority, in partnership with the Antonio O. Floirendo Foundation Inc. and the municipality of BE Dujali.

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T least 80 inmates from the Davao Penal Colony (Dapecol) and Correctional Institute for Women are currently undergoing life-skills training in preparation for their return to society. These inmates—55 men and 33 women—are all set to finish serving their prison terms very soon. They have been selected to join the rehabilitation program, called the “Inmates Farm Training and Exposure Program”, which was initiated by the joint-venture agreement between Tagum Agricultural Development Co. Inc. (Tadeco) and the Bureau of Corrections. Gerardo Padilla, acting superintendent of the Davao Penal and Prison Farm, in a talk with the trainees, said this is a “unique rehab program and is not offered in other prisons in the country”. The eight-week training course was designed by the Technical Education and Skills Development Authority (Tesda), in partnership with the Don Antonio O. Floirendo Sr. Foundation Inc. and the municipality of BE Dujali, to provide the inmate-trainees the proper skills that will allow them to seamlessly reintegrate into their communities. This program is included in Tesda’s private-public partnership project lineup. After the end of the course, the “learners”

will receive a Tesda-recognized certificate of program completion. This certificate is equivalent to a National Certificate of Competency Level 1, which is issued when a candidate has demonstrated competence in all units of competency that comprised a qualification as per Tesda assessment. This ensures the productivity, quality and global competitiveness of the middle-level workers. Under the said rehabilitation program, inmates work on banana farms and packaging houses within the Dapecol area in Davao del Norte and participate in training sessions on various topics, such as financial literacy, Basic English, agriculture production and even housekeeping. Close to 10,000 inmates from Dapecol have already graduated from the rehab program since the 1950s. Of this number, about 5,000 have joined the work force at Tadeco, while others have successfully started their own business ventures in their respective hometowns. One former inmate-trainee, who has since been employed by Tadeco, was able to put up his own house and provide college education to his children from his earnings as plantation worker.

country. By planting trees, farmers can install water-impounding areas on their farmlands and replenish the aquifers. The presummit meetings were organized by the NWRB, in partnership with Congress, the Philippine Chamber of Commerce and Industry and various government agencies, including the Office of the Cabinet Secretary, the Department of Agriculture and the Department of Public Works and Highways. The Water Roadmap and Summit Tripartite convenors, led by Sen. Loren B. Legarda, Socioeconomic Planning Secretary Ernesto M. Pernia, Agriculture Secretary Emmanuel F. Piñol, and the University of the Philippine Los Baños are pushing for various ways to avert a potential water crisis in the country, including the creation of an apex body that will unify 30 water-related agencies, in addition to a separate strong regulatory body. According to the Annual Poverty Indicators Survey in 2014, 15 million Filipinos still have to rely on unsafe water for their everyday drinking, cooking and hygiene needs. In May 2016 a total of 18 provinces have remained under a state of calamity due to El Niño, which caused severe water shortages and reportedly destroyed P6 billion worth of crops in the Philippines.

PhilRice develops first PHL heat-tolerant rice By Jasper Emmanuel Y. Arcalas

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@jearcalas

he Philippine Rice Research Institute (PhilRice) is currently developing the country’s first series of heat-tolerant rice varieties as an answer to the ill effects of climate change. In a study, titled “Quantitative Trait Loci [QTL] for high-temperature tolerance in rice [Oryza sativa L.]”, PhilRice researchers Norvie L. Manigbas, Jupier L. Gorospe and Evaristo A. Abella of the Central Luzon State University has found a way to produce the first heat-tolerant rice variety in the Philippines. “As of now, we do not have any heat-tolerant rice varieties released in the country. Through this study, we’ve learned that the heat-tolerant trait is associated to the plants’ heading days, time of flowering, fertility and dehiscent temperature—most of which are found in the nine QTLs,” Manigbas added in a news statement on July 18. Manigbas added they found out nine QTLs containing the genes that can counter the ill effects of high temperature. QTLs are sections of DNA containing the genes that control the trait. “These QTLs were found through the backcrossing of Dular and NSIC Rc150 [Tubigan 9]. Dular is an Indian heat-tolerant rice variety that has low yield potential,” Manigbas said. “Tubigan 9, on the other hand, is a Philippine rice variety with an average yield of 8.5 tons per hectare but not resistant to high temperature,” Manigbas added. Backcrossing is an effective method to transfer one or a few genes controlling a specific trait from one line into a second—usually elite—breeding line. The researchers identified six major QTLs—qHTfert1, qHTfert3 qHTfert4, qHTtof10, qHTdht3, and qHThd3—and three minor QTLs, namely, qHTdht4, qHTdht10 and qHTdht5. Manigbas said these QTLs will be used in mapping genes using molecular markers and incorporating the genes into high-yielding cultivars through marker-assisted breeding. “Through this process, breeding new cultivars becomes faster,” Manigbas said. The attached agency of the Department of Agriculture said earlier studies have confirmed that high temperature affects all growth stages of rice. “However, it is from the booting to flowering stage that rice is most sensitive to high temperature,” PhilRice said. “Moreover, temperature exceeding 35 degrees at flowering stage can cause high pollen and grain sterility in rice. This leads to serious yield loss, low grain quality and low harvest index,” it added. At present, six advanced promising lines are currently being tested for multilocation trials in the National Cooperative Test under high temperature environments, according to PhilRice.

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TheBroa

Business

Thursday, July 20, 2017

Rural banks march on amid mergers,

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By Kathryn Jose

Long-term capital, especially postharvest facilities that include resources for construction, acquisition and repair of equipment and buildings for production, processing, storage and marketing, is mostly needed by farmers. The disappearance of some rural banks (RBs) is taken also as a precaution as the Central Bank has urged them to merge, or else sink into closure from capital inadequacy or tiny market share. Meanwhile, cloud computing and digital banking are previewing an alternative expansion to widen access to credit and ensure payments in the countryside. “[RBs] have their own challenges, but they are still alive,” Pasia, RBAP president, told the BusinessMirror. “In fact, along with cooperatives, RBs are the only financial institutions that have complied with the loan ratio for farmers that is mandated by the Agri-Agra law.” From its highest growth of 1,081 in 1981, rural banks dropped to 471 with 21 closures at the end of last year and 24 in 2015, according to the Bangko Sentral ng Pilipinas (BSP). In the first three months of this year, three rural banks followed and stopped their operations in Iloilo, Batangas and Camarines Sur. “We wish to point out that although the number of rural banks declined from 695 as of end-2006, the number of offices of rural banks increased to 2,611 from 1,964 for the same period,” BSP Gov. Nestor A. Espenilla said.

Consolidation tack

TO enhance the viability of countryside lenders to pool more financial and management resources and expand their market reach, the BSP launched in 2015 the Consolidation Program for Rural Banks (CPRB). The program, in cooperation with the Land Bank of the Philippines (Land Bank) and the Philippine Deposit Insurance Corp. (PDIC), required rural banks to submit by August 25 their letter of intent to merge with up to four

other rural banks in the region or area where their head offices or majority of branches are located. The resulting single bank must have a minimum risk-based capital-adequacy ratio of 12 percent and a combined unimpaired capital of at least P100 million. Through the CPRB, the government institutions provide the banks advisory on finances, business operations and capacity building. The Countryside Financial Institution Enhancement Program funds the service with 80 percent allotment on its first year and 20 percent from the participating rural banks. The CPRB replaced the Strengthening Program for Rural Banks (SPRB). Began in 2010, the SPRB authorizes rural banks to build more branches, merge and acquire bank or nonbank third-party investors. “The decision, however, to enter in a merger remains a bank decision depending on its strategic circumstances, and on whether their corporate objective is to strengthen corporate viability, management and governance, as well as expand market reach,” Espenilla said.

Lower CARs

LOWER risk-based capital-adequacy ratio was the main reason the central bank forced RBs to close down. The ratio is computed by dividing tier-1 capital and tier-2 capital over risk-weighted assets. Tier-1 capital includes more cashable common stocks, while tier-2 capital includes supplementary cash from reserves, debt and preferred stocks. A higher ratio means more capital can easily absorb bank losses to preserve the depositors fund and maintain operations. Since 2012 the ratio for rural

banks has declined from 20.69 percent to 18.27 percent in September last year. The BSP’s latest records show the rate slowed down with 17.62 percent in 2008, 17.97 percent in 2009, 19.39 percent in 2010, 18.08 percent in 2014 and 18.06 in 2015. However, with the addition of branches in 2016, total loans and deposits of rural banks increased. In 2006, under Circular 522, the BSP also allowed rural banks to operate foreign currency-deposit units to encourage more savings from remittances of overseas Filipino workers. “The total loan portfolio and total deposits of the rural banking industry increased to P115.2 billion and P140.0 billion as of end2016 from P77.1 billion and P89.0 billion as of end-2006, respectively,” Espenilla said.

Main clients

THE RBAP supports the consolidation program, especially for struggling rural banks, to infuse more credit for financing farmers who are their main clients. “No more RBs will be established, but there will be more mergers because the important thing is for rural banks to continue existing rather than disappear completely,” Pasia said. In April the Rural Bank of Sibulan Inc. was the first to be revived through its merger with the Dumaguete City Development Bank Inc. in Negros Oriental. Filidian Rural Bank of Antipolo Inc. agrees that no RBs will be added into the system as it, instead, sees merger as a way for bigger commercial banks to engulf banks in the countryside. The rural bank has one branch in Quezon City and was originally based in Davao. “For most rural banks, I think the aspiration is to get bought out,”

Grigvovan | Dreamstime.com

ORE than half of rural banks are gone. But Antonio O. Pasia of the Rural Bankers Association of the Philippines (RBAP) sees a half-filled glass.

the bank’s president Hiro A. Budharani said.

Documents galore

BUDHARANI believes documents and regulations that are applied by the BSP to commercial banks (KBs) must not cover RBs, which he said have fewer personnel and information-gathering resources. “It takes away the speed we provide. Half of our employees are just reporting to the BSP,” Budharani said. “It can also take away the enthusiasm in rural banks when you have a lot of documents to require clients and report everything that you do. But we just have to comply.” An RB executive who declined to be named believes RBs “are overregulated.” “We want to be more personal to our clients, but we cannot because of the strict requirements,” the person familiar with RBs said. “These make our operations and services less efficient.” According to BSP Circular 855, dated October 29, 2014, borrowers must submit audited financial statements, including the stamped income-tax returns (ITRs) by the Bureau of Internal Revenue, as primary document for credit evaluation. The circular provides guidelines on sound credit-management practices. For bank performance evalu-

ation, the BSP has also required timely submission of complete and accurate reports on approved loans, deposit base, capitalization and corporate governance rules. Based on Circular 963 issued last month, rural banks are fined P450 for each error or delayed submission and P150 for either violation in their secondary reports. The amounts are tripled for noncompliance and nonsubmission.

rector Dennis Emmanuel C. Peña said. “These are [for their] immediate needs, such as tuition, food and medical expenses.” However, the RBAP said longterm capital, especially postharvest facilities that include resources for construction, acquisition and repair of equipment and buildings for production, processing, storage and marketing, is mostly needed by farmers.

Farm loans

Major considerations

THE BSP has advised that RBs must improve systems and acquire more resources to be fully compliant with industry regulations by January 1 next year. However, the RBAP said the documents, including collateral, in loan applications have long hindered RBs to provide more credit. Thus, it said many farmers still resort to informal or “5-6” lenders who impose up to a 20-percent interest rate. In March the Securities and Exchange Commission (SEC) warned 300 unauthorized lending companies, which is about one-third of the remaining RBs, to acquire a certificate of authority to lend. “Many farmers do not file income-tax returns because they do not have regular incomes. In fact, many of our farmer clients mostly [request for a] loan for short-term purposes,” RBAP Executive Di-

PASSING by rustic views, “it is not uncommon to see rice grains laid out [in the] open on the streets,” Pasia said. “Rain can spoil their produce and render them unprofitable,” he added. “Farmers then have to wait for another three months or longer because weather can be unpredictable.” This situation is a major consideration of lending by RBs, according to Agricultural Guarantee Fund Pool Executive Director Edna A. Atienza. “Formal lenders consider unsecured loans risky because typhoons are as many as the letters in the alphabet, and family emergencies mean no payment of loan and prices of produce are low at harvest time,” Atienza added. Thus, despite the permission by the BSP for foreign banks to increase ownership of domestic RBs,

aderLook

sMirror

www.businessmirror.com.ph | Thursday, July 20, 2017

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strict rules and technology progress sult in decreased funds available to farmers as it only involves change in ownership.” Thus, the BSP has also included policies that replace the documentary requirements with alternative proofs showing borrowers’ capacity to pay. Under a circular, the BSP allows rural banks to create their own sound credit-risk assessment and management measures to protect their depositor funds and, at the same time, provide additional credit to farmers. “Banks are, thus, afforded the flexibility to use any financial data or information deemed relevant in their credit evaluation provided these are properly documented,” Espenilla said. “The rationale is to give banks more leeway to lend to farmers who are creditworthy but may not necessarily have collateral, particularly real estate, which could unduly restrict their access to credit.”

To further expand the market reach of rural banks, the BSP partners with private telecommunications firms to extend financial services in the countryside through cloud computing and digital banking on mobile phones.

Itchaznong | Dreamstime.com

Agri-Agra law

the RBAP said only two have foreign ownership. According to the amended Rural Bank Act of 1992, foreign individuals can own up to 60 percent of voting stock of rural banks from 40 percent, provided aggregate foreign-owned voting stock does not exceed 60 percent of the outstanding voting stock. On the other hand, foreign banks can own up to 100 percent of their voting stocks based on RA 10641 or the Act Allowing Full Entry of Foreign Banks in the Philippines.

Reach expansion

Under a circular, the BSP allows rural banks to create their own sound credit-risk assessment and management measures to protect their depositor funds and, at the same time, provide additional credit to farmers.

Mcpics | Dreamstime.com

Going in

LAST year, TPG Growth, an American equity firm with $7 billion in assets, acquired 40-percent share of One Network Bank through BDO Unibank Inc. (BDO), the country’s biggest lender. Two years earlier, the Sy-led BDO bought 99.59 percent of the total shares of One Network Bank Inc. (ONB), which is the country’s largest rural bank with 105 branches. ONB had P28.1 billion in assets, P19.7 billion in loans and P17.9 billion in deposits in 2014. The takeover enabled BDO to reach clients in Mindanao, where 80 percent of the branches of the Davao-based ONB are located. According to Espenilla, the acquisition of RBs by bigger banks “does not necessarily re-

UNDER the Agri-Agra Credit Reform Act of 2009, banks must lend at least 25 percent of their loanable funds to agriculture and agrarian reform beneficiaries. According to the law, 15 percent must be allotted to agriculture and 10 percent to agrarian reform. As penalty, banks incur 0.5 percent of the unfulfilled credit amount to be computed quarterly a year. RBs exceeded the ratios last year with P14.582 billion, or 28.79 percent, in agricultural loans, and P8.327 billion, or 16.44 percent, in agrarian loans. KBs fell farther with only 0.74 percent for the former loan, but surpassed the latter with 12.75 percent. Ninety percent of the collected penalties will be equally divided to the Agricultural Guarantee Fund Pool (AGFP) and Philippine Crop Insurance Corp. The AGFP also absorbs the 2007 surplus of government financial institutions and governmentowned and controlled corporations for rice and food production, as provided by the mechanisms of the Department of Agriculture and the LBP in Administrative Order 225A of 2008 of former President Gloria Macapagal-Arroyo. With the fund pool, farm loans unbacked by collateral can be covered. However, to ensure compliance with the credit ratios, AGFP suggests steeper penalties up to 2.5 percent as stated in House Bill 3522 by Enrico A. Pineda and Michael L. Romero of the House of Representatives. The bill has remained pending since 2006. TO further expand the market reach of rural banks, the BSP partners with private telecommunications firms to extend financial services in the countryside through cloud computing and digital banking on mobile phones. In 2013 the BSP introduced cloud technology that shares and streamlines information and transactions through data-storage centers connected by the Internet. The data include retail-payment and credit histories of borrowers from financial institutions and commercial firms that show their cash flows. According to the BSP, over 500 rural banks have little or no integrated computerized systems for their core banking processes, while 102 have no system at all. This year, one rural bank began using the cloud to reach more farmers who may lack ITRs or collateral, but have the capacity to pay as indicated by their load subscriptions for mobile phones and online purchases on the device. With the technology integrated in the shared services system of rural banks, the BSP aims to build data centers, digitize transactions, provide a credit scoring or level of credit risk of a borrower, secure information and design products for

rural banks on a par with bigger commercial banks. “This is a welcome development as the proposal would be beneficial in enhancing information-technology capabilities of smaller RBs to cope with increasing competition, regulation and market demands,” Espenilla said. “In line with this initiative, one RB is undergoing pilot implementation of cloud-based core banking solution. The BSP is closely monitoring the pilot program, so that the RB is properly guided as to the necessary control measures, robustness and other risk management mechanisms when using cloud-based solutions/ infrastructure.”

Fintq, Lendr

ALONG with the launch of the National Retail Payment System (NPRS) in 2015, the BSP partnered with Fintq, a subsidiary of PLDT Inc., to create Lendr. The NPRS allows cashless transactions through digital payments and fund transfers among banks. According to documents, Lendr is a one-stop loans shop for all mobile networks and participating banks where interested rural banks must sign with the RBAP for a free three-week platform setup. The digital and financial technology platform offers immediate loan-approval notifications, 24/7 technical support, all-in-one Lendr account and a console for loan updates and management. With mobile phones, clients can create Lendr accounts, select lending partners and submit loan applications online. Credit becomes claimable at branches or withdrawal points after at least two days. According to Lito Villanueva, managing director and CEO of Fintq, the company has disbursed over P20 billion in loan volume in the past two years. “While we have just started with both SME/business and agriculture/ crop loans, we are projecting that both would account for more than 20 percent of such volume or approximately P4 billion,” Villanueva said. “So far, we have seven rural banks offering such loans.” In June Fintq added five partner rural banks in the Visayas to its 50 global partners, he added. Villanueva claims over 40 banks expressed interest to join Lendr during the RBAP annual convention in May.

e-Banking

ACCORDING to Villanueva, Fintq plans to attract over 200 rural banks and reach P30 billion in loan releases this year. He said Lendr receives about 2,000 account registrations a day. At present Fintq is the first and only BSP-approved cloudbased digital platform lender that has full coverage of the provinces, 93 percent of cities and 14 percent of municipalities. According to its survey, 80 percent of its borrowers are located in the provinces, and, among them, 47 percent apply loans beyond banking hours. “Rural banks know that competition will always be there, and it is imperative among them that the only way to arm themselves is to be digital as well, the quickest possible way,” Villanueva said. “The realization that neither the fintechs [financial technologies] of this world nor any other bigger banks are not really the ones providing such competition, but the consumer themselves who dictate what and how banking services best serve them.” “Note that the key to keep one’s relevance is future-proofing one’s business. One must be ready with the near-future clients,” he added. “You must be equipped with the wherewithal to ensure that you are ready to serve the children of your customers today.” The BSP said there are 51 RBs offering electronic-banking facilities and two RBs that operate as electronic money issuers would start operating by the end of this year. n

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Thursday, July 20, 2017 • Editor: Lyn Resurreccion

The World BusinessMirror

www.businessmirror.com.ph

Arabs to Qatar: Accept 6 principles vs extremism

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NITED NATIONS—Four Arab nations that cut ties with Qatar urged the tiny Gulf nation on Tuesday to commit to six principles on combatting extremism and terrorism and negotiate a plan with specific measures to implement them—a step that could pave the way for an early resolution of the crisis.

Saudi Arabia, the United Arab Emirates (UAE), Egypt and Bahrain broke diplomatic relations with Qatar in early June largely over their allegations that it supports terrorist and extremist groups—a charge Qatar rejects. They initially made 13 demands, which Qatar also dismissed. Saudi Arabia’s UN Ambassador Abdallah Al-Mouallimi told a briefing for a group of UN correspondents that the four nations are now committed to the six principles agreed to by their foreign ministers at a meeting in Cairo on July 5, and hope Qatar will support them, as well. The principles include commitments to combat extremism and terrorism, prevent financing and safe havens for such groups, and suspend all acts of provocation and speeches inciting hatred or violence. Al-Mouallimi said the quartet of nations think it “should be easy for the Qataris to accept” the six principles. He stressed that implementation and monitoring must be “essential components,” and “there will be no compromise when it comes to principles.” But he said both sides can talk

13

The initial number of principles and tools which the quartet of nations demanded Qatar to commit to combat extremism

about details of “the tactics” and “the tools” to implement them— “and that’s where we can have discussion and compromise”. The Saudi ambassador explained that the initial 13 points included some principles and some tools to achieve compliance. Mixed in the 13 points were what Western nations might see as fair demands, such as cracking down on support for extremists and curbing ties with Iran, and tougher-toswallow calls to shut down the Al-

Jazeera television network—one of Qatar’s best-known brands—and kick out troops from the North Atlantic Treaty Organization-member Turkey, which has a base in Qatar. Al-Mouallimi said stopping incitement to violence is essential, but he said closing Al-Jazeera might not be necessary. “If the only way to achieve that is by closing down Al-Jazeera, fine,” he said. “If we can achieve that without closing down Al-Jazeera, that’s also fine. The important thing is the objective and the principle involved.” UAE Minister of State for International Cooperation Reem Al Hashimy said all the countries involved have strong relations with the US “and we believe that the Americans have a very constructive and a very important role to play in hopefully creating a peaceful resolution to this current crisis.” President Donald J. Trump has sided strongly with Saudi Arabia and the UAE in the dispute, publicly backing their contention that Qatar is a supporter of Islamic militant groups and a destabilizing force in the Middle East. Secretary of State Rex Tillerson recently concluded several days of shuttle diplomacy and sealed a deal to intensify Qatar’s counterterrorism efforts. The memorandum of understanding (MOU) signed by the US and Qatar lays out steps Qatar can take to bolster its fight against terrorism and address shortfalls in policing terrorism funding. Al Hashimy called the MOU “an excellent step.” “We’d like to see more of that,” she said. “We’d like to see stronger measures taken and stronger commitment made to address that.” Al Hashimy said “at this stage

A parked Qatari plane in Hamad International Airport in Doha, Qatar. In early June, Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut ties with Qatar and moved to isolate the small, but wealthy, Gulf nation, canceling air routes between their capitals and Qatar’s and closing their airspace to Qatari flights. AP/Hadi Mizban

the ball is in Qatar’s court.” “We’re looking for a serious change in behavior, serious measures,” she said. “No more talk.” Qatar has further escalated the situation by encouraging Turkey’s military presence, Al Hashimy said. “We do not want to see a military escalation of any kind,” she said. “We hope to be able to resolve this internally and among ourselves with the assistance of strong mediation, whether it’s from the US or the Kuwaitis.” Al-Mouallimi said Qatar’s future lies with its neighbors not with “faraway places,” a clear reference to Turkey and Iran which are supporting Doha.

Trump, Putin held 2nd, undisclosed, private meeting

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ASHINGTON—Hours into a long dinner with world leaders who had gathered for the Group of 20 summit, President Donald J. Trump left his chair at the sprawling banquet table and headed to where President Vladimir Putin of Russia was seated. Earlier in the day, the two presidents had met for the first time, yielding what the Trump administration later described as a warm rapport, even as they talked about Russia’s interference in the US’s 2016 elections. The July 7 meeting in Hamburg, Germany, was the single most scrutinized of the Trump presidency. But it turned out there was another, potentially just as important, encounter: a roughly hourlong one-on-one discussion over dinner that was only overheard by a Kremlin-provided interpreter. No presidential relationship has been more dissected than the one between Trump and Putin, a dynamic only heightened by the swirl of investigations into whether Trump’s campaign colluded with Russia to sway the election in his favor. Nevertheless, the meeting was confirmed by the White House only on Tuesday, after some attendees privately expressed surprise that it had occurred. The dinner discussion caught the attention of other leaders around the table, some of whom later remarked privately on the odd spectacle of an American president seeming to single out the Russian leader for special attention at a summit meeting that included some of the US’s staunchest, oldest allies. The White House acknowledged the conversation on Tuesday but said there was nothing unusual about it, batting aside the suggestion that it had been deliberately hidden from public view. Late on Tuesday night, Trump derided news reports about it as “sick.” He said the dinner was not a secret, since all of the world leaders at the summit meeting and their spouses were invited by Chancellor Angela Merkel of Germany. “Press knew!” he tweeted. “Even a dinner arranged for top 20 leaders in Germany is made to look sinister!” Trump added. While the private leaders-and-spouses dinner was on Trump’s public schedule, the news media was not allowed to witness any part of it, nor were reporters provided with an account of what transpired. Trump’s trav-

“Our Turkish brothers need to recognize that the era of covert and to some extent unwanted intervention in the Arab world has long gone,” he said. “If Turkey wants to play a constructive role they are welcome to do so, but trying to find the role through military bases or military intervention would not be productive, and would not fare well for Turkey’s reputation in the Arab world.” Diplomats from the four countries who attended the briefing said there have been discussions about possible next steps. UAE Ambassador Lana Nusseibeh said, “If Qatar is unwilling to accept core principles around what

US to impose sanctions against top Venezuelans T

President Donald Trump and President Vladimir Putin of Russia shake hands in a meeting during the Group of 20 summit in Hamburg, Germany, on July 7. Later that day, the two leaders had a second, previously undisclosed meeting, one of which with no official US government record, the White House acknowledged on July 18. Stephen Crowley/The New York Times

eling press contingent did note, however, that his motorcade left the dinner four minutes after Putin’s did. The conversation took place at a private meal that lasted more than three hours after a concert for the leaders and their spouses at the Elbphilharmonie, a concert hall on the banks of the Elbe River. In the earlier, formal meeting, Trump said later, he asked the Russian president twice about his role in the US vote. Putin denied involvement, and the two men agreed to move beyond the dispute in the interest of finding common ground on other matters, including a limited cease-fire in Syria. There is no official US government record of the intimate dinner conversation, because no American official other than the president was involved. “Pretty much everyone at the dinner thought this was really weird, that here is the president of the United States, who clearly wants to display that he has a better relationship personally with President Putin than any of us, or simply doesn’t care,” said Ian Bremmer, president of the Eurasia Group, a New York-based research and consulting firm, who said he had heard directly from attendees. “They were flummoxed, they were confused and they were startled.” The encounter occurred more than midway through the lengthy dinner, when Trump left his chair and approached Putin, who had been seated next to the first lady,

Melania Trump. It was described to Bremmer by other guests as lasting roughly an hour and not initially disputed by a White House official who spoke on the condition of anonymity. But Sean Spicer, the White House news secretary, disputed that account. He said Trump had described the exchange with Putin as purely social, and as lasting far less than an hour. “It was pleasantries and small talk,” Spicer said. In a separate statement, the White House said the two presidents had spoken through the Kremlin’s interpreter because the American translator with Trump did not speak Russian. Experts in US-Russia relations said such an encounter—even on an informal basis at a social event—was a concern because of its length, which suggested a substantive exchange, and because there was no note taker or national security or foreign-policy aide present. “We’re all going to be wondering what was said, and that’s where it’s unfortunate that there was no US interpreter, because there is no independent American account of what happened,” said Steven Pifer, a former ambassador to Ukraine who also specializes in Russia and nuclear-arms control. “If I was in the Kremlin, my recommendation to Putin would be, ‘See if you can get this guy alone,’ and that’s what it sounds like he was able to do,” added Pifer, a senior fellow at the Brookings Institution in Washington. New York Times News Service

defines terrorism or extremism in our region, it will be very difficult” for it to remain in the Gulf Cooperation Council with Saudi Arabia, the UAE and Bahrain. “So it may be a parting of ways for a little while in order to work things out,” she said. Al-Mouallimi said the quartet briefed the 10 elected Security Council members on Tuesday and hopes to meet the permanent members, as well. There are no plans to take the dispute to the UN’s most powerful body, he said, but “if we develop the conviction that that is a necessary move forward, then we will do so.” AP

he US is poised to impose sanctions on Venezuela’s defense minister and several other top officials for humanrights violations, according to people with knowledge of the plan, who added that the action was one of several under consideration by the Trump administration against President Nicolas Maduro’s government. The US Treasury could announce the sanctions, which would freeze the officials out of the US financial system, as soon as Tuesday, the people said. Among those targeted would be Defense Minister Vladimir Padrino Lopez, 54, and Diosdado Cabello, 54, a longtime ally of late President Hugo Chavez and power broker within the ruling Socialist party, they said. A senior Trump administration official confirmed the US is ready to impose sanctions against individuals, though the official wouldn’t identify the targets. The sanctions could come at any time and will definitely be imposed if the Maduro government proceeds with a plan to change Venezuela’s Constitution, the official said in a conference call with reporters arranged by the White House. The official asked not to be identified discussing US policy ahead of its announcement. The move against top officials—potentially the third round of sanctions against Venezuelans under the Trump administration—is one offshoot of a broader US probe into allegations of Venezuelan corruption that began several years ago and has resulted in some criminal charges. Other Venezuela-related measures are also in the works, the people said, adding that US officials have given briefings on the potential actions in recent weeks to lawmakers, including Sen. Marco Rubio of Florida.

Groundwork laid

The administration laid the groundwork this week for new penalties on Venezuela’s government. Last Sunday millions of Venezuelans, struggling with an economic collapse many blame on years of official

corruption, protested the Maduro government’s plan to rewrite the country’s constitution to maintain its hold on power. On Monday evening the White House, even as it absorbed a blow to its plan to remake American health care, said it would bring “strong and swift economic actions” if Maduro’s government went ahead with its constitution plan. But there is tension inside the White House about which measures to adopt, and whether to wait to see how Venezuela’s constitutional issue plays out, according to people familiar with the discussions. Among the measures creating divisions is whether to impose some sort of ban on crude-oil imports from Venezuela, they said. The debate among top administration officials reflects friction over the potential impact on US gasoline prices and concerns about exacerbating the worsening humanitarian situation in Venezuela, said the people, who asked not to be identified discussing internal deliberations. While the National Security Council views limiting Venezuelan crude as a powerful weapon, the State Department has argued that cutting off a major piece of the country’s foreign trade could harm already suffering Venezuelans. There is significant sensitivity to the impacts on Venezuelan people, one of the people said. Other officials have highlighted potential economic harm inside the US, including higher gasoline prices for motorists. Refiners have warned that any move to choke off the third-largest foreign source of US oil imports (after Canada and Saudi Arabia) could disadvantage Gulf and East Coast refiners optimized to use Venezuelan crude and cause a spike in gasoline prices. “While placing sanctions on oil imports from Venezuela would not deny a market for this internationally traded commodity, it would likely hurt consumers and businesses right here in the United States,” the American Fuel and Petrochemical Manufacturers, a refining trade group, said in a July 6 letter to Trump. Bloomberg News

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US, China sidestep discord to focus on trade

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.S. and Chinese economic chiefs sidestepped their differences over North Korea and steel imports ahead of a highlevel forum in which the Trump administration is seeking clear commitments from China to open its markets. “There remains serious imbalances, which we must work to rectify,” Commerce Secretary Wilbur Ross said on Tuesday in Washington at an event organized by the US-China Business Council, a nonprofit group representing more than 200 American companies that do business in China. “It is time to rebalance our trade and investment relationship in a more fair, equitable and reciprocal direction.” Ross spoke at the gathering along with US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Wang Yang, a day before the USChina Comprehensive Economic Dialogue (CED) in Washington. The forum for economic and trade talks was agreed to in April, when President Donald J. Trump met his Chinese counterpart Xi Jinping in Florida and developed a 100-day action plan. The talks led to China reopening its markets to US beef and pledging to buy US liquefied natural gas, while allowing greater access to its financial-services sector. The meeting comes amid tensions between the two nations as Trump steps up pressure on China to rein in North Korea’s nuclear program. His administration is also weighing steps to cut steel imports, blaming China’s overcapacity for creating global gluts. “What matters most with the CED and other forms of dialogues is to get the two sides to sit together and talk, to avoid the mutual abuse

6.5%

The average percentage in economic growth that China is targeting in five years triggered by lack of communication,” said He Weiwen, deputy director of the Center for China and Globalization in Beijing. “The dialogue should cover both the generic rules and the specific deliverables. It should be cooperation-oriented, and to get the things hanging over China-US relations done one by one.” Mnuchin on Tuesday said the US wants specific deliverables from the CED and that the US will use the discussions to push China on lifting foreign-ownership restrictions in its financial-services industry and to remove hurdles for information and technology sectors. “China is in the midst of a change to a more sustainable growth model,” Mnuchin added. “We still have work to do with China to achieve a balanced relationship” based on reciprocity.

‘Climb higher’

The Chinese government has been giving market-oriented policies a larger role in the economy, moving away from a state-led model, with a

U.S. President Donald J. Trump (left) and Chinese President Xi Jinping arrive for a meeting on the sidelines of the Group of 20 Summit in Hamburg, Germany, on July 8. Saul Loeb/Pool Photo via AP

goal to achieve 6.5 percent average economic growth in the five years through 2020. “ The Chinese economy will continue to grow at medium-high speed and climb higher on the value chain, as China’s traditional industries are transformed and upgraded at a faster pace and emerging industries flourish,” Wang said in a speech at the event. Xi said China is going to open up more to foreign investors in a meeting with his financial lieutenants on Monday, according to national broadcaster China Central Television. The nation should accelerate easing of restrictions and stake ownership requirements on foreign investment in areas ranging from nursery to e-commerce, and it should also proactively expand imports while stabilizing exports, looking into lowering tariffs for some consumer goods, he added.

The US is likely to pressure China to expand imports of agricultural products, electronics and transportation equipment, and China could possibly reduce tariffs on these products, especially that on the automobiles, Industrial Bank Co. economists led by Lu Zhengwei wrote in a research note. While Trump built a positive rapport with Xi during the April meeting at his Mar-a-Lago resort in Florida, there are signs of growing friction as the US pushes China to reduce North Korea’s nuclear threat. The US president in June said China hadn’t done enough to control North Korea and its nuclear-weapons program, though he appeared to brush over differences from that threat and about trade issues during the Group of 20 meeting earlier this month. In a move that threatened to raise tensions, Mnuchin last month took

Saudi king’s son plotted to oust his rival

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MMAN, Jordan—As next in line to be king of Saudi Arabia, Mohammed bin Nayef was unaccustomed to being told what to do. Then, one night in June, he was summoned to a palace in Mecca, held against his will and pressured for hours to give up his claim to the throne. By dawn, he had given in, and Saudi Arabia woke to the news that it had a new crown prince: the king’s 31-year-old son, Mohammed bin Salman. The young prince’s supporters have lauded his elevation as the seamless empowerment of an ambitious leader. But since he was promoted on June 21, indications have emerged that Mohammed bin Salman plotted the ouster and that the transition was rockier than has been publicly portrayed, according to current and former US officials and associates of the royal family To strengthen support for the sudden change in the line of succession, some senior princes were told that Mohammed bin Nayef was unfit to be king because of a drug problem, according to an associate of the royal family. The decision to oust Mohammed bin Nayef and some of his closest colleagues has spread concern among counterterrorism officials in the US who saw their most trusted Saudi contacts disappear and have struggled to build new relationships. And the collection of so much power by one young royal, Prince Mohammad bin Salman, has unsettled a royal family long guided by consensus and deference to elders. “You may have now such a concentration of power within one branch and within one individual

who is also younger than so many of the cousins and sons of former kings that it may begin to create a situation where the family is out of whack,” said Kristian Coates Ulrichsen, a fellow for the Middle East at Rice University’s Baker Institute for Public Policy, who studies Persian Gulf politics. The insularity of Saudi Arabia’s sprawling and phenomenally wealthy royal family is well known, often leaving diplomats, intelligence agents and members of the family itself struggling to decipher its inner workings. But since The New York Times reported last month that Mohammed bin Nayef had been confined to his palace, US officials and associates of senior royals have provided similar accounts of how the elder prince was pressured to step aside by his nephew. All spoke on the condition of anonymity so as not to endanger their contacts inside the kingdom, or themselves. In response to questions from The Times, a written statement by a senior Saudi official denied that Mohammed bin Nayef had been pressured and said that the Allegiance Council, a body of senior princes, had approved the change in “the best interest of the nation.” The statement said Mohammed bin Nayef was the first to pledge allegiance to the new crown prince and had insisted that the moment be filmed and broadcast. The former crown prince receives guests daily in his palace in Jiddah and has visited the king and the crown prince more than once, the statement said. The rivalry between the princes

began in 2015, when King Salman ascended the throne and bestowed tremendous power on his favorite son. Mohammed bin Salman was named deputy crown prince, or second in line to become king, as well as defense minister; put in charge of a powerful economic council; and given oversight of the state oil monopoly, Saudi Aramco. Mohammed bin Salman elevated his profile with visits to China, Russia and the US, where he met with Mark Zuckerberg, the Facebook CEO, and dined with President Donald J. Trump in the White House. He has also guided Vision 2030, an ambitious plan for the future of the kingdom that seeks to transform the Saudi economy and improve life for citizens. Mohammed bin Salman’s supporters praise him as a hardworking visionary who has addressed the kingdom’s challenges with extraordinary directness. His programs, including increasing entertainment opportunities inside the hyperconservative kingdom, have won him fans among the two-thirds of Saudis who are younger than 30. But his critics call him rash and power-hungry, saying he has entangled the country in a costly and, so far, failed war in Yemen that has killed many civilians, as well as in a feud with Qatar. Neither has a clear exit. The prince has risen at the expense of his elder relatives, including Mohammed bin Nayef, 57. As the head of the Saudi Interior Ministry, Mohammed bin Nayef led the dismantling of al-Qaeda in the kingdom after a deadly bombing campaign a decade ago. While he

kept a low public profile, even after becoming crown prince in 2015, his work won him allies in the US and other Western and Arab nations. But while his removal struck many as sudden, it had been planned out. On the night of June 20, a group of senior princes and security officials gathered at the Safa Palace in Mecca, after being informed that King Salman wanted to see them, according to US officials and associates of the royal family. It was near the end of Ramadan, the Islamic holy month, when Saudis were preoccupied with religious duties and many royals had gathered in Mecca before traveling abroad for the Eid al-Fitr holiday. That made it advantageous for a change, analysts said, like a coup on Christmas Eve. Before midnight, Mohammed bin Nayef was told he was going to meet the king and was led into another room, where royal court officials took away his phones and pressured him to give up his posts as crown prince and interior minister, according to US officials and an associate of the royal family. At first, he refused. But as the night wore on, the prince, a diabetic who suffers from the effects of a 2009 assassination attempt by a suicide bomber, grew tired. Meanwhile, royal court officials called members of the Allegiance Council, a body of princes who are supposed to approve changes to the line of succession. Some were told that Mohammed bin Nayef had a drug problem and was unfit to be king, according to an associate of the royal family. New York Times News Service

steps to penalize a Chinese bank, a Chinese shipping company and two Chinese citizens to reduce North Korea’s access to the international financial system. Mnuchin said at the time that the measures were “in no way targeting China” but instead focused on “North Korea’s external enablers.” The sanctions provoked a furious response from China, with a foreign ministry spokesman saying the measures violated understandings reached during the Mar-a-Lago meetings.

Back burner

While Trump has put trade tensions on the back burner—at least publicly—if his patience runs out on China he could revive the threat of escalating trade spats. The administration has decisions pending on the national-security implications of importing steel and

aluminum that could lead to quotas or tariffs, as it blames China for creating excess capacity with production of the metals at record highs. Wednesday’s CED replaces the Strategic and Economic Dialogue, which was formalized during the Obama administration, and the longstanding Joint Commission on Commerce and Trade. Both have drawn criticism for involving too many people and producing too few results. The CED is “different only in how it is packed,” as every US president likes to put his own stamp on how these dialogues are carried out, Anka Lee, senior director at Albright Stonebridge Group, said in an interview with Bloomberg Television. He also added that difficult domestic contexts in both nations might exert influence on the conversation. China is bracing for a major leadership reshuffle in the fall, and Trump is focusing on the trade deficit, which could cloud his ability to achieve “some of the broader, more ambitious conversations, like pushing China to reform the domestic economy,” Lee said. On the sidelines of the talks, Ross met with top CEOs, including Alibaba Group Holding Ltd. Chairman Jack Ma, Stephen Schwarzman of Blackstone Group, Tom Hayes of Tyson Foods Inc., General Electric Co. Chairman Jeffrey Immelt and Sinochem Group Chairman Frank Ning. In their public remarks on Tuesday, Ross, Mnuchin and Wang were focused on areas of cooperation. Mnuchin left out any mention of Chinese investments in the US, which has sparked concern from the administration and Congress over China’s interest in purchasing stakes in nuclear-weapons businesses, semiconductor companies and other critical infrastructure. Ross downplayed any friction on Tuesday, saying the US-China relationship is better today than in many decades, and the countries have “fundamentally shared objectives.” Bloomberg News

How Trump’s health-care bill failed

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ASHINGTON — President Donald J. Trump was fed up with the grind of health-care legislation and, at a dinner with Republican senators on Monday at the White House, he let them know it. He told the lawmakers how annoyed he was with one Republican who was not there—Sen. Rand Paul of Kentucky, who had gone on television over the weekend to oppose a Senate healthcare bill that once held the promise of victory for Trump. It is one thing to vote no, Trump told the group, according to one of the guests. It is another, the president said, to go on all of the Sunday shows and complain about it. The scene on Monday night was an exasperating end for Trump to a month of negotiations between the White House and Senate Republicans in an effort to repeal the Affordable Care Act (ACA), former President Barack Obama’s signature domestic legacy. The Senate bill, which faced a nearimpossible path forward after the House passed its version of the legislation in May, was ultimately defeated by deep divisions within the party, a lack of a viable health-care alternative and a president who, one staff member said, was growing bored in selling the bill and often undermined the best-laid plans of his aides with a quip or a tweet. Governors, especially Republicans from states that had expanded Medicaid under the ACA, also played a vital role in the demise of Trump’s plans. “In our state,” said Gov. John Kasich of Ohio, a Republican, “many people on Medicaid expansion are on the program for just a year and a half, until they get a job. They are not on it for 20 years. They are not lazy or committing fraud.” The effort by Senate Republican leaders to remake the nation’s

health-care system—which went well beyond the perimeters of Obama’s health-care law—was, in retrospect, doomed from the moment it began, even with the wind of an unlikely win in the House at their backs. The Senate measure would impose annual caps on Medicaid spending, ending what has been an open-ended entitlement for the poor and disabled. The process bypassed committees, any public airing of the bill or formal bill drafting. Instead, Sen. Mitch McConnell of Kentucky, the majority leader, farmed out the remaking of 17 percent of the economy to a small group of senators, all Republican white men. The bad first look did not fade. But under fire for the all-male panel, McConnell reduced it to little more than a kaffeeklatsch, open to anyone who wanted to come by and chat health care. Republican senators, reflecting the divide in the party, quickly formed two camps: those who wanted to squeeze hundreds of billions of dollars out of Medicaid, and those, mainly from states that had expanded the program, who wanted to preserve it. Both groups held constant meetings, with many usually conservative senators like Jerry Moran of Kansas and Charles E. Grassley of Iowa sliding into the moderate group’s gatherings to quietly voice their own concerns. Sen. Rob Portman of Ohio, in particular, formed the spine of opposition to the bill, and pushed for changes to reduce the cuts to Medicaid. In his state, more than 700,000 low-income people have gained coverage through the expansion of Medicaid under the ACA. Sen. Susan Collins of Maine criticized the Trump administration’s often specious descriptions of what the bill would actually do, bolstering other more quiet critics’ resolve. New York Times News Service

A10 Thursday, July 20, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

BBL in the hands of our legislators

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resident Duterte received on Monday a new draft copy of the Bangsamoro basic law (BBL), which aims to establish a new region for the Bangsamoro, a collective term for Filipino Muslims, to replace the Autonomous Region in Muslim Mindanao (ARMM). The Bangsamoro Transition Commission (BTC) drafted the proposed BBL as part of efforts to end armed conflict in Mindanao. The BTC’s 21 members include representatives from both the Moro Islamic Liberation Front and the Moro National Liberation Front.

The President said he has yet to read the document, although he is expected to certify it as urgent to both houses of Congress. During the ceremonial turnover, Duterte said, “This moment is a significant step forward in our quest to end centuries of hatred, mistrust and injustice that caused and affected the lives of millions of Filipinos.” BTC Chairman Ghazali Jaafar described the proposed BBL as the “best antidote to violent extremism” in Mindanao. He could be referring to the Marawi City siege, an obvious experiment of the global jihadist Islamic State (IS). What was not said has profound implications: Failure to pass the once-rejected BBL would risk exacerbating disenchantment among Muslims, fueling criminality and facilitating religious radicalization in the South. The IS has shown an ability to exploit social disorder in Muslim communities to gain new recruits. The BTC chairman was amplifying a clear message: The most effective way to avoid these dangers is for the Duterte administration to pass enabling legislation that delivers at least as much autonomy as was promised by the Aquino administration. To his credit, Aquino almost succeeded in securing Congressional approval of the first version of the BBL in 2014 if not for the Mamasapano incident. Before the tragedy, both houses of Congress were eyeing to pass the law by February or March 2015 to give sufficient time for its ratification and what was supposed to be at least a yearlong transition period before the election of the first set of officials of the Bangsamoro government. Mohager Iqbal, a member of the BTC, said only 20 percent to 30 percent of the original provisions in the BBL were changed in the draft submitted to the President. Among the changes, Iqbal added, was the creation of an office for Christian communities. He said some controversial provisions from the old draft were retained, such as the creation of constitutional bodies, like the Commission on Elections, Commission on Audit and the Civil Service Commission, a provision on having their own police units, as well as a parliamentary form of government for the Bangsamoro entity. Government panel Chairman Irene Santiago hopes the Bangsamoro Transition Authority, the interim government under the proposed BBL, will be in place by July 2018. This means the President has to sign the law by the end of this year, followed by a plebiscite, and then by the dissolution of the ARMM. Duterte, the first president from Mindanao, promised during the 2016 presidential campaign to pass the BBL if he were elected. With the Chief Executive’s strong support and Iqbal’s assurance that the new BBL is in line with the Constitution, let’s hope the Filipino nation will give its positive support for the passage of the BBL. Mindanao is potentially closer to peace than at any time in the four decades since Muslim insurgents started fighting for independence, and the ball once again will be in the hands of our legislators. Let’s hope that Congress will do its job right this time. Since 2005

Grab/Uber nonsense John Mangun

OUTSIDE THE BOX

B

ack in the late 1980s, taxi cabs came in three flavors and two sizes. The “flavors” were the three, maybe four, companies that put almost all of the cabs on the road, including Golden Taxi, which has disappeared into the dust of history. The “sizes” were “aircon” and “non-aircon”. There was a great price differential between the two and taxies were cheap. I mean really cheap.

You could go from United Nations Avenue in Manila to Makati for less than P40. Sometimes, the taxi’s back seat was not attached and bounced around but you could smoke. Taxi meters were not exactly regulated. I remember one time when the car had a floor-mounted stick shift. Every time the driver’s hand got near the meter, his little finger flipped the switch. You were charged not by the kilometer but by every time he shifted in first or second gear.

Cecilio T. Arillo

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and Grab by the Land Transportation Franchising and Regulatory Board (LTFRB) is being framed as government going against the interests of the people in favor of the taxi monopoly. Also, it is supposedly a case of government not adapting to 21stcentury technology. Some are calling it a battle between good and evil, as if Jesus would have taken Uber instead of a donkey on his ride to the Last Supper. But the reality of what is happening came from Transportation Secretary Arthur P. Tugade. “What we are saying is, follow the process. After that, pay the taxes”. Granted, the LTFRB has not gotten its act together for almost two years on that “process”, but the key to the deal is “pay the taxes”. Ultimately, with the government, it always comes down to “If you want to play, you have to pay”. All the other arguments are nonsense. E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

Does the country have a national security strategy?

BusinessMirror A broader look at today’s business Founder

Over the years, all taxis became air-conditioned and a rule forced them to be painted predominately white. Rates have increased and the back seats seem to be attached, but customer complaints of overcharging and refusing to go to a particular destination has not changed. But that is not unique to Manila as there must be an unwritten and secret code among the world’s taxi drivers that can do almost anything they want. In Papua New Guinea, if the taxi gets into an accident, it is

the passenger’s fault and financial liability. If you had not hired the cab and told it where to go, the accident would not have happened. There is no doubt that Grab and Uber have changed the global taxi game. However, in almost every country where Uber operates, there has been controversy, legal challenges, taxi cab strikes and protests and Uber has been shut down. Public transportation probably does need laws and rules and all participants should obey those rules. Normal taxis are required by law to take the passenger where he or she wants to go. Uber drivers can refuse a destination by simply not responding. Is that fair? Taxi fares are fixed but Uber has “rush hour prices”. Also fair? Now don’t get me wrong, if Uber had a “frequent flyer” program, I would be on top of that list. I never go from the south to Makati during the week in anything else but Uber. I love it. But then again, I was quoted an official P1,000 fare from Bonifacio Global City to SMBF one time. The current “shut down” of Uber

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ASKED this important question because no public official is even talking about it despite government’s paramount obligation to draw up a cohesive national security strategy (NSS) and make it public. Japan, for instance, has its own NSS that presents the country’s guiding principles in national security, its national interests, its objectives, its security environment and challenges, and presents to its citizens and its allies the strategic approaches that it should take to address those challenges. We will write on this later. In the Philippines there’s none to guide the people, notwithstanding the following, among others: 1) The country is riven by three types of continuing rebellion. First, the reformist officers in the armed services who are quietly active and the most dangerous, having access to organic weaponry, other war materiels and who continue quietly to operate inside the government; second, the Moro separatists and terrorists in Mindanao; and third, the communist insurgents, who are separately and violently stalking the countryside and some urban centers, oftentimes manifesting themselves in terrorism, ambuscades, political assassinations, banditry, kidnappings and revolutionary taxation. 2) Some government officials are

often posturing and shamelessly proclaiming in various local and international fora that they are fully committed to stifle insurgency and terrorism without realizing that the country is the only one today in Asia, or probably including the Western world, without a clearly defined national security law of its own. This is so because the Ramos administration on September 22, 1992, repealed the country’s only national security law, Republic Act (RA) 1700, otherwise known as the antisubversion law, hoping that by doing so, terrorists and other subversive elements will joint his government and, thus, give him a chance to win the Nobel Peace Prize. The repeal, instead, decriminalized subversive organizations, created a security vacuum and saw the resurgence of the Moro Islamic Liberation Front (MILF), the expansion of the Communist Party of the Philippines and its armed wing, the New People’s Army, the birth of the extremist Abu Sayyaf, and the intrusion of the dreaded ISIS and Jema’ah Islamiyah terrorists.

Also, as a consequence, what is left in our law books to suppress subversion, rebellion and terrorism is the antiquated Revised Penal Code, which, in Article 147, penalizes subversive and rebellious acts for only six years in prison and imposes a fine not exceeding P1,000 ($21) for founders, directors and presidents of associations totally or partially organized for the purpose of committing any of the crimes punishable under the Code. The new antiterrorism law, or the Human Security Act (RA 9372), remains untested because of its serious flaw on the side of enforcement and prosecution of terrorist suspects after it was systematically torpedoed in Congress and the Supreme Court by militants, mostly allied with the enemies of the state. 3) The Philippines has now one of the highest number of armed rebels (the US and the European Union classify them as terrorists): 15,000 Moro separatists and terrorists in Mindanao (MILF, Abu Sayyaf, Maute-ISIS group and others) and 7,000 communist guerrillas operating elsewhere in the country. They total 22,000 terrorists, making them one of the highest concentration of armed combatants in any part of the world, with their own flags, constitutions, territories and armed forces, all in violation of the Constitution. Their combined strength is the equivalent of 44 light infantry battalions or more than 50 percent of the Army’s total strength of 81,000 officers and men. 4) The police and military organizations are top heavy with identical multilayered command structures that are complex, confusing and expensive to maintain.

5) An enormous foreign and domestic debt estimated at more than P6.3 trillion is a critical issue in national security and public safety because such a huge liability hinders economic growth, creates serious unemployment problems, worsens poverty and has the potential of triggering political and social upheavals. It may be true that poverty does not turn poor people into instant terrorists, but a weak country, beset with lack of direction and unbridled corruption, is vulnerable to terrorism. 6) The country is heavily dependent on Middle East oil. The Asean, of which the Philippines is a founding member, commands strategic waterways, like the Straits of Malacca, Sunda, Lombok and Macassar, through which oil and trade to and from Japan and East Asian countries must move, a fact that requires drawing up a strategic direction. Philippine laws on combatting cybercrimes are inadequate. The cybercrime law and E-Commerce Act have no equivalent for the protection of national security and public safety. The Data Privacy Act prohibits the government from eavesdropping on private electronic communications without a court order, yet, private individuals can intrude into government web sites by invoking the right to information. Again, bear in mind the overriding obligation of the government to ensure that the safety and security of the people and territory (air, land and sea) is of the highest priority in all circumstances.

To reach the writer, e-mail cecilio.arillo@ gmail.com.

Opinion BusinessMirror

opinion@businessmirror.com.ph

A pre-Sona high for the President

Divine wisdom and mercy Msgr. Sabino A. Vengco Jr.

Alálaong Bagá

Ariel Nepomuceno

DECISION TIME

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ailed and appreciated before his State of the Nation Address (Sona), President Duterte’s superior showing in recent surveys conducted by both Pulse Asia and Social Weather Stations signifies that his administration has touched a lot of Filipino lives in those aspects that mean to them. He earned a net satisfaction score of +66 higher that his score of +63 in March 2017. An impressive 78 percent of about 1,200 respondents throughout the nation are satisfied with his performance, with just 12 percent dissatisfied and 10 percent uncertain. His overwhelming support came from Classes D and E with +66 and +67, respectively. Interestingly, the President garnered an increase of 3-percentage points from Class ABC. On the other hand, Pulse Asia results demonstrated an approval rating of 82 percent for him, and most of the adulation came from the National Capital Region. Overall, a sensational trust rating for the administration, which included Senate President Aquilino L. Pimentel III and House Speaker Pantaleon D. Alvarez, with 62 percent and 43 percent, respectively. What captures the interest of political observers, both here and abroad, is the fact that Duterte had to grapple with very challenging and difficult issues before these survey results were released. The ongoing rebellion in Marawi City, a controversial declaration of martial law and lingering questions about his health have hugged national headlines. Crime and violence didn’t spare Metro Manila, when an assault by a lone gunman on Resorts World Manila resulted in the death of 38 individuals. Meanwhile, the Bangsamoro Islamic Freedom Fighters staged an attack on a military outpost in North Cotabato just on June 22. These events notwithstanding, we have a President truly appreciated and loved by the ordinary Filipino. This massive support for our Chief-Executive and the political capital that comes with it should be utilized to hasten and fast track the nation’s economic development, despite very worrisome events taking place in the world. Only with a solid economic base can we be sufficiently shielded from the vicissitudes of international politics. With our stable growth rate at 6.4 percent, there are exciting prospects for investors once government spending for infrastructure and other segments are increased for the remaining months of this year. Already, we see our economic managers extremely focused on rolling out several projects. First, the implementation of the tax-reform law is now being rigorously worked out. The Board of Investments, for its part, expects registered investments worth P290 billion before the end of July, as against its target of P500 billion

for the full year. More job generation will result from investment projects that are technology driven, due to the extension of incentives for the importation of capital equipment and spare parts. The National Economic and Development Authority, in coordination with the Department of Finance, is updating the regular foreign investment negative list by allowing 70-percent foreign equity in telecommunications and public utilities. It also plans to lift ownership limitations on education, financial, banking and mass media to attract more players to invest in the country. Furthermore, the Department of Energy is about to launch a new contracting round for petroleum, gas and coal contracts in December 2017. It also seeks to lay the groundwork for the Philippines to be a hub for liquefied natural gas because of our archipelagic advantage. Gladly, we are now hearing the LegislativeExecutive Development Advisory Council endorsing 13 urgent bills to be passed by Congress, ranging from a proposed increase in the tariff for rice imports to replace the quota system, the security of tenure bill, coconut-levy fund utilization, national transport , budget reform, land use, Anti-Cybercrime Act and Public Service Act, among others. The bustling, noisy and feverish activities in the government agencies that take care of our economy are very good signs. Leveraging on a strong presidency and an administration that works on a full cooperation mode may just be the answer to addressing the lingering ills of our nation. Definitely, a big surge in confidence levels before the Sona next week. So stay tuned.

The ECB should be firmer with troubled banks

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he failure of three banks in less than a month has led the European Central Bank (ECB) to wonder whether it needs fresh powers to deal with struggling lenders. Some new tools might prove useful, but they aren’t the main thing. What the ECB needs most is the will to resist political pressure and act promptly when necessary. The recent crisis at Banco Popular, a Spanish lender, showed that the euro zone’s bank regulators can act swiftly when they choose to. Yet, the liquidation of Veneto Banca and Banca Popolare di Vicenza, two Italian lenders, happened only after a prolonged and costly delay. In the end, the Italian government had to commit up to €17 billion to persuade Intesa Sanpaolo, a rival lender, to acquire the good assets of the two banks. Evidently, the regulatory system still needs work. European supervisors want to be able to force banks to increase their provisions and raise more capital when the regulators deem it necessary. The so-called Single Supervisory Mechanism can already ask for this, but lenders can often deflect the demand. Stronger powers could, indeed, help in such cases— though they won’t make much difference

with the most urgent problems, where banks are on track to fail regardless. There, the ECB has to strike a balance. It should act as early as possible to prevent a crisis from dragging on, which would only add to the eventual costs; but it also needs to be sure that a bank is “failing or likely to fail”, or else it will face legal challenges from investors who’ll lose money when the bank is wound up. In practice, political pressure is brought to bear, as well, weighing in on the side of undue delay. The ECB needs to lean against that. And it should keep something else in mind. Banking is an increasingly competitive business, disrupted by new entrants and technologies. The market is less forgiving than it used to be, so turning around a troubled bank is more difficult than before. Supervisors ought to be suitably skeptical when reviewing the business plan of a bank on the brink of failure, and should always insist that a troubled bank raises all the capital it’s likely to need, rather than settling for less. Getting those judgments right will require clarity and determination more than new powers. Bloomberg View

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ocusing on the first and longest parable in the gospel reading (Matthew 13:24-43), the presence of weeds among the wheat portrays the perplexing situation in the reign of God, just as among Christians today the presence of sinners in the world and in the Church is a big challenge.

Children of the evil one The Son of Man is the one who sows good seed in the world in establishing the reign of God. The good seed are the children of the kingdom. But the enemy comes under cover of darkness to sow weeds among the good seed; it is the devil at work spreading his own children. Good grain and weeds in the same field; murderers, plunderers, drug-pushers, shameless religious leaders in the kingdom of God, threatening perdition even to all the good people. A familiar scenario both in society at large and also in the Church. Some people naively think that God as the creator of this world

should have arranged things better, like having all sinners eliminated early on and maintaining an evil-less universe. So, they conclude that there is really no God or that God is not really good or all-powerful. Since evil is not eliminated, they would rather eliminate God. Many still have to understand that because God is good and omnipotent, He alone conceives of the humankind in His likeness with the calling to His divine love and with the freedom that it takes. As with His angels, so with His human beings: the fundamental freedom they have in order to be able to love is necessarily the freedom that can also lend itself to what is evil.

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Let them grow together IN the kingdom of God where there is always the interplay between divine initiative and human freedom, the end is never in doubt. Relentlessly, the will of God will be done; the completion of the work of Christ in the eternal reign of God will come. Meanwhile, people listen or reject God’s word as they will. We will always have scammers, egoistic and violent individuals who can gleefully watch the city burn for a song, side by side with heroes who labor assiduously for the good of the many and willing to accept sufferings in defiance of evil. Our need to separate one from the other is not always possible or easy; we go by appearances and ourselves oft tainted or otherwise motivated. God has a different take on this: We should not risk taking out the good as well in uprooting the weeds. Human justice is not the last instance for the good or against evil. We are only too familiar with the inadequacies of our justice system, where the powerful can flaunt the law and wiggle out of culpability, and where the innocent can rot in blatant injustice or be simply rubbed out in utter inhumanity. We are more and more aware that what is said among

us as legal and correct is not always truly moral and right in accord with God’s will. God does not rush to sort out the weeds from the wheat. He is only too aware that we all need time for growth and conversion. There is proper time for judgment. In the light of the divine mercy, life on earth should be one of always available second chance. Alálaong bagá, God’s patience and indulgence arise from His wisdom and mercy that in time never gives up hope on us, even as to the very end, He provides the grace that can work miracles. Waiting is not inaction but unyielding charity to all. When people are murderously impatient with those perceived to be evil, they clearly are so sure of themselves and of their understanding of things that they forego of the safety net of our ground rules of God-given human rights and dignity. And when they play impatient gods instead of listening to divine wisdom and mercy, they end up devoured by the mindless tiger they choose to ride. Join me in meditating on the Word of God every Sunday, from 5 to 6 a.m. on dwIZ 882, or by audio streaming on www.dwiz882.com.

Agrarian crisis: Winning, losing under globalization Dr. Rene E. Ofreneo

LABOREM EXERCENS Continued from A1 “There are some who believe that simply opening markets on a global scale is the be-all and end-all, no matter how it is done or no matter who benefits. I subscribe to a different view. It is imperative that we open markets in a manner consistent with the rules of the WTO, but we must make sure Americans benefit directly from this process, and to do that Americans must drive the rules of the new global landscape and the opening of markets. There is simply no other way to protect our jobs, our vital trading interests or our global leadership on trade.”—Testimony given by US Trade Representative Charlene Barshefsky, March 18, 1997.

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he above American position on the need to promote, preserve and protect American interests in global trade is similar to the position of the European Union (EU) in the AOA and other trade negotiations. Like the United States, the EU refused to phase out the huge price support it has been giving to European agricultural producers under the EU’s Common Agricultural Policy (CAP). At the same time, both the EU and the United States have been pressuring other member-states to open up or liberalize markets in the name of the World Trade Organization’s (WTO) AOA. In the Cancun Ministerial Conference of the WTO, the EU unabashedly came up with nontrade arguments in support of its position, stating that agriculture is part of their history, part of their culture and part of their civilization. Hence, they cannot afford to stop supporting agriculture even as they have been pushing for the opening up of agricultural markets everywhere. The foregoing US and EU stance —insisting on market opening for all countries and yet maintaining protection for their domestic producers—explains why the WTO negotiations for a new round of trade liberalization have been bogged down for one-and-a-half decades. The problem is that the Philippines has taken a relatively passive stance on its trade negotiations with the WTO. In fact, we undertook a program of unilateral agricultural deregulation program (under the WB’s SAP program of the 1980s) long before we joined the WTO in 1995. Likewise, we adopted a program of agricultural tariff reduction ahead of the formal tarrification of the sector as mandated by the WTO. Our actual tariff reductions in both industry and agriculture were also much lower than our bound commitments to the WTO compared to those of Thailand and other countries. This unilateral trade liberalization has been reinforced subsequently by the bundle of trade liberalization agreements under the WTO, Asean, Afta/AEC, and the numerous bilateral and regional FTAs concluded or being concluded by the Philippines with various countries. The agricultural deregulation/ liberalization program, in place for nearly three decades, is clearly a failure, as reflected in our own statistics

on exports, production and so on. But with tariffs now down to 0 to 5 percent and the last remaining restricted item, rice, now due for tarrification, what can the Philippines do now? The answer is still a lot. But first, our policy-makers should recognize the bankruptcy of the neoliberal idea that market opening and liberalization automatically usher in competitiveness and eventually growth. It does not happen this way. Whether the market is liberalized or not, we have to work our way up, that is, build up domestic capacity step by step, e.g., technology adaptation, skills development, market mastery, etc. As mentioned, globalization is war, war among the most efficient and competitive. However, the most efficient and competitive industries in the world happen to be the ones enjoying government support and assistance from their own government. For examples: EU agricultural producers get support from the CAP and European phytosanitary standards, US farm sector receive annual subsidies from the US Farm Policy, and Thai farmers are guaranteed price support, subsidies and a myriad of government assistance. In the case of the Philippines, similar support programs for the farm sector—irrigation, credit, market assistance, etc.—are either missing or are

The problem is that the Philippines has taken a relatively passive stance on its trade negotiations with the WTO. In fact, we undertook a program of unilateral agricultural deregulation program (under the WB’s SAP program of the 1980s) long before we joined the WTO in 1995.

getting paltry budgetary allocations, or worse, even hijacked by the con artists inside and outside the bureaucracy. In addition to the foregoing, the Integrated Rural Development Foundation has come up with the following specific doables: First, on the rice issue, the government should not waste so much time discussing the repercussions of the so-called end of the rice quota. Instead, the focus should be on how to strengthen the rice sector. For example, instead of privatizing the National Food Authority, the government should strengthen its bufferstocking capacity (at least 90 days) and palay procurement program (at least 20 percent of national output). This should be complemented with the program of modernizing rice culture the organic way (such as the rice intensification method) backed up by integrated extension, input and credit assistance similar to what the Masagana 99 did in the mid-1970s. The belief that the international market will deliver for the Philippines food stability is simply false, given the reality that only around 7 percent of rice production in the world is traded internationally. The appropriate policy for rice in the medium and long term is to abandon the policy of perennial importation and start redirecting all efforts on rice self-sufficiency and making rice farming profitable for the rice producers, with all the support they can get from the government. Second, the Philippines should take a strong stand against smuggling and unfair trade practices. Catch the smugglers, not only the smuggled agricultural products, and haul them to prison. Overhaul the inept or corrupt Bureau of Plant Industry, an institution that gives import permits, usually after the harmful products have already arrived. Adopt the Australian phyto-standard examination procedures to weed out vegetables and other products being dumped by China and other countries. Make full use of the safeguard laws as routinely practiced by other countries. If the viability of any sector in agriculture is threatened because of dumping of subsidized products and smuggling

(whether outright or technical), the government should immediately impose the following as emergency measures: tariff adjustment upward even beyond the current bound levels; reimposition of quantitative restrictions; and application of specific duties. Third, the Philippines should convene a multisectoral group composed of farmers, civil-society organizations, Church and other stakeholders in a review of the WTO and the various bilateral and regional FTAs. The idea is to show the positive and negative impact of these agreements and determine appropriate remedies to the deleterious consequences of these agreements. The bilateral and regional FTAs should be given special attention because these agreements generally go beyond the trade liberalization agenda of the WTO, for example, the strong emphasis on protection for intellectual property rights of the investing multinationals (MNCs) without giving importance to the protection needed by the people against bad technology, such as GMO and monopoly situations created by the MNCs. Fourth, at the global level, the Philippines should fight for fairness in the system. It must call for the abolition of distorting subsidies provided by developed countries to their domestic producers. The irony is that, while the developed countries allocate two dollars of subsidy for each cow a day, many poor people in the developing nations live on just one dollar a day. Our negotiators must advocate the principle of the special and differential treatment (SDT) as the guiding principle governing global trade. The SDT, mentioned over 100 times in the WTO agreements, recognizes the reality that not all countries are of the same level of development; hence, less-developed countries should have more flexibility to make adjustments in a globalizing economic order. The food security/agricultural sovereignty amplified earlier should be the primary consideration in the formulation of SDT guidelines and in negotiating old and new trade agreements. In summary, the aimless and mindless agricultural liberalization should be cast aside in support of a clearer program focused on enhancing the country’s food security/agricultural sovereignty and strategizing the overall position of the Philippines not only in the global market but also in the deregulated and liberalized home market. Hopefully, the Duterte administration, in its second year, can develop a more focused program on how to rebuild agriculture while asserting Philippine agricultural interests in both the domestic and global markets.

2nd Front Page BusinessMirror

A12 Thursday, July 20, 2017

DOE’s ‘Causers Pay Policy Program’ to start within the year

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By Lenie Lectura

@llectura

he Department of Energy (DOE) will no longer allow “negligent and incompetent” power-industry players to pass on to consumers the additional costs incurred in sourcing higher priced electricity when a power outage occurs. Energy Undersecretary Felix William Fuentebella said this will be the objective of the DOE’s soonto-be-released policy, dubbed as the “Causers Pay Policy Program”. Under this new policy, Fuentebella said the DOE will pass on the burden of shouldering the incremental cost to the generation companies (gencos), distribution

utilities (DUs) and the National Grid Corp. of the Philippines (NGCP), “if the cause of the outage is intentional on their part, if they were negligent or incompetent”. “This is a proposed policy that we will seriously look into together with the ERC [Regulatory Commission] and have it tested. Basically, it will be determined if the cause

Fuentebella: “We want them to be held liable. They are accountable for incidents which could have been averted.”

was intentional or not, if there were lapses on their part that led to the outage, which could have been avoided in the first place,” Fuentebella said, on the sidelines of the two-day forum on Philippines Power and Electricity Week. The proposed policy would be formalized through a memorandum circular, which is targeted for issuance within the year. While the penalty is yet to be firmed up, the DOE official said the

responsible party would be made to pay for the incremental cost of electricity. For instance, when a power plant conks out and the DOE was able to determine that there was negligence on the part of the plant operator, the operator must shoulder, among others, the cost related to sourcing a more expensive fuel source, instead of passing on this cost to the consumers. “We want them to be held liable. They are accountable for incidents which could have been averted,” the DOE official added. However, if the sudden power outage incident was caused by unforeseeable circumstances, such as natural calamities, the concerned parties would not be panelized. “Force majeure events are not included,” Fuentebella said.

BGC-ORTIGAS CENTER LINK (From left) Vicencio Dizon, president and CEO of the Bases Conversion and Development Authority, Department of Public Works and Highways (DPWH) Secretary Mark Villar, Taguig City Mayor Lani Cayetano, Department of Transportation Secretary Arthur Tugade, Metro Manila Development Authority chairman Danilo Lim, and Engr. Marlon Caparas, representative of the City of Pasig lead the groundbreaking ceremony for the Bonifacio Global City (BGC)-Ortigas Center link road project of the DPWH. The 961.427-lineal meter BGC-Ortigas link involves the construction of a four-lane Sta. Monica to Lawton Bridge across Pasig River connecting Lawton Avenue in Makati City and Sta. Monica Street in Pasig City. The project also includes the construction of a viaduct structure that will traverse Lawton Avenue to the entrance of the BGC. ROY DOMINGO

CA trashes Sunvar plea on ‘Mile Long’ ruling Continued from A1

City, Branch 61.” It can be recalled that MeTC Makati City 61 Brach granted on June 10, 2015, the complaint for ejectment filed by the government against Sunvar and ordered the company to vacate the 2.9-hectare property between De la Rosa and Arnaiz streets and parallel to Amorsolo Street in Legaspi Village. The MeTC also directed Sunvar to pay the government back rentals as of May 2015, amounting to P478.2 million, with monthly rental of P3.2 million beginning June 2015 until it vacates the premises. Sunvar, however, filed a petition for injunction before the Makati RTC Branch 59. The government elevated the issue before the CA after the RTC in Makati denied its petition seeking the dismissal of the petition for injunction filed by Sunvar.

The government insisted that the RTC in Makati should have dismissed Sunvar’s petition on the ground of forum shopping. Aside from the preliminary injunction petition filed before the Makati RTC Branch 59 (Civil Case 15-759), Sunvar also filed an appeal with Makati RTC Branch 141 on the MeTC decision docketed as Civil Case 15-958. After a motion to consolidate was granted, Makati RTC Branch 59 took cognizance of both cases. Subsequent ly, Ma k ati RTC Branch 59 issued a joint decision on May 7, 2016, dismissing the petition for injunction and disposed Civil Case 15-958 by ruling to set aside the June 10, 2015, decision and to refer the said case to arbitration pursuant to the agreement of the parties as embodied in their contract. In upholding its January 2017 decision, the CA insisted that

Makati RTC Branch 59 has no jurisdiction over the two cases. It noted that Sunvar violated the Rules on Summary Procedure, which provides for the remedy of appeal to the appropriate RTC. “We reiterate our stand that consolidation of the two cases cannot be allowed for the reason that the RTC Branch 59 has no jurisdiction over Civil Case 15-759,” the CA ruled. “With the consolidation being declared improper, the RTC in Makati City, Branch 59 cannot exercise jurisdiction over Civil Cases 15-759 and 15-958 and consequently resulting joint decision, which it issued is void and carries no legal effect,” the CA stressed. It held that Makati RTC Branch 141, where the appeal of the main case was originally filed before it was consolidated with the case before Makati RTC Branch 59, should

be the one to hear and decide on its merits. “Circuitous as it may appear, but we are dealing with the issue of jurisdiction. Then again, jurisdiction is not a mere matter of form or technicality. Jurisdiction exists as a matter of law, and may not be conferred by consent of the parties or by estoppel…,” it added. In its complaint for ejectment, the government and the National Power Corp. accused Sunvar of refusing to vacate the subject property despite the lapse of the ultimatum given to the latter. The property is at present being leased out by Sunvar to the operators of Premier Cinema, Mile Long Arcade, Makati Creekside Building, The Gallery Building and Sunvar Plaza. Other portions of the subject property, however, remain as open spaces, profitably utilized as parking area for customers and guests.

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World champion is PHL’s new‘envoy’ for freediving By Ma. Stella F. Arnaldo

@akosistellaBM Special to the BusinessMirror

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N a bid to promote the Philippines as a top freediving destination in Asia, celebrity freediver Guillaume Néry was annointed by the Department of Tourism (DOT) as its new “ambassador” for freediving. This developed as the government agency collaborated with Freediving Planet, a freedive operator based in Hong Kong, on a monthlong freediving expedition in the country for Néry, who gained celebrity status outside the diving community after starring in DJ Naughty Boy’s music video of the 2015 hit, “Runnin’ (Lose It All),” featuring Beyoncé and Arrow Benjamin. In the video, Néry is seen running on the ocean floor without a breathing apparatus. As part of the monthlong expedition, Néry will be touring Mactan, Moalboal, Malapascua, Coron and El Nido, as well as freedive with the Badjaos now living in Davao. The Badjaos, an ethnic group in Mindanao, also called “sea gypsies”, are well known for holding their breath for long periods of time underwater while deep-sea diving and hunting for pearls. In a news statement, Tourism Secretary Wanda Corazon T. Teo said: “To have a world-renowned figure like Guillaume Néry on board is both a privilege and opportunity for the country, helping us position ourselves better in Asia’s diving industry of the region.” Néry has beaten several world records in freediving, the last in 2013 with a dive to 123 meters deep in Toulouse, France. He has also produced and starred in films such as Free Fall (2010), and the epic Narcose (2014), which shows the hallucinations one may experience in freediving. In his speech on “The Exhilirating Peace of Freediving” at TED Talks in January 2016, Néry talked about what happens to the body

in a freedive and why he keeps practicing the sport: “That’s how I feel when I’m at the bottom, at 123 meters. I feel like a small dot, a speck of dust, stardust, floating in the middle of the cosmos, in the middle of nothing, in the immensity of space. It’s a fascinating sensation, because when I look up, down, left, right, in front, behind, I see the same thing: the infinite deep blue. Nowhere else on Earth you can experience this—looking all around you, and seeing the same thing. It’s extraordinary. And at that moment, I still get that feeling each time, building up inside of me‚ the feeling of humility.” (http://bit.ly/1n754T6) On Wednesday Nery conducted a freediving yoga class, which was open to the general public, a press conference, film viewing of his notable works, as well as a meet-and-greet at Shangri-La’s Mactan Resort & Spa, in celebration of the grand opening of the resort’s marine sanctuary. A filmmaker and an environment advocate, Néry also held a freediving workshop in Mactan in cooperation with Freedive HQ, a Franco-Philippine freedive operator, based in Lapu-Lapu City, Mactan. He has another workshop in Moalboal (August 4 to 6), Freediving Planet’s dive center. The three-day workshops are full immersion courses that will cover the basics of freediving, including yoga, deep breathing exercises, as well as practical sessions (dry practice, pool and open water). “Nearly 1 million square miles of sea covering major parts of the Coral Triangle, which is home to more than 2,500 species of fish and over 500 species of coral, comprise the Philippine waters. Our extraordinary array of marine life and calm waters make the Philippines an ideal place for more tourists to learn or practice freediving,” Teo said. Néry will also be joining the DOT in future international dive shows and exhibitions to engage and invite more freedivers and diving enthusiasts to visit the Philippines.

Duterte signs expanded Amla By Elijah Felice E. Rosales

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@alyasjah

resident Duter te has signed into law the inclusion of casino operators in the coverage of Republic Act (RA) 10927, or the Anti-Money Laundering Act (Amla). Unanimously approved by the House of Representatives and Senate, Duterte enacted the amendments to RA 10927, which now includes casinos, Internet and shipbased gaming sites with respect to their casino-cash transactions related to their gaming operations. “A single casino-cash transaction involving an amount in excess of P5 million or its equivalent in any other currency” is now covered for scrutiny by the Anti-Money Laundering Council (AMLC). Under the law, the Court of Appeals (CA) may issue a 20-day freeze order against a suspected unlawful activity of a monetary instrument or property. It added the CA should hold a summary hearing, with notice to the parties, to determine whether to modify

ESPENILLA: “It plugs a critical gap in our legal framework. It will significantly strengthen our ability to prevent the entry of illicit money into our economy.”

or lift the freeze order. “The total period of the freeze order issued by the Court of Appeals under this provision shall not exceed six months,” the amended RA 10927 read. The expanded Amla will be presented to the Asia-Pacific Group and the Financial Action Task Force, international watchdogs tracking money-launderitng activities. Sen. Francis G. Escudero, chairman of the Committee on Banks and Financial Institutions, said the coverage of the AMLC will be “more comprehensive” under the revised Amla. The inclusion of casino operators in the coverage of RA 10927 is one See “Amla,” A2