SENATE EYEING P204-B MALAMPAYA FUND TO CUT CONSUMERS’ BILLS
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CTING on the initiative of Senate President Pro Tempore Ralph G. Recto, the Senate’s Committee on Energy is now “studying the possibility” of tapping the P204-billion Malampaya Fund to reduce the universal charge (UC) paid by end-consumers on their monthly electricity bills. Sen. Sherwin T. Gatchalian, Energy Committee chairman, estimates that Recto’s recommendation, if adopted, “could result in household savings as high as P2,033.76 annually” from lower electric bills. The Committee tackled on Tuesday Recto’s Senate Bill 924 which, once enacted into law, will allocate the net national government share from the
The Malampaya deep water gas to power project is seen in this file photo. SHELL.COM
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Malampaya Natural Gas Project for the payment of the stranded contract costs and stranded debts of the National Power Corp. SCC and SD are components used to compute the UC imposed on consumers under the Electric Power Industry Reform Act (Epira law) embodied in Republic Act 9136. In a statement, Gatchalian noted that data presented by the Power Sector Assets and Liabilities Management Corp. (PSALM), applying the remaining P204 billion of the Malampaya Fund, would avert an impending increase of P0.8474 per kilowatt-hour (kWh) in retail power rates. He added this would result in annual savings of P2,033.76 for an average household consuming 200 kWh per month. Gatchalian on See “Malampaya Fund,” A8
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n Tuesday, July 31, 2018 Vol. 13 No. 290
Palace warns Boracay casino firms: Don’t push it By Bernadette D. Nicolas
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ALACAÑANG issued a stern warning on Monday against those who would insist on building casino resorts on Boracay, saying that “no private entity should test the political will of the President.”
Presidential Spokesman Harry L. Roque Jr. made the statement after an official from the Leisure
and Resorts World Corp. (LRWC), the local partner of Macau’s Galaxy Entertainment Group Ltd., said
the company’s casino resort is “on track” to open in 2021 despite the six-month closure of Boracay.
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RADE officials have pitched to Japanese manufacturing firms the advantage of expanding operations in the Philippines, as the government looks to secure more commitments from its top source of foreign investments. In an investment road show in Japan last week, Trade Secretary Ramon M. Lopez urged an audience of more than 400 firms to do business in the Philippines. He claimed now is the best time to invest here, with the administration pursuing several economic reforms, including the passage of the ease of doing business law, the rollout of the “Build, Build, Build” program and the liberalization of various industries. “The Philippines is on an economic breakout. It is the perfect time to invest and do business in our country, which has a 6.8-percent GDP growth and an 8-percent growth in [the] manufacturing industry,” Lopez said. He conveyed his intent to tap Japan in the government’s bid to revive manufacturing and link it with agriculture and services under the Inclusive Innovation Industrial Strategy. Under the i3s, the government listed 12 priority industries it intends to develop, of which five are covered by manufacturing: electronics, automotive, shipbuilding, aerospace and furniture. Japan fits the picture, Lopez argued, as it is the country’s top source of offshore investment pledges. Its commitments to the Board of Invest-
Safety nets for rice farmers
Roque also reminded LRWC that the provisional license to operate a casino resort in Boracay that it obtained from the Philippine Amusement and Gaming Corp. does not necessarily mean that it can set up shop on the island. “I would hope they will respect that as part of the Executive branch’s power, noting that the provisional license is not a license itself. It is conditional. It is provisional. It is subject to happening of conditions, which will never be fulfilled because the President has said that he will not allow it,” he said.
resident Rodrigo Duterte’s call on Congress to pass the rice tariffication bill in compliance with our commitments to the World Trade Organization (WTO) will help moderate the inflation rate and encourage the agriculture sector to become more competitive. Rice accounts for a big part of the inflation basket of goods and services. It is also one of the biggest expenditure items among average Filipino households. The proposal is to lift the quantitative restriction on rice imports, as we committed to the WTO, and replace it with a 35-percent tariff rate or higher that will allow the private traders to import the commodity from other rice-producing countries to augment domestic supply.
See “Boracay,” A2
Continued on A6
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Banks’ total assets grow 12.2% in May
₧12.75B
By Bianca Cuaresma
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PESO exchange rates n US 53.3710
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the Aquino-era Disbursement Acceleration Program (DAP); and Package 2 of Comprehensive Tax Reform Package (CTRP). “The budget modernization bill pending in Congress will promote and implement participatory budget mechanisms in the different phases of the budget cycle to entice citizen engagement and ensure a more responsive budget,” Duterte said.
HE local banking system’s balance sheet posted double-digit growth in May this year, latest data from the Bangko Sentral ng Pilipinas (BSP) showed. Philippine banks’ total assets in May this year hit P15.56 trillion. This is a 12.2-percent growth from the P13.87 trillion in the same month last year. In end-2017 the local banks’ total asset pool grew by 11.59 percent, from its level in end-2016. BSP Governor Nestor A. Espenilla Jr. said the expansion of the banks’ total assets was funded by the 12.5-percent growth in deposits mostly deployed to lending activities. Espenilla said the loans were broad-based across various borrower and industry types. The BSP governor further lauded the banking system’s health and profitability in 2018, as buoyed by the increase in core income from lending activities. “Banks continue to adhere to sound credit underwriting standards as shown by the very satisfactory quality of the banking system’s loan portfolio. Moreover, banks are well prepared to bear credit losses as they have set up adequate provisions for possible defaults,” Espenilla said. “Moving forward, we expect further expansion of the banking
See “Duterte,” A2
See “Banks,” A8
Japan’s commitments to the Board of Investments and the Philippine Economic Zone Authority in January to May 2018, up by 286 percent, from P3.3 billion during the same period last year
ments and the Philippine Economic Zone Authority expanded to P12.75 billion in January to May, up by 286 percent, from P3.3 billion during the same period last year. “We are very keen on engaging with Japan, especially on the aspect of manufacturing and innovation, and how we can work together to strengthen not only manufacturing, but the MSMEs [micro, small and medium enterprises] in their value chain, as well,” Lopez added. The trade chief also told car parts makers they are assured of a site should they decide to operate in the Philippines. “We have identified opportunities for Japanese [automobile parts] makers to locate around the Toyota and Mitsubishi manufacturing plants in Laguna,” he said. According to Lopez, the country’s geographical position in Southeast Asia is advantageous for investors. He said it serves as an entry point to a region of over 600 million people, as well as access to the markets of the region’s neighboring countries.
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MANUFACTURING SECTOR BECKONS TO JAPANESE BIZ By Elijah Felice E. Rosales
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A worker at the Toyota Motor Philippines Corp. plant in Santa Rosa, Laguna, focuses on the body frame of a car in this BusinessMirror file photo. At an investment road show last week, Trade Secretary Ramon M. Lopez told Japanese businessmen this is the best time to invest in the country. He said they have, among others, identified opportunities for Japanese [automobile parts] makers to locate around the Toyota and Mitsubishi manufacturing plants in Laguna. NONIE REYES
Duterte asks Congress to pass 3 key reforms By Jovee Marie N. dela Cruz
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S the House of Representatives begins on Tuesday (July 31) the budget deliberations for the proposed P3.757-trillion national budget for 2019, the Palace has asked the leadership of the 17th Congress to pass two bills seeking to improve and support the country’s budgetary system, and the bill providing
for the conversion of quantitative restrictions to a rice tariff system. In his 2019 budget message to Congress, President Duterte mentioned two measures—the budget modernization bill or the measure strengthening Congress’s power of the purse by reiterating its power to appropriate and hold executive agencies accountable, especially in the light of the landmark decision of the Supreme Court outlawing pork barrel and
n japan 0.4812 n UK 69.9854 n HK 6.8011 n CHINA 7.8326 n singapore 39.2059 n australia 39.4732 n EU 62.2306 n SAUDI arabia 14.2311
Source: BSP (30 July 2018 )
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Andaya is new House majority leader, but minority leadership still in chaos
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WEEK after the election of Speaker Gloria MacapagalArroyo, the House of Representatives on Monday started electing its new officials. During Monday’s session, Deputy Speaker Fredenil Castro of Capiz moved to elect Deputy Speaker and Camarines Sur Rep. Rolando Andaya as the new majority leader to replace Rep. Rodolfo C. Fariñas Sr. of Ilocos Norte. For committee positions, Sagip Party-list Rep. Rodante Marcoleta was elected vice chairman of the House Committee on Rules, replacing Rep. Juan Pablo Bondoc, who also held the position of deputy majority leader. Leyte Rep. Yedda Marie Romualdez was named chairman of the House Committee on Accounts, replacing Batangas Rep. Eilene Ermita-Buhain. House members also elected Ret. Gen. Romeo Prestoza as the new House sergeant at arms, replacing Roland Detabali while Dante Roberto Maling was elected secretary-general, replacing Cesar Pareja. M i nutes before P resident Duterte was to deliver his third State of the Nation Address on
July 23, Arroyo was elected as the new Speaker and took her oath in full view of thousands of visitors, ousting Davao del Norte Rep. Pantaleon D. Alvarez.
Minority issue
Meanwhile, the session was adjourned on Monday without resolving the issue of the minority following heated debates between current members of the minority bloc led by Quezon Rep. Danilo E. Suarez and those of other opposition alliances that banded together—Makabayan, the Magnificent 7 and Liberal Party-led minority headed by Marikina Rep. Romero Quimbo. Also, former Majority Leader Fariñas threatened to bring the minority issue before the Supreme Court to resolve the problem, saying the Suarez camp abandoned their positions by voting for Arroyo. The Alvarez and Fariñas camp are also reinstitutioning themselves as part of the minority bloc, but gave assurances they
will still support the agenda of the Duterte administration. “We believe the acting minority leader was [ABS party-list] Rep. Eugene de Vera because all of them [members of the minority under Suarez] went to the majority [after voting for Arroyo],” Fariñas said. De Vera is the only member of the Suarez-led group who did not vote in favor of Arroyo. But Suarez has insisted on keeping his leadership, saying his post is valid until the end of the 17th Congress next year. “If you do not listen to me, I will bring the matter to the Supreme Court and that would be embarrassing,” said Fariñas. Fariñas also warned the leadership that if LP will lead the minority bloc, it will control the Legislative branch, as it is also minority in the Senate. On Monday members of the lef t-leaning Ma k abayan bloc teamed up with the members of the LP to join a Liberal-led minority bloc in the lower chamber. In a letter to Speaker Arroyo, Quimbo said several lawmakers have conducted a continuing organizational meeting and elected him as minority leader. With this, Quimbo said they now have 22 members in the minority bloc together with Makabayan and the Magnificent 7, who earlier joined the LP in forming the bloc.
T he s e l aw m a k e r s i nc lud e Cavite First District Rep. Francis Gerald Abaya, Dinagat Islands Rep. Kaka Bag-ao, Ifugao Rep. Teddy Baguilat Jr., Quezon City Third District Rep. Jorge Banal, Quezon City Sixth District Rep. Jose Christopher Belmonte, Camarines Sur Third District Rep. Gabriel Bordado Jr., Northern Samar First District Rep. Raul Daza, Pangasinan Fourth District Rep. Christopher de Venecia, Caloocan City Second District Rep. Edgar Erice, Albay First District Rep. Edcel Lagman, Negros Oriental First District Rep. Jocelyn Limkaichong and Occidental Mindoro Rep. Josephine Ramirez-Sato; Akbayan Rep. Tom Villarin, Magdalo Rep. Gary Alejano, Anakpawis Rep. Ariel Casilao, ACT Teachers Rep. France Castro, Gabriela Rep. Emmi de Jesus, Kabataan Rep. Sarah Elago, Gabriela Rep. Arlene Brosas, ACT Teachers Rep. Antonio Tinio and Bayan Muna Rep. Carlos Zarate. According to the rules of the House of Representatives, the minority bloc will be comprised of congressmen and party members who did not vote for the elected Speaker. Rule II, Section 8 of the rules of the House of Representatives states that members who voted for the winning candidate automatically become part of the majority.
Duterte asks Congress to pass 3 key reforms Continued from A1
The President is also pushing for the passage of the rice tariffication bill as the measure provides that revenues from rice tariffs shall be invested in public goods and services directly benefiting farmers through farm-to-market roads, irrigation and storage, which can reduce production and marketing costs. “For one, I am asking the help of Congress to consider the passage, as soon as possible, of our rice tariffication bill, a priority legislation of this administration, which is estimated to reduce the price of rice by P3.40 per kilogram,” Duterte said. “If implemented in the last quarter of this year, it could reduce headline inflation by about 0.20 percentage points, and an additional 0.60 percentage points in 2019. If implemented in the first quarter of 2019, headline inflation could decline by about 0.80 percentage points in full year 2019,” he added. The bill aims to amend the Agricultural Tariffication Act of 1996, which allows the NFA to monopolize rice importation. The House Bill 7735, or the “Revised Agricultural Tariffication Act,” is up for plenary debates in the House of Representatives.
Budget modernization
The budget modernization bill was filed in both chambers of Congress. HB 5590 was approved in March 2018 by the lower chamber. The Senate bill is pending. The Department of Budget and Management is pushing for the passage of the bill, a measure that seeks to modernize budgetary practices in the Philippines. It is an encompassing reform initiative covering the entire budget process—from budget planning, to budget execution, tracking and so forth. The DBM said bill will change the way the government does budgeting as it will address age-old problems like under spending and the usurpation of Congress’s power of the purse.
Boracay. . .
Continued from A1
Roque echoed Tourism Secretary Bernadette Fatima Romulo Puyat’s statement to the BusinessMirror over the weekend. Romulo Puyat said the President has not changed his mind about keeping casinos out of the country’s popular tourist destination. She also said only hotels and resorts accredited by the Department of Tourism (DOT) will be allowed to reopen on October 26.
Among the pertinent features of the reform bill is the shift from a multiyear obligation budget to an annual cash-based budget. The common budgetary practice in the Philippines is to allow appropriations and obligations until the next fiscal year, extending the validity of funds to two years.
Push for CTRP
Also, President Duterte once again urged Congress to pass the second package of the CTRP. “We urge Congress to study and thereby appreciate the merits of the other upcoming packages under the CTRP and to see beyond politics. The CTRP is not a populist reform measure,” he said. “It seeks not to deprive people of resources, but instead to give them more through lower income taxes. And it seeks not to destroy business confidence, but instead to build the appropriate environment to attract more investments through quality infrastructure development nationwide and lower corporate income tax,” Duterte added. Package 2 plus of the CTRP covers the lowering of the corporate income tax rate from the current 30 percent to 25 percent, and rationalization of fiscal incentives. Duterte said the 25-percent corporate tax rate is a competitive rate within the Asean region. “With an estimated P301.2 billion in annual foregone revenues in 2015 alone, the need to rationalize the existing 150 investment-related fiscal incentive laws has become a priority. Under this set up, we will need to identify activities worthy of our fiscal incentives, and ensure that there is a sunset provision in the grant thereof,” he added. Package 2 of the CTRP is now under deliberation by the House Committee on Ways and Means. Meanwhile, he thanked members of the House and the Senate for their thorough study and passage of the Tax Reform for Acceleration and Inclusion (TRAIN) law that took effect on “The President recently reiterated to the DOT his earlier position against the entry of casino operators in Boracay. This is in line with the desire of the DOT and tourism stakeholders in Boracay to further develop the island as a sustainable and family-oriented destination,” Romulo Puyat said. She said she asked the President to clarify the issue again last Friday (July 27): “I confirmed it with the President, and his stand is, ‘there would be no casinos in Boracay.’ The President’s stand has not changed.” Casinos that had been operat-
January 1, and through which the government will have the resources to achieve the goals of sustainable and inclusive growth that have eluded the people for years. “For fiscal year 2019, we submit for your perusal and approval, a national budget that will amplify the forces and resources to effectively and efficiently build our nation, in order to draw more of our people from the clutches of poverty and maintain law and order, so everybody lives in peaceful coexistence,”said the President. “We are almost midway to the path that our people have chosen to traverse with us, one that will take them from mere hopes and dreams of the past to the reality of a better and more comfortable life, in a peaceful and more progressive nation today. We are finally poised on the bridge that will lead us to the bright future that we can actually already glimpse,” said the President. He said the shift to annual cash-based appropriations from the current obligationbased appropriations will promote betterdesigned, better-coordinated projects and programs from agencies, and speed up delivery of goods and services to the people, while obligations or contracts for programs, activities and projects (PAP) for implementation during the fiscal year should be delivered, inspected and accepted by the end of the said fiscal year. Among the key budget priorities the President identified are: 1) intensifying infrastructure development through infrastructure projects in and outside Metro Manila and in local government units (LGUs), and through information-technology (IT) infrastructure; 2) expanding programs on human development; 3) enhancing social services through expanded educational opportunities, universal health for all, and social protection; 4) continuing provisions for the people’s basic needs by ensuring food security and securing meaningful
ing in Boracay prior to its closure were the Movenpick Resort and Spa and the Crown Regency Resort and Convention Center.
‘Iffy’ timetable Despite its pronouncement that it is on track to open its casino resort by 2021, LRWC could not say if construction would push through this year. LR WC Vice President K atrina Nepomuceno said the closure of the island gives the company time to complete necessary items running on a resort, including the master
employment; 5) rehabilitating Marawi and moving forward; and 6) building a more secure nation through hiring of more police officers and enhancing the capability of the Philippine National Police and the Armed Forces of the Philippines, and ensuring efficient administration of justice.
Budget hearings begin
Meanwhile, the House Committee on Appropriations will start to scrutinize today (Tuesday) the proposed P3.757-trillion national budget for 2019, themed “Building a Bright Future for the Philippines and Its People.” The committee has calendared hearings on the budget proposals of government agencies and departments from July 31 to August 29. A briefing by the Development Budget Coordination Committee, the interagency body that determines the overall economic targets, expenditure levels and sources of funds, will kick off Tuesday’s hearing. The agencies tabled for the last day of budget hearings on August 29 are the Office of the President, Office of the Vice President and the Department of National Defense. Under the proposed 2019 General Appropriations Act, education will remain a top priority of the Duterte administration with P659.3 billion, higher by P72.2 billion or 12.3 percent than its cash-based equivalent in the 2018 budget. Other agencies with big allocations are the Department of Public Works and Highways with P555.7 billion; the Department of the Interior and Local Government with P225.6 billion; the Department of National Defense with P183.4 billion; the Department of Social Welfare and Development with P173.3 billion; the Department of Health with P141.4 billion; the Department of Transportation with P76.1 billion; the Department of Agriculture with P49.8 billion; the Judiciary with P37.3 billion; and the Autonomous Region in Muslim Mindanao with P32.3 billion. plan for the 23-hectare area. Nepomuceno, however, said there is still no definite timetable for the components of the resort. The company earlier said the $500-million integrated gaming resort will “redefine” the standards of luxury resorts in the country with the bulk of its gross floor area allocated for premium hotel rooms and other amenities like wellness centers, bars, lounges and fine-dining restaurants. The LRWC official said at least three hotels are being eyed for the property when it opens.
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Gas prices going up by P1.15 a liter Tuesday; diesel, P0.95
File photo
A2 Tuesday, July 31, 2018
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IL companies have announced a hefty price increase in petroleum products starting Tuesday morning. In separate advisories, oil firms said they would jack up the price of gasoline by P1.15 per liter, diesel by P0.95 per liter and kerosene by P0.85 per liter. Seaoil Philippines, Phoenix Petroleum Philippines, PTT Philippines, Total Philippines, Petro
Gazz said they will implement the price adjustment at 6am of July 31. Other oil firms are expected to announce their price adjustments also within the day. Last week, oil firms reduced the price of gasoline by P0.70 per liter, diesel by P1 per liter and kerosene by P1.25 per liter. Local pump prices are mainly influenced by the crude prices in the world market, the peso-dollar exchange rate and taxes. Lenie Lectura
PNP deploys teams vs rice, food smugglers, profiteers By Rene Acosta
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HE Philippine National Police (PNP) will join the government’s campaign against rice smugglers and other illegal traders tagged as criminal manipulators of prices of basic commodities in the market. PNP chief Director General Oscar D. Albayalde said police operations are being mapped out with the guidance provided by President Duterte in his State of the Nation Address. “We will aggressively support concerned government agencies in waging war against unscrupulous traders who willfully manipulate market forces for their own selfish gain that result in higher prices of basic and essential commodities, particularly rice and food products,” Albayalde said. “These acts go beyond the economic issue of fair trade. This is a matter of food security that the state is duty-bound to protect and defend,” he added during a news briefing on Monday. In ordering the police to go after illegal businessmen, the PNP chief also directed the PNP Directorate for Operations to review all of its existing operational plans, directives and issuances, including exist-
ing memoranda of agreement with the Department of Agriculture and National Food Authority (NFA). The review is being taken in order to identify possible areas or room for improvement for the strengthened law-enforcement operations against “rice smuggling, hoarding, pilferage, profiteering and illegal trade practices involving rice and basic commodities.” Last week Sen. Cynthia A. Villar called on the government to arrest and prosecute at least one illegal rice trader in order to show that it is serious in dealing with rice smuggling. Albayalde said a “whole of government approach” is needed in order to decisively address the “chronic economic sabotage” that is being waged and sustained by “wealthy criminals whose protectors might be in the high places.” Aside from revisiting its agreements with the agriculture department and with the NFA on its law-enforcement operations, Albayalde also ordered the PNP to closely coordinate and work with the National Bureau of Investigation, the Department of Justice and the Philippine Competition Commission in the concerted effort to bring down illegal rice traders and market manipulators.
Atty. Andres G. Gatmaitan, 78
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AWYER Andres G. Gatmaitan died on July 25, 2018, at the age of 78, his family has announced with sadness. The memorial service will held on Tuesday, July 31, at the Santuario de San Jose in Greenhills, San Juan, beginning at 12 noon. There will also be a Mass at 7 p.m. Gatmaitan was born June 30, 1940, to Manuel Gatmaitan and Esperanza Gatmaytan and raised in Paombong, Bulacan. He married fellow accomplished lawyer, outstanding UP alumnus and devoted mother to eight children, Atty. Asuncion Yatco on February 22, 1960. A renowned lawyer, Gatmaitan was most recently the Senior Counsel at Sycip Salazar Hernandez and Gatmaitan, the largest law firm in the Philippines, which he also led for 18 years as managing partner and chairman of the Executive Committee. He guided it as it received national, regional and international recognition during his tenure. He was concurrently the chairman of a number of international law networks, sat on the boards of national and multinational companies and foundations, and was
president of the Yale Club of the Philippines, among many other leadership positions he held during his long career. A cum laude graduate of UP, former editor in chief of the Philippine Collegian, and valedictorian of his UP College of Law Class of 1961, he began to practice law in New York, working as a foreign associate for the Wall Street law firms Winthrop, Stimson, Putnam and Roberts and Cahill, Gordon, Reindel and Ohl, right after earning his master of laws and doctorate degrees from Yale Law School. Upon the invitation of the late Supreme Court Justice Florentino P. Feliciano, he returned to the Philippines to join the Sycip Law firm, where he rose to partner at the early age of 30. He is survived by his wife of 58 years, Asuncion; his children James (Yvette), Jonathan (Gina), Geraldine, Gwendolyn (Ray), John (Mimi), Peter (Karisia), Joshua (Patricia), and Jerome (Margie); brother Bienvenido, sisters Celia and Jeanette, predeceased by sisters Ding and Esther; grandchildren Jacob, Joachim, Jared, Andy, Ryan, Spencer, Marco, and Ian; many cousins, nephews and nieces.
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Zambo solon calls for rescue of debt-ridden power co-op By Jovee Marie N. dela Cruz @joveemarie
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lawmaker has called on the national government to intervene in the raging financial crisis besetting an electric cooperative in Zamboanga City. Zamboanga City Rep. Celso Lobregat said the Zamboanga City Electric Cooperative (Zamcelco) reportedly owes its suppliers some P2 billion, which, he claimed, could lead to the further deterioration of its power service and adversely affect residents and businesses in the area. The lawmaker asked the National Electrification Administration (NEA) to intervene and look for a company, which can be awarded an investment management contract (IMC) that will ensure the total rehabilitation of the power cooperative. “I believe NEA should come in already because this will be a long process. NEA should come in and maybe NEA should be the one to handle the bidding process,” he said. Lobregat said Zamcelco called for a rebidding of the IMC after Meralco-Comstech backed out, citing concerns about a lower system loss cap that will require additional investment. But some observers are claiming the new terms of reference have been watered down. Lobregat said awarding the IMC to the wrong company will only worsen Zamcelco’s delivery of service. “What is important to me is that the contract is awarded to a com-
pany that has experience in power distribution, and will not treat the process as an experiment to lower or manage the system loss,” he said. “The qualified bidder should not only have the financial backing, financial expertise, but the technical expertise and track record as well,” he added. Zamcelco’s debts are expected to balloon further once the Energy Regulatory Commission (ERC) lowers the system loss cap from 12 percent to 8.3 percent, the cost of which will be passed on to consumers. According to Lobregat, Zamcelco’s system loss is now at 24 percent and only 12 percent of it can be passed on to the consumers. The rest has to be shouldered by Zamcelco, the reason the cooperative is losing so much money. The lawmaker added Zamcelco should undertake measures to lower its system loss even before the IMC is set into motion. This, he pointed out, will ensure that it will not incur more losses and accumulate more debts. “The continued financial decline of Zamboanga City Electric Cooperative is bothersome, and leads to [the] further deterioration of its power service that can lead to outages which will adversely affect its residents and business,” he said. “Actually, the problem is worsening because the system loss is not going down and not improving. Last month, Zamcelco’s power supply was almost cut off because it couldn’t pay its suppliers in time,” he said.
PNP chief urges four ex-lawmakers linked in double-murder cases to yield
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By Rene Acosta
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espite being one of the best places to be a woman, the Philippines is still home to millions of “unpaid” women farmers, according to a study released by the Philippine Institute for Development Studies (PIDS). In a Policy Note, PIDS Senior Research Fellow Connie Bayudan-Dacuycuy said around 35 percent of women in the crop and animal production, hunting and related activities were unpaid. Women composed around 26 percent of agriculture workers in 2015 and 2014. In 2013 only 25 percent of these workers were women. “This [number of unpaid women workers] is substantially higher than the proportion of unpaid males in the sector, which is merely 12 percent. In addition, gender and land statistics show that only one in every 10 land titleholders is a female in 2002,” Dacuycuy said. The plight of women was largely due to traditions and norms, as well as the lack of a gender perspective in agricultural policies. Traditional role assignments where women are regarded as nurturers and men as providers, women “shoulder a disproportionate burden of the care economy” through housework and taking care of children, the sick and the elderly. This limits their ability to learn new skills and improve their abilities, as well as their contribution to the growth and development of the economy. In terms of policies, Dacuycuy said the agriculture and fisheries mechanization law and the proposed Free
“I am also appealing to these individuals to just turn themselves in, and to submit themselves to judicial processes,” the PNP chief said during a news briefing on Monday at Camp Crame. Regional Trial Court Branch 40 Judge Evelyn Atienza-Turla ordered the arrest two weeks ago of former Bayan Muna Reps. Satur Ocampo and Teodoro A. Casiño, former Gabriela Party-list Rep. and now National Anti-Poverty Commission (NAPC) Chairman Liza L. Maza and former Agrarian Reform Secretary Rafael V. Mariano. The four have been accused of conspiracy in the killings in 2006 of Carlito Bayudang on May 6, 2004, in Bongabon, Nueva Ecija, and Jimmy
Irrigation and Reform and Restructuring Act both fail to address women’s participation in agriculture. “As a result of these constraints, women may still prefer growing crops that use low external input techniques, such as those that do not need much fertilizers, pesticides, tractors and mechanized equipment. Policies that can address these issues can help make women’s agricultural livelihoods more sustainable,” Dacuycuy said. In order to address the situation, Dacuycuy said the government needs to institute gender-sensitive policies and measures to address climate change. She added that men and women are affected by climate change differently, and the government must be able to craft policies that address their needs. Climate change may cause women to have fewer options to adapt, since they have lower command over land, credit and information. Climate change can also lead to crimes against women and vulnerable minorities. Dacuycuy also said the government needs to encourage the growth of social enterprises (SEs) and mainstream adaptive social protection (ASP). Women in the farm sector can benefit from SEs not only through livelihoods but also through the ability of SEs to transform the communities they work in. ASP, meanwhile, is a concept which refers to the combination of social protection (SP), climate change, adaptation (CCA) and disaster-risk reduction. Combining SP, CCA and disaster-risk reduction will help women better cope to socioeconomic challenges, as well as the threat of climate change.
Las Piñas City’s top execs strengthen Badac in all-out drive vs illegal drugs
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as Piñas City Mayor Imelda Aguilar gathered officials from the city’s 20 barangays recently for a two-day seminar to work out with a more comprehensive approach to address the problem on the use and abuse of illegal and prohibited drugs. Aguilar rallied members of the Barangay Anti-Drug Abuse Council (Badac) to prove their commitment to rid the communities of illegal drugs. Aguilar directed the Las Piñas Anti Drug Abuse Council and Barangay Anti-Drug Abuse Council to implement a holistic approach in dealing with drug dependents. This will cover a community-based approach by encouraging drug users/dependents to avail themselves of programs, such as providing livelihood and skills seminars, organized healthy lifestyle activity and faith-based counseling. The mayor said the use of illegal drugs is a serious threat to well-being, health and national security. The continuous proliferation of prohibited and illegal drugs is a hindrance to the over all development of the country, she added. Aguilar stressed that the activation of Badac will ensure that there is a convergence of efforts among
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ational Police (PNP) chief Director General Oscar D. Albayalde has asked four former leftist lawmakers to turn themselves in to authorities following the issuance of an arrest warrant against them by a Nueva Ecija judge linking them to double-murder cases.
PIDS study bares millions of ‘unpaid’ women agriculture workers in PHL By Cai U. Ordinario
Editor: Vittorio V. Vitug • Tuesday, July 31, 2018 A3
barangay leaders to carry out the anti-illegal drugs campaign in the community level, citing that as the first line of defense, barangay chairmen should lead the fight against illegal drugs. On top of the medical and psychological intervention, the mayor said Badac will conduct a weekly “rehabilitation/prevention program” for illegal-drug users. Under this activity, Aguilar expressed hope that illegaldrug dependents will come out in the open to seek help, and avail themselves the government’s rehabilitation program, counseling and physical activities to totally free them from the vice and lead a new life. Aguilar also urged barangay officials to conduct strict monitoring of illegal-drug activities in their respective jurisdiction and closely coordinate with the local police to ensure peace and order in their area by ridding the drug menace. Meanwhile, Vice Mayor Luis Bustamante, head of Las Piñas Anti-Drug Abuse Council, urged Badac officials to strengthen the information and education campaign on illegal-drug demand reduction and monitor the disposition of drug-related cases filed.
Peralta on December 3, 2003. Peralta, who was ran over by a car, was allegedly mistaken for his brother Ricardo, the alleged real target of the attack. The warrant of arrest issued by the court in Palayan City, Nueva Ecija, also included and covered three other respondents identified as Vicente Cayetano, Delfin Pimentel and Emeterio Antalan. Albayalde said the PNP has already received a copy of the arrest order, which gives them no choice, but to implement it, unless, otherwise, the respondents will voluntarily surrender. “ The PNP is duty-bound to implement orders of jud icia l authorities. That is our consti-
tutional mandate that law enforcers must abide with due consideration to human rights and dignity of the accused,” he said. “I have directed the CIDG [Criminal Investigation and Detection Group] over the weekend to immediately send out arresting teams to serve the warrant of arrest,” he added. At a news conference last week,
Ocampo and the three other former lawmakers, said the charges were based on testimonies of discredited witnesses, who lost to countercharges that were filed against them by Ocampo and the other respondents. On the other hand, Bayan Muna Chairman Neri J. Colmenares noted that the charges were revived after the assumption of former President
I have directed the CIDG over the weekend to immediately send out arresting teams to serve the warrant of arrest [against these four former lawmakers].... The PNP is duty-bound to implement orders of judicial authorities. That is our constitutional mandate that law enforcers must abide with due consideration to human rights and dignity of the accused.”—Albayalde Bayan Muna condemned the issuance of the warrant of arrest over the charges that were filed in 2004, although it said it would asked Turla to reconsider the charges. R achel Pastores, law yer of
Gloria Macapagal-Arroyo as Speaker of the House of Representatives. The charges were filed in 2004 when Arroyo was the country’s president and with the late Raul Gonzalez as justice secretary.
Palace eyes Mocha Uson’s ‘help’ in federalism info drive By Bernadette D. Nicolas
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@BNicolasBM
alacañang, struggling to raise people’s awareness on the Duterte administration’s federalism drive, has assured the release of standardized materials suited for the dissemination of information on the Consultative Committee’s (Con-com) proposed federal Charter. Sought for comment on the report that Con-com is considering to tap Assistant Secretary Mocha Uson of the Presidential Communications Operations Office (PCOO) for the Con-com information drive, Presidential Spokesman Harry L. Roque Jr. said on Monday: “Anyone is welcome to disseminate [information].” “Of course, we seek to come up with standardized dissemination materials so that no one will deviate from the messaging. We are [also] developing materials for disseminators, and we are formulating a module to train first the trainors, and we are developing a module for dissemination so that anyone who will follow the module can disseminate properly,” Roque said. Con-com Spokesman Conrado I. Generoso said they are seriously considering to tap Uson, saying the controversial actress and blogger would be a big help to promote federalism on the account of her huge social-media following. “We’re just exploring ways she [Uson] could help. She has a wide audience. If she can write about federalism a few times, we would reach a great number of people,” he told the BusinessMirror in a text message. Generoso added he is planning to schedule a talk with Uson “maybe within the week” right after the completion and presentation of the communication to Executive Secretary Salvador C. Medialdea and other Palace officials. Asked if the involvement of Uson has the gosignal of Con-com Chairman and former Chief Justice Reynato S. Puno, Generoso said they have been talking about this months ago, not just about her involvement, but also about other people who can help, and other ways to extend the information reach on their proposed federal Charter. Con-com and Malacañang both admitted earlier that there is a need to boost the federalism information drive since recent surveys showed low public awareness on the proposed federal system of government. Uson, who runs the “Mocha Uson Blog,” has been an object of public criticism for allegedly spreading “fake news” on social media. The Con-com submitted the draft constitution on federalism to the President on July 9. But the Chief Executive “requested” the Con-com to revise the transitory provisions to include a ban for an incumbent president to seek reelection and for elections to be held for transitory president and transitory vice president after the proposed Constitution has been ratified by the people. The Con-com released the final and official copy of their proposed constitution publicly on July 17.
A4 Tuesday, July 31, 2018 • Editor: Vittorio V. Vitug
Economy BusinessMirror
Farm damage after 3 tropical storms breaches P2-B mark, DA report shows By Jasper Emmanuel Y. Arcalas
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@jearcalas
amage to the farm sector caused by three tropical storms the past week has reached the P2-billion mark, according to the latest report of the Department of Agriculture (DA).
In its initial damage report, the DA-Disaster Risk Reduction and Management Operations Center (DA-DRRM OpCen) said that, as of Monday morning, the total damage to the farm sector caused by Tropical Storm Henry, Severe Tropical Storm Inday and Tropical Depression Josie climbed to P2 billion. The regions affected by the three weather disturbances are: Cordillera Administrative Region and Regions 1, 2, 3, 4A, 4B and 6. “The increase in the overall damages and losses is attributed to reports from the provinces of Pangasinan, Bataan, Bulacan, Nueva Ecija, Pampanga, Tarlac, Z a mba les, R i z a l , Occ ident a l Mindoro, Oriental Mindoro and Palawan; particularly for rice, corn and livestock,” DA-DRRM OpCen said in the report, which is yet to be validated, published on Monday. T he repor t noted t hat DA
81% The share of production loss incurred by the rice-farming sector after three consecutive storms struck the country the past week, affecting a total of 58,063 rice farmers in at least 19 provinces and loss of 20,836 MT of rice valued at P1.62 billion
reg iona l field offices are now conducting field validation “to deter mine the extent of damage and losses brought by the three weather disturbances, as well as the needs of the affected
Castriciones orders faster land disposal as DAR gears up for 2nd phase of CARP By Jonathan L. Mayuga @jonlmayuga
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he Department of Agrarian Reform (DAR) will step up the distribution of land covered by the Comprehensive Agrarian Reform Program (CARP), as it gears up for the implementation of the program’s second phase under the Duterte administration. The DAR still needs to distribute at least 500,000 hectares of CARP-covered public and private agricultural land. According to DAR’s official record, the land acquisition and distribution balance (LAD) as of January 2018 was 561,000 hectares. This is down by 20,000 hectares as of June 2018, given the pace of land distribution. At 50,000 hectares per year, the DAR needs at least 10 years to complete the distribution, but with President Duterte’s order, the DAR is now gearing up for more workloads with the distribution of more land to landless farmers under CARP Phase 2. To do this, Agrarian Reform Secretary John R. Castriciones urged officials and employees of the agency to be more proactive not only in the distribution of land, but in providing the much-needed support services to agrarian reform beneficiaries. The DAR has recently concluded its 2018 midyear performance review and planning conference held at the Development Academy of the Philippines in Tagaytay City. The activity was conducted to ensure that targets are met, and that the development thrusts of the current administration are integrated into the programs and services of the DAR, the lead implementing agency of CARP under Republic Act 6657 and its amendatory law, Republic Act 9700, or the Comprehensive Agrarian Reform Program Extension with Reform (CARPer). Castriciones noted that as the DAR implements the Phase 2, or second phase, of the agrarian-reform program, the DAR will endeavor to
cover more private and public agricultural lands for distribution to landless farmers. Castriciones said foremost in his directive for the department is to increase issuance of certificates of land ownership award (CLOAs) and to speed-up giving various support services to farmer-beneficiaries. “It’s foolishness to ever state that farmers or farm workers do not want to own land. There is no such reason for the slow distribution of land for this year. That’s why we are streamlining procedures on land distribution to hasten the processes in acquisition and distribution of lands,” Castriciones said in a news statement issued on Monday.
Join Arbos
Meanwhile, the DAR chief emphasized the importance of forming agrarian reform beneficiaries’ organizations (Arbos) and enjoining agrarian-reform beneficiaries to be part of these organizations. It is through Arbos that the DAR courses through its various support services, he said. To date, there are a total 5,451 Arbos nationwide. Of these, 4,923, or 90.3, percent are operational. He ordered Municipal Agrarian Reform Provincial Officers (Marpos) to look for all CLOA and non-CLOA holders even in far-flung barangays, to visit them and encourage them to become members of Arbos. “The fastest and easiest way for farmers to get support services and assistance is if they are members of Arbos,” Castriciones said. During the performance review, the participants identified the internal and external drivers and barriers of the DAR, which either helped or hindered in the achievements of its targets. The DAR regional directors also identified opportunities for improvements to further enhance the implementation of DAR’s projects, priority programs and management accountability.
far mers and fisher men.” Most of the production losses were recorded in the rice sector, which accounted for 81 percent of the total, according to the DA. A total of 58,063 rice farmers in at least 19 provinces lost 20,836 metric tons (MT) valued at P1.62 billion. T he storms affected about 110,306 hectares of rice fields in the provinces of La Union, Pangasinan, Bataan, Bulacan, Nueva Ecija, Pampanga, Tarlac, Zambales, Batangas, Cavite, Laguna, Rizal, Quezon, Occidental Mindoro, Oriental Mindoro, Palawan, Aklan, Antique and Negros Occidental. “Region III remains the most affected region with an amount of P8 43.77 m i l l ion [52 per cent], while Pangasinan is still the most affected province at P491.87 million [30 percent],” the report read. “The increase in values is attributed to the reports from the provinces of Bataan, Bulacan, Nueva Ecija, Pampanga, Tarlac, Zambales, Rizal, Occidental Mindoro, Oriental Mindoro and Palawan,” it added. The DA said a total of 7,083 bags of palay used for seedbeds were washed out. The report also indicated that the fisheries sector lost P236.06 million, or 13 percent of the total damage. The typhoons affected 1,731 fishermen in the provinces of Abra, Benguet, Ifugao, Kalinga, Mountain Province, Ilocos Norte,
La Union, Pangasinan, Cagayan, Bataan, Bulacan, Pampanga, Cavite and Antique. Production losses in the corn sector reached 4,631 MT valued at P64.54 million. The three weather disturbances affected 1,847 hectares of corn fields in the provinces of Pangasinan, Bataan, Nueva Ecija, Pampanga, Tarlac, Zambales and Negros Occidental. “The increase in values comes from the reports in the provinces of Pangasinan and Nueva Ecija,” the report read. Livestock farmers in four provinces have now incurred losses amounting to P7.53 million. About 4,488 chickens, 1,008 ducks, 350 swine, 263 goats, 68 fighting cocks, 35 cattle and three carabaos were affected in the provinces of Ilocos Sur, La Union, Pangasinan and Oriental Mindoro. “As for...high-value crops and cassava, the amount of production loss remains the same at...P4.36 million and P1.35 million, respectively,” the report said.
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Third-party group to conduct survey on ridership, traffic impact of L.R.T. 2 By Cai U. Ordinario
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he national government is spending nearly a million pesos to study rail ridership and the impact of the Light Rail Transit (LRT) Line 2 on traffic, according to the Philippine Statistics Authority (PSA). In a news statement issued on Monday, the PSA said the government will spend P689,300 for an impact evaluation study on the LRT Line 2 to be conducted by a third-party organization. The PSA said the study will be conducted by the Certeza Infosys Corp. (CIC), which was contracted by the National Economic and Development Authority (Neda). “The impact evaluation study will collect primary and secondary data from households, rail-riders/ commuters, implementers [government agencies], and establishments [realtors and business owners in Quezon City, Marikina, San Juan City and Manila],” the PSA said. The study will involve the use of different data collection methods namely, surveys, focus group discussions (FGD), key informant interview (KII), review and assessment of secondary data, transportation simulation study of time savings and vehicle traffic count. The budget for the study will be used for personal services, maintenance and
other operating expenses, such as traveling expenses, communications, supplies, training and seminar, representation and printing expense, among others. The PSA added the survey is tentatively scheduled in August 2018 and the result is expected to be released in September 2018. The survey to be used for the study was reviewed and cleared for conduct under the Statistical Survey Review and Clearance System (SSRCS). The SSRCS aims to ensure sound design for data collection; minimize the burden placed upon respondents; effect economy in statistical data collection; eliminate unnecessary duplication of statistical data collection and achieve better coordination of government statistical activities. The LRT Line 2 , also known as the “Purple Line,” is composed of 11 stations along Aurora Boulevard. The first station from the East of Metro Manila is Santolan and the last station is Recto. The government is in the process of completing the extension of the Purple Line to SM Masinag in Antipolo City. The government expects the completion of the extension in 2019. The LRT 2 East Extension Project involves the construction of a 4.0kilometer extension of the existing LRT 2 System from Santolan, Pasig City to Masinag in Antipolo. Rizal.
The 5 most critical cybersecurity threats to businesses in 2018
ransomware is a highly public threat, business pros feel even more pressure, having to respond to the security breach in the public spotlight, said the survey.
3. The cloud
Participants said they were growing concerned about possible attacks in the cloud, with 52 percent worried that cloud-based threats will become an increasing reality in the future. While the cloud is extremely useful to businesses, it can quickly turn into a threat if not secured properly, said the survey. Cloud functionality is still so new, however, that most threats have yet to be realized, continued the survey.
₧1.7-B loan facility for MSMEs launched
4. GDPR
By Elijah Felice E. Rosales @alyasjah
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he Small Business Corp. (SB Corp.) announced on Monday the opening of P1.7-billion loan facility for micro small and medium enterprises (MSME). SB Corp. President and Chief Executive Officer Maria Luna E. Cacanando on Monday said the loans will coursed through the Pondo sa Pagbabago at Pag-asenso (P3) program, the government’s lending measure for MSMEs. “We are keeping the momentum going, targeting the release of at least P1.7 billion in P3 loans by [the] end [of] 2018. The P1 billion a year in P3 funds will support at least 40,000 micro enterprises serviced by more than 200 credit delivery partners spread out in all provinces of the country,” she said. Each province will be allocated with at least P10 million in P3 funds, according to Cacanando. The P3 program is designed to veer MSMEs away from onerous moneylending schemes, such as the so-called 5-6 loan scheme. Small enterprises can borrow as much as P200,000 from this loaning measure, with a maximum interest rate of 2.5 percent per month with no collateral requirement. This is lower compared to the 20 percent per day, week or month interest charged by 5-6 lenders. Cacanando also said SB Corp. can now redirect all its energy and resources on financing MSMEs, with the recent removal of its guarantee functions. President Duterte last week issued Executive Order 58 that approved the merger of the Philippine Export-Import Credit Agency and the Home Guaranty Corp. With the amalgamation, the two agencies are now named the Philippine Guarantee Corp. (PhilGuarantee).
@cuo_bm
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By Henry J. Schumacher
N the midst of businesses becoming GDPR compliant, cybersecurity measures have moved from purely technical, to political. A recent survey involving some 900 security professionals at the “Infosecurity Europe 2018’” conference attempted to gain insight into the current state of cybersecurity threats. Some 56 percent of respondents said they believe that cybersecurity is becoming a political pawn. This shift indicates that cybersecurity isn’t only infiltrating personal lives, but society, as well.
However, data issues like GDPR compliance, or lack thereof, shouldn’t be the only focus for businesses. Here are the top 5 cybersecurity concerns for professionals in 2018. And please take note that the cybersecurity concerns are not limited to the European Union’s GDPR compliance; they also play a major role in the Philippine Data Privacy Act compliance:
1. Phishing
Phishing is the reigning winner of internal threats, with nearly 55 percent of participants agreeing it is the biggest risk, said the survey, explaining that it is the human element of phishing that makes it appealing to cybercriminals. Unfortunately, no single precaution can be used to prevent a phishing attack, continued the report. Most breaches are actually caused by human error, said the survey, highlighting the vitality of user awareness and education. However, it is becoming obvious that user education alone isn’t enough— businesses need a multilayered defense of technology, processes and people.
2. Ransomware
Weighing in at 45 percent, ransomware was the second-highest internal worry for professionals. Since
Industry observers are still waiting for a breach with GDPR, but until then, it brings a host of different concerns for business, said the survey. Companies have been forced to completely rearrange and reorganize management of customer records, said the survey. And failure to be compliant with GDPR standards can be a huge hit to businesses, financially and socially, causing consumers to shy away from businesses that don’t protect their data. We are certainly observing the same issues in the Philippines, implementing the data privacy protection and cybersecurity regulations.
5. Cryptocurrency mining
Cryptocurrency mining is a relatively new trend, in which cybercriminals infect machines in order to commandeer their CPU power and steal Bitcoin, said the survey. Businesses still have some work to do to stay protected, with 29 percent of respondents not confident in their cryptomining protection and 24 percent unable to detect cryptomining activity. The survey result certainly raises a difficult strategic question for compliance leaders: How do you balance worries about compliance/cybersecurity risk with worries about reputation risk? Certainly, a company cannot ignore compliance obligations; they’re required by law or regulation. But let’s not kid ourselves, either: A compliance risk gone wrong usually leads to an investigation, a negotiated settlement and, perhaps, a corporate penalty. A reputation risk gone wrong, however—gets senior executives fired. Or it punishes the stock price and leads to lawsuits. Or it sparks a social-media campaign that punishes the stock price and gets senior executives fired. Above all, in our modern world soaked in social media and brimming with distrust in organizations, reputation risk is what scares the board. So compliance officers must figure that fact of corporate life into the programs they run. Boards will appreciate it, and in many instances, reputation risk is the bigger potential threat to an organization anyway. I hope I have provided you with enough arguments to understand how important compliance management is. These and many other arguments were the reason I am focusing more and more on compliance management and on services that will protect companies and managers from fines, criminal suits and reputation losses. Feedback would be appreciated—contact me at Schumacher@eitsc.com.
The World BusinessMirror
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Editor: Angel R. Calso • Tuesday, July 31, 2018 A5
Industrialist Koch warns Trump trade war could trigger recession
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OLORADO SPRINGS, Colo– rado—Billionaire industrialist Charles Koch warned on Sunday that Trump administration trade policies could trigger a recession. The conservative activist lashed out at the Republican president’s brewing international trade war as hundreds of donors gathered for a private retreat in the Colorado mountains. Koch told reporters during a rare question-and-answer session that “protectionism at any level” is “detrimental.” Trump’s approach could lead to a recession “if it’s severe enough,” he said. The administration has imposed billions of dollars of tariffs on Chinese and Canadian goods and threatened billions more on America’s allies in Europe. The White House last week announced plans to send $12 billion in taxpayer dollars to US farmers to help ease the economic fallout. The conservative Koch network, which has broken with Trump on immigration, government spending and trade, is promising to punish politicians in either party who support the tariffs. Asked to respond to Koch’s remarks, White House Spokesman Lindsay Walters cast Trump as “a
free trader.” “He believes that the best way forward is for all countries to get rid of unfair practices and move toward zero tariffs, zero nontariff barriers, and zero subsidies,” Walters said. “However, until other countries move in that direction, stop engaging in unfair practices and start playing by the rules, the president is going to take tough action.”
Sustained US growth
Meanwhile, Trump’s top economic policy-makers insisted that the robust growth marked in the Aprilto-June quarter will maintain its pace and that he respects the Federal Reserve’s (the Fed) independence, despite his condemnation of the central bank for raising interest rates. “We as an administration absolutely support the independence of the Fed, and the president has made it clear that this is the Fed’s decision,” Treasury Secretary Steven Mnuchin told Fox News Sunday. He said Trump’s critical statements “are really more just comments saying as interest rates are going up, it’s
something that the president has a concern” about. The Fed isn’t expected to announce a rate increase when its latest policy meeting ends on Wednesday. But the central bank is widely anticipated to set the stage for tightening credit again in September for a third time this year and then to likely raise rates again by December. The Fed has raised rates twice this year in response to strong growth, low unemployment and a slight rise in inflation. Trump has taken credit for that growth, and 10 days ago he criticized the recent rate increases, warning that they could slow the economy’s advance. Criticism of interest-rate hikes by the Fed, which is politically independent from the White House and administration, is something no president has expressed publicly in more than two decades. “I don’t like all of this work we are putting into the economy, and then I see rates going up,” Trump said in an interview with CNBC. The rate increases are intended to prevent the economy from overheating or inflation from accelerating too sharply. But higher rates make borrowing for homes, autos and credit cards more expensive—an unpopular consequence for consumers. “The market expects interest rates to keep going up,” Mnuchin said. “So the only question is how
Iran’s currency in free fall as American sanctions loom
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EHRAN, Iran—Iran’s currenc y is cont inu ing its dow nward spira l as increased American sanctions loom, hitting a new low on the thriving black market exchange. The Iranian rial fell to 112,000 to the dollar on Sunday, from 98,000 to $1 on Saturday. The government-set exchange rate was 44,070 to the dollar, compared to 35,186 on January 1. The Iranian rial has been declining steadily for years but the drop has accelerated in recent months after the US decision to pull out of the nuclear deal with Iran in May and announcement of increased sanctions beginning next month. The government last week replaced the country’s central bank Governor Valiollah Seif, whose policies have also been blamed for
In this AP file photo, Iranian and US banknotes are on display at a currency exchange shop in downtown Tehran, Iran. Iran’s currency is continuing its downward spiral as increased American sanctions loom, hitting a new low on the thriving black market exchange. The Iranian rial fell to 112,000 to the dollar on Sunday, from 98,000 to $1 on Saturday. AP Photo/Vahid Salemi
the rial’s fall, and eased regulations on bringing foreign curren-
cies into the country to combat black market trading. AP
Death toll from Greek wildfire reaches 91 as village grieves
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ATI, Greece—Fire officials in Greece raised the death toll from a wildfire that raged through a coastal area east of Athens to 91 and reported that 25 people were missing on Sunday, six days after Europe’s deadliest forest fire in more than a century. Before the national fire service updated the official number of fatalities, it stood at 86 as hundreds of mourners attended a Sunday morning memorial service for the victims in the seaside village hardest-hit by the blaze. The fire sped flames through the village of Mati, a popular resort spot, without warning on July 23. A database maintained by the Centre for the Research on the Epidemiology of Disasters in Brussels shows it as the deadliest wildfire in Europe since 1900.
The vast majority of victims died in the fire itself, though a number drowned in the sea while fleeing the flames. Until Sunday night Greek officials had not provided a tally of the people reported missing. Hellenic Fire Service Spokesman Stavroula Malliri provided a breakdown that illustrated why the death toll continued to expand and the list of people thought to be missing was difficult to draw up with precision. Malliri said that as of Sunday evening, 59 victims had been identified from bodies or remains and another four people injured in the fire had died in area hospitals. But identities have not yet been linked to another 28 sets of remains, she said. Relatives or friends reported 25 people who were considered officially missing, Malliri said.
A fire service official said some or all of the 25 missing people could be among the yet-unidentified remains of the dead. The official requested anonymity because the fire still is under investigation. At the morning memorial service in Mati, the senior local Greek Orthodox Church official, Bishop Kyrillos, said the community was grieving the simultaneous loss of family, neighbors and friends. “There’s fewer of us now than usually,” the bishop said. “It is the victims of the recent fire that are missing— friends, relatives and acquaintances, next-door people that we saw every day in town and on the beach.” Local resident Angeliki Galiatsatou said she narrowly managed to escape the fire that killed others in their cars and homes. AP
far and for how long? And we think the Fed will be very careful in managing the economy.” The latest snapshot of the economy issued by the government on Friday showed an energetic 4.1-percent annual growth rate in the second quarter, the fastest pace in nearly four years. Trump and administration officials have declared that the gains are sustainable and will only accelerate. But few economists outside the administration agree with that assessment. And there is concern that the trade battles pursued by Trump could endanger economic growth over time. The administration has imposed billions of dollars in tariffs on Chinese and Canadian products, and threatened billions more on US allies in Europe. Tariffs, which are taxes on imports, are meant to protect domestic companies against foreign competitors—but also can hurt US businesses and consumers that pay more for imported products. Downplaying the concerns, White House economic adviser Larry Kudlow said on Sunday the basic drivers of economic performance — not temporary factors like the surge in farm exports ahead of anticipated new tariffs—will continue to boost growth going forward. “The basics of this [secondquarter] number were consumer spending and business investment,” Kudlow said on CBS’s Face the Na-
tion. “Consumer spending, business investment are on a tear.” Mnuchin predicted the economy will enjoy four or five years of sustained 3 percent growth “at least.” “I don’t think this is a one- or twoyear phenomenon,” he said. Kudlow told CNN’s State of the Union: “I think the president deserves a victory lap—low tax rates, rolling back regulations, opening up energy, for example.... The fundamentals of the economy look really good.” Pointing to “five Trump quarters” of strong growth, Kudlow said, “I don’t see any reason we can’t run this for several quarters.” Many experts believe it’s unlikely that growth can continue at the 4.1-percent pace. Some of the factors in the second quarter appeared to be one-offs. Soybean exports jumped as farmers sought to beat the impending tariffs overseas. And business spending was boosted by soaring investment in oil and gas drilling equipment, which might not last. Other challenges loom. Borrowing costs are rising, lifted by the Fed’s interest-rate increases. And rising prices have left average hourly pay, after adjusted for inflation, flat over the past 12 months. Still, other trends do appear sustainable and could help boost growth above the roughly 2 percent annual pace that’s prevailed since the 2008 and 2009 financial crisis and Great Recession ended. AP
‘New York Times’ publisher pressed US president on ‘anti-press rhetoric’
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ASHINGTON—The publisher of The New York Times says he took President Donald J. Trump to task for “deeply troubling anti-press rhetoric” that is “not just divisive but increasingly dangerous” when the two met privately at the White House this month. Trump disclosed the meeting on Twitter on Sunday, saying he and A.G. Sulzberger “Spent much time talking about the vast amounts of Fake News being put out by the media & how that Fake News has morphed into phrase, Enemy of the People. Sad!” Enemy of the People is the phrase Trump uses to broadly describe most journalists. He said the July 20 meeting was “very good and interesting.” Sulzberger, who succeeded his father in the role on January 1, said his main purpose for accepting the meeting was to “raise concerns about the president’s deeply troubling antipress rhetoric.” “I told the president directly that I thought that his language was not just divisive but increasingly dangerous,” he said. Sulzberger said he told Trump that while the phrase “fake news” is untrue and harmful, “I am far more concerned about his labeling journalists the enemy of the people.’ I warned that this inflammatory language is contributing to a rise in threats against journalists and will lead to violence.” Sulzberger said he stressed to Trump that leaders of other countries have adopted his rhetoric to justify cracking down on journalists. He was accompanied to the meeting by James Bennet, the Times’s editorial page editor. “I warned that it was putting lives at risk, that it was undermining the democratic ideals of our nation, and that it was eroding one of our country’s greatest exports: a commitment to free speech and a free press,” the publisher said. Sulzberger added that he made clear to Trump that he was not asking him to soften his attacks on the Times if he thinks the newspaper is being unfair. “Instead, I implored him to reconsider his broader attacks on
Sulzberger AP
journalism, which I believe are dangerous and harmful to our country,” he said. Trump reads the Times and gives interviews to its reporters, but regularly derides the newspaper as the “failing New York Times.” The Times ownership company in May reported a 3.8-percent increase in first-quarter revenue compared to the same period in 2017. The president, who lashes out over media coverage he thinks is unfair, has broadly labeled the news media the “enemy of the people” and regularly accuses reporters of spreading fake news—his term for stories he dislikes. Hours after the tweet about the Sulzberger meeting, Trump lobbed fresh attacks against the media in a series of posts that included a pledge not to let the country “be sold out by anti-Trump haters in the...dying newspaper industry.” Trump also accused reporters of disclosing “internal deliberations of government” that can endanger “the lives of many.” He cited no examples but wrote “Very unpatriotic!” and said freedom of the press “comes with a responsibility to report the news...accurately,” a sentiment journalists share. Trump also claimed that 90 percent of the coverage of his administration is negative, leading to an “all time low” in public confidence in the media. He cited the Times and The Washington Post, two repeat targets, and claimed, “They will never change!” AP
Oil edges higher as fuel efficiency proposal counters bearish rig data
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il edged higher near $69 a barrel on prospects a US overhaul of car efficiency rules will increase fuel consumption, countering concerns over potential gains in American supply. Futures in New York rose as much as 0.5 percent, following a fourth straight weekly drop last week. US federal regulators said their proposal to roll back US mileage targets would increase the nation’s fuel consumption by 500,000 barrels per day. While the draft plan may be bullish for prices, Baker Hughes data on Friday showed the number of oil rigs in America rose last week, a sign there could be a ramp-up in future production. Oil has declined about 7 percent this month on concern that a trade war between the US and China will hurt global economic growth that underpins energy demand. Investors are also monitoring by how much the Organization of Petroleum Exporting Countries (Opec) and its allies will boost output to make up for potential supply disruptions in Iran and other nations, as well as whether record American shale production could weigh on prices. “An increase in oil demand spurred by the proposed overhaul of fuel efficiency standards could offset rising US output and reduce the nation’s exports,” Takayuki Nogami, chief economist at state-backed Japan Oil, Gas & Metals National Corp., said by phone from Tokyo. “With the Permian shale play showing little growth amid the pipeline crunch, concerns remain that crude output in the US could temporarily slow down.” West Texas Intermediate (WTI) crude for September delivery rose as much as 36 cents to $69.05 a barrel on the New York Mercantile Exchange and traded at $69.03 7:45 a.m. in London. The contract fell 2.5 percent to $68.69 last week. Total volume traded was 44 percent below the 100-day average. Brent for September settlement traded at $74.48 a barrel on the London-based ICE Futures Europe exchange, up 19 cents. The contract climbed 1.7 percent to $74.29 last week. The global benchmark was at a $5.43 premium to WTI. Futures for September delivery were up 0.5 percent to 509.2 yuan a barrel on the Shanghai International Energy Exchange. The contract gained 2.7 percent last week. US regulators are poised to propose a dramatic overhaul of tough efficiency rules set during the Obama administration. Under the proposal, new cars and light trucks would be required to average about 37 miles per gallon (mpg) from 2020 through 2026, instead of increasing over time to roughly 47 mpg under standards adopted by the previous administration, according to the draft. Meanwhile, US working oil rigs rose by three to 861 last week, according to Baker Hughes data. While the number of rigs in the Permian Basin also increased, pipeline capacity constraints in the region remains a major challenge. Cabot Oil & Gas Corp. was pushed to stop spending money on exploring America’s hottest shale play amid pipeline jams and soaring costs. Bloomberg News
A6 Tuesday, July 31, 2018 • Editor: Angel R. Calso
Opinion BusinessMirror
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editorial
In search of good construction workers
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pgrading the country’s infrastructure is one of the top concerns of the Duterte administration. To do so, it needs to lead the effort in upgrading the construction industry.
Official unemployment numbers say there should be plenty of workers looking for jobs, at least 2.36 million as of June. However, even if jobs under President Duterte’s “Build, Build, Build” (BBB) agenda are available, not a lot of job seekers seem qualified to build all the roads, bridges, airports and railways the government needs for this ambitious infrastructure program. The Department of Labor and Employment’s Bureau of Local Employment estimates demand at over 1 million construction workers for the BBB program alone, as our recent BusinessMirror story (“Challenge Accepted” by Lorenz Marasigan) reported. But in 2017—when jobs in the construction sector reached 3.59 million, or about 158,000 more than the 3.31 million construction workers in 2016—there was already a shortage of 120,000 workers. The government launched in May an online jobs portal for the BBB program, listing 11,000 vacancies in ongoing projects. The portal is expected to post “hundreds of thousands” of employment opportunities through 2022. Filling these vacancies is not going to be easy. Many of our skilled construction workers, contractors, architects and engineers have left for overseas jobs, where they get paid at least four times as much. To entice them to come home, the government must make the industry provide competitive compensation and benefits, or perhaps provide tax incentives and other perks to even things out. Compounding the problem, whole generations of younger workers are no longer even considering construction as a viable career option. Personal preferences, their parents’ wishes, even our own education system, have steered our high-school graduates to college courses and white-collar careers. The traditional formula of “college = white-collar job = success” is precisely what the K to 12 (kindergarten plus six years grade school, four years of junior high school and two years of senior high school) curriculum change was supposed to tweak, but how many senior high-school students are taking the vocational-technical strands of the curriculum? And do schools even offer these strands? Let’s face it: “Success” for most Filipino kids is still very much equated with a glamorized white-collar job, working for a firm in Makati or some other business district. There is still the stigma of a vocational education—the belief that it leads to lower wages, contractual and menial jobs and the label of being a noncollege degree holder. If our goal is to bring back the dignity of blue-collar jobs by producing a highly skilled work force demanded by industries like the construction sector, the government would also need the support of employers and businesses, the various chambers of commerce, and other stakeholders to work with the education sector. We need to bring back the emphasis on the trades in high school and college and focus on apprenticeship programs where our young people can learn a trade. In Germany, for instance, students aged 16 to 19 years old, outside of their school work, are trained in companies for three to five days a week for two to three years, where they also earn a small stipend. The process ends with a certification examination. More than 350 professions are officially recognized in Germany as training occupations with more than 60 percent of high-school graduates regularly participating in the program. This is a big factor why Germany’s youth unemployment remains low. To bridge the labor gap in construction, the industry also needs to focus on recruiting more women, whether as construction managers or onsite workers. This is the 21st century, where overseas employers even prefer Filipina welders and heavy equipment operators. New building technology has made the requirement for brute physical work, commonly associated with men (often mistakenly), inapplicable to construction. Besides, construction work involves more than just physical skills, but technical and even scientific skills, as well. The construction industry has an opportunity for higher growth and unqualified success for smart and hardworking Filipinos who desire to make a lifelong career in it, if both the government and the private sector can work together to professionalize the industry.
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THE Entrepreneur Continued from A1
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he tightness in domestic supply is what is causing prices to soar in the past two years. This will also help abolish the rice cartels that dictate the domestic prices of the staple, and remove from the state-run National Food Authority the monopoly of rice supply. President Duterte himself warned against “rice hoarders, cartels and their protectors” who were causing artificial shortage of rice to cause prices to go up. I believe prices, especially those of rice, will start to come down after the government imported more rice. A stable and adequate supply of rice, without a single entity controlling it, is seen resulting in more affordable prices, which would be beneficial to Filipino consumers, according to government agencies. The bill will amend Republic Act (RA) 8178 or the Agricultural Tariffication Act of 1996. “We need to switch from the current quota system in importing rice to a tariff system where rice can be imported freely,” Duterte said in his State of the Nation Address, as he asked Congress to prioritize the urgent reform measure. National Economic and Development Authority (Neda) Director General Ernesto M. Pernia said the
rice tarrification bill will make our agriculture sector more competitive in the long term. He said that in the short term, the headline inflation rate would go down by 1 percentage point if the domestic wholesale rice market matches the level of imported rice. In its own estimate, the Bangko Sentral ng Pilipinas claimed that allowing cheap rice imports with tariffs would ease inflation rate by 0.4 percentage point. Finance Secretary Carlos G. Dominguez III, who heads the economic team, said rice import liberalization would be vital in helping low-income households cope with inflation, as rice accounts for 20 percent of their consumption. The proposed bill would complement the social mitigation measures to further
The bigger picture
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Safety nets for rice farmers
John Mangun
OUTSIDE THE BOX
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ne of the reasons I find the financial and economic world fascinating is that it never stops to take a breath. If you were to follow it as closely as it deserves, you would need at least five TV sets running 24/7, sort of like Netflix on steroids. Watching the perpetual flow of information, you would realize that virtually everything is connected one way or another.
It is a balloon—when you push one side, the other side bulges out. The problem is that most of the analysis and commentary we get rarely see the other side of the balloon. This past week the International Monetary Fund predicted the Venezuela inflation rate would hit 1 million percent this year. Of course it is the US economic sanctions on Venezuela that is causing all the problems. But what are those sanctions? The US government has placed broad financial sanctions targeting the Venezuelan government’s ability to access US debt and equity
markets. But then again, Venezuela was the fourth-largest supplier of crude oil and products to the US in 2017. Others say the inflation rate is all China’s fault because Venezuela owes China so much money. Except, the economic collapse of Venezuela preceded its Chinese borrowing. China is a predator lender, circling a wounded economy like wolves ready to devour a wounded deer. Jeff Bezos, founder of Amazon, appears to be the richest person in the world, maybe in all of history, with a current net worth of $143 billion. Naturally, to some this is
ease the impact of inflation on poor households. However, opening the domestic rice market to imports will naturally affect the livelihood of millions of Filipino rice farmers. Many subsistent rice farmers lack the capital to buy mechanized farm tools, procure hybrid seeds or apply fertilizers and pesticides. They are at the mercy of traders who buy their produce below market rates, and the farmers are forced to bite the predatory rates charged by loan sharks. Rice is also very dependent on rain. Farms that are not connected to irrigation systems could only produce rice once a year, instead of the three harvest periods made possible by modern techniques. This means more irrigation systems are needed to expand the country’s rice production areas. A farmer who harvests rice only once a year from a 1-hectare plot that is not connected to an irrigation system and who lacks access to mechanized farming techniques will find it hard to earn enough for his family’s daily needs. What if a typhoon hits the farm during the harvest season? In low-rice productivity areas and places where irrigation is absent, it would be more prudent for farmers to switch to more financially rewarding crops, such as coffee, cacao, peanut, corn, fruits and vegetables. Forcing the Filipino farmers to become more competitive and bringing down the prices of their harvest to the levels of Vietnamese or Thai
rice would require government support or subsidy. Rice produced by Vietnam and Thailand are cheaper because farmers in these countries are supported by their respective governments and they are mechanized. There is a need to upgrade the skills of Filipino farmers and provide them with better equipment to raise their yield and enable them to compete at the international level. A government subsidy is needed to improve rice productivity. Such subsidy should help farmers mechanize their techniques, procure higher-yielding rice varieties and give them access to irrigation allyear-round. To support the family’s daily needs and send their children to school, a rice farmer should be able to harvest at least 6 metric tons (120 sacks) of rice per hectare, three times a year. At present, the average yield per hectare in the Philippines is below 4 metric tons. However, some Filipino farmers using modern techniques have reported production of over 10 metric tons per hectare. This means Filipino farmers could compete with their Asean counterparts if they have the tools they need and support from the government. In short, Filipino farmers need safety nets in the form of government subsidy so they can provide adequate and affordable food for the growing Philippine population.
evil. If Bezos sold all his Amazon stock for cash, he could wipe out world poverty and hunger, bring the Bali tiger back from extinction and give us more legroom when flying economy class. Amazon employs 600,000 people and, despite the fact that some of the jobs are like being a galley slave in ancient Rome, their employment is tied to Bezos making money. Last year Amazon generated $178 billion in revenues, which means many people were employed making the things sold on Amazon.com. You cannot separate Jeff Bezos’ personal wealth from the wealth that Amazon is creating for millions of people. Criticism of Amazon’s income tax payments—or lack thereof— may be justified, but there is a bigger picture. And speaking of pictures, Dwayne “The Rock” Johnson earned $65 million for his movies in 2017. Why is no one complaining about that? The “trade war” between the two giants—the US and China—has created many experts. Except it is more of a “war” between David and Goliath and this time, David is not going to win. Another “goliath”—the
European Union (EU)—set down in the US to talk free trade. Note these facts: The US and EU account for over 50 percent of the global economy and trade, exchanging $1.1 trillion worth of goods and services. One-third of world trade involves the US and EU with the US being the No. 1 customer on earth and the EU being No. 2. The total US investment in the EU is 300 percent higher than its investment in Asia. EU investment in the US is 800 percent higher than its investment in India and China combined. Therefore, if the US and the EU do join hands in trade, they could potentially put the economic squeeze on China, pushing that economy back to 1992 when its growth rate was 2 percent. The economic world is larger and more complex than it may seem. Unfortunately, all we often get is a one-sentence synopsis like on Netflix, and that tells us little about the movie.
For comments, e-mail mbv.secretariat@gmail. com or visit www.mannyvillar.com.ph.
E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.
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Opinion
Fathers, your time off is past its due date
A US lawmaker and the Aquino regime spread fake news to destroy the Marcoses
By Anjani Trivedi Bloomberg Opinion
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t’s 2018, and much of the world is still trying to justify why fathers matter. The US doesn’t federally mandate parental leave of any sort, bracketing it with countries, such as Suriname and Papua New Guinea. Large swaths of Asia, including India and China, have policies only for maternity leave. New Zealand is the sole country with a primary caregiver policy that applies to mothers and fathers. Ironically, even when time-off policies for fathers are in place, they may mean little in practice. Japan and South Korea, both deeply patriarchal societies, stipulate some of the lengthiest periods for parental leave. Fathers in Japan are entitled to 52 weeks of benefits covering around 60 percent of average gross earnings, the most generous among countries in the Organisation for Economic Co-operation and Development (OECD). However, only about 2 percent to 3 percent of new fathers take up the entitlement. Deep-seated views of who should work and misguided information about parental roles mitigate against the effectiveness of such policies. A banker in Japan sued his employer, Mitsubishi UFJ Morgan Stanley Securities Co., claiming he was denied leave as a single parent and suffered harassment. The brokerage fired him earlier this year, and the case has yet to be resolved. South Korea isn’t far behind Japan in terms of days and compensation available. But the country’s public expenditure on maternity and paternity leave per child is less than $5,000, below the OECD average and half the $10,000 that Japan spends, indicating minimal take-up of benefits. Beyond these barriers, companies often justify stingy policies by saying the cost of paternity leave is too high and could lead them to cut jobs. The real question is what the cost would be of replacing that employee, says Professor Jody Heymann of UCLA’s Fielding School of Public Health and WORLD Policy Analysis Center. For the average company, the reality is that paid leave would be cheaper. Factoring in the time, money and other resources spent, total replacement costs can reach 90 percent to
BusinessMirror
200 percent of an employee’s annual salary, according to Josh Levs, author of All In: How Our Work-First Culture Fails Dads, Families and Businesses and How We Can Fix It Together. Paid leave is highly correlated with retention of employees, which reduces expenses and boosts profits, Levs says. Since cost is a big part of the calculus, who foots the bill? Across the world, paid leave has mostly been covered by social insurance systems—either fully or partially, with contributions from employers and employees. Such systems can be affordable for all businesses if they contribute a small percentage of payroll, the WORLD Policy Analysis Center has found. So even small companies, which often have the most to lose, can benefit. In Japan and South Korea, businesses with fewer than five workers can opt out of parental benefit insurance programs, the only OECD members where such exemptions apply. Still, voluntary insurance plans are available. The United States mandated 12 weeks of unpaid leave under the Family and Medical Leave Act that came into effect in the early-1990s. This year, some multinational American companies that previously followed local laws have started offering global maternity-leave policies of as long as 20 weeks. But on paternity leave, they continue to adhere to local practices. In Hong Kong, for instance, fathers are entitled to three days off with pay at 80 percent of daily salary —which says a lot about how their role is viewed. Besides the advantage of retaining employees, there’s evidence that paternity leave can also help to close the gender pay gap. A mother’s earnings rise by about 7 percent for each additional month her spouse takes off work, according to a study by Sweden’s Institute for Labor Market Policy Evaluation. Consider this: If a bigger salary means a higher replacement cost, wouldn’t it make sense for companies to increase paternity-leave coverage? Meanwhile, the reluctance of fathers to take leave—which research shows increases the more they earn relative to their spouses—helps to perpetuate the pay gap. Childbirth is the one cause of employee absence that companies can plan for, yet paternity leave remains a low priority despite a persuasive economic case. It’s an idea that’s had long enough to gestate.
Trump’s tech tariffs are awesome, for Southeast Asia By Tim Culpan Bloomberg Opinion
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onald J. Trump may well be the best thing that’s happened to Southeast Asia’s humble electronics industry in quite a while. Relatively small, and frankly not as sexy as their North Asia cousins, makers of components and devices with factories dotted around the region may get some time in the spotlight, thanks to the US administration’s decision last month to levy an additional 25-percent import tax on 818 separate items from China. Assembly of name-brand gadgets like Apple Inc.’s iPhones tends to grab an outsized share of attention from media, analysts and investors. Yet crucial parts of the electronics supply chain that also rely on low-cost manufacturing exist in Southeast Asia, such as capacitors, printed circuit boards, hard drives and bluetooth headsets. Simon Shen, president of Taiwanese electronics conglomerate New Kinpo Group, oversees facilities in the Philippines, Malaysia, Singapore, Thailand and the US and he’s becoming quite a fan of the US president. Well, his tariffs anyway. The more the US taxes Chinese electronics products, the better it is for Asian companies like his that have operations outside of China, Shen told Bloomberg News’s Cecilia Yap last week. Of course he’s talking his own book when he says that clients are very keen to hear about non-China manufacturing, especially with a Philippine IPO on the cards.
Some investors have already taken notice of the fact that Thailand, Malaysia, the Philippines and Vietnam stand as likely beneficiaries of the US-China trade war. Thailand’s electronics components subindex is up 14.5 percent in the past month against a 4.8-percent rise for the broader market. Eight of its 29 members have climbed by double digits over that period, led by a 20-percent advance for Delta Electronics Thailand Pcl. Stars Microelectronics Thailand Pcl. has climbed 12 percent. Perhaps investors are willing to bet that 12 straight quarters of revenue declines at Stars might be brought to an end if customers lean more on Southeast Asia. They’re also betting on Shen’s Thai unit Cal-Comp Electronics Thailand Pcl., as well as Hana Microelectronics Pcl. Viettronics Binh Hoa JSC, a Ho Chi Minh City-based assembler of electronics and components, more than doubled in the past month compared to a 4.5percent decline in the benchmark Hanoi UPCoM index. The 28 members of Malaysia’s information-technology sector averaged an 8.4-percent return compared with 4.6 percent for the market. The Philippines is an exception, with its information-technology index falling 0.5 percent versus a 5.4-percent advance in the Philippine Stock Exchange All Share Index. Perhaps a listing for the local unit of Shen’s Cal-Comp Technology will help turn that around, aided by a protracted US-China tariff dispute. With Trump repeatedly upping the ante, the US president is likely to remain an accidental ally.
Cecilio T. Arillo
database Part three
No plea bargain!
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HE New York trial of the sensationalized RacketeerInfluenced and Corrupt Organizations case took all of four months in a cold courtroom with 12 jury members who knew nothing of the lives of the Marcoses, their culture and their dreams. After President Marcos died on September 28, 1989, the prosecution, when the trial began, attempted to convince Mrs. Marcos to plead guilty to a lesser offense so that she could be convicted and jailed lightly. Perhaps they reckoned that, with President Marcos gone, she would feel forsaken, vulnerable and helpless. She stood up and told the prosecution: “No plea bargain! To plead even to a minor malfeasance is to admit guilt, and I know we did not steal. Sacred honor, good name, principles and belief are nonnegotiable. I shall defend myself and this man whose lips are now sealed by death.” The flash of camera lights blinded her eyes, and contraptions recorded the sadness of her face for the whole world to see. The landscape she had drawn about the world, about people and about herself was no longer the landscape before her. She continued her narration: “I saw stone, steel and cemented steps leading to dark corridors and darker rooms where you could not see the sun and the sky. I was shedding tears, but I knew I was not crying for myself but for those who had taken away my landscape, perhaps, because they never had one. “The judge wore black, the lawyers wore black, the marshals wore black and it looked like I was in a funeral
parlor, except that there was no dead body. I could see people watching me as though a drama was being played. “What made me sadder was the thought that they had taken a life, dissected its parts and unleashed them to the highest bidder, mock it as a specimen of humanity’s vile, laugh at the dreams you have built, put a price tag on the beautiful that you had given to your world and then call you a racketeer and extravagant. “But can anyone be more extravagant than nature itself? Or how could you be more extravagant than the landscape in your heart? “After a while, I felt lonely because Ferdinand, the man they accused, that other half of me, could no longer defend himself. “My suffering caused me to cough blood, and the prosecution offered me a medical severance to spare me, according to them, of further agony. “I refused. “I told them again that more than life, President Marcos and I valued honor. “I felt helpless as I stood up at the opening of the trial. My only guide was the rosary in my hand. I touched the small crucifix in the bead, held on to it firmly and closed my eyes imagining I was on that cross too and told myself: ‘Be brave and courageous, and the truth shall make you free.’ On July 2, 1990, her 61st birthday, the 12-man jury unanimously
Tuesday, July 31, 2018 A7
Since 1986 up to the time the Marcoses were exiled to the US, Mrs. Marcos had been asking what happened to valuable properties and assets belonging to the Republic of the Philippines that were arbitrarily sequestered as “ill-gotten wealth” by agents of the Aquino administration.
acquitted her on all counts. Feeling vindicated, on that day, she walked on bended knees from the portal to the altar of the Saint Patrick Church, thanking God for his quality of justice: No courtroom and no mortal power could ever match. In this era of “televoting,” “telesurvey” and “telepolling,” people are still wondering why did they do that to her and President Marcos? There is a litany of reasons. The prosecution witness, Timothy Khan, provided one, a reason fraught with political, social, economic and national security implications because, at that time, the retention of the American military bases in the Philippines was under negotiation. Khan testified that the suit was used for political leverage: “Mrs. Aquino said, no prosecution, no bases.” Since 1986 up to the time the Marcoses were exiled to the United States, Mrs. Marcos had been asking what happened to valuable properties and assets belonging to the Republic that were arbitrarily sequestered as “ill-gotten wealth” by agents of the Aquino administration. The New York office of the Aquino regime put several interesting pieces of arts on the auction block on August 15 and 16, 1986. The sale was held at the Viscount International Hotel in Long Island, New York, through auctioneer Sunrise Galleries. The items were vandalized from the seven-story, 30-room townhouse on 66th Street in Manhattan, New York. Here are some samples: n A photograph of Mrs. Marcos with Pope John Paul II, listed at $150 to $250, sold for $450; n An oil painting of President
Marcos, which was expected to fetch $100 to $150, sold for $400; n A photograph of Mrs. Marcos with President and Mrs. Gerald Ford (priced at $150 to $250); n A photograph of Mrs. Marcos and President Marcos with Mao TseTung (priced at $200 to $300); n A photograph of Mrs. Marcos and President Marcos with Russian dignitaries (priced at $150 to $250); n A photograph of Mrs. Marcos with Lord Mountbatten ($150 to $250); n A rare George III side table, circa 1780, valued at $40,000, sold for $42,500; n A Steinway concert grand piano, valued at $18,000, sold for $26,000; n A George III gilt-wood mirror, circa 1770, valued at $10,000, sold for $35,000; n A pair of George I walnut armchairs, circa 1730, priced at $5,000 to $7,000, sold for $22,000; and n A 4-foot-tall sculptured camel made from seashells, valued at $500 to $700, sold for $2,000. Why did the Aquino administration conclude that the priceless pictures with Pope John Paul II, Mao Tse-Tung and other dignitaries were “ill-gotten?” It can be explained that the motive could not only be hatred and vengeance. The Yellows and their inveterate supporters also wanted to take away good memories they cherished and nurtured for the Filipino people. Or maybe they wanted to make the Marcoses scapegoats to hide their greed, graft and plunder. They sold many more gifts and treasures the Marcoses kept in their private chambers in Malacañang, including 82 Old Masters and 81 boxes of valuables, and those that were on display and had been taken out from the Metropolitan Museum in Manila. They were worth millions of dollars. To be continued To reach the writer, e-mail cecilio.arillo@ gmail.com.
What economists still don’t get about 2008 crisis
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By Noah Smith | Bloomberg Opinion
acroeconomics tends to advance—or, at least, to change—one crisis at a time. The Great Depression discredited the idea that economies were basically selfcorrecting, and the following decades saw the development of Keynesian theory and the use of fiscal stimulus. The stagflation of the 1970s led to the development of real business cycle models, which saw recessions as the efficient working of the economy, and central bank meddling as likely only to cause inflation. The painful recessions of the early-1980s saw a shift to so-called New Keynesian models, in which monetary policy is the central stabilizing force in the economy. The housing bubble that peaked in 2006, the financial crisis of 2008 and the Great Recession that followed constitute another crisis. So far, however, it has produced mostly evolution, rather than revolution, in economists’ conception of the business cycle. The bubble and the following crisis convinced macroeconomists that recessions often emanate from the financial sector—an idea that had often been resisted or overlooked before. There was immediately a flurry of activity, as economists hastened to shoehorn finance into their standard models. Some now believe that the addition of finance will allow New Keynesian models to forecast crises before they happen; others are, understandably, skeptical. Another important insight from the Great Recession was that traditional monetary policy isn’t always enough to stabilize the economy— when interest rates hit zero, other measures are needed. These could include quantitative easing, forward guidance or fiscal stimulus. As New Keynesian pioneer Jordi Gali noted in a recent summary, there has been much work figuring out how New
Keynesian models can deal with zero interest rates. There has also been much work on making the models more realistic by taking into account of the big differences among consumers and companies. These are important innovations, and they address glaring deficiencies in the pre-2008 models. But they don’t feel like a big break with the status quo. Most important, the basic notion of recessions as driven by rational actors’ responses to unpredictable, sudden events—or shocks, as economists call them—remains in place. That would come as a jarring surprise to many outside academia. To lots of people, it seems obvious that the 2008 crisis was long in the making — the product of years of financial and regulatory folly. In general, the notion that economic booms cause busts, instead of being random unrelated events—an idea advanced by the maverick economist Hyman Minsky—seems to have much more currency beyond the ivory tower than within it. But at least a few economists are working on something more revolutionary—a new interpretation of recessions, booms and financial
markets that more closely matches the popular idea that business cycles are both predictable and driven by irrationality. The basics of this new idea are laid out in a presentation by Nicola Gennaioli and Andrei Shleifer— two behavioral finance specialists venturing into the realm of macroeconomics. Gennaioli and Shleifer take their cue from a number of recent papers hinting that recessions are actually possible to predict years in advance, if one simply pays attention to the right variables. One of these is a 2013 paper by Robin Greenwood and Samuel Hanson, showing that when junk bond issuance increases and credit spreads narrow, a credit bust often tends to follow two or three years later. Another is a 2016 paper by Matthew Baron and Wei Xiong, showing a similar result for bank lending instead of corporate bonds. A third recent paper, by David López-Salido, Jeremy C. Stein and Egon Zakrajšek, adds term spreads to Greenwood and Hanson’s list of forecasters, and find that, together, these indicators give a decent amount of warning about recessions two or three years down the road. Other papers find a correlation between rapid credit growth and heightened recession risk. All of these papers have one thing in common—they use debt to predict recessions years in advance. That fits with the emerging post-crisis wisdom that problems in credit markets are the source of both financial crashes and the ensuing economic slowdowns. Gennaioli and Shleifer explain these patterns by turning to their own preferred theory of human irrationality—the theory of extrapolative expectations. Basically, this
theory holds that, when asset prices rise—home values, stocks and so on—without a break, investors start to believe that this trend represents a new normal. They pile into the asset, pumping up the price even more, and seeming to confirm the idea that the trend will never end. But when the extrapolators’ money runs out, reality sets in, and a crash ensues. Gennaioli, Shleifer, and their coauthors have been only one of several teams of researchers to investigate this idea and its implications in recent years. When extrapolative expectations are combined with an inherently fragile financial system, a predictable cycle of booms and busts is the result. At some point during good economic times, irrational exuberance takes hold, pushing stock prices, house values or both into the stratosphere. When they inevitably come down, banks collapse, taking the rest of the economy with them. This story, if it became the standard model of the business cycle, would represent a true revolution in macroeconomics. It discards two pillars of recent macroeconomic thought—rational expectations, and shock-driven unpredictable recessions. It would represent a triumph for Minsky’s ideas, and for those outside the academy who have long urged macroeconomists to pay more attention to debt markets and human psychology. And if the code of booms and busts can finally be cracked, there may be ways for central banks, regulators or other policy-makers to head off crises before they begin, instead of cleaning up afterward. So far, Gennaioli and Shleifer’s story isn’t close to achieving dominance in macro. But of all the ideas being put forth in the field, this seems like the most interesting to watch.
2nd Front Page BusinessMirror
A8 Tuesday, July 31, 2018
Airlines’ transfer to Clark reset as operational kinks sorted out
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By Recto Mercene
@rectomercene
HE Manila International Airport Authority (Miaa) has indefinitely postponed the proposed transfer of some airline companies to designated passenger terminals, including Clark, as authorities and carriers sort out “operational constraints.”
The Media Affairs Division (MAD) said the Miaa stand is “contrary to what is now circulating in social media.” “The August 31, 2018, terminal transfer of airline will not proceed, as originally envisioned. While talks with some airline operators have started and with some signifying their intent to transfer, options that have been discussed are exploratory in nature,” MAD said in a statement. The Miaa justified the postponed transfer by saying, “Discussions gave rise to unforeseen operational constraints that require a longer time to resolve.”
There had been talk of decongesting the Ninoy Aquino International Airport (Naia) complex by transferring some of the air carriers to Clark. Four-star Philippine Airlines (PAL) and AirAsia have complied, relocating some of their domestic operations to north of Manila since last year. Last Febr uar y then-House Speaker Pantaleon D. Alvarez renewed his threat to cancel the franchise of local budget carrier Cebu Pacific, citing the airline’s alleged faults in dealing with customers who complained that, instead of them using the passenger tube,
they are usually compelled to walk or are fetched by a shuttle bus. At a House hearing, Alvarez, who was also the chairman of the House of Representatives Committee on Transportation, berated airport officials and airlines over flight delays, long lines at the Naia and other issues that hound the country’s main airport. He gave Cebu Pacific 45 days to fix its issues, or face franchise cancellation. Alvarez told the airline’s chief executive officer, Lance Gokongwei, to transfer some of the flights to Clark International Airport in Pampanga in a bid to decongest air traffic at the Naia, where Cebu Pacific primarily operates out of Terminal 3. In this regard, the Miaa, in its letter dated June 5, 2018, formalized to the chairman of the House of Representatives Committee on Transportation its request to defer the implementation of the Terminal Rationalization Program. “Therefore, no transfer of airlines will occur until further notice.” As envisioned by airport authorities, Naia 1 and Naia 3 would be purely for international operations, while Naia 2 and Naia 4 would be for mixed domestic operations of
several air carriers. Presently, Naia 1 hosts a mixture of international budget airlines and Middle East carriers. On the other hand, Naia 2 is exclusively use by PAL, while Naia 3 is a mix of PAL, Cebu Pacific and other international budget carriers. The Miaa, through MAD, said the transfer of certain PAL flights to Naia 1 is necessary “to prepare Naia 2 for its rehabilitation, which is expected to commence before year-end. “We assure the air-riding public that passenger safety, comfort and convenience are always our priority,” the Miaa said. Today, Naia 1 is used for PAL flights PR 103 and PR 115 from San Francisco and Vancouver, respectively. PAL will mount 12 turnaround flights from Abu Dhabi, Dammam, Doha, Jeddah, Kuwait and Riyadh, departing and arriving at Naia 1, until further notice. Effective July 31, 2018, the following PAL flights shall depart from or arrive in Naia 1: PR 656, PR682, PR684, PR663, PR668 and Pr654, said the Miaa. The Miaa said that, starting July 31, all Canada flights enroute to or from Manila shall depart from or arrive at Naia 1.
Senators approve automatic PhilHealth benefits for PWD
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HE Senate passed on third and final reading Monday a bill mandating automatic Philippine Health Insurance Corp. (PhilHealth) coverage for persons with disability (PWDs). Voting 18-0, the senators passed
Senate Bill (SB) 1391, introduced by Senate President Pro Tempore Ralph G. Recto, which provides mandatory PhilHealth coverage for the PWD, who now enjoy medicine and hospitalization discounts at the same level as senior citizens
for as long as they are certified as such and carry PWD cards issued by local governments. In sponsoring SB 1391’s approval, Sen. Risa Hontiveros said the remedial legislation aims to expand the benefits granted to PWDs
under the Magna Carta for Persons with Disabilities by including their automatic PhilHealth coverage. As provided in the proposed law, she said PhilHealth is mandated to shoulder “all or some of the PWDs’ expenses when they get hospitalized.” Hontiveros pointed out that PWDs are one of the “most vulnerable segments of the population,” adding that it is “doubly difficult when you have a disability and you become sick.” Once signed into law by President Duterte, she said PhilHealth will be required to “develop exclusive packages for PWDs, taking into account their specific health and development needs.” Sen. Joseph Victor G. Ejercito, cosponsor of the measure, said funds to pay for their PhilHealth insurance premium will be sourced from “sin” tax revenues. “This is a good case of a vice paying for the virtue of helping the vulnerable,” he said. “As to its fiscal implication— because every law has a price tag, including this one—whatever it would be, I am sure, will be within the capacity of future sin tax payments to absorb,” Ejercito said. “In fact, tobacco and alcohol tax collections have always been bigger than government plowbacks to PhilHealth. In 2016 the sin tax haul was P144.2 billion, but the national government subsidy to PhilHealth was P43.8 billion.
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In a separate roundtable, Lopez advised Kenji Kawano, president of Tsuneishi Shipbuilding Company Ltd., to locate one of his expansions in the City of Iligan. He said this will generate jobs for people in the area that is near Marawi City, the once-progressive Islamic city that local terrorists influenced by the Islamic State laid siege to for five months last year. A delegation of trade officials and business executives, headed by Lopez, was in Japan last week to establish stronger investment ties with manufacturing firms there. The delegation also had meetings with Japanese government officials and business owners.
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COCO OIL EXPORTS DIP 11% IN H1, BUT INDUSTRY SEES 2018 GOAL DOABLE By Jasper Emmanuel Y. Arcalas @jearcalas
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HE country’s coconut oil (CNO) exports in the first half fell 11.10 percent to 414,089 metric tons, from 465,084 MT, due to lower firstquarter shipment, according to preliminary data of the United Coconut Association of the Philippines Inc. (Ucap). Ucap data showed that the country’s first-quarter CNO exports declined by 31.05 percent to 206,043 MT, from 298,838 MT recorded in the January-toMarch period of 2017. Despite the double-digit decrease in the January-to-June shipments, Ucap is optimistic the country can hit its full-year export target of about 1 MMT on the back of higher demand, according to Ucap Executive Director Yvonne T.V. Agustin. “We are still hopeful that we would hit almost 1 millon [metric tons]. In the first semester we already exported over 400,000 metric tons, so doubling it would easily reach 800,000 metric tons,” Agustin said. “And the demand for CNO in the second half is usually higher compared to the first half,” Agustin added. Agustin said demand for CNO from nontraditional markets, such as Malaysia and Indonesia—which are oil exporters as wel—have been increasing in the past years. This is probably attributed to the shortage in their respective domestic outputs of vegetable oil, according to Agustin. The industry is also banking on higher domestic coconut output brought about by better weather conditions to drive CNO exports in achieving the full-year target. “We are expecting good production this year. Production was low in the previous years due to El Niño and typhoons, but now we are expecting a better one because of good weather,” she said. “Because if the weather is better, then production would
be higher.” Ucap projects that domestic coconut output this year would grow 8.67 percent to 2.607 MMT in copra terms, from 2.4 MMT recorded volume in 2017. Agustin said they are hopeful higher CNO shipments would offset the decline in the global market price of the vegetable oil to maintain a more than $1-billion export revenue this year. “For example, our volume of exports in the last three months has been steadily increasing. But revenue is affected by the low prices [of CNO],” she said. A “great performance in terms of production and export” could offset, she said, the decline in revenue. “Last year we earned around $1.4 billion, so we hope to reach that due to higher shipment.” The global price of CNO depends on the prices of other fats, such as palm oil, which accounts for the bulk of the global vegetable oil market, according to Agustin. The higher price of CNO last year allowed the industry to rake in $1.504 billion in revenue, a 30.56-percent jump, from the $1.152-billion CNO-export receipt recorded in 2016. Available Philippine Statistics Authority data showed that this is the first time that revenue from CNO exports breached the $1.5-billion level since 2010. The price of CNO has been declining since the last quarter of 2017 due to higher supply of vegetable oils in the global market, Agustin told the BusinessMirror in an earlier interview. “When November came, the year-on-year price of CNO declined. But it is not just CNO; the price of other oils also declined, such as palm oil,” she pointed out. “You will not see the price declining steeply, it is swaying. But, if you look at the line, the trend is really declining,” she added. The World Bank projects that the average global price of CNO this year would decline by 20.46 percent to $1,275 per MT, from the six-year high of $1,603 per MT recorded in 2017.
Malampaya Fund. . . Monday committed to support the measure “subject to further study on precisely how much of the remaining Malampaya funds should be applied for the purpose.”
ERC castigated
At the same time, the senator castigated Energy Regulatory Commission (ERC) officials, voicing disappointment over “several delays in the approval of SCC and SD rate applications.” Citing PSALM data submitted to his committee, Gatchalian lamented that various delays have resulted in an “additional P34.78 billion of costs to be shouldered by consumers,” equivalent to a power-rate increase of P0.1973 per kWh. “After all of your controversies, you will pass on the P34
Banks. . .
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system, sound asset quality, adequate liquidity and rising capital buffers. The trajectory for profit growth will continue, driven mainly by strong growth outlook, upbeat lending activities, product innovations, and more cost-efficient and
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billion as additional burden of Juan de la Cruz due to these delays,” the senator confronted ERC officials at the hearing. “This is absolutely unacceptable. What is your solution?” In response, ERC lawyer Krisha Buela replied that the regulatory body was reviewing its procedures and process flows to improve their work. Gatchalian, however, remained skeptical. “I’m telling you that there’s a problem in your procedures. It’s a P34-billion problem to be shouldered by the Filipino people.” He indicated his readiness to push passage of the ERC Governance Act embodied in Senate Bill No. 1490, which will clearly mandate “transparency and accountability in [ERC’s] deliberations and decisions.”
technology-enabled operations,” he added. At the recently held reception for the banking community, the Central Bank governor commended the leaders of the banking industry for pursuing reforms, such as raising risk-management standards and aligning corporate governance with international best practices.