Businessmirror July 20, 2018

media partner of the year

United nations

2015 environmental Media Award leadership award 2008

BusinessMirror A broader look at today’s business

www.businessmirror.com.ph

n Friday, July 20, 2018 Vol. 13 No. 279

DOF sending all CTRP measures to Congress A By Rea Cu

@ReaCuBM

LL packages under the Duterte administration’s Comprehensive Tax Reform Program (CTRP) would have been submitted to Congress by the end of the month, according to the Department of Finance’s (DOF) timeline.

DOF Undersecretary Karl Kendrick T. Chua told financial reporters on Thursday that, by the end of July, all proposals under the CTRP would have been submitted to Congress for assessment and review. “By the end of the month , all packages [comprising the CTRP would

be in] Congress already. We have proposed and prepared everything, so it’s up to them to hear it and pass it as they see fit,” Chua said. He explained that, while the third and fourth packages of the CTRP are still pending for submission within July this year, other

proposals tackling measures under Package 1B, Package 2 and Package 2 plus are already being discussed in both houses of Congress. “You know, there [would have been] at least six packages already in Congress by August, and we would have submitted all. That’s a big load

“By the end of the month, all packages [comprising] the CTRP would be in] Congress already. We have proposed and prepared everything, so it’s up to them to hear it and pass it as they see fit.”—Chua

for Congress,” he added. He said the DOF is hoping for three measures to be approved by Congress within the year, with two measures under the CTRP, namely Package 1B and Package 2, and the other being the Rice Tarrification Act. “So it really depends on how Congress will prioritize...but I am very hopeful that at least they pass the three that are already in the hearing stage—the amnesty, See “DOF,” A2

PHL disbursement rate for ODA improves by 11.5%, says Neda

See “ODA,” A2

A.D.B. HIKES INFLATION FORECAST FOR 2018 By Cai U. Ordinario @cuo_bm

T

HE Asian Development Bank (ADB) raised its inflation forecast for the country due to the spike in the country’s inflation in June and the government’s taxreform program. In its Asian Development Outlook Supplement (ADOS), the ADB said it now projects inflation to reach an average of 4.3 percent by year-end instead of the earlier forecast of 4 percent. The adjustment was due to the increase in inflation, which reached 5.2 percent in June 2018 because of higher fuel prices and “sporadic shortages of key food items,” and the impact of Tax Reform for Acceleration and Inclusion (TRAIN) on commodity prices. “This outcome combines with expectedly high global oil prices, peso depreciation and strong domestic demand to prompt this Supplement to

PESO exchange rates n US 53.4690

4.3% The average inflation by yearend as newly projected by ADB, up from 4 percent

revise the inflation forecast for 2018 to 4.3 percent, from the ADOS 2018 forecast of 4 percent,” the ADB said. “Higher excise taxes on fuel and some commodities as part of the Tax Reform for Acceleration and Inclusion Act, which took effect in January 2018, are contributing factors,” it added.

No impact on 2019 However, the ADB said the impact of the TRAIN will not extend to 2019. This is why the ADB maintained its inflation forecast for 2019 at 3.9 percent in the ADOS. The ADB See “ADB,” A2

Toyota pins hope on new Vios amid challenge from weak peso, TRAIN law

T

Different brands of cars are seen on a parking lot in Makati City in this file photo. Reports said the automotive industry has seen its first-semester sales go down by 12.5 percent, and the country’s leading car manufacturer said the weak peso, inflation and the impact of the TRAIN law was hurting its bottom line. The next wave of tax reforms includes more bad news: an increase in the controversial road user charge. NONIE REYES

business news source of the year

P25.00 nationwide | 6 sections 32 pages | 7 days a week

By Elijah Felice E. Rosales

E

FFORTS to fast-track the government’s infrastructure spending have apparently borne fruit as the country’s official development assistance (ODA) disbursement rate improved in 2017, according to the National Economic and Development Authority (Neda). In a statement on Thursday, the Neda said the country’s ODA disbursement rate grew 11.5 percent to $1.4 billion in 2017. As a percentage of target, the disbursement rate was at 67.21 percent in 2017. “ This means implementing agencies are improving their technical capacities and making headway in resolving key issues that cause delays in the execution of

2016 ejap journalism awards

@alyasjah

HE country’s leading car manufacturer stands to lose P1 billion in additional costs if the peso weakens further in the second semester. However, Toyota Motor Philippines Corp. is optimistic its new Vios, enrolled under the Comprehensive Automotive Resurgence Strategy program, will help the firm recover its sales in the closing half of the year. The TMP on Thursday launched its CARS-registered Vios, a version of the popular vehicle brand that is 40 percent made of local parts. The Vios is TMP’s enrolled model to the Cars program, the government’s time-bound and

performance-based fiscal support intended to attract investments in the local production of vehicles and parts. Total allocation for the program is at P27 billion, and each enrolled model can obtain up to P9 billion of fiscal incentives. TMP applied the Vios to the program in 2016, and vowed to produce, as a matter of contract, 200,000 units of the model for the next six years beginning this year. It invested P5.53 billion for the localization project. “Much of this model is proudly made in the Philippines, a total of 352 individual parts, 22 percent higher than in the previous Vios. This localization is the result of P5.53 billion in investments by TMP and local suppliers, which See “Toyota,” A2

n japan 0.4739 n UK 69.8840 n HK 6.8117 n CHINA 7.9561 n singapore 39.1829 n australia 39.5510 n EU 62.2326 n SAUDI arabia 14.2576

Source: BSP (19 July 2018 )

News

BusinessMirror

A2 Friday, July 20, 2018

www.businessmirror.com.ph

PHL may not achieve 46% of medium-term goals: PSA

As Caloocan widow is slain, bishop urges flock to stay strong

HE Duterte administration may not be able to achieve 46 percent of its medium-term targets by 2022, according to the Philippine Statistics Authority (PSA).

T

T

By Cai U. Ordinario

@cuo_bm

In its 2017 Statistical Indicators on Philippine Development (StatDev) report, the PSA said around 54 percent of the country’s medium-term targets may be achieved by 2022. The PSA also said targets in ag r ic u lt u re, gover n a nce a nd shelter have a low likelihood of being achieved. “Among the fourteen sectors, eleven have at least 50 percent of their respective indicators exhibiting high or medium likelihood of achieving the target in 2022,” the PSA said. The PSA explained StatDev 2017 contains 257 indicators covering the 14 publicly available

Philippine Development Plan (PDP) sectoral chapters. Considering the latest available data one year or so following the baseline year, the PSA said 111 indicators show high likelihood; 29 show medium likelihood; and 117 show low likelihood of achieving their respective targets by 2022. In terms of the targets in Agriculture, Forestry and Fisheries (AFF), the PSA said only two of the 13 major crops—sugar cane and palay —posted high or medium likelihood of being achieved by 2022. The PSA also said that in terms of the objective to provide technical support services for perennial crops, only the provision for

ADB. . .

DOF. . .

said the recent decision of the Central Bank to hike key rates will also stem the increase in inflation. The Bangko Sentral ng Pilipinas (BSP) raised its policy rates in May and June by 50 basis points, bringing the overnight reverse repurchase rate to 3.5 percent. The BSP decision is also seen to help stabilize economic growth rate this year and next year. The ADB has maintained its growth forecast for the Philippines this year and next year. Based on the ADOS, the country is still on track to post a growth of 6.8 percent and 6.9 percent in 2018 and 2019. “Recent trends align with expectations of strengthening investment and domestic consumption,” the ADB said. The massive infrastructure program counts among the factors that will keep the country on track to post growths of over 6 percent this year and next year. The ADB also highlighted higher investments in human capital through lower taxes, as well as higher social service spending. The report said public construction grew by 25.1 percent and government consumption increased by 13.6 percent. The ADB said data showing unemployment slowed to 5.5 percent in April 2018, from 5.7 percent in April 2017, will boost household consumption. “Public spending on social services and infrastructure will be supported by better budget execution and higher revenue mobilization,” the ADB said. “As part of the ongoing tax reform, a reduction in personal income tax for most of the work force will boost disposable income and consumption,” it added. The President’s economic team hopes the country’s GDP growth in the second quarter will reach 7 percent on account of the “Build, Build, Build” (BBB) and rice tariffication. In a recent briefing, Socioeconomic Planning Secretary Ernesto M. Pernia told reporters the BBB will boost employment and incomes while the lifting of the country’s quantitative restriction (QR) on rice will give households some reprieve when it comes to food prices. Higher incomes and less expenses, particularly food expenses, will both boost household spending. This is crucial for a consumption-driven economy like that of the Philippines. Other growth drivers on the demand side include the completion of the government’s cash transfers, particularly the unconditional cashtransfers and the Pantawid Pasada, which are directed toward workers and drivers affected by the TRAIN.

the rice tariffication and Package 2. Those three are the minimum that we hope that Congress can pass this year, then the rest can follow,” he said. Under HB 4904 or the ricetariffication bill is the proposal to amend the Agricultural Tariffication Act of 1996, prescribing import volumes to be removed and imports to be opened to private entities. In June the DOF, along with the other members of the Duterte administration’s economic team, had pointed out that the best way to address the rising inflation rate is for Congress to, among others, approve the Rice Tariffication Act as this would bring down prices of rice by around P7 per kilo and reduce inflation to below 4 percent by the second half of 2018. In the House of Representatives, House Bill (HB) 4815 on estate tax amnesty was passed on final reading last year. Still pending is HB 7105 which focuses on general amnesty. Both amnesty provisions are under Package 1B of the CTRP. Finance Secretary Carlos G. Dominguez III earlier expressed hope of Congress passing the bills on the amnesty measures by the second half of the year for the

Continued from A1

Continued from A1

Toyota. . .

Continued from A1

represents our collective contribution to the country’s long-term economic growth,” TMP President Satoru Suzuki said in a speech.

Difficult time

In a separate news briefing, Suzuki admitted TMP needs all the boost it can get from its products in rebounding from its first semester sales decline. He argued the current market situation—accelerating inflation, weakening of peso and the imple-

ODA. . .

Continued from A1

programs and projects,” Socioeconomic Planning Secretary Ernesto M. Pernia said. The Neda said the Philippines’s total outstanding ODA portfolio for the full year of 2017 reached $14.72 billion.

2

The number of major crops—in a total of 13—that posted high or medium likelihood of being achieved by 2022 rubber and cacao showed high or medium likelihoods while the rest have low likelihoods of being met in the medium term. In terms of governance, the PSA expressed concern that the country’s ranking in global indices have remained stagnant, if not decreased. Despite efforts to increase transparency in many local government units, the country’s rankings in the World Governance Index, Corruption Perceptions Index

government to be able to implement it by April 2019 in time for the tax-paying season. Measures under Package 1B include increasing the motor vehicle users charge, an estate tax amnesty program, as well as a measure on general tax amnesty, amendments to the bank secrecy law, and automatic exchange of information. “[The six proposals are] Package 1B which is the amnesty, Package 2, Package 3, Package 4, then there’s 1B for the motor vehicle [users charge], and the last is [Package] 2 plus which is the alcohol, tobacco, mining...,” he said.

and Global Competitiveness Index have not improved. In terms of shelter, the current administration’s targets have a low likelihood of being achieved i n t h e m e d iu m t e r m g i v e n recent developments. “The increase in the proportion of socialized housing targets met and the number of socialized housing units delivered in 2017 showed low likelihoods of achieving the Plan target,” the PSA said. The country has a medium likelihood of achieving targets on reaping the demographic dividend; science and technology; competitiveness; infrastructure; culture and values; and social protection by 2022. The Philippines, however, has a high likelihood of achieving targets on the macroeconomy; justice; human capital development; industry and services; and environment in the medium term. The StatDev is a statistical indicator system that provides a comparison of actual sectoral accomplishments with the corresponding targets indicated in the PDP 20172022 Results Matrices.

Chua pointed out that the measure on increasing the motor vehicle users charge is now in the technical working group (TWG) stage in the House of Representatives, with the proposal having three measures: the increase in the rate, organization of the road board, and the road fund reform. Package 2 of the CTRP, which aims to reduce corporate income tax rates from 30 percent to 25 percent while rationalizing the country’s fiscal incentives regime, was submitted by the DOF to Congress in January this year. The measure is under HB 7458 at the House of Representatives. Package 2 plus of the CTRP contains measures on further increas-

ing rates for tobacco products as well as alcoholic beverages and mining taxes, among others. The DOF earlier said it is supporting Senate Bill 1599 filed by Sen. Emmanuel D. Pacquiao in terms of increasing tobacco excise tax rates. SB 1599 proposes to revise the “sin” tax law and double the excise tax on cigarettes from the current P30 per pack to as much as P60 per pack with an annual increase of 9 percent from the initial 4 percent. “[For] tobacco we are already supporting Manny Pacquiao’s bill, we don’t need to submit. Alcohol we submitted already; it’s being reviewed by both houses; mining we also submitted already, so it’s being reviewed by both houses. We’ll wait for them to review and file,” he added. Earlier in the month, Dominguez told financial reporters that the DOF will be submitting within the month Packages 3 and 4 of the CTRP, with Package 3 tackling the single valuation for real property, and Package 4 focused on financial taxes. The finance chief pointed out that both packages are revenueneutral. Under Package 3, the DOF wants land or property valuation to follow international standards, while the department wants to simplify the number of financial taxes being imposed on financial instruments in the country.

mentation of the Tax Reform for Acceleration and Inclusion—made it doubly difficult for TMP to grow from January to June. Asked how much TMP stands to lose if the peso continues to plunge, Suzuki said “for one year, I think P1 billion.” He explained TMP still equips the majority of its vehicles with imported parts; as a consequence, it is at the short end of the stick with an unstable currency. To cope with the gloomy outlook of the economy, TMP had to increase prices of several cars by P5,000 to as much as P50,000 in the first six months of the year, Suzuki added. For his part, Trade Secretary

Ramon M. Lopez challenged TMP to overcome the challenges of the economy, and widen its employment base with the introduction of the new Vios. He said he hopes to see the Toyota Special Economic Zone, TMP’s manufacturing plant and head office, employ as many as 10,000 workers from its current 3,000-strong work force. Lopez also invited TMP to participate in the government’s program to modernize public-utility vehicles. Last, he told the firm to take up the challenge of leading the country’s bid to become an automotive manufacturing hub in Southeast Asia.

Based on the ODA Portfolio Rev iew, this amount is composed of 70 loans worth $12.30 billion and 352 grants worth $2.42 billion. The infrastructure sector continued to receive the largest share of the total ODA at $6.62 billion, accounting for 45 percent of the total amount, followed by social reform and community development at 26.11 percent.

Japan top provider

Motor vehicle users charge

Meanwhile, Japan remained the top provider of ODA to the Philippines in 2017. Its loans and grants for 2017 stood at $5.33 billion, accounting for 36.18 percent of the country’s total ODA portfolio. It was followed by the World Bank with $3.07 billion or 20.88 percent, and the Asian Development Bank with $2.97 billion or

By Samuel P. Medenilla @sam_medenilla

HE vice president of the Catholic Bishops’ Conference of the Philippines (CBCP) rallied the faithful on Thursday to become shepherds of their community to guard against extrajudicial killings (EJK). Bishop Pablo Virgilio David made the appeal during his homily at the second day of the fifth Philippine Conference on New Evangelization (PCNE). On Wednesday David said he got a text message that 27-year-old Jennifer Taburada, one of the widows of the extrajudicial killings in his diocese in Caloocan, was shot dead by masked gunmen. He lamented the growing indifference in local communities, where people tolerate such killings. “Believe it or not I already hear whispering—‘maybe she is into drugs, that is why she is killed.’ It is like it is justified. That deadens the consciousness and the conscience, as well,” David said. Taburada was the wife of Ryan Taburada, who was also murdered by death squads last year amid the government’s campaign against illegal drugs. The gunmen then proceeded to a nearby block and killed 36-yearold Alvin Teng. David expressed his frustration at how the police were not able to immediately respond to the incident. “The killers were not even rushing. They took their sweet time. They moved to another street, just a few blocks away and killed another one,” David said. “If the police wanted to pursue them, they could have, because they stayed for four hours,” he added.

Becoming shepherds

David admonished himself for being a “bad shepherd” for failing to protect another member of his “flock.” “The wolves have been prowling the streets and alleys of Caloocan, Malabon and Navotas. They have killed hundreds already, and I am unable to protect them with my life,” David said. The incident, David said, made him realize how each member of the community should become like Jesus Christ, the good shepherd, to guard the community against those who will harm it. He said each member of the community should be ready to offer themselves for others like Jesus. “Never shepherd your f lock alone. It is only by uniting yourself with your flock that you can grow together into the church,” David said. He said they should be led no less by their parish priests, who should not shrug from the duty of safeguarding their “flock.” “The priesthood is not for cowards; it is not for the fainthearted,” David said. “One of the tasks of the Church is to build communities. And if we are a community, the pain of one member becomes the pain of all others,” he added.

Appeal for aid

Before ending his homily, David appealed to the PCNE participants to offer financial assistance to Taburada’s two orphaned children through the offertory. The over P300,000 collected from the offertory will be turned over to the Birhen ng Lourdes Parish, which has jurisdiction over Taburada’s family.

Palace to Davide: ‘No sense’ in Duterte seeking election as transitory president

M

ALACAÑANG has disputed former Chief Justice Hilario G. Davide Jr.’s claim that President Rodrigo Duterte wants to stay in power as transitory president. Presidential Spokesman Harry L. Roque Jr. said it would have been easier for the President to stay in office by simply not asking the Consultative Committee (Con-com) to change the original transitory provisions in which he was designated as the head of the Federal Transition Commission. “There is no sense” in the President asking that there be an elected transition leader “if he just wants to stay in his post,” Roque said in a mix of English and Filipino. “All he had to do was to stay in office if that’s what he wants. So what Chief Justice Davide is saying is wrong, with all due respect.” Davide, a 1986 Constitutional Commission member, said that Duterte is not barred from seeking to become the transition government head under the transitory provisions of the proposed Charter, although there was a mention that the incumbent president is prohibited from running as President in 2022 elections. Davide warned that the proposal could also pave the way for former Sen. Ferdinand “Bongbong” R. Marcos Jr. to run and win as transitory vice president. Marcos lost to Vice President Maria Leonor G. Robredo in 2016 polls and has sought a recount of votes because he claimed that he was a victim of “massive cheating.” Roque, however, ruled out any possibility that President Duterte will run as

transition president. “He asked that the transition leader be elected, and then he will run as transition leader? It will not simply make sense,” he said. Con-com Chairman and former Chief Justice Reynato S. Puno said in an earlier interview that they changed the original transitory provisions according to the President’s “special request” to include a provision that will bar him from seeking reelection in 2022. Asked if the President will allow no election (no-el) scenario through people’s initiative, Roque said they can’t do anything about it because that’s the nature of people’s initiative. “If it is done through people’s initiative, what can we do if it already came from citizens, right?” he said. Still, Roque said the President wants to see all of his allies not deriving any benefit from Charter change. “He has asked the Consultative Committee to include the provision that would ensure that he will not benefit from Charter change. He would like to see all his allies do the same thing—not to benefit from Charter change, leading by way of example,” he said. House Speaker Pantaleon D. Alvarez earlier asserted that instead of Congress acting as Constituent Assembly, Charter change can be done through the so-called people’s initiative provision in the 1987 Constitution. However, Senate President Vicente “Tito” C. Sotto III said on Thursday that holding a people’s initiative to postpone the 2019 midterm elections will first require an enabling law. Bernadette D. Nicolas

20.16 percent. Of the total 407 projects and programs assisted by ODA loans and grants, 271 projects or 66.58 percent were on schedule while 79 or 19.41 percent were completed. Around 52 projects or 13 percent of the total, on the other hand, were behind schedule while five projects or 1 percent were closed with incomplete outputs.

“We are grateful for all the foreign assistance in the form of grants and loans that we received from our development partners last year. The government’s constant role is to make the most out of these to bring positive impact to the people’s lives and realize our collective development goals as a nation,” Pernia said. Cai U. Ordinario

The Nation BusinessMirror

www.businessmirror.com.ph

Editor: Vittorio V. Vitug • Friday, July 20, 2018 A3

DPWH allots P1.08B to rebuild, retrofit 36 Metro Manila bridges By Lorenz S. Marasigan

W

@lorenzmarasigan

ith the government allotting P1.08 billion to develop bridges in Metro Manila, the Department of Public Works and Highways (DPWH) is ensuring that the reconstruction methods and processes involved in the retrofitting, rehabilitation, and replacement of old and weak bridges in the metropolis is on a par with international standards. DPWH Regional Director for t he Nat ion a l C apit a l Reg ion (NCR) Melvin B. Navarro said the government is employing at least

four guidelines in the implementation of its 36 bridge projects in Metro Manila. These are the following: stan-

dards on bridge design, standards on seismic preparations, bridge specification standards by the American Association of State Highway and Transportation, and the guidelines for submission plans and program works. “To ensure the integrity of the bridges that will undergo retrofitting works, the load capacity of the said bridges is constrained, meaning vehicles that are over the set allowed limit are not allowed to pass through the bridge and are detoured or rerouted,” he told the BusinessMirror. Based on a document sent by the agency, there are 36 bridges in 10 cities in Metro Manila that will be strengthened to conform with the standard design under the agency’s design and seismic guidelines to make them more resilient to national disasters. “Among the priority projects in NCR, we focus on the implement at ion of repa i r a nd re -

placement of bridges that need seismic upgrade. That’s why we have allocated P726.782 million to retrofit a total of 26 bridges, P323.753 million to rehabilitate nine bridges and P25 million to replace one bridge under the 2018 General Appropriations Act,” Navarro said. Bridges that will be retrofitted or strengthened include: AlabangBayanan, Cupang, Insular Bilibid Prison and Lower Buli Bridges in Muntinlupa City; C.P. Garcia and Pasig Boulevard Bridges in Pasig City; Quezon Bridge in Taguig City; Pasong Tamo Bridge in Makati City; Canumay, Polo, Malinta Interchange and Torres Bridges in Valenzuela City; and the Algeciras, Antipolo, McArthur, Muelle dela Industria Bridges, and Nagtahan Link Bridge 1 in Manila City. Culiat Bridges 1 and 2 (Northbound and Sout hbound) and Lagarian Bridge 1 in Quezon City;

Cut-Cut Bridge (Northbound), Cementina. Malibay Bridge 1 and 2 (Northbound and Southbound), and Tramo Bridge in Pasay City; and the Marcos Alvarez Bridge 1 in Las Piñas City will likewise be retrofitted. Major rehabi l itat ion w i l l be i mplemented on t he fol lowing br idges: Ba ra ngca Vi aduct (F lyover), Ma rcos, Ma r i k ina, and Nangk a Br idges in Mar ik in a C it y ; B ut i n g B r id ge a nd C- 5/O r t i g a s I nt e rc h a n g e i n Pasig Cit y; and Delpan, Mabini Br idges a nd Nag ta ha n Flyover in Ma ni l a C it y. The Tripa de Gallina Bridge in Pasay City which is rapidly deteriorating will be totally replaced. He explained that these projects are designed to “ensure that bridges will incur limited damage and will be functional after calamity with structure repair done within short period of time.” Aside from these, there are also

12 other priority bridges that were funded by the 2015 to 2017 budget that are set to be rehabilitated this year to “provide better and safer travel to motorists.” “Bridge projects that involve widening will help ease the traffic…that the volume of vehicles that can pass through are increased and bottlenecks between the bridge approach and bridge will be eliminated,” Navarro said. He added that traffic in the areas where the bridge projects will be implemented will be affected in various levels. “ The construction of these bridges will definitely affect the traffic in those areas where the scope of work of the project is total replacement or reconstruction or widening like Tripa de Gallina Bridge and Marcos Bridge. In cases where the scope of work is only retrofitting, like the rest of our list projects, then it will not affect much,” Navarro said.

PNP beefs up commando counterterrorism capability By Rene Acosta

@reneacostaBM

T

he Philippine National Police (PNP) is beefing up the roster of its elite forces by taking in four more Special Action Force (SAF) class batches in its effort to strengthen its counterterrorism capabilities. This developed even as the United States renewed its support to the government’s ongoing campaign against terrorism by contributing $2.5 million in assistance within the next two years to its counterterrorism efforts. A statement from the US embassy said the assistance would be given to support “nonmilitary rule-of-law approaches” in addressing threats posed by terrorist threats and will complement Washington’s commitment in building the counterterrorism capabilities of the military.

The mission

PNP Spokesman Senior Supt. Benigno Durana Jr. said that no less than Director General Oscar D. Albayalde opened the SAF’s commando course for batches 81, 82, 83 and 84 at Fort Santo Domingo in Santa Rosa City, Laguna. He said the chief of the PNP emphasized the need for the SAF to enhance its operational capability and efficiency in performing its mandate and functions. “These additional forces will be utilized in curbing criminality and terrorism in line with our President Rodrigo Roa Duterte’s order,” Durana quoted Albayalde as saying. The PNP SAF is currently training 1,920 recruits in total to fill up five SAF battalions.

‘Whole-of-govt support’

The US assistance, meanwhile, will include “training, equipment and other support to build comprehensive law-enforcement capacity within a rule-of-law framework to deny terrorist operations, funding and movement.” It would also be given to support efforts in the investigation and prosecution of terrorism cases and counter radicalization to violence and violent extremism. The statement said that as an ally, the US “will continue to provide whole-ofgovernment support and assistance to Philippine counterterrorism efforts” as

both countries works together to address shared threats to peace and security.

Bolder

“WE must be bolder, tougher, stronger and faster than the evil elements we are fighting against. We thus need men and women in the police force who will live up to demands of the job and the expectations of the people we serve and protect,” Albayalde said. The commando recruits will be trained for almost 20 months, and these include the Public Safety Basic Recruit Course, Public Safety Field Training Program and SAF Commando Course. SAF said that the first two battalions will be activated in September 2019, followed by two more battalions in November 2019, while the last battalion would be activated in February 2020. In February this year, the National Police Commission has approved Resolution 2018-027 “Strengthening of the PNP Special Action Force, which the Philippine National Police is tasked to form five more Special Action Battalions.”

Entrapment ops

Meanwhile, two members of the Manila Police District’s (MPD) antidrugs unit were arrested by members of the Camp Cramebased Counter Intelligence Task Force (CITF) during an entrapment operation right inside the police’s headquarters in Manila on Thursday. CITF Spokesman Chief Inspector Jewel Nicanor identified the suspects as PO1 Erdie Bautista and PO1 MJ Cerilla. Four other colleagues of the suspects identified as PO3 Michael Chavez, PO3 Dindo Encina, PO1 Arcadio Orbis and PO1 Martinico Mario were also being sought. Nicanor said the entrapment operation was borne by a complaint from a woman who claimed that her husband was arrested on Wednesday along with seven others by the six policemen in Santa Mesa, Manila, during an anti-illegal drugs operation. The policemen, however, demanded P100,000 in exchange for the liberty of those arrested, but the woman bargained and the policemen agreed for a P50,000.

BI launches e-gate facility in PHL’s four intl airports By Recto Mercene

T

@rectomercene

he Bureau of Immigration (BI) introduced on Thursday its P329-million electronic gate system, or e-gate, which is expected to enhance and lessen the air travelers clearing time. BI officials said the e-gate, an initiative introduced by the International Air Transport Association called Fast Travel program, will simplify and efficiently improve travelers’ clearing processes. The e-gate also “aims to provide the agency with efficiency and accuracy on pinpointing citizens under watch list and/ or persons of interest in immigration formalities.” It will enhance clearing time of each traveler and reduce human errors in the process of clearing, the BI added.

The new technology is initially for Filipino citizens at arrival formalities. Marc Red Mariñas, BI’s Port Operations Division chief, said that with e-gate, the standard processing time for a passenger to be cleared at an immigration counter is 45 seconds. He said there are 21 units of e-gates installed at four international airports in the country. These are the Ninoy Aquino International Airport Terminal 1 with five e-gates; Terminal 3 with six; Mactan-Cebu International Airport with five; Clark International Airport with three; and Davao International Airport with two. Mariñas, however, said the queue time may take longer depending on the primary or secondary requirements of individual passengers.

A4 Friday, July 20, 2018 • Editor: Vittorio V. Vitug

Exempt RE developers from TRAIN 2–group

T

HE National Geothermal Association of the Philippines (NGAP) is asking the government to exempt Republic Act (RA) 9513, or the Renewable Energy Act of 2008 (RE law), from the coverage of the second package of the Comprehensive Tax Reform Program (TRAIN 2) of the Duterte administration. The group, which organized on Thursday a forum on “Promoting Growth through Policies and Technologies” in Pasig City, said the Tax Reform for Acceleration and Inclusion (TRAIN) 2 runs counter to the purpose of the RE law to accelerate the development of RE resources, such as geothermal energy. “TRAIN 2 will further decrease the competitiveness of the Philippines in attracting investors in geothermal energy due to the current proposal to apply a single menu of incentives that may not be responsive to the needs of the industry,” it said. For the past 30 years, the Philippines has been recognized as the second-highest installed geothermal capacity in the world. Last year the country’s standing dropped to third after Indonesia took over the second spot. NGAP Counsel Fernando Penarrovo said reclaiming the second spot will be a tougher challenge if TRAIN 2, as proposed, is passed by Congress. He cited the risks involved in geothermal energy development, with the high costs and uncertainties of exploratory drilling and associated works, plus the long gestation period from exploration to commissioning, making it difficult to attract and retain capable investors. The current cost of drilling and development is estimated to be in the range of $5,000 per kilowatt (kW). Fiscal incentives are key in most investment decisions since they lower the cost of doing business. “If TRAIN 2 is implemented, the fiscal regime of the geothermal industry will no longer be attractive. That’s why we want to lobby before Congress to exempt the RE law from the TRAIN law,” said Pennarovo. NG A P P reside nt No e l S a longa, who is also the vice president of the Energy Development Corp. (EDC), said geothermal players seek support from the government to develop the remaining geothermal fields in the country. EDC is the country’s largest geothermal producer in the country. It operates five geothermal plants in Leyte. These are the 112.5-megawatt Tongonan, the 125-MW Upper Mahiao, 232.5-MW Malitbog and the 180-MW Mahanagdong power

plants, and the 51-MW optimization plants. In Negros Island the EDC operates two geothermal steam field projects and two geothermal plants under Bacman Geothermal Inc. These are the two units of Panlipinon geothermal facility (112.5 MW and 60 MW) and the 49.4-MW Nasulo geothermal plant. The EDC also operates one geothermal steam field project in Mindanao, which delivers steam to two EDC-owned geothermal power plants on Mount Apo, which have capacities of 52 MW and 54 MW. “The remaining geothermal fields are difficult to develop because it will require deeper drilling. A lot of efforts are now focused on technology development to bring down the cost of materials and the drilling expenses. We need more incentives than ever. We have identified 1,500 MW more but the areas are smaller, deeper and challenged with technology,” Salonga said. NGAP urged Congress to reconsider the blanket approval in rationalizing the fiscal incentives and exempt the RE law from the coverage of TRAIN 2, since the survival and growth of the geothermal industr y depends on this landmark legislation. NGAP proposes a targeted approach in laying the foundation for future incentives across industries. The group pointed out that a sudden change in the existing fiscal incentives regime for the geothermal-energy industry will affect investor confidence since investors seek consistency, predictability and transparency. “While NGAP acknowledges TR AIN 2 as a needed reform to manage tax leakages, the government should strike a balance between revenue generation and the long-term outlook for the development of a vital industry that powers the economy. The success of geothermal energy development is intricately linked with effective government energy policies, predictable rules and regulations, simple and coordinated permitting process, and a competitive set of incentives that promote geothermal investments,” the group added. Hou se Ene rg y Com m it te e Chairman Rep. Lord Allan Jay Velasco of Marinduque said during the forum that he will study NGAP’s proposal. “All suggestions are welcome. We are talking to experts. I want NGAP to explain further why the RE law should be exempted. But I told them that we will look into it,” the lawmaker said. Lenie Lectura

Economy BusinessMirror

www.businessmirror.com.ph

House bill to restructure ERC leadership to be passed this year, lawmaker says

A

By Lenie Lectura

@llectura

bill seeking to restructure the Energy Regulatory Commission (ERC) by expanding the number of commissioners to 17 could be passed into law within the year.

House Energy Committee Chairman Rep. Lord Allan Jay Velasco of Marinduque said on the sidelines of “Promoting Growth through Policies and Technologies” forum that he is hopeful that the proposal would be approved soon. “It’s with the TWG [technical working group]. We will try to have it approved within the year. There’s another bill authored by the Speaker, and we agreed to merge the two bills, and hopefully get this bill passed and signed into law before the year ends,” Velasco said.

House Speaker Pantaleon D. Alvarez proposed the replacement of the ERC with another body that will be attached to the Department of Energy. “The Speaker filed a bill that seeks to abolish the ERC, and putting it under the DOE. But we talked and I told him that the regulator should be an independent commission so he agreed for the two bills to be put together. We are reviewing it now,” Velasco said. Velasco’s bill, if approved, is expected to fast-track regulatory pro-

cessing of all cases since the number of commissioners will be increased to 17, including the chairman, from the current five. “It is meant to hasten the decision powers of the ERC because it takes time for them to issue decisions. So, I want to increase the number of commissioners to 16 and pattern it to the Supreme Court with the creation of three divisions,” Velasco said. He added that the proposed 16 commissioners would still have a fixed term of seven years, but the chairman would serve at the pleasure of the president. “The commissioners must be composed of lawyers, engineers, accountants, economist to name a few,” Velasco said The bill also calls for fiscal autonomy to boost the morale of ERC employees. ERC Chairman Agnes VST. Devanadera earlier welcomed the creation of the body that will study the proposed bills. She also vowed to step up the regu-

From 5 to 17 The jump in the number of commissioners, including the chairman, at the ERC with the expected passage of a proposal to restructure the leadership of the commission. lation of the electric power industry and, if necessary, amend certain ERC rules to ensure that the consumers’ welfare are promoted and protected. “We are acting on the electric power industry’s plea to strengthen the ERC. We recognized that we have entered a new regime where consumer benefit consciousness has to be given utmost consideration. In this connection, I have directed the review of all ERC rules with direct impact on electricity consumers, and improve thereon, if warranted,” Devanadera said.

India seeks increased trade, tourism ties with PHL By Leslie Gatpolintan Philippine News Agency

N

EW DELHI, India—India is vigorously pushing for increased trade and tourism ties with the Philippines, as the country is turning to Southeast Asia to accelerate its economic development through its “Act East” policy. Additional Director of the Indian Chamber of Commerce Bodhisattwa Mukherjee said Indian companies from various sectors have already expressed interest in boosting trade with the Philippines. “There are Indian companies which would be interested in the Philippines. Sectors [including] health care could be, agro and food processing could be another. I think tourism is another area which could probably be of interest,” he said in an interview with the Philippine News Agency in Kolkata, West Bengal, over the weekend. To penetrate the trillion-dollar Indian economy, Mukherjee said the Philippines can market marine products, processed food, garments and finished apparel products. “It is more important to be associated with SMEs [small and medium enterprises] because the cooperation between SMEs of both countries would actually help, that would [facilitate] effective tie-up. That could also lead to creating, let’s say more channels, value chains in terms of marketing distribution, so

Value cards

The Land Transportation Franchising and Regulatory Board launched on Tuesday the distribution of Pantawid Pasada cards with P5,000 load to registered public-utility vehicle (PUV) operators and drivers. The distribution of cards is meant to aid beneficiaries from the impact of inflation and high fuel price. Nonoy Lacza

on. I think that would be the way forward,” he said. But while trade in some goods has increased following the implementation of the free-trade agreement (FTA) between India and the Asean bloc, Mukher jee pointed out that bilatera l t rade in services between India and the Philippines mu st a l so increase. “One… very important area for I nd i a a nd t he Phi lippines to work on is on tourism because India has some very exotic destinations to offer and so do t he Philippines. So if tourism could be developed, that w i l l help Indians to explore, understand untapped ar-

eas and eventually also look at businesses that can grow from there,” he added. Mukherjee said they look forward to the arrival of more Filipino tourists following the intensified promotion of India’s tourist attractions and destinations. “Indian companies are trying to reach out and what is important as an Asean bloc, various countries would have various complementarities. These complementarities need to be explored because that would help Asean to really prosper and go forward,” he said, noting the need for India to connect more with Asean. The 10 Asean members are Brunei Darussalam, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, the Philippines, Lao PDR and Vietnam. For his part, State Government of Assam Additional Chief Secretary Shri Ravi Capoor underscored the importance of increasing trade between India and the Asean bloc under the FTA. India and Asean in 2009 signed the trade in goods agreement, one of the key elements that would facilitate the creation of an open market in the region. The FTA was implemented in 2010. Data shows bilateral trade between the Asean and India has increased to about $76 billion in 2017 and 2018, from about $53 billion in 2009 and 2010, the year when the Asean-India FTA was signed. “We need to therefore not just

come and visit each other and do tourism and various exchange, we also need to do a lot of trade,” he said in Guwahati City in the Indian state of Assam during a briefing on Monday, with a group of Asean journalists participating in the India-Asean Media Exchange Program. Capoor identified food processing and tourism as “very good strengths” of Asean member-countries. “These are the industries where we need to work together. You can sell the products here, we would be most happy to have the products here. We encourage you to sell your products here but the only condition is that you should be manufacturing them,” Capoor said. He also asked Asean members to establish their consulates in India, which he considered important for the bloc to open up trade here, especially in northeast India. He was also looking at enhanced India-Asean connectivity to boost regional growth. Apa r t f rom t rade, C apoor bared that Assam state planned to undertake educational and cultural exchange programs with Asean members. “We [also] want to do this [on a] cultural [level], because if you see our dances, they are similar to the dances of most of your countries. The way you dress, the way you dance, the beat of the music are almost the same. So there are now plans to start cultural exchange. There are plans to start educational exchanges,” he said.

The Regions BusinessMirror

A5

Editor: Dennis D. Estopace • Friday, July 20, 2018

DENR stands by sewage policy for Boracay operators

A

S a preventive measure, all sewer lines, including those owned by the Boracay Island Water Co. (BIWC) at the famed white beach on the worldrenowned Boracay Island, will have to go sooner or later. Environment Secretary Roy A. Cimatu is firm in his plan to condemn the BIWC sewer line, a senior official of the Department of Environment and Natural Resources said. These sewer lines were established a long time ago with the approval of the Philippine Tourism Authority, now called Tourism Infrastructure and Enterprise Zone Authority, DENR documents revealed. Cimatu has signed an order canceling all the environmental compliance certificates (ECCs) held by establishments on Boracay Island. In an interview, DENR Undersecretary for policy, planning, international affairs and foreign-assisted projects Jonas R. Leones said the order justifies the policy to require all establishments, whether they are residential, commercial or mixed residential-commercial buildings used for tourism purposes, such as hotels or resorts, to put up their own sewage-treatment plants (STPs). “The pipe of the BIWC is small and old, [which] is why Cimatu wants it condemned,” Leones told the BusinessMirror. “All pipes connected to it will also be cut and condemned because, in the future, it might leak, or worse, burst. If that happens, we will have a major water pollution problem again.”

Exemptions

BUT, on July 16, Cimatu issued an order exempting small businessmen with establishments that have five rooms and below, including those in the beachfront, from the policy requiring the construction of STPs. Those with small establishments may secure a certificate of exemption from the DENR or apply for a discharge permit for proper monitoring. Either way, they need to be inspected and must apply and secure approval of the DENR. DENR Region 6 Director Sophie T. Manuel said the agency has set August 15 as the deadline for submission of application for permits and for registration as hazardous waste generators. That’s also the deadline for the submission of necessary documents for the lifting of the ECC suspension. Applications may be submitted to the National Task Force based at Casa Pilar Resort Boracay. All permits will be issued on or before September 15, 2018, according to Manuel.

Appeal

IN an earlier interview, Leones said that any conflict that may adversely slow down the ongoing rehabilitation may eventually lead to a delay in the scheduled reopening of Boracay in October. Leones was reacting to news that the Boracay Foundation Inc. (BFI) appealed to the DENR to reconsider its policy requiring resorts, hotels and other similar establishments on the island’s main beachfront to build their own STPs or clustered STPs. The appeal was for Cimatu’s order issued through Memorandum Circular 2018-06 dated

June 26, 2018. In their letter, the BFI said the DENR should implement existing laws and compel all water utilities operating and supplying water in Boracay to be responsible for treatment of wastewater. The BFI said these utility firms should set up a sewer network and STP instead of requiring business establishments to have their own STPs. The BFI said all water providers have the obligation to treat the water they provide and not to transfer this responsibility to the water consumers. “Requiring all establishments to build their own STPs and treat water at the source, when there is a properly functioning centralized sewer network, is in contradiction to existing laws,” the BFI said.

Burden

THE BFI warns that allowing establishments to build individual STPs would give additional burden to DENR, which has to monitor their compliance. Sought for reaction, Leones said establishments already connected to sewer lines need not put up their own STPs. However, in the case of establishments near the shores, including those connected to the BIWC sewer lines that would soon be condemned, construction of STPs will be a must under the law, he added. “That’s why the DENR secretary had issued an exemption for small businessmen.” Leones added that even establishments in areas that are not yet developed or have no sewer lines to connect to must comply with the Clean Water Act, which requires the construction of an STP. “Remember that the water pollution was caused by the direct discharge of wastewater into the environment, some directly into the beach area,” he said. Leones said the policy applies to all establishments near the shores on the island. “In other areas [near beaches], there is still no sewage system, that is why we want to require all establishments near the shores to have their own STPs,” he said.

Common

THE DENR wants all establishments with 50 rooms and above to have their own STPs, while those with 49 rooms and below to form a cluster and have a common STP. He said the policy is consistent with the policy of the local government of Malay, Aklan, which has jurisdiction over Boracay Island. For establishments inland, he said many establishments are still not connected to BIWCs sewer lines. Boracay TUBI, the other private water contractor operating on Boracay Island, has sewer line of its own but practices desludging. “For those connected to the BIWC, it is okay not to have their own STPs,” Leones said. “The policy requiring STPs apply to those that are not connected, whether there is an existing sewer line in their area or not.”

A4 Friday, July 20, 2018 A6

The Regions BusinessMirror

www.businessmirror.com.ph

Con-com sees self-sustaining regions under federal system

A

By Bernadette D. Nicolas

@BNicolasBM

LL regions will have enough resources to operate their respective governments and pursue programs to spur economic growth under the fiscal design of the proposed draft Federal Constitution, the Constitutional Committee (Con-com) technical working group (TWG) said.

According to a discussion paper a copy of which was provided to the BusinessMirror, the Con-com TWG estimated that the available funds to be controlled by regions under the proposed federal setup will amount to at least P57 billion for Autonomous Region in Muslim Mindanao (ARMM) and Negros Island Region (NIR) to as high as P93.8 billion for the National Capital Region. The amount was based on the regions’ 50-percent share on the government’s top 4 revenue sources and the taxes to be administered by the federated regions. The said basis doesn’t apply to ARMM and NIR since there is no available data yet on revenue collection corresponding to the taxes they will administer. The discussion paper, which was submitted during a Senate hearing on the proposal to change or amend the 1987 Constitution, also noted that the simulation exclude transfers under the equalization fund, which will be defined on a yearly basis by the Federal Intergovernmental Commission. The simulation

also didn’t yet include the revenues in the utilization of natural wealth, program grants through the General Appropriations Act and such other revenues in the future that Congress would provide by law. The simulation has also yet to include borrowings, which may be authorized by federal law and allowed by the Monetary Board, to finance capital outlays and major income generating projects of the regions. To note, the Con-com is estimating that the equal share from the top revenue sources of the government of each of the 18 federated regions is P57 billion. Under the proposed Charter, the Con-com is proposing that federated regions will have a share of not less than 50 percent all collected income taxes, excise taxes, value-added taxes and customs duties, which are the top revenue sources of central government. The other 50 percent will go to the federal government. The TWG noted that because of the “50-50 formula” on the top 4 revenue sources of the government, the federal government and the regional governments will each have a

share of approximately P1.027 trillion. Also, the Con-com is proposing that the federated regions will collect several taxes. These include real property tax, estate tax, donor’s tax, documentary stamp tax, professional tax, franchise tax, games and amusement tax, environmental tax, pollution tax, road user’s tax, vehicle registration fees, transport franchise fees and other taxes that may be granted by federal law. Given the projected figures, the Con-com TWG noted that the regions will be able to cover the current Internal Revenue Allotment requirements of local governments and still have a positive cash position to finance regional operations, programs, projects and activities. “The resulting positive cash position will enable the regions to finance shared powers and the associated expenditures,” the discussion paper read. “If any region shall need additional funds for its operation this can be addressed through the transfers mechanisms of the equalization fund as well as revenues from taxing powers and other revenue generating mechanisms…and borrowings.” This will also free up the federal government of regional and local concerns to focus on issues of national importance, the Con-com TWG added. The federal government and the regional governments, once established, shall also have enough powers and resources to operationalize the federal setup. Under the fiscal provisions, the federal government shall have P2.235 trillion to finance federal operations, programs, projects and activities, including expenditures on the branches of the federal government, Constitutional Commissions, defense and se-

The breakdown of estimated total cash funds per region based on their equal share from the top 4 revenue sources of the government and the taxes they administer under federalism are as follows: • Region 1 - P58.796 billion • Region 2 - P58.363 billion • Region 3 - P65.358 billion • Region 4A - P70.77 billion • Region 4B - P58.161 billion • Region 5 - P59.194 billion • Region 6 - P60.543 billion • Region 7 - P60.349 billion • Region 8 - P58.152 billion • Region 9 - P57.915 billion • Region 10 - P58.776 billion • Region 11 - P60.068 billion • Region 12 - P58.938 billion • Region 13 - P57.735 billion • NCR - P93.812 billion • Cordillera Administrative Region - P57.991 billion • ARMM - P57 billion • NIR - P57 billion Source: Constitutional Committee Technical Working Group Discussion Paper curity, foreign affairs, law and order, among others. This amount includes the computations for other taxes, nontax and borrowings. The Con-com TWG also claimed that by applying the federalism fiscal design on the current unitary system fiscal performance, spatial and geographic equity is achieved across all regions while at the same time, the federal government remains fiscally strong to address both federal functions and the regional gaps.

Cimatu orders suspension of all ECCs on Boracay Island By Jonathan L. Mayuga

E

@jonlmayuga

NVIRONMENT Secretary Roy A. Cimatu has suspended all environmental compliance

certificates (ECCs) issued by the Department of Environment and Natural Resources (DENR) to business establishments operating on Boracay Island, the country’s top tourist destination in Malay, Aklan province. Memorandum Circular (MC) 2018-08 dated July 18, 2018, signed by Cimatu, a copy of which obtained by the BusinessMirror, was handed down on July 19 ordering the suspension and, subsequently, the thorough review of all existing ECCs in terms of their compliance with current local and national laws, rules and regulations. The DENR is leading the interagency Task Force Boracay composed of the Department of Tourism (DOT) and Department of the Interior and Local Government (DILG). The task force recommended the closure of the island to tourists for six months starting April 26 to fasttrack its rehabilitation. In the review of the ECCs, Cimatu’s order stated that the results of the Cadastral Mapping and Carrying Capacity Study shall be taken into full consideration. The Cadastral Mapping is a mandate of the Land Management Bureau of the DENR-BMB. Map preparation is the responsibility of the National Mapping and Resource Information Authority. The study of the carrying capacity of Boracay Island was del-

egated to the DENR’s research arm, the Ecosystems Research and Development Bureau. To conduct the review, a committee composed of representatives from the DENR, Environmental Management Bureau (EMB) and Mines and Geosciences Bureau (MGB), will be created “very soon,” according to DENR Undersecretary Jonas R. Leones. Task Force Boracay plans to cancel business permits, permits to operate and the ECCs. This move, Leones said, aims to give concerned authorities like the DENR to start with a clean slate in reviewing environmental compliance of business establishments on the island in preparation for its reopening to tourists on October 28. Leones declined to name the members of the committee that “will be created very, very soon.” The committee, according to DENR MC 2018-03 will review establishments’ compliance with all existing ECCs and environmental management plans. The committee is also required to submit a report to the DENR chief, either for the lifting of the suspension or cancellation, the order read. Meanwhile, the DENR-EMB Regional Office has been ordered to continue monitoring establishments during the suspension of their ECCs to ensure all environmental laws are followed. Likewise, this unit will monitor establishments issued with Certificate of Non-Coverage (CNC) for their compliance. A CNC shows whether a proposed project is required or not to secure an ECC prior to starting operations. This applies to small establishments like eatery, restaurant and other businesses whose operation have minimal impact to the environment or are located away from an environmentally critical area like rivers, lakes, or beach, or areas that are set aside for conservation.

Chinese steel company scouts 300-ha land for $3.5-B project

A

Chinese steel manufacturer is looking for a 300-hectare parcel of land in the Philippines, preferably in Mindanao, for its $3.5-billion investment project in the country. Philippine Economic Zone Authority Director General Charito B. Plaza said the Panhua Group seeks to put up an integrated steel mill in the Philippines. Panhua currently produces flat steel products in its three integrated steel mills in China.

Plaza said the company has been looking for a new manufacturing hub in a neighboring country since the United States began imposing higher tariffs on steel and aluminum imports from China. “Because of US, China and G-7 trade war, it is an advantage to the Philippines because we have now received intent from various China and European investors that they want to locate in the Philippines to avoid the tariff war going on between US, China and the G-7 allies,” she said. PNA

Editor: Angel R. Calso | www.businessmirror.com.ph

Chinese president visits U.A.E. amid push to increase influence

D

UBAI, United Arab Emirates—Chinese President Xi Jinping was to arrive on Thursday in Abu Dhabi on his first trip to the United Arab Emirates (UAE) as the leader of China at a time when the two countries look to strengthen trade ties and expand investment. It is Xi’s first trip abroad since he was appointed to a second five-year term as president in March when he made a historic power grab by moving to abolish presidential term limits, allowing him to rule for as long as he wants. The visit also comes as China pushes to expand its influence in a region where it sources much of its energy needs. China and the UAE conduct some $50 billion in annual trade and, ahead of the trip, the UAE’s ambassador to China said the country hopes that will double over the next decade. The UAE, home to oil-rich Abu Dhabi and the skyscraper skylines of Dubai, also hosts some 200,000 Chinese expatriate workers, according to Emirati government statistics. In recent years, the UAE has focused on boosting Chinese tourism to its seven-sheikhdom federation. Some 1 million Chinese tourists visited in 2017, boosted by the UAE offering visas on arrival. Long-haul carriers Emirates and Etihad provide a crucial airlink between East and West. China’s state-run CNPC oil company has also bought interests in both onshore and offshore oil concessions in the UAE. “Our relationship with China is a longterm strategic one that encompasses a multitude of aspects; political, economic, cultural, social, tourism, among others,” UAE Minister of State Sultan Ahmed Al Jaber said in a statement. “The UAE-China relationship is rooted in the principles of mutual respect, constructive dialogue and meaningful cooperation to achieve their common interests in a variety of sectors.” Ahead of Xi’s arrival, the country kicked off an official “UAE-China Week” featuring cultural events and entertainment, which officials say they plan on making an annual event. Developer Emaar also announced plans for what it said would be the biggest Chinatown in the Mideast: a development of 6 square kilometers (2.3 square miles) that will be located 10 minutes from the Dubai International Airport. Construction is also a big-ticket market for Chinese firms. In Dubai especially, its massive Sheikh Zayed Road has seen a number of quickly built Chinese overpasses spring up over its dozen lanes. Chinese-built high-rises also have become increasingly common. The state-run China State Construction Engineering Corp. also has contracts with private interests as well. Most noticeably, it won a $19.6-million contract in June for “major road and infrastructure work” at a development by DAMAC Properties that will surround Dubai’s second Trump golf course. It earlier won a $130-million contract to build apartment towers near the first Trump golf course, which President Donald J. Trump’s sons Donald Jr. and Eric opened in February 2017. Trump’s ties to DAMAC’s owner, billionaire businessman Hussain Sajwani, have raised ethics and security questions as the American president did not divest himself from his eponymous development company when taking office. However, the Trump Organization has said it won’t make new foreign deals while its namesake is president. AP

The World BusinessMirror

Friday, July 20, 2018

A7

Trade alarms ring loud for G20 as risk of protectionism looms

G

lobal economic growth is poised to pick up this year, though the alarm bells about trade protectionism are getting louder.

That’s the backdrop for central bankers and finance ministers from the Group of 20 (G20) nations who gather on July 21 and 22 in Buenos Aires. It’s the first meeting of the club that oversees 85 percent of the world economy since President Donald J. Trump imposed tariffs on China and the European Union (EU), sparking retaliation in the first salvo of a global trade war. Financiers and business leaders from G20 nations cautioned about the repercussions of increased protectionism ahead of this weekend’s meetings. US Federal Reserve Chairman Jerome Powell on Tuesday said trade barriers threaten productivity and wages, while BlackRock Inc. boss Larry Fink warned intensifying tensions could spur a broad market downturn. “Global growth has reached an inflection and tipping point, with signs that the escalating

US-China trade war is starting to disrupt business and investment,” said Chua Hak Bin, senior economist at Maybank Kim Eng Research Pte. in Singapore. T hat disruption hasn’t yet dented global growth, which is poised to pick up to 3.9 percent in 2018—the fastest expansion in seven years, according to July forecasts from the International Monetary Fund (IMF).

Bigger concern

T he bi g ge r conce r n i s t h at tit-for-tat tariffs between the United States and its trading par tners w i l l g naw at conf idence and eventually hurt business investment and consumer spending. For JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, the tension is so far “affecting psyche more than it is economics,” which can have “unpredictable outcomes.”

The trade war has been building for some time. An early warning sign was the March 2017 G20 meeting in Germany—the first for US Treasury Secretary Steven Mnuchin—when members dropped from the official communique a pledge to avoid protectionism. Mnuchin said at another gathering a year later that the US was “loud and clear” in its message. Trump had announced levies on global steel and aluminum imports just days before. Since then, the US has slapped tariffs on $34 billion of Chinese imports, with another $16 billion likely to follow and an additional $200 billion under consideration. Beijing has retaliated on $34 billion of US goods, saying it will fight back against any further levies. Separately, the US and EU are in a tit-for-tat battle over American metal tariffs, while Trump has threatened to erect barriers against European cars. The tariffs are hitting supply chains and boosting prices just as some major economies show signs of decelerating. China’s GDP grew at the slowest pace since 2016 in the second quarter, while key readings on investment gains and industrial

output eased in June. The IMF in its July forecasts cut 2018 growth estimates for the euro area and Japan, cautioning that global output could drop roughly 0.5 percent below its projected level by 2020 if threatened trade barriers become reality. While the numbers point to modest deceleration, the trade clash with the US has only just begun.

Trade bellwether

South Korea, considered a bellwether for global trade, is showing signs of strain. June exports fell 0.1 percent from a year earlier, compared with a 2.2-percent gain forecast in a Bloomberg survey, and both the Bank of Korea and finance ministry this month trimmed their growth outlook. The softening in Asian exports is a clear warning sign, said Robert Subbaraman, Singapore-based head of emerging markets economics at Nomura Holdings Inc. “If this growth cushion starts to give way, as we expect, watch for Asia’s market risk premium to rise more sharply,” he said. Meanwhile Latin American economies may grow increasingly inward looking, as new

governments in Mexico and Brazil are likely to focus on domestic issues rather than regional integration, the IMF’s Western Hemisphere Director A lejandro Werner said Tuesday. Markets don’t fully ref lect concer ns that trade tensions w ill derail global growth. T he US S&P 500 stock index has increased 5.3 percent this year, while the STOX X Europe 600 Price Index has slipped just 0.5 percent. T he MSCI Emerging Markets Index has dropped 7.6 percent in 2018 after surging 35 percent last year. Businesses, however, are finding it difficult to ignore the trade tensions. US central bankers say their business contacts are expressing concerns over tariffs, with Federal Reserve Bank of Saint Louis President James Bullard reporting “ full-throated angst” from companies in his district. “Businesses are becoming a lot more dissatisfied,” said Nick Wall, portfolio manager at Old Mutual Global Investors. “That might soften the rhetoric. Trump cares about business, cares about the stock market, and this might rein him in a little bit.” Bloomberg News

E.U. fines Google $5B over mobile practices B

RUSSELS—European regulators came down hard on another US tech giant Wednesday, fining Google a record $5 billion for forcing cell-phone makers that use the company’s Android operating system to install Google search and browser apps. The European Union (EU) said Google’s practices restrict competition and reduce choices for consumers. While Google can easily afford the fine, the ruling could undermine the company’s business model, which relies on giving away its operating system in return for opportunities to sell ads and other products. Google immediately said it will appeal, arguing that its free operating system has led to lower-price phones and created competition with its chief rival, Apple. Android has “created more choice for everyone, not less,” Google CEO Sundar Pichai tweeted . Google has 90 days to put remedies in place regardless of its appeal—which could involve unbundling key apps and allowing Android handset manufacturers to sell devices using altered versions of Android. Mozilla Foundation, the nonprofit group that creates the lightweight ad-blocking browser Firefox Focus, said the ruling gives it the opportunity to displace Chrome as the default browser in some phones. It has been in talks with manufacturers from Huawei to Samsung about that. The ruling creates “a huge opportunity,”

EUROPEAN Union Commissioner Margrethe Vestager holds a press conference on a Competition Case involving Google Android at the European Commission building, in Brussels on Wednesday. The European Union’s antitrust chief has fined Google a record $5 billion for abusing the market dominance of its Android mobile-phone operating system. AP/Olivier Matthys

Denelle Dixon, Mozilla’s chief operating officer, said Wednesday. It’s also possible not much will change. Google Search, Chrome and the Play Store are popular with consumers and developers. Handset manufacturers could choose them despite unbundling. “It’s possible phone manufacturers won’t actually take advantage of the newfound freedom they have,” said Thomas Vinje, lead lawyer for FairSearch, the Brussels-based lobbying group backed by Oracle, TripAdvisor and others that was the main complainant in the case. “It at least opens up the possibility.” The fine, which caps a three-year

investigation, is the biggest ever imposed on a company by the EU for anticompetitive behavior. The ruling could stoke tensions between Europe and the United States, which regulates the tech industry with a lighter hand. Still, some US politicians welcomed it. Democratic Sen. Richard Blumenthal of Connecticut tweeted that the fine should “be a wake-up call” to the Federal Trade Commission and should lead US enforcers to protect consumers. Blumenthal previously called on regulators to investigate how Google tracks users of Android phones. In its ruling, the EU said Google broke the rules by requiring cell-phone makers to take

a bundle of Google apps if they wanted any at all. The bundle contains 11 apps, including YouTube, Maps and Gmail, but regulators focused on three that had the biggest market share: Google Search, Chrome and the company’s app store, called Play Store. The EU also took issue with Google’s payments to wireless carriers and phone makers to exclusively preinstall the Google Search app. It ruled, too, that Google broke the law by forcing manufacturers that took its apps to commit to not selling devices that use altered versions of Android. Regardless of the pending appeal, failure to come up with remedies to rectify the behavior after 90 days risks a further penalty of up to $15 million a day. EU Competition Commissioner Margrethe Vestager said that, given the size of the company, the €4.34 billion fine is not disproportionate. The Google crackdown comes at a sensitive time for trans-Atlantic relations, with President Donald J. Trump lambasting the EU as a “foe” only last week. The US imposed tariffs on EU steel and aluminum this year, and the European Union responded with duties on American goods. “We have to protect consumers and competition to make sure consumers get the best of fair competition,” Vestager said. “We will continue to do it, no matter the political context.”

The penalty is on top of a €2.42-billion fine ($2.8 billion) that regulators imposed on Google a year ago for favoring its shopping listings in search results. Neither fine will cripple the company. Google parent, Alphabet, made $9.4 billion in profit in the first three months of the year and has over $100 billion in cash reserves. “What is important is that Google has to change its abusive behavior,” said Rich Stables, CEO of the rival search engine Kelkoo. Android is technically an open-source operating system that Google lets cell-phone makers use for free. As a result, it is the most widely used system, beating Apple’s iOS by a wide margin. The EU wants to ensure that phone makers are free to preinstall apps of their choosing. It also wants cell-phone makers to be able to more easily use altered versions of Android, like Amazon’s Fire OS. Both Amazon and Samsung, maker of the popular Galaxy line of phones, declined to comment on the ruling. Google argues that downloads are easy, and while the inclusion of its suite of apps help phones run well out of the box, competitors’ apps are a tap away. It also argues that not supporting socalled “forked” versions of Android ensures a baseline of experience across some 24,000 different models of Android devices. Vestager called the compatibility argument a “smokescreen.” AP

A8

The World BusinessMirror

Friday, July 20, 2018

www.businessmirror.com.ph | Editor: Angel R. Calso

Frustrated US lawmakers threaten legislative action on Trump’s tariffs

W

ASHINGTON—Lawmakers are losing patience with the Trump administration’s reliance on tariffs to win trade disputes and are talking increasingly about legislative action to protect US jobs.

A senior Republican senator has threatened legislation to c u rb President Dona ld J. Trump’s trade actions, and other senators joined him on Wednesday in promising a complementary bill. Meanwhile, lawmakers are using congressional hearings to put the spotlight on the economic fallout for local farmers and businesses. The prospects for any votes on trade legislation before the August recess are dim. Still, lawmakers appear to be putting the Trump administration on notice. Sen. Orrin Hatch, the Republican chairman of the Senate Finance Committee, said that if the administration continues “with its misguided and reckless reliance on tariffs,” he’ll push for legislation. He said he’s discussing options with colleagues now. Hatch has been a critic of the administration’s imposition of

tariffs but has so far focused on working behind the scenes to influence the White House. His speech on the Senate floor served as a pointed warning to the administration not to move forward with tariffs on imported vehicles and auto parts on the grounds that they pose a threat to America’s national security. Sen. Doug Jones, D-Ala., and Sen. Lamar Alexander, R-Tenn., followed his cue. They said the president’s proposed auto tariffs threaten tens of thousands of jobs in the South, where foreign automakers have invested heavily in recent decades. They announced on the Senate floor on Wednesday that they’ll introduce legislation as soon as next week that would freeze the Commerce Department’s investigation into whether auto imports present a national security threat. The bill would halt the

Commerce Department probe while the International Trade Commission conducts a study. Alexander urged Trump to reconsider his trade policy and “drop the tariffs.” “These tariffs are dangerous. These tariffs are going to cost us jobs. These tariffs are going to lower our family incomes,” Alexander said. W hile Jones and Alexander went to bat for auto manufacturers in their state, lawmakers from farm country sought to highlight concerns that retaliatory tariffs will dry up export markets as consumers in China, Europe and other places look elsewhere to buy soybeans, pork and other farm goods. “Our farmers and our ranchers are being used as pawns in a trade war that I can guarantee you not one of them asked for,” Sen. Jon Tester, D-Mont., said on the Senate f loor. “ This trade war is eliminating access to foreign markets that have taken generations to develop.” On the House side, a trade subcommittee heard from farm groups directly on Wednesday. The same panel will examine next week the process that US companies must go through to be excluded from the administration’s tariffs on imported steel and aluminum. No witnesses from the

administration testified, much to the dismay of Democrats. Kevin Paap, a corn and soybean farmer from Minnesota, said the tariffs are hitting farmers from all sides, increasing their costs at a time when prices for their products are falling. “Agriculture is facing the perfect storm: trade uncertainties, decade lows in farm income, agricultural labor shortages and the uncompleted farm bill,” Paap said. “It’s quickly becoming more than we can handle.” Cass Gebbers, a fruit grower from Washington state, said China this month increased tariff rates to 50 percent for US cherries, apples and pears. He said that customers have canceled orders as a result of the tariffs and that has pushed down prices as a result of the extra product in the domestic market. If the tariffs remain in place next year, competitors elsewhere in the world “will snatch up these markets as soon as we stumble.” Behind the scenes, Sen. Mike Rounds, R-S.D., is urging constituents to make their voices heard at the White House. He said they may have better luck convincing Trump than lawmakers. “He puts a lot more stock in what he sees and hears from his base than he does from elected members in Congress,” Rounds said.

briefs

While concern about a trade war is clearly growing on Capitol Hill, many Republican lawmakers are still giving Trump the benefit of the doubt, hoping the tariffs will lead trading partners, particularly China, to make concessions. “I think what he had to do is get their attention, particularly China,” said Sen. David Perdue, R-Ga., adding that tariffs did just that. Rep. Mark Walker of North Carolina, chairman of the Republican Study Committee, the largest GOP caucus in the House, said members have been talking about the tariffs at all their recent meetings but are admittedly “slow-walking” the issue. “The majority is wanting to kind of wait and give President Trump time to see if he can seal the deal,” Walker said. “But, yeah, there are some concerns, and it seems to be growing with each passing week.” As lawmakers deal with the series of tariffs announced in recent months, the Trump administration opened another front on that issue on Wednesd ay w it h t he Depar tment of Commerce initiating an investigation into whether imports of foreign uranium, especially from Russia and nations under its inf luence, are a national security risk. Uranium is used in producing fuel for the nation’s nuclear power plants. AP

Trump tries tougher tone on Russia

W

ASHINGTON—President Donald J. Trump spent a second day managing the political fallout from his widely criticized meeting with Russia’s Vladimir Putin, shifting stances and mopping up what the White House said were misstatements. His toughness with the longtime American foe in question, Trump said on Wednesday he told the Russian president face-to-face during Monday’s summit to stay out of America’s elections “and that’s the way it’s going to be.” That rhetoric marked a turnabout from Trump’s first, upbeat description of his sitdown with Putin. Still, Trump backtracked on whether Russia is currently targeting US elections. When asked the question on Wednesday, he answered “no,” a reply that put him sharply at odds with recent public warnings from his own intelligence chief. Hours later, the White House stepped in to say Trump’s answer wasn’t what it appeared. The zigzagging laid bare the White House’s search for a path out of trouble that has dogged the administration’s discussions of Russia from the start, but spiraled after Trump’s trip to Helsinki. After days of criticism from both Democrats and Republicans, Trump—a politician who celebrates his brash politic al incorrec tness—has appeared more sensitive than usual to outside opprobrium. The scale of the bipartisan outcry at Trump’s stance toward Putin has only been rivaled by his 2017 waffling over condemning white supremacist demonstrators in Charlottesville, Virginia. “I let him know we can’t have this,” Trump told CBS News of his conversations with Putin. “We’re not going to have it, and that’s the way it’s going to be.” AP

Biggest mobile-phone plant masks PM Modi’s ‘Make in India’ struggle

Yemen rebels claim to target Saudi oil refinery in Riyadh SANAA, Yemen—Yemen’s Shiite rebels at war with a Saudi-led coalition say they have attacked a Saudi Aramco refinery in Riyadh but the oil company said a “minor fire” that erupted there was “due to an operational incident.” Rebel spokesman Mohammed Abdul-Salam said on Twitter late on Wednesday that a long-range drone was used to target the refinery and that the operation was “successful.” Meanwhile, Aramco said the fire was brought under control and didn’t affect operations or result in any casualties. The Shiite rebels, known as Houthis, have previously targeted the Saudi mainland, including the capital, Riyadh, the city’s international airport and a royal palace—the Saudis intercepted all of the projectiles. The Saudi-led coalition backing Yemen’s internationally recognized government has been fighting the Iran-backed Houthis since March 2015. AP

Top German court rejects bid to block gas pipeline BERLIN—Germany’s highest court has rejected a bid by an environmentalist group to block construction of the planned Nord Stream 2 pipeline, which would pump Russian gas to Germany under the Baltic Sea. The Nord Stream 2 project will add to an existing direct RussianGerman pipeline, increasing the amount of natural gas Russia can send to central Europe skirting transit countries to Germany’s east. Several eastern European countries object to the plan, which the United States also opposes. The Naturschutzbund Deutschland environmental group filed a suit to the Federal Constitutional Court challenging a lower court’s rejection of its bid for an injunction blocking permission for construction in German waters. However, the federal court said on Thursday that it threw out the complaint, finding that the group failed to explain its case sufficiently.

AP

D

In this June 18 file photo, venture capitalist Tim Draper points to a computer screen at his offices in San Mateo, California, showing that an initiative to split California into three states qualified for the ballot. The California Supreme Court has blocked a measure that would divide the state in three from appearing on the November ballot. AP/Haven Daley

No California vote in November

S

ACRAMENTO, California— A measure that would divide California into three parts won’t appear on the November ballot, the state Supreme Court decided on Wednesday, marking the latest defeat for a long-shot push to reimagine the nation’s most populous state. The justices ordered the secretary of state not to put the ballot initiative before voters, saying significant questions have been raised about its validity. The court now will consider a challenge from the Planning and Conservation League, an environmental group that argued splitting up California would drastically change its government structure beyond what can be accomplished through a simple ballot initiative. “ We conclude that the potential harm in permitting the measure to remain on the ballot outweighs the potential harm in delaying the proposition to a future election,” the justices wrote in a unanimous ruling. They said time constraints forced them to rule on the issue immediately.

Venture capitalist Tim Draper, who spent more than $1.7 million on his “Cal 3” initiative, has tried for years to split the state, arguing it has become ungovernable because of its size, wealth disparities and geographic diversity. His last attempt to divide California in six didn’t gather enough signatures to make the ballot in 2016. “The whole point of the initiative process was to be set up as a protection from a government that was no longer representing its people. Now that protection has been corrupted,” Draper said in a statement. “Whether you agree or not with this initiative, this is not the way democracies are supposed to work.” The director of the Planning and Conservation League cheered the ruling. The initiative “was a costly, flawed scheme that will waste billions of California taxpayer dollars, create chaos in public services including safeguarding our environment,” Howard Penn said in a statement. “It would have dismantled the world’s fifth-biggest economy

without solving a single challenge facing Californians today.” The environmental group’s lawsuit says major changes to the state’s government structure require approval from two-thirds of the legislature before being considered by voters or a state constitutional convention. Draper has argued that the measure doesn’t go beyond what voters can enact through an initiative. If passed, it would be only the first step toward splitting the state, he said. The initiative, which could appear on a future ballot if the court ultimately rules in its favor, seeks to divide the state into Northern California, California and Southern California. Northern California would comprise the Bay Area, Silicon Valley, Sacramento and counties north of the state capital. California would be a strip of land along the coast stretching from Los Angeles to Monterey. Southern California would include Fresno and the surrounding farming communities, reaching to San Diego and the Mexican border. AP

espite a sleek marketing campaign, the world isn’t quite ready to “Make in India.” Last week Indian Prime Minister Narendra Modi and South Korean President Moon Jae-in celebrated the inauguration of what Samsung Electronics Co. Ltd. called the world’s largest mobile-phone factory. At the splashy event just outside New Delhi, Modi said the facility was “extremely important” for his Make in India initiative to boost manufacturing to 25 percent of India’s economy by 2020 and create millions of jobs. Samsung said the plant was a “shining example” of the success of the program. But the investment is more the exception than the norm. Data from the World Bank and the Reserve Bank of India show manufacturing hasn’t received a significant boost since Modi took office in 2014. While India’s economy has overtaken France to become the world’s sixth largest, manufacturing has shrunk to about 15 percent of gross domestic product from a peak of 18.6 percent in 1995, according to the World Bank. Other data show new investments in India have dropped and stalled projects are on the rise. “The Samsung announcement is good news, but it must be seen as a one-off at present,” says Vivek Dehejia, an associate professor of economics at Carleton University in Ottawa. “Make in India is a noble aspiration of the Modi government. Yet, in the absence of a supporting infrastructure and ease of doing business environment, it’s a tough challenge.” The initiative is a worthwhile attempt to lure global businesses, analysts say, but it hasn’t been accompanied by enough meaningful changes to revive manufacturing or alter what is essentially a servicesoriented economy.

Made in China

Spokesmen for the Prime Minister’s Office and the commerce ministry didn’t respond to requests for comment. Unlike Beijing’s Made in China 2025 program—which targets strategic industries from robotics to new-energy vehicles through state investment and subsidies—Modi’s Make in India plan is more of an investment promotion strategy. One of the key reforms under the initiative launched in 2014 was the loosening up of foreign investment restrictions in several sectors, including defense. However, private data shows investment

is falling. The Centre for Monitoring Indian Economy show new project investments have dropped to 6.62 trillion rupees ($96.6 billion) in the financial year ended March from 18.7 trillion rupees in fiscal 2015.

Overcapacity

The value of stalled projects climbed to 7.63 trillion rupees from 5.29 trillion during that period. Even data from the Reserve Bank of India’s bulletin show that corporate capital expenditure has fallen since Modi came to power. Modi’s Make in India project hasn’t worked, in part because Indian companies invested heavily for years until 2012, well before Modi’s election, and now have excess industrial capacity, said Mahesh Vyas, CMIE chief executive officer. “It now needs to wait for these capacities to be absorbed fully before new capacities are built aggressively again,” Vyas said. He added “the world has become a lot more protectionist and is more keen to retain employment on its shores than exporting these to other countries.” Those capacities have done little to temper growth in imports of foreign-made goods. Rising purchases of smartphones and TVs have made electronics India’s secondbiggest import item after oil, and is pushing the nation’s trade deficit wider. Under Modi, record foreign direct investment has flowed into India and the country’s ease of doing business ranking has improved. Most investment, such as Amazon. com Inc.’s $5-billion commitment to expand operations in India, has gone into the nation’s dominant services and technology industries. FDI remains just 1.2 percent of India’s overall investment, according to Bloomberg Economics analyst Abhishek Gupta. Highprofile investments from foreign firms “should not be confused with an overall improvement in investment activity in India,” he said. With more jobs created in the services sector, Modi’s program should focus on investments there, said Gupta. “Job creation in India could hugely benefit if Make in India’s focus is expanded to include more services, relative to its overemphasis on manufacturing,” Gupta said. “India’s tough labor laws and higher bureaucratic entry barriers into manufacturing, along with its widespread fluency in English—a boon in global services—suggests that its comparative advantage lies in services.” Bloomberg News

Agriculture/Commodities BusinessMirror

www.businessmirror.com.ph

Editor: Jennifer A. Ng • Friday, July 20, 2018

A9

Farmers press govt to hike palay-buying price By Jasper Emmanuel Y. Arcalas

T

@jearcalas

he national government must increase the support price of the National Food Authority (NFA) for palay soon, as the prices of fuel and other inputs have gone up in the past 10 years, according to a farmers’ group.

The Philippine Farmers Advisory Board (PFAB) also slammed economic experts in the NFA Council (NFAC) for purportedly using “outdated” data in evaluating proposals to hike the buying price for unmilled rice. PFA B C h a i r m a n Edw i n Y. Paraluman, who represents the farmers’ sector in the NFAC, said he questioned the National Economic and Development Authority (Neda) in particular for using the P12-per-kilogram production cost as basis for assessing the NFA’s proposal to hike its buying price to P25 per kg. “I asked the Neda if the prices of production inputs by rice farmers did not increase in the past 10 years since the buying price of the NFA was raised to P17 in 2008. I also asked them why their cost of production [COP] data is still around P10 to P12 per kg,” Paraluman told the BusinessMirror in an interview. “The cost of labor has increased, prices of fuel have increased. Do

they think our cost of production has remained the same over the past 10 years? Why are they still using data which was [collected] 10 years ago?” he added. A source privy to the meetings of the NFAC confirmed to the BusinessMirror that economic managers use the P12 per kg COP to evaluate the NFA’s proposal. An official of the Neda confirmed to the BusinessMirror that the agency pegs the production cost of rice at P12 per kg. “We already requested the Philippine Statistics Authority [PSA] to provide the NFAC through the NFA management with the updated production cost,” the source, who was not authorized to speak on behalf of the NFAC, said. Deliberations on the NFA’s proposal to increase its support price by P8 per kg have been postponed pending the PSA’s release of the latest data. Also, economic managers sitting at the NFAC are yet to come up with their study on the impact

A farmer in Central Luzon plants rice in this file photo. The Philippine Farmers Advisory Board called on the government to increase the National Food Authority’s support price for palay due to the continuous hike in the cost of fuel and other production inputs.

of hiking the NFA’s palay-buying price on inflation. During a February hearing at the House of Representatives, the Neda vowed to come up with a study on the “ideal level” of support price for palay. The study would be conducted by the interagency Food Security Committee chaired by the Neda and members including the Departments of Agriculture, Finance, Trade and Industry and the Bangko Sentral ng Pilipinas, the source said.

‘Breakeven’

Paraluman pegged the cost of producing a kilogram of unmilled rice at P17 per kg. “The current buying price of NFA at P17 per

kg allows farmers producing 80 cavans, or 4 metric tons (MT), to 90 cavans (4.5 MT) of paddy rice to break even, based on our computations.” “Our average production is just around 80 cavans per hectare. So we are just within the breakeven level. That is why it is really urgent to increase the buying price of palay. The current price has been in effect for 10 years already,” he added. The latest available data from the PSA showed that the average cost of producing a kilogram of palay last year was pegged at P12.31, 2.84 percent higher than the P11.97 COP recorded in 2015. Due to the “uncompetitive” support price of the NFA for palay,

Paraluman said the food agency was unable to make use its entire procurement budget of P7 billion for this year. “The NFA has a budget of P7 billion that should be used solely for procuring palay from farmers. Right now, the NFA was only able to use around P1.8 billion because it cannot buy palay from farmers,” Paraluman said. Paraluman said he would appeal anew in the next NFAC meeting to approve the NFA’s proposal to increase its buying price so that the agency could use its remaining procurement budget. “Congress could question the NFA why they sought for a budget which they cannot use. The NFA would be forced to return the re-

maining money,” he said. The NFAC member also questioned the claim of economic managers that increasing the buying price of the NFA would accelerate inflation. “They have been saying that a higher support price would be inflationary. But why did the retail prices of rice continue to increase even if the buying price of the NFA is just P17?” Paraluman said. “Traders are now buying at a minimum of P22 per kg.” The Neda has already expressed its opposition to the NFA’s proposal to hike the support price for palay by P8 per kg. Neda Undersecretary for Policy and Planning Rosemarie G. Edillon and Regional Development Office Assistant Secretary Mercedita A. Sombilla said increasing the procurement price to P25 per kg, from P17 per kg will accelerate inflation. “The cost is obvious: inflation and NFA debt pileup but the benefits are unclear. We will ask for an intensive cost-benefit analysis first before we can agree [to the increase in buying price],” Edillon said. She added that, during a recent meeting with rice traders, the private rice traders informed the government that should the NFA hike its support price, they will follow suit. “ This means that the NFA will still not be able to get a big market share, but for sure, the price of rice will really go up. And since rice has a big weight in the consumer basket, then yes, [it will result in] high inflation,” Edillon said.

Farm-gate price of rice up 10.61% Trade chief wants changes at start of lean season–PSA report in sugar import rules T T he average farm-gate price of unmilled rice at the start of the lean season for the staple in the Philippines rose by 10.61 percent to P21.48 per kilogram, from P19.42 per kg recorded a year ago. The farm-gate price of palay as of the first week of July is the second-highest average palay quotation recorded in the country’s rice-production history, Philippine Statistics Authority (PSA) data compiled by the BusinessMirror showed. Preliminary data released by the PSA on Thursday showed that the latest average farmgate price of palay as of the first week of July is just P0.05 away from matching the highest quotation of P21.53 per kg recorded in the fourth week of July until the first week of August in 2014. “The average farm-gate price of palay at P21.48/kg posted an increment of 0.42 percent, from previous week’s level of P21.39/ kg,” the PSA said in its pricemonitoring report, titled “Updates on Palay, Rice, and Corn Prices,” published on Thursday. During the survey period of July 4 to 10, the PSA observed the highest farm-gate price of

palay in South Cotabato at P25.08 per kg. The lowest was recorded i n Composte l a Va l le y at P18 per kg. Industr y and gover nment sources told the BusinessMirror that the average quotation of palay could breach P22 per kg and set a new record-high during the lean season, which runs from July to September. The country’s rice harvest declines significantly during the lean months. The highest average quotation of palay of P21.53 per kg was recorded during the middle of the lean season of 2014. In fact, the price-monitoring report of the PSA showed that some regions have already breached the P22-per-kg average quotation. For example, the buying price of palay in Ilocos region averaged P22.50 per kg, while the average quotation in Central Luzon—the country’s rice granary—reached P22.43 per kg. Both the prices of well-milled rice and regular-milled rice at the retail and wholesale level posted increments, according to the PSA. “During the week, the average wholesale price of well-milled

rice at P41.87/kg picked up at a slower rate of 0.22 percent, from a week-ago level. It moved upward by 7.52 percent, from previous year’s price of P38.94/ kg,” the PSA said. “The average price of regular milled rice at P38.39/kg during the week posted an increase of 0.36 percent, from previous week ’s level. It also went up by 9.98 percent, from a yearago quotation of P35.18/kg,” it added. In a report, the PSA said unmilled rice production in the first half of the year likely rose by 1.2 percent to 8.67 million metric tons, from the previous year’s 8.57 MMT. Despite the slight contraction in yield per hectare to 4.08 metric tons, from 4.09 MT last year, the PSA said harvest area may expand to 2.12 million hectares in the January-to-June period, from the 2017 record of 2.1 million hectares. Based on farmers’ planting intentions, the PSA also said production in the July-to-September period may post a slight decline due to the farmer’s anticipation of the late onset of rainfall. Jasper Emmanuel Y. Arcalas and

Monique Danielle A. Fernando

By Elijah Felice E. Rosales @alyasjah

r ade Secretar y R amon M. Lopez is in favor of c h a ng i ng r u les on i mporting sugar and said manufacturers should be allowed to d irect ly buy the staple f rom foreign producers. In a recent speech, Lopez said sugar-based manufacturers will always be on the losing end if the government will not allow them to directly import sugar. Consumers, he argued, will bear the burden of higher prices as producers will be forced to use domestic sugar, which is currently more expensive than imports. “All those manufacturing sugar users in the sector are at a disadvantage right now. What’s the solution? The solution is to allow importation. The good thing is that the DA [Department of Agriculture] has actually allowed already the importation of sugar,” Lopez said. “The bad news, of course, is it has been limited to a sector of planters, the millers and the traders. Why should it be limited to this sector?” he added. Lopez questioned the importation rules, and pointed out: “Why

don’t we allow the sugar-using industry to import their requirements so they benefit from the lower cost input, so the industry will be more competitive? That’s an issue.” T he c h ie f of t he D e pa r t ment of Trade a nd Indust r y believes the sugar importation regime must be liberalized and m a nu fac t u rers mu st be permitted to buy foreign sugar if shortage arises. “At the end of the day, if you add all these costs—additional fees on any sugar importation—when it gets to retail, to the supermarkets and the wet markets, the sugar becomes too expensive already. You get sugar for what used to be P50 per kilogram [kg], [now] it is close to P60 and, even more, P65 per kg,” Lopez added. “That’s also the reason some basic commodities are priced high, as sugar pr ices have been really going up. It’s not good for consumer, [nor is it] good for t he m a nu fac t u r i ng industry,” he said. In a previous interview with the BusinessMirror, a confectionery industry source demanded that the government allow manufacturers to directly buy

imported sugar. The source said “there has to be a built-in mechanism that if there is a shortage, even industrial [users will be allowed to import].” A g r icu lture Secretar y Emmanuel F. Piñol warned traders that he will permit direct importation of sugar if they fail to supply the volume required by manufacturers. T he source sa id, however, that Piñol’s plan is not enough and it is already “moot” to discuss the importation of 200,00 metric tons (MT) of sugar at this point. “It is a moot point [to discuss that] at this time. They will let their recent sugar order to import play out, whatever happens. What we are looking forward to is the future,” the source said. “It will hasten the importation because manufacturers will be accredited to do so. [They should also] do away with the conversion, or let the government mandate the conversion rates,” he added. The industry insider argued the government will still oversee the procedure if manufacturers are given the freedom to import the staple in times of shortage.

A10 Friday, July 20, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

www.businessmirror.com.ph

editorial

The trade war

W

e often look for reasons to be a part of the bigger picture and the “trade war” between the United States and China is not an exception. While those that examine Philippine trade have stated for the most part that the Philippines is not involved, certain quarters keep trying.

The Philippines does export $2.5 billion worth of electronic equipment to China that conceivably could be part of China’s finished goods exports to the US and subject to increased tariffs. But to say that the trade problems between the two economic giants are going to have a major impact on the Philippines is a giant leap. Some analysts have been pushing the trade problems as a reason for the recent dismal stock market performance. However, they never seem to be able to mention exactly how and why local companies would suffer financially. It always seems to come down to negative investor sentiment, and that too is a big logic jump. It may be true that foreign investors are selling local stocks because they fear a spillover on the Philippines, but again there are no specifics of how that might happen. In fact, former Trade Secretary Adrian Cristobal—now president of SteelAsia Manufacturing Corp.—said the “United States-China trade spat may even bring down prices of steel locally.” It is difficult to fault the United States for being concerned about its huge trade deficit with China. Last year China imported about $130 billion worth of goods from the US. The US, though, imported some $500 billion worth of Chinese goods. Those facts give the US a strong advantage in the war. China has much more to lose than the US does as the two countries raise tariffs on the other. The one thing about a trade war is that it is “fought” to impose short-term pain for long-term gain, and that is what the US is striving for. Further, unlike with bullets and bombs, a trade war can be stopped in an instant by simply lifting the new tariffs with a single signature. However, the US is at risk. The one thing that could turn the situation around in an instant is if the US stock market starts failing as the higher tariffs begin to bite the US economy as the prices of imported goods go higher. China can respond by depreciating its currency to offset the higher prices from the increased customs duties. This week, the dollar exchange rate for the yuan in China is at a 12-month low. It is important to note that the People’s Bank of China sets the exchange rate, so this is not market forces depreciating the Chinese currency. And the yuan is being taken down at a faster rate than back in 2015 when China devalued its currency. Both sides are betting that the other will blink first. What we in the Philippines should be doing is figuring out how we can benefit and take advantage of the situation. Since 2005

BusinessMirror A broader look at today’s business ✝ Ambassador Antonio L. Cabangon Chua Founder Publisher Editor in Chief Associate Editor News Editor Senior Editors

T. Anthony C. Cabangon

Jennifer A. Ng Vittorio V. Vitug Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos Dennis D. Estopace Ruben M. Cruz Jr. Angel R. Calso

Creative Director Chief Photographer

Eduardo A. Davad Nonilon G. Reyes Judge Pedro T. Santiago (Ret.) Benjamin V. Ramos Adebelo D. Gasmin Marvin Nisperos Estigoy Aldwin Maralit Tolosa Rolando M. Manangan

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

www.businessmirror.com.ph

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

James Jimenez

spox

R

ight off the bat, the most obvious difference between the 1987 Constitution’s and the Bayanihan Federalism Charter’s Article on Suffrage is length. The former is all of two Sections long; the latter, a gargantuan eight. More than that, the Bayanihan Charter introduces several new ideas that are worth diving deep into. Take the draft Charter’s anti-dynasty provision as an example. Unlike the 1987 Constitution, the Bayanihan Charter actually ventures into defining dynasties (Article V, Section 8a), and prohibiting certain classes of people from standing for election (Article V, Sections 8b,c). The Bayanihan Charter scores big for at least making the attempt to wrangle with this intrinsically contentious and sensitive issue. Unfortunately, the outcome of the effort also falls far short in terms of clarity. First, the declaration of principle (i.e., the first paragraph of the Section) spells out the State’s interest in preventing the formation of dynasties—to “prevent the concentration, consolidation, or perpetuation of political power in persons related to one another.” Obviously, there is no jurisprudence on this yet, but it’s a safe bet that this declaration will come under a lot of scrutiny as political

families try to wriggle out from under this anti-dynasty sledgehammer. It can be argued, for instance, that the State has no business imposing what would amount to prior restraint on both a person’s right to stand for office, and the voters’ right to select their representative in the government. Second, Section 8(a) defines the conditions under which a dynasty can be said to exist. The key elements seem to be the existence of 1) a family, 2) whose members up to the 2nd degree of consanguinity or affinity, 3) maintain or are capable of maintaining political control, 4) by succession, or by simultaneously running for, or holding elective positions. Apart from the fact that Section 8(a) declares that the legitimacy of the relationships is considered immaterial—and rightly so—this definition is incredibly vague and

only spawns more questions than it answers. What does the provision mean by “capable of maintaining control?” Does this phrasing imply that mere capability is enough and that the actual control is not necessary? And what exactly does “political control” technically and legally mean anyway? The clause that speaks of maintaining control “by succession” is no better. When we speak of succession and successors in the context of our democracy, we normally refer to holders of positions that— by law—are bound to step into a recently vacated position. Thus, if the presidency is vacated, the VP becomes the successor; if the VP goes, the Senate President steps in, and so on, down the line of succession. Is this what the Bayanihan Charter refers to? And what about the proscription against “simultaneously running or holding office?” Will this apply even if the elective offices concerned are in separate political subdivisions? Again, these are things that’ll probably have to be threshed out in Court. For now, however, it would be good to be aware that this version of a Constitutional anti-dynasty provision is probably just as non-selfexecutory as its much bemoaned predecessor. Third, Section 8 (c) might be the worst offender of all. This provision says that persons related within the second civil degree of consanguinity or affinity are “prohibited from running simultaneously for more

than one national and one regional or local position. However, in the event that two or more members of the same family are running, the member who shall be allowed to be a candidate shall be determined by the drawing of lots.” Let’s try to visualize that: Maria, Marietta and Marissa are three generations of the same family—all within two degrees from each other. Since Section 8(c) says they cannot run, at the same time, for more than one national, regional, or local position, then it would seem that they can all run for the same position. But the second clause of Section 8(c) retorts: if two or more members of the same family—hence, Maria, Marietta and Marissa—are running, only one of them will be allowed to be a candidate. Does this mean, therefore, that when all is said and done, only one person from the family can actually run for the same level office? Why not just say so in the first place? And why specify that lots need to be drawn? Does the State really need to concern itself with how family members resolve these differences? If none of this is crystal clear to you, trust me: you are not alone. About the only thing I can definitively claim to understand completely with this particular part of the Bayanihan Charter’s Article on Suffrage is Section 8(d)—“The Federal Congress may, by law, provide for additional prohibitions.” It sure can, and I’m also fairly certain that didn’t actually need to be said.

Lourdes M. Fernandez

Online Editor Social Media Editor

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

Anti-dynasty 2018

Teachers need to build strong relationships with school stakeholders

A

By Rose Macapulay

S teachers, our primary goal for our students is to promote learning, inspire them to bring out their best and help them become productive members of the community.

Some teachers are more popular than others among students. These teachers become popular by building good relationships with their students, and by treating them with respect. However, this ideal situation would not be possible without the help and support of all school stakeholders. Stakeholders are individuals or groups who have an interest or concern for the school. They include parents, school administrators, board members, local government officials, alumni and socio-civic groups who contribute to the development of the school community. Thus, a healthy relationship between the teachers and stakeholders is important, as this will enable

everybody to harmoniously work together, which will have a positive impact on the students. Parents desire a successful educational system for their children; while the students themselves want to receive good education. It’s easy to imagine the influence the education system has on government officials, like city councilors and district representatives, as voters also base their decision on the way public officials show their support to the school system. In fact, the community as a whole is the biggest stakeholder in its education system. This is because local schools educate future employees, business owners and community leaders. A solid education program

builds a stronger community by preparing students to be successful community members. Since everyone in a community is a stakeholder in the local education system, every stakeholder plays a different, significant role in supporting the education system. For example, a stakeholder’s input and relationship with other stakeholders are important in the planning, implementation and evaluation of, say, health promotion and education programs in schools. Their personal perceptions and understanding can help motivate children in the school environment. Parents, on the other hand, can support and influence the adoption and implementation of a solid school curriculum. In addition, the parents can help monitor and evaluate the implementation of the curriculum by keeping abreast with the performance of their children, particularly by monitoring their

homework activities. Furthermore, the parents can help teachers by monitoring the behavior and social development of their children at home, especially for children with special education needs. As teachers, we know we are dealing with fragile beings. Adolescence, for example, brings insecurities. Individuals at this age are pulling away from adults. Being accepted by their peers is the key to develop their selfesteem. When children feel good about themselves, it’s much easier to motivate them to become academically proficient. To fulfill our goals of developing successful students, teachers must work together with school stakeholders in planning and building a school community where children thrive as they enhance their learning capabilities. The author is Principal II at the Afusing National High School in Alcala, Cagayan.

Opinion BusinessMirror

www.businessmirror.com.ph

Apple deserves a fine from the EU, too

Cinema is heritage Tito Genova Valiente

annotations

Leonid Bershidsky

BLOOMBERG

T

he European Commission had solid antitrust reasons for fining Google €4.3 billion ($5 billion) for violations including the bundling of certain apps with the Android operating system—and for not going after Apple for similar behavior. Yet, from a consumer’s point of view, Apple should get the same kind of attention. The most important infraction by Google in the EU ruling is the “illegal tying” of its search and browser apps to the Android operating system. The search giant, the ruling said, made Android phone manufacturers preinstall its search and browser applications if they wanted to provide access to the Google Play Store, where almost all Android users get their apps. That, according to the European Commission, reduced the ability of other search providers and browser developers to compete because preinstallation creates a “status-quo bias”: Users are too lazy to research alternatives to apps that are already on their new phones. The commission ruled that the bundling practices were illegal because of Google’s dominance in the markets of “licensable smart-mobile operating systems and app stores for the Android mobile operating system.” The language matters because Apple (or Blackberry) doesn’t license its operating systems to equipment manufacturers. It produces a full package and cannot be accused of putting illegal pressure on manufacturers. It makes intuitive sense for the European Union (EU) to refrain from punishing Apple, too: If a product wholly belongs to a company, it can decide what to wrap into it. But if Google is at fault for its de facto monopoly in Android app stores, Apple should be held to account for a similar violation. Although an Android user can easily shop in a few alternative stores (though none is a match for the Google Play Store), an iPhone user cannot go outside Apple’s App Store without “jailbreaking” the phone, a process that disables operating system updates. That makes Apple a monopoly in the truest sense of the word, and the US Supreme Court has agreed to hear a suit challenging this super-dominant position on behalf of consumers who have no choice but to pay Apple’s 30-percent commission for developers as part of every app’s price. Like Google, Apple makes its preinstalled browser impossible to delete from a phone. Google, however, allows users to choose their own default applications, including the browser and maps. Apple doesn’t do that; you can, for example, install Google’s Chrome browser and Google Maps on an iPhone, but they won’t launch by default when you click on a link in an e-mail or another app. That’s even more anticompetitive than simply preinstalling one’s own software and hoping users will keep it because it’s good enough. Indeed, Chrome’s market share on mobile devices is smaller than Android’s. Apple is more effective at

keeping competitors out: Its Safari browser holds almost the same market share as its iOS operating system. As a consumer, I’d like all phone makers, whether their gadgets run Android, the iOS, Samsung’s Tizen, Linux or something even more exotic, to offer me a choice of apps. When setting up a new phone, users should see a list of browser apps, with ratings from users and independent reviewers, along with a list of e-mail applications and mapping and navigation apps. The lazier users could just hit a button for installing all the apps recommended by the operatingsystem producer. The experience of Microsoft, which was forced by the EU to give users a choice of browsers on Windows computers (it was fined twice for not doing so) shows that letting people decide for themselves creates a level playing field for competition. Chrome, and not a Microsoft-developed program, is now the most popular browser on Windows. Independent developers are capable of producing better apps than those created by the big platform companies. They deserve a boost from a universal preinstallation ban. And the platform companies, too, can only benefit from more competition: It’ll keep them in shape as app developers. It’s understandable that Margrethe Vestager, the EU competition commissioner, didn’t go for a complete ban on preinstalling basic apps on mobile phones. Trying to regulate giants such as Apple, Google, Facebook, Microsoft and Intel, which have all received antitrust fines from the EU in the last 10 years, requires a lot of resources. The companies fight back with all their lobbying might, and appeal every ruling against them. Vestager has to concentrate on areas where she’s on the most solid ground, and going for major behavior changes in an entire industry probably would be too ambitious. On Wednesday she said repeatedly that it wasn’t her business to tell Google what to do, just to punish it for illegal behavior. And yet there is a case to be made for regulatory interference in app preinstallation practices. European companies are unlikely to become operating system leaders in the foreseeable future. But Europe does have a sizable app economy: In 2017 it employed 1.89 million people, compared with 1.73 million in the United States. Giving this industry easier access to consumers should be a goal for European policy-makers and regulators. Vestager’s latest Google ruling should be just a first step, not an isolated attack on one US company for something others do, too.

I

f we are to consider the recent celebration of the Heritage Month, one notices no mention of cinema as part of the national heritage, if by heritage we mean the components of cultures that create the politics, sociology and splendor of a nation. This gap in the reckoning of what we mean by heritage or national cultural legacy must be addressed. I write this paper not so much as to convince any institution—because there should be no convincing as to the existing value of cinema—but to articulate the compelling presence and roles of cinema in the life of a nation and its people and all the ethnolinguistic groups that compose that aggrupation. Hereunder follow my views of cinema as heritage: Cinema compared to the other arts is ideologically, politically and technically a popular and populist art. Cinema does not have to grapple with the divides provided by class structures and education. Organic to cinema is its ability to reflect (a theoretical perspective inherent in the past decades) and refract (a way of seeing that diverts from what is widespread at present), subvert, interrogate, even merely indicate the questions, crises, and dreams of a group of people, whether they are at the center of a perceived urban civilization, as a dominant class in the socially stratified society or at the margin or periphery of a heavily centralized cultural renaissance and aesthetic inventions. Cinema, despite being the youngest of the arts, is at the forefront of how arts can work with the rapid changes in societies and in people’s worldview and ethos. Cinema, at its very core, has been invented to question other arts and itself. When the Lumierre Brothers came up with the cinematograph, which allowed them to screen “moving pictures”

to an audience of some 200 people, they initiated an art form that would evolve and shift not only from within but also from without—cinema being an art form that requires the audience actively sensing the images projected, extending the narrative with their reactions and responses, and—through radical shifts in film-viewing (death of stand-alone cinemas, end of the continuous screening among many other factors), giving rise to an art form that is radically and wonderfully transitioning in forms. Cinema is nation-building. When Hollywood became a machinery and a technological dictatorship, cinema was reinvented into “national cinemas.” This historical development provides us an understanding how cinema comments on the identities, or the problems of the identification and definition of the same identities, and throw those words onto the world screen. Thus, there came to be “French cinema,” “Italian cinema,” “Japanese cinema.” All these labels were and are responses and counteractions to the aggressively marketed and arrogantly exhibited films from Hollywood. The Hollywood machine was helped in no small measure by colonization, when that nation taught the world how to speak and think in English. We are the prime example of this tacit conquest. While there is a critical stance that cinema is inescapably international, there is also the perquisition and inquiry that cinemas can be used to manifest the characteristics of the arts of a

Bloomberg Opinion

J

erome Powell became chairman of the Federal Reserve (the Fed) in February, but two very short—and very new—words he proclaimed to Congress this week signaled the approach of an important new phase in United States central banking. The coming period will be one he owns. It won’t be guided by cruise control, will be more data-driven and might reflect a gut feel for the economy, given Powell’s background in private equity rather than academic economics.

The two words were “for now,” and they appeared near the end of Powell’s five-page prepared remarks to Senate Banking Committee, where he testified on Tuesday. They were inserted into an otherwise routine sentence explaining that the Federal Open Market Committee (FOMC) of Fed members and regional central bankers believes that the best path is to keep raising interest rates gradually, as the Fed has been doing since 2015. Powell was careful to add that rates could rise faster or slower, depending on circumstances. Fed watchers tended to interpret the comments to mean that the Fed would be disinclined to raise rates aggressive-

particular nation. That, in the end, cinema can have nationality. Cinema is national arts. Contemplate these names: Gerardo de Leon, Lamberto Avellana, Manuel Conde, Eddie Romero, Lino Brocka and Ishmael Bernal and Fernando Poe Jr. They—together with the scriptwriters, musicians, cinematographers, technical men and women—at particular as well as specific historical points of the arts, in parts and of societies, as totality, commented, defined, engaged and imagined for us the issues and themes that were within the grasp of the literati and the illiterate and nonliterate, of the formally educated, the informally educated and the uneducated. Complicate this in a beautiful way: Examine the growth of regional cinemas and factor in the search and formation of the nation the contribution from below and from out of the center—the regional and local complexions of the other languages and cultures. If we are to define heritage, we can examine the definition put forward by the United Nations Educational, Scientific and Cultural Organization (Unesco) and appearing on its web site. It asks the question: What is meant by “cultural heritage?” Its response: The term cultural heritage encompasses several main categories of heritage. Under cultural heritage are the following: Tangible cultural heritage: n Movable cultural heritage (paintings, sculptures, coins, manuscripts); n Immovable cultural heritage (monuments, archaeological sites and so on); and n Underwater cultural heritage (shipwrecks, underwater ruins and cities). Intangible cultural heritage: oral traditions, performing arts, rituals Natural heritage: natural sites with cultural aspects, such as cultural landscapes, physical, biological or geological formations The definition is not static because Unesco even indicates another category: Heritage in the event of armed conflict. This refers to places where heritage sites are ruined,

destroyed or eradicated because of armed conflicts. The definitions of Unesco further envisions the natural strength of cinema where it is able to document, preserve the vanishing discourses and scenarios of various ethnic groups, especially those that are threatened both by armed conflicts and perspectives that deny the persistence of certain communities and their practices and rituals. National Artist for Film and Theater (in various documents, he is listed under Theatre) Lamberto Avellana has been quoted in the January 1985 issue of Filipino Film Review, as he answered the question: How would you evaluate the development of cinema in our country in the same manner that the Europeans have developed a cinema distinctly their own? To this, Avellana responded: I believe that there is a Filipino feeling for movies; a Filipino way of film making; and one day this will emerge, slower than usual, human, pathetic, touching the heart. On the screen, we’ll see the way we talk, the way we make love, the way we die. We are a unique people living in a unique place, and we deserve a uniquely Filipino cinema. If Heritage—palpable and sensual, political and social—is to be counted, then cinema should be there within that definition, within that movement, within that celebration. Bienvenido Lumbera, national artist for literature and one of the original founders of the Manunuri ng Pelikulang Pilipino, considered to be the premier critics group in the country, states in his essay, “An Approach to Filipino Cinema,” how “a film is not merely an interplay of light and shadow, of movement and stillness, or of sound and silence. It is about something, and this something is rooted in the realities of the society, which produced the film.” Those realities, aside from the lovely sights and visions, are part of our cultural heritage, and they, the legacies of the past we can all share and remember, are indeed rooted in cinema, the art form for a nation and all its wonderful permutations. E-mail: titovaliente@yahoo.com.

Why Israel got the biggest win from Helsinki By Zev Chafets Bloomberg Opinion

I

sr aeli Prime Minister Benjamin “Bibi” Netanyahu is enjoying a triumphal moment. He didn’t attend the Helsinki summit between Vladimir Putin and Donald J. Trump, of course, but he certainly felt he was represented there. “I think we really came to a lot of good conclusions, a really good conclusion for Israel,” Trump told interviewer Sean Hannity immediately after the meeting. Putin, Trump said, “is a believer in Israel. He’s a fan of Bibi. He is really helping him a lot and will help him a lot, which is good for all of us.” At the summit’s concluding press conference, Putin also had a gift for Bibi: “The situation on the Golan Heights must be restored to what it was after the 1974 [separation of forces] agreement,” he said. This is precisely what Netanyahu asked him for when they met in Moscow, a few days before the summit. It means a complete cease-fire along the Israel-Syrian border and no foreign troops anywhere in the vicinity.

Officially, Netanyahu (and Trump) want all Iranian troops withdrawn from Syria. But neither is willing to expel the Iranians by force, which would require ground troops, and so a compromise is needed. Israel can live with a relatively small contingent of Iranian “advisers,” stationed east of Damascus, far from its border. That would suit both the United States and Russia. The Iranians, of course, don’t want to go anywhere, and they don’t intend to accept limitations on the deployment of their forces. But if there is an American-Russian agreement on no-go zones for Iranian troops, there is very little they can do. Senior Israeli security officials say such a ban can be effectively enforced, and scoff at the notion, recently mentioned in the media, that large formations of Iranian troops can evade detection by simply donning Syrian uniforms. “The Iranian army speaks Farsi, not Arabic,” one senior Israeli government official told me. “We have all sorts of ways to tell them from the Syrian army or Hezbollah. We really don’t require a dress code.” Russia does not necessarily want all

Powell just said that it’s his Fed policy now By Daniel Moss

Friday, July 20, 2018 A11

ly. Traders were skeptical and pushed the dollar higher. Until now, Powell has operated within the framework that he inherited from his predecessor, Janet Yellen. That approach has been characterized by a quarter-point increase in interest rates every three months at the moment the Fed publishes quarterly projections for jobs, growth and inflation. His task has been made easy by an economy that’s behaved as anticipated. The expansion is humming along, the unemployment rate grinds lower and inflation has finally risen to the Fed’s 2-percent target rate. The FOMC has

been able to incrementally and predictably take back some of the stimulus pumped into the economy during the 2008 recession and its aftermath. The aim was to move toward an interestrate level that neither stimulates nor restricts growth. That neutral-rate nirvana was seen as coming, but not immediately. Powell’s “for now” was an effort to speed things along. Speeches by Fed officials, minutes of meetings and anecdotedriven business surveys like the Fed’s Beige Book will be more closely scrutinized. The FOMC’s next scheduled meetings in August and September are too close to expect a change in the rate

Iranian troops to leave Syria. It is building permanent installations and ports in Syria, and it needs a stable regime in Damascus. Putin has no interest in serving as Assad’s internal security policeman, and it would serve his purpose to have Iran providing muscle in the immediate post-civil war period. If and when Bashar al-Assad gets full control of the country, he may well get rid of the Iranians himself. Arab dictators are notoriously unwilling to cede freedom of action to non-Arab (and in this case, non-Alawite) armed personnel on their turf. Another issue that seems settled, at least for now, is Israel’s right to interdict Iranian weapons shipments sent via Syria to Hezbollah in Lebanon. These strikes have been going on for a long time, with American encouragement and Russian acquiescence. There is no sign the status quo is changing. Less than 24 hours before the Helsinki summit, Israeli planes attacked an airbase near the Syrian city of Aleppo. A number of Iranian personnel were reportedly killed. Netanyahu would never have green-lit such a mis-

sion without being confident of Putin’s tacit agreement. Of course there is a land route from Iran to Lebanon, via Iraq and Syria. At present the US has roughly 2,000 troops stationed in the area, making it impractical for Iran to use it for large-scale arms smuggling. Back in April Trump let it be known that he intended to remove these troops soon. Netanyahu considered this a serious mistake and told him so. Trump got the message. Before the Nato conference in Brussels, his National Security Adviser John Bolton explained to ABC’s Jonathan Karl that there has been a change of plan. “I think the president has made it clear that we are [in Syria] until the ISIS territorial caliphate is removed and as long as the Iranian menace continues throughout the Middle East,” he said. In Brussels Trump made it clear to his Nato allies that he intends to hit Iran by waging brutal economic warfare. “Their economy is collapsing” he said. “At a certain point, they’re going to call me, and they’re going to say ‘Let’s make a deal,’ and we’ll make a deal. But they’re feeling a lot of pain right now.”

trajectory. From then on, be on alert. Four rate hikes this year, foreshadowed in June, would get the benchmark rate to a range of 2.25 percent to 2.5 percent. That’s not far from the 2.9 percent the Fed views as sustainable over the long run, kind of a proxy for neutrality. There were other refreshing Powell touches before the Senate. Baited by senators eager for Fed action to influence trade, fiscal policy, productivity and education, he was direct about where his responsibilities begin and end. To Sen. Tim Scott of South Carolina: “I’m really firmly committed to staying in our lane.” To Sen. Brian Schatz of Hawaii: “These are

things for the legislature to work on.” To Catherine Cortez Masto of Nevada: “We don’t have those tools, you have those tools.” I wrote in February after Powell’s first congressional testimony that he was his own man. He’s about to have his own era. If that era is characterized by an end to investor complacency in the face of global disruptions like trade conflict and alliance-shattering, that would be a public service. All the more so if a less formulaic approach to managing the economy can guide the US expansion to record territory. It’s now the second longest, after the 1990s. Jay Powell, all yours.

2nd Front Page BusinessMirror

A12 Friday, July 20, 2018

Bangsamoro organic law can hurdle SC scrutiny, says bicameral panel

A

By Jovee Marie N. dela Cruz

@joveemarie

FTER six days of deliberations, the congressional bicameral committee on Wednesday finally approved the proposed organic law for Bangsamoro in the Autonomous Region in Muslim Mindanao (BARMM), which they described as a lot better than the Autonomous Region in Muslim Mindanao (ARMM). T he 28 -member bica mera l conference committee said the proposed organic law, which seeks to abolish the ARMM and creates BARMM, can withstand constitutional scrutiny before the Supreme Court. The final copy of the reconciled proposed law will be ratified by Congress on Monday, July 23, and will be submitted to President Duterte to sign it into law hours before his third State of the Nation Address of the same day. “On behalf of our contingent to the BiCam Conference Committee on the Bangsamoro organic law, I have the honor to inform you that we have successfully accomplished the mandate you had given us. We will submit the BiCam Report for your ratification on Monday morning,” Majority Leader Rodolfo C. Fariñas Sr. of Ilocos Norte told reporters. “All of us took an oath to support and defend the Constitution of the Philippines. We have to abide by it,” Fariñas added. For her par t, A na k Mindanao Party-list Rep. Amihilda J.Sangcopan said the passage of the BARRM will address the peace and

order problem in Mindanao. “I and other [Moro] legislators fought hard for the passage of the peace bill. We bore the moral obligations in this August chambers, more so, our forebears who sought in every arena possible to push for a peaceful and just resolution to almost half a century of struggle for self-determination,” said Sangcopan, a member of the bicameral conference committee. “Moros will have something better than the status quo that is the Autonomous Region in Muslim Mindanao,” she added. The Bangsamoro region will be headed by a chief minister and a ceremonial leader called a Wali.

Parliament

Under its structural government, the BARMM would have a parliament of 80 members composed of 50 percent party representatives, 40 percent district representatives and 10 percent sectoral representatives. Article VII said the Seat of Government, where the Bangsamoro Parliament shall determine the seat of the Bangsamoro Government anywhere within

the jurisdiction, and the Powers of Government, where the powers of government shall be vested in the Bangsamoro Parliament. On the policies regarding the Executive Offices, the reconciled version of the measure said the executive function and authority shall be exercised by the Cabinet, headed by the Chief Minister. The Chief Minister shall be elected by a majority vote from the members of the Parliament. Both versions of the two chambers’ proposed Bangsamoro law on the powers, duties and functions of the Chief Minister were adopted. According to the measure, the Chief Minister shall head the Bangsamoro government; appoint officers; formulate the platform of government; issue executive orders; and represent the Bangsamoro government outside the Bangsamoro. Meanwhile, the committee approved having two Deputy Chief Ministers to be nominated by the Chief Minister, as appointed by the members of the Parliament from among themselves instead of the original provision of the House version—which states that there shall be two Deputy Chief Ministers to be appointed by the Chief Minister. The approved version includes also a provision guaranteeing two reserved seats for “non-Moro indigenous peoples and settler communities.” Except from energy-producing bodies of water like Lake Lanao that will be handled jointly by the Department of Energy and the Bangsamoro region, the latter will oversee all inland bodies of water. The coverage of the region includes current ARMM provinces, such as Tawi-Tawi, Sulu, Basilan,

Maguindanao and Lanao del Sur, while a regional plebiscite is awaited. The bicameral committee adopted the House version of the measure which provides that “the six municipalities of Lanao del Norte and the 39 barangays of North Cotabato could vote to join the territory in a referendum to be conducted in the mother territory of the areas involved.”

Share in taxes

The bicameral conference committee, meanwhile, adopted the House version of the bill regarding policies on the shares in taxes of the national government. Under the provision, 75 percent of the national government taxes, fees and charges collected in the Autonomous Region in the Bangsamoro shall be shared to the Bangsamoro, including the shares of the local government units, and the remaining 25 percent to the national government. Meanwhile, on revenue sources, the Senate version of the Bangsamoro Basic Law (BBL) was accepted by the committee. It states that “the Bangsamoro Government shall have the power to create its own sources of revenues and to levy taxes, fees and charges.” The sources of revenue of the Bangsamoro Government shall include taxes; fees and charges; annual block grant from the national government; revenues from exploration, development and utilization of natural resources; dividends from Bangsamoro government-owned and -controlled corporations, financial institutions and other corporations; grants and donations; and loans. The bicameral-approved version said the national government and Bangsamoro shall jointly have the power to grant rights, privileges and concessions over the exploration, development and utilization of fossil fuels and uranium in the region. However, the House version was adopted regarding the annual block grant. This allows the national government to provide an annual block grant equivalent to 5 percent of the net ational Internal Revenue collection of the Bureau of Internal

Revenue and the net collection of the Bureau of Customs.

Police, military

The Bangsamoro region’s police and military will still be under the control of the national government and its Shari’ah or Islamic law, tribal and traditional, and other relevant laws are in consonance with the 1987 Constitution. It also provides for the creation of a Shari’ah high court, among others, and its powers. The measure provides for the addition of Shari’ah high, district and circuit courts to regular courts within the territorial jurisdiction of the Bangsamoro and confers on the Bangsamoro Parliament the power to enact laws on personal, family and property law jurisdiction. Shari’ah courts may also enact laws on commercial, other civil action not provided for under the Code of Muslim Personal Laws, and on minor crimes punishable by Ta’zir under Shari’ah law. The committee also settled differences in the sections of Article XVII, which provide conditions for amendments and revisions to the proposed law. Congress may propose amendments or revisions, and the enacted changes shall become effective upon approval by a majority vote of qualified voters in the region in a plebiscite called for the purpose.

Plebiscite in November

Me anwhile, Senate Majority Leader Juan Miguel F. Zubiri, cochairman of the panel, said the plebiscite for the proposed BBL may be held in November. Once the measure is ratified through a plebiscite, President Duterte could start appointing members of the Bangsamoro Transition Authority (BTA) by early next year, he said. A s t he rat if ic at ion of t he proposed law deems offices of the ARMM abolished, the BTA shall be tasked with scheduling the gradual phasing out of the concerned offices. Zubiri said the parliamentary elections for the new region may be held in 2022 along with the national elections. With Kezhia Maglasang

www.businessmirror.com.ph

3rd Sona to pitch federalism, rice tariffication; BOL to be signed

F

EDERALISM and the ricetariffication bill are among the expected priority legislative agenda that President Duterte will push in his third State of the Nation Address (Sona) on July 23, Malacañang said. Aside from these two, Presidential Spokesman Harry L. Roque Jr. said in a briefing on Thursday the President is also expected to discuss the Bangsamoro organic law (BOL) on Sona day. Roque said the President will sign the BOL before he delivers his Sona and after the two chambers of Congress ratify the measure on the morning of Monday. “Well, that will have to be the procedure because both Houses will meet separately to open the Third Regular Session of the 17th Congress, and the ratification will happen there,” Roque said. The bicameral conference committee approved late Wednesday night their version of the Bangsamoro Basic Law, which was renamed as the Organic Law for the Bangsamoro Autonomous Reg ion in Musl im Mind anao (BARMM) or the BOL. On federalism, the President’s Consultative Committee has submitted their proposed draft Federal Constitution on July 9. It was also able to give copies to both the House and the Senate. Concom also expects their draft to be endorsed formally during the President’s Sona. The Con-com’s draft is just “recommendatory,” however, and the mode of revising the Constitution whether through Constituent Assembly or Constitutional Convention must still be finalized. Meanwhile, the rice-tariffication bill, Roque said, is “an administration bill which has not seen the light of day.” Roque had earlier said that Duterte will be able to finish reading his Sona speech in under 35 minutes. The administration’s achievements were laid out during the three pre-Sona forums held this month at the Philippine International Convention Center in order to give the President the freedom to say whatever he wants in his Sona. Bernadette D. Nicolas

Congress urged to okay hike in IRA share of LGU from 40% to 60%

T

HE vice chairman of the House Committee on Appropriations on Thursday asked the leadership of both houses of Congress to pass the measure increasing the internal revenue allotment (IRA) share of local government units (LGUs) from 40 percent to 60 percent. Rep. Luis Raymund F. Villafuerte Jr. of Camarines Sur made a statement following a landmark Supreme Court ruling enlarging the IRA share of LGUs and in support of the planned switch to a federal form of government. House Bill (HB) 4697 aims to amend Sections 284 and 286 of the Local Government Code of 1991 to increase the current IRA of LGUs from 40 percent to 60 percent. Once enacted into law, the proposal will increase the IRA share of LGUs to 50 percent on the first year of effectivity, 55 percent on the second year and 60 percent on the third year. However, if the national government incurs an “unmanageable” public-sector deficit upon the effectivity of this amended

IR A law, HB 4697 authorizes the President of the Philippines, upon the recommendation of the secretaries of finance, of budget and management, and of interior and local government, to make the necessary adjustments in the IRA share of LGUs; but in no case shall the amount be lower than 40 percent of all national tax earnings in the third fiscal year prior to the current one. The bill also provides that, on top of the new IRA allotment, the LGUs’ share will include the cost of devolved functions for essential public services. Villafuerte said the IRA provision in the Local Government Code is meant to be “an integral part of local governance and local government,” and to provide local governments with resources to fund the implementation of their respective programs in their pursuit of genuine political and financial autonomy from the national or central government in Manila. The bill also aims to include all types of national taxes in the computation of the annual rev-

enues due provincial, city and municipal governments, which was already ruled upon by the Supreme Court in its landmark ruling on a separate petition filed by Batangas Gov. Hermilando Mandanas in 2012. The Supreme Court ruled last July 4 to grant Mandanas’s petition, stating in its decision that the “just share” of LGUs from taxes must be computed and sourced from “all national taxes” and not just from the national internal revenue taxes—or collections by the Bureau of Internal Revenue (BIR)—as is currently being done. With the approval of HB 4697, the lawmaker said LGUs could further be encouraged to support federalism and the public could be informed about how a federal setup would improve delivery of basic services and speed up the implementation of development programs at the local government level. A recent Pulse Asia survey showed 69 percent of Filipinos have admitted they know very little about federalism. Jovee Marie N. dela Cruz