Businessmirror june 02, 2017

media partner of the year

United nations

2015 environmental Media Award leadership award 2008

BusinessMirror A broader look at today’s business

www.businessmirror.com.ph

n

Friday, June 2, 2017 Vol. 12 No. 232

Senate concurs with House on diesel, income-tax tweaks

W

By Butch Fernandez

@butchfBM

HILE the Senate has vowed to take its time in scrutinizing the tax bill approved by the House of Representatives on Wednesday, its leaders have already given indication that at least three main provisions of the measure would be retained. These are the reforms in the existing income-tax brackets, the P6 diesel levy and additional taxes on luxury items. Senate President Aquilino L. Pimentel III confirmed on Thursday that senators are working to reform the personal income tax, the revenue-depleting provision

May PMI indicates further manufacturing expansion on sustained local demand By Bianca Cuaresma

T

@BcuaresmaBM

he manufacturing sector is preparing for acceleration of production in the second half the year, as indicated by the latest Purchasing Managers’ Index (PMI) data released by Nikkei and think tank IHS Markit. The Philippines’s PMI for May hit 54.3, the strongest this year, indicating confidence of manufacturers for the coming months due mainly to sustained domestic demand. In April the PMI was at 53.3. The PMI is a composite index, calculated as a weighted average of five individual subcomponents. The components include new orders—which weigh the most at 30 percent of the index; output, at 25 percent of the index; employment, at 20 percent; suppliers’ delivery times, 15 percent; and stocks of purchases, comprising the other 10 percent. Readings above 50 signal an improvement in business conditions on the previous month, while read-

Buoyant domestic demand and business optimism augur well for the strong growth momentum to be sustained as we approach the end of the second quarter.”—Aw

ings below 50 show deterioration. The report attributed the gains in the sector to robust growth in both output and new orders, which, alongside higher employment and buying levels, lifted the sector’s performance. Strong demand and business optimism also prompted firms to build inventories at a faster rate. Continued on A12

PESO exchange rates n US 49.7610

in the approved House Bill (HB) 5636, or the Tax Reform for Acceleration and Inclusion (TRAIN). “ K ailangan na po ’yun k asi lahat ng compensation income earners ay magkikita na po dun sa highest bracket,” the Senate chief told reporters. Pimentel pointed out that “even the rich-

PIMENTEL: “If you can afford so much luxury, you should pay your dues to the government, which allowed you to enjoy luxury goods.”

est man in the Philippines” is now ranked alongside middle-class income earners in the highest tax bracket. “It is now time to reform that,” he said. He also stressed that the rich are taking advantage of the low tax on diesel, “so we need to update that also. The proposal is P6 per liter, the imposition of which will be staggered under a P3-P2P1 scheme.” Continued on A2

2016 ejap journalism awards

business news source of the year

P25.00 nationwide | 5 sections 28 pages | 7 days a week

VETERAN SENATORS HIT CONGRESS INACTION ON MARTIAL-LAW EDICT By Butch Fernandez @butchfBM

T

wo veteran senators who survived the Marcos-era martial-law regime—former Senate President Aquilino Q. Pimentel Jr. and former Sen. Rene Saguisag—deplored the inaction of current members of Congress to fulfill a constitutional mandate for the Senate and the House to convene in a joint session “within 48 hours” following President Duterte’s martial-law edict. In separate interviews at the sidelines of the necrological service in honor of the late former Sen. Eva Estrada Kalaw, Pimentel and Saguisag expressed their dismay over the failure of incumbent senators and congressmen to fulfill their constitutional duty to meet in joint session to tackle Duterte’s Proclamation 216 imposing martial law in the entire Mindanao. Pimentel, father of incumbent Senate President Aquilino L.

Pimentel III, however, acknowledged that “the basis for the declaration of martial law has some foundations, because the President has access to information that many of us don’t have.” Noting the basis for imposing martial rule to contain Maute outlaws in Marawi City, as well as the reported “evil desires of ISIS-related organizations”in Mindanao, Pimentel asserted that members of the Senate and House of Representatives,“even if they are not in session, must call a special session within 48 hours from the declaration of martial law by the President, who is obligated to report to Congress what he is doing.” He added Congress is dutybound to look into the martial-law issue because the lawmakers “are the representatives of the people, and under the Constitution, it is required that they should have a joint session, joint discussion and joint deliberation.” See “Senators,” A2

IN THE PHILIPPINES, ALL THE PRESIDENT’S PEOPLE By Nicole Curato The New York Times

C

ANBERRA, Australia—In the year that he has been president of the Philippines, Rodrigo R. Duterte has been called a murderer, a tyrant, a misogynist and a madman. And yet, according to some recent opinion polls, he inspires “much trust” in 80 percent of Filipinos. Duterte’s supporters are sometimes pejoratively called “Dutertards”. But are they simply naïve, and easy prey for demagoguery, propaganda and fake news? I don’t think so. For more than three years, I have been studying how democratic politics takes shape in postdisaster context—specifically in communities that were affected by Typhoon Haiyan (Supertyphoon Yolanda) in November 2013. Haiyan was one of the strongest tropical storms ever to make landfall, and it killed more than 6,200 people. Tacloban City, my field site, was ground zero for the cyclone. A city of about 240,000 people in the central part of the Philippines, it is a hub of commerce, trade, education and tourism in one of the country’s poorest regions. I have talked to more than 250 residents, mostly in hazard-prone areas the government has declared “no-build zones”. and many, while still reeling from the disaster, were energized when Duterte ran for the presidency, and when he won it. See “In the Philippines,” A2

President Duterte (left) sits inside the newly commissioned BRP Davao del Sur as he attends the 119th anniversary of the Philippine Navy in Davao City on May 31. Duterte, who declared martial law on Mindanao island, southern Philippines, has approved the creation of a “peace corridor” to hasten the rescue of civilians and delivery of humanitarian aid for displaced people, said Presidential Spokesman Ernesto C. Abella. Presidential Communications Operations Office via AP

n japan 0.4493 n UK 64.1519 n HK 6.3866 n CHINA 7.2995 n singapore 35.9779 n australia 36.9674 n EU 55.9612 n SAUDI arabia 13.2696

Source: BSP (1 June 2017 )

BMReports BusinessMirror

A2 Friday, June 2, 2017

Senators. . .

Continued from A1

The elder Pimentel set aside claims by current Congress leaders that the two chambers are required to hold a joint session only to revoke or extend the martial-law declaration. “They can revoke, extend or justify.... In other words, do their function to report to the people because they are the representatives of the people.” He asserted both the President and Congress have a duty to perform. “If there is no session, they can call a special session; if there’s a session, they should make it a priority measure. That’s what they are supposed to do.” The former Senate president did not rule out the possibility that both legislative chambers may opt to still convene a joint session to comply with the Constitution. “Why not? It’s the people, I think [that] should demand it. That’s why I’m saying that the people should speak out. We are a democracy. If they are wrong, we tell them they are wrong.” He said convening a joint session to tackle a martial-law proclamation is mandated by the Constitution, noting: “That is required, within 24 hours, as a matter of fact, if I’m not mistaken, Congress should already act on the report of the President in joint session, not individually,” he said, referring to the transmission of copies of Duterte’s martial-law edict to Pimentel III and Alvarez in Davao last week.

‘Yes sir, yes sir’

For his part, Saguisag questioned the basis for imposing martial law in Mindanao. “What is the basis? Where is the invasion? From where are the invaders? Where is the rebellion? Defense Secretary Delfin N. Lorenzana was right; there is no need [for it]. Now the Senate and the House, they are really not voices but echoes. Whatever the President says, they will say ’yes sir, yes sir’.” Saguisag recalled Lorenzana was reported to have admitted to senators in a closed-door briefing that “the Defense secretary himself saw no need [for martial law], so he said he did not recommend”.

De Lima weighs in

In a separate statement, detained Sen. Leila M. de Lima expressed dismay over the Senate leadership’s refusal to convene Congress in joint session to tackle Proclamation 216. De Lima, under detention for alleged links to illegal drugs racket, lamented the pro-Duterte majority bloc’s decision not to convene the Senate and the House in joint session “is a failure

of our democracy”. “Both Houses have to convene with the implementation of martial law,” she said. “We have to remember that convening both chambers of Congress does not automatically mean we are going to revoke it. De Lima clarified the assembly is meant to “review the merits of the executive action on the need to implement military rule” warning that “our democracy is at stake here”.

‘Effects minimal, short-lived’

In a recent statement, international credit watcher Moody’s Investor Service said the impact on economic activity of the crisis in Marawi will be “minimal and short-lived”. “According to official statements, the military has regained control of most of Marawi as of May 30. As such, martial law, which is limited to 60 days by the Philippine constitution and after which congressional approval would be required for an extension, may not be needed for much longer, pending the full resolution of the situation. We have maintained our forecast for real GDP growth in the Philippines at 6.5 percent for 2017,” Moody’s said. But while economic prospects remain stable amid the development in Marawi City, Moody’s expressed concern over the noise behind the martial-law declaration in Mindanao. “However, beyond the immediate implications of the crisis in Marawi, President Duterte has publicly stated his willingness to bypass safeguards provided by the Constitution against the arbitrary declaration of martial law, including the power of Congress and the Supreme Court to review, and even revoke, martial law. The President has also previously threatened to invoke martial law to address other issues, such as the eradication of drugs, which may not conform to the definition of ‘cases of invasion or rebellion’ that is required under the Constitution,” Moody’s said. As such, the international credit watcher said any challenges to the constitutional system of checks and balances could undermine the improvement in institutional strength in the Philippines. “Along with enhancements to government effectiveness and the control of corruption, the greater policy predictability afforded by better rule of law has underpinned a more favorable environment for economic growth and investment in recent years,” Moody’s added. “However, if recent events lead to prolonged uncertainty around security or governance, such a development would eventually dampen business confidence and, consequently, economic outcomes.”

In the Philippines. . . Tacloban may not be an exact snapshot of the entire country, but it reveals something important, and something beyond the merely anecdotal, about why communities living in precarious conditions value Duterte’s leadership: He seems like a rare politician who doesn’t forget about the people. Consider Shirelyn, a gregarious mother of two in her 20s. When I first met her in 2014, she lived in a shanty made of driftwood and galvanized iron sheets. Her home

www.businessmirror.com.ph

Senate concurs with House on diesel, income-tax tweaks Continued from A1

“We start at P3, then P2 plus P1, so P6 will still be the total. There are many strategies in tax law which we could implement.” But the Senate President promptly clarified that “the key here is to calibrate, not to shock the entire system because of a big jump in the price of diesel.” He added: “Luxury goods, it’s okay to tax them. If you can afford so much luxury, you should pay your dues to the government, which allowed you to enjoy luxury goods.” At the same time, Pimentel III indicated that Congress is also finalizing tax-reform measures that will lift current exemptions, but did not go into details, which have yet to be finalized. “You know, if you want a modern country, a modern society, a fairer society, we really have to have funds to improve our society,” he added. Under HB 5636, workers earning P250,000 will be exempted from paying personal income taxes. Also, an 8-percent tax on the self-employed and professionals will now be imposed on gross receipts in excess of P250,000. The measure provides automatic adjustment of taxable income levels and their corresponding base every three years beginning 2022, based on a three-year cumulative consumer price index inflation rate. The bill said the tax exemption for 13th-month pay and other benefits would increase from P82,000 to P100,000. The House rushed the approval of the bill after it was certified as urgent by President Duterte. Senators, however, said they will set more public hearings to further scrutinize the Duterte administration-endorsed revenue-generating measure TRAIN. Sen. Juan Edgardo M. Angara, Ways and Means Committee chairman, said: “We need to hold more hearings [on the tax measure]. We are crunching figures because the impact of this tax measure will be harder on the poor sector.” Senate President Pro Tempore Ralph G. Recto indicated he will push for adoption of additional taxrelief measures to further mitigate the impact of the planned higher tax impositions. Recto estimated that proposed mitigating measures are projected to add up to P200 million in income-tax relief, even as the government is looking to take back P500 million from the TRAIN bill revenues, “like giving 200 to one pocket but taking 500 from the other pocket”. He said senators are also awaiting submission of details on so-called safety nets, like cash transfer, for

Continued from A1

had been washed away by the typhoon. Shirelyn worked odd jobs whenever her partner, a pedicab driver, failed to earn enough to support the family. Last year she chose to forego a few days’ pay to campaign for Duterte when he was running for president. “This is the least I can do,” she told me in April 2016, at the height of the race. Duterte was the mayor of Davao City when Haiyan struck, and he sent rescue operations to Tacloban at the time.

the poor sector. In the same interview, Recto confided the Palace-backed TRAIN bill’s early approval by Congress is likely to take some time, projecting plenary deliberations to “stretch until year-end”. “The earliest could be 2018,” Recto told the BusinessM irror. “The debates could stretch until December, so how can they implement it in January when there is still the publication requirement?”

Infra funding

Speaker Pantaleon D. Alvarez said expected revenues from the tax-reform measure will be used to fund infrastructure programs of the government. However, Nacionalista Party Rep. Luis Raymund F. Villafuerte​ Jr. of Camarines Sur, vice chairman of the House Committee on Appropriations, said government agencies, such as the Department of Public Works and Highways and the Department of Transportation, must work on upgrading their absorptive capacity to ensure the implementation of infrastructure programs of the government. “The bill will extend programs to the poorest of the poor, where social benefits card will be given to every beneficiary,” Alvarez said. Under the bill, for four years, an allocation of 40 percent of the yearly incremental revenues generated from the proposed petroleum excise tax shall be allocated to fund social-benefits programs and granting of fuel vouchers to qualified transport franchise holders. The measure also said that for the same period, the remaining yearly incremental revenues shall be allocated for infrastructure, health, education and social-protection expenditures. Also, the measure said 85 percent of the tax collection from sweetened beverage excise tax shall be allocated for government priority programs, while the remaining 15 percent shall be used to fund programs for the welfare and benefit of sugar planters/farmers. Villafuerte said the approval of the bill will equip the administration with a steady revenue flow “to go full blast on its ambitious “Build, Build, Build” agenda while eschewing the debt trap that has saddled past growth and development programs.” But Villafuerte said government agencies must improve their absorptive capacity to ensure the ambitious infrastructure buildup of the Duterte administration does not end up being hobbled by the slow implementation, if not nonimplementation, of big-ticket projects, as what had happened

“It’s our turn to help him”, said posters plastered around Tacloban during his presidential bid. Six months into his term, Duterte’s campaign promise “change is coming” materialized for Shirelyn. She and her family were relocated to the northern part of the city—to a house with concrete walls, a toilet, even a garden. Her new home brings to mind the aspirational middle-class gated communities of Manila, with their brightly painted welcome arches, rowhouse designs and picket fences. “I knew Duterte would not forget,” Shirelyn said. In November I heard Duterte give a

speech in Tacloban commemorating the third anniversary of Haiyan’s landing. He promised to speed up relief assistance in the region, which had stalled. And he threatened to kill a government official he had put in charge of the effort if that official failed to move families into permanent disaster-proof homes fast enough. (“You know mate,” he told the man, who was on stage with him, “in truth, it’s rare that I shoot people, especially my friends. But if you are unable to do this…”). In the same speech, Duterte also made a comment implying that he had ogled Vice President Maria Leonor G. Robredo’s legs during Cabinet meetings. “What a pervert,” I whispered to an old woman sitting next to me in the audience. “Let it go,” she said. “He cared enough to be here.” Politicians in the Philippines are often viewed as opportunists who reach out to constituents while they are courting votes but disappear from view once in office. To Haiyan survivors, Duterte is different. Three years after the disaster, even since becoming president, he came to Tacloban. This set him apart from his predecessor, Benigno S. Aquino III, who once castigated survivors for complaining about their hardships instead of being grateful for still being alive. The paradox, of course, is that even as Duterte restores dignity to disaster victims who have felt neglected by the state, his administration is attacking other vulnerable communities, like suspected drug users and those around them. In January I asked Rafael, a security guard in Tacloban, how he felt about the government’s campaign against drugs, which has already claimed more lives than Haiyan did. Rafael lost his wife to the typhoon. “It’s sad,” he said, mentioning the case of a teenager who was killed by unidentified gunmen after being mistaken for someone else. “But others deserve it. I know. I patrol the streets here.” I asked if he thought that what Duterte was doing was fair. “He has been fair to us,” Rafael replied. In other words: Not all suffering is equal, and compassion must be earned. Duterte’s antidrug campaign masterfully builds on the popular view that there are hierarchies of misery.

in the past administration. “As far as I can recall, of the 60 public-private partnership [PPP] projects announced by the previous administration, only one was completed by the end of the Aquino presidency, which was the MuntinlupaCavite Expressway, or MCX. This was quite disappointing, especially because Malacañang then had been touting the PPP as the flagship initiative of then-President Aquino,” he said. “The tax-reform bill will help raise domestically a significant portion of the P8 trillion needed between now and 2022 for the government’s aggressive spending on infrastructure, instead of sourcing such revenues from borrowings that would only sink the present and future generations of Filipinos in a quicksand of debt.”

Workers oppose bill

The Associated Labor Unions- Trade Union Congress of the Philippines (ALU-TUCP) on Thursday chided the new tax-reform package, saying it will send millions of workers deeper into poverty. In a statement, ALU-TUCP Spokesman Alan Tanjusay said once the TRAIN is enacted into law, around 30 million workers will become poorer. “The impact of the proposed tax measure to workers is not uplifting because those who are already poor workers would become even poorer. This bill is a big mistake committed by congressmen who approved it,” he said.

‘Don’t dilute bill’

But the Action for Economic Reforms (AER) have lauded the passage of HB 5636, pointing out that the necessary reforms in the personal income tax, fuel and automobile excise taxes adjustments and removal of exemptions in the value-added tax (VAT) will truly benefit the Filipino people. According to AER senior economist Jo-Ann L. Diosana, the group will remain vigilant so the TRAIN bill will not be further diluted when the Senate committee tackles the bill. HB 5636 contains the first package of the Department of Financeproposed Comprehensive Tax Reform Program. “The bill contained compromises, such as, allowing the VAT exemption of cooperatives and the nonindexation of excise taxes on fuel and automobiles. We believe that should be corrected in the Senate deliberation of the bill. We will continue to be vigilant and make sure that the bill will not be further diluted and that the essential reforms will be secured,” Diosana said. With Jovee Marie dela Cruz,

Jonathan Mayuga and Rea Cu

In a village near where Shirelyn used to live, a market vendor proudly told me that she had reported a drug dealer to the head of the village. “I have been working hard to put my kids to school,” she said. “Then this man sells them drugs. This can’t be.” The dealer is now on a government watch list. According to a poll conducted in March, 73 percent of respondents said they were worried that they or someone they knew might become the victim of an extrajudicial killing. But the anxiety I encountered in Tacloban was about something else. It was about people’s fear of being abandoned by the state, once again. Shirelyn showed me a notebook in which she had written down the promises Duterte made in his first address to the country as president. This was in January, a few months after she moved into her new home. For that, she was grateful; about the rest— the jobs, the new schools and the better health care to come—she was unsure. “I made a list so I won’t forget,” she said. “We know what we deserve.” Duterte might get away with murder, but he won’t get away with broken promises. Nicole Curato is a fellow at the Center for Deliberative Democracy and Global Governance at the University of Canberra. She is the editor of the forthcoming book The Duterte Reader.

Pirated goods. . . Continued from A12

The NCIPR is the country’s anticounterfeiting committee that aims to protect and enforce IPRs in the country. The NCIPR is composed of several government departments and agencies,including the Department of Trade and Industry, IPOPHL, Department of Justice, Department of the Interior and Local Government, Bureau of Customs, National Telecommunications Commission, National Bureau of Investigation, Philippine National Police, Optical Media Board, National Book Development Board, and Bureau of Food and Drugs. A total of P6.5 billion worth of counterfeit goods were seized through the collective efforts of the NCIPR members in 2016.

The Nation BusinessMirror

news@businessmirror.com.ph

Youth group hits CHED over tuition, OSF hikes

Wayward bomb kills 11 Army troops

By Marvyn N. Benaning Correspndent

T

HE Kabataan Party-list group on Wednesday denounced the approval of increases in tuition and other school fees (OSFs) in 268 private colleges and universities by the Commission on Higher Education (CHED). Kabataan said the schools got an average of P86.68 increase in tuition per unit in 262 schools and the CHED also approved increases in other fees for 237 schools. For sure, the fee increases will affect students enrolled in these schools who are already shouldering the high costs of tuition and other redundant and dubious fees, the group said in a statement. Tuition has skyrocketed in the last five years. A study released by Kabataan Party-list group last year showed that both tuition rates and profits of private universities almost doubled under former President Benigno S. Aquino III’s first five years in office. School administrators have also employed the practice of double-charging students by imposing OSFs, which go to expenses supposedly already covered by their tuition. These include garbage fee, athletics fee, cultural fee, donation fee, energy fee, Internet fee and developmental fee. The last fee was banned by the CHED, but several schools, including public universities, continue to charge its students with such a fee under a different name, the group said. “The existence of other school fees and their regular increases only reinforce the commercialized orientation of education in the country. Education remains a commodity to which capitalist educators and school owners continue to milk out profits from students who can pay,” the group added. “We urge the Filipino youth to call for the abrogation of CHED Memo Order 3, which has turned the CHED into a mere stamp pad for increases, as well as the Education Act of 1982, which brought about this reorientation of education,” Kabataan said. The group reiterated its call for the establishment “of a truly free and nationalist education” and not a commercialized education that has become a milking cow for capitalist educators. For its part, the National Union of Students of the Philippines (NUSP) slammed the increases and said it is indicative of the Duterte administration’s adherence to the same policies that have made education inaccessible to the youth. “The Duterte administration’s policies are nothing more than the perpetuation of the same policies used by previous administrations. Once again, the President has reneged on his promise for change. The policies of deregulation, commercialization and privatization in our education remains firmly rooted, as manifested by the continuing collection of exorbitant fees,” NUSP said in a statement. “To make things worse, it seems this administration is set to intensify the crisis of higher education in the country. Promises of free education turned into the nightmare of socialized tuition because of President Duterte’s conditional veto. Now, we are faced with bills from both houses of Congress that are set to implement a socialized tuition scheme for all state universities and colleges, effectively limiting the number of students able to enter the tertiary level,” the group added.

Editor: Dionisio L. Pelayo • Friday, June 2, 2017 A3

E

LEVEN soldiers were killed while seven others were wounded by a wayward bomb that was meant for Maute Group bandits in Marawi City on Wednesday. Defense Secretary Delfin N. Lorenzana told reporters that the bomb hit troops from the Army’s 55th Infantry Battalion. Lorenzana did not give more details, but Brig. Gen. Restituto Padilla Jr., Armed Forces spokesman, said the aircraft involved was an SIAIMarchetti SF.260 “Warrior” armed trainer that came from the MactanBenito Ebuen Air Base in Cebu. Lorenzana ordered an investiga-

tion into the incident upon receipt of the report and appointed Armed Forces Chief of Staff Gen. Eduardo M. Año to head the inquity. Families of the victims have been notified, Padilla added. The aircraft involved in the incident is part of a flight of four SF.260s from the 205th Tactical Operations Wing based in Cebu. Padilla said the first three SF.260s delivered ordnance on target, but

the bomb of the fourth hit the Army troops on the ground. “It could have been equipment failure or miscoordination with ground controllers. It could also be human error,” Padilla said. “The Board of Inquiry, headed by the chief of staff [Año], will determine the cause of the incident. In the meantime, all personnel involved in the incident will be on administrative control to ensure their presence for investigation at all times,” Padilla added. The SF.260 “Warrior” can carry up to 660 pounds of ordnance on four underwing hardpoints. It can carry gun pods, rocket launchers, regular bombs and cluster bombs.

No halt to air strikes

THE suspension of air strikes in

the ongoing clearing operations in Marawi City is the exclusive decision of the ground commanders. This was disclosed by Padilla after the accidental bombing of Army troops involved in the ongoing clearing operations in the locality, killing 10 and wounding seven others on Wednesday. Bodies of the fatalities and the wounded were immediately recovered by rescuing units. Padilla issued this statement when asked if the incident will mean the automatic suspension of air strikes in the ongoing offensive against the remaining Maute Group bandits in Marawi City. Only ground commanders have this authority as they are the only ones who have full knowledge of the “combat environment” where the action is taking place, he said. Despite this tragedy, Padilla said the military has been inflicting significant casualties to the Maute Group bandits, who have plotted to burn down Marawi City, since fighting started on May 23. “The Armed Forces has greatly diminished the number of the bandits having neutralized, so far, 120 from the ranks of the terrorists and undetermined number of them wounded,” he added. Padilla added that government security forces continue to degrade the capability of the bandits and have seized 98 highpowered firearms. “However, the recalcitrant remnants of the bandits refuse to heed the call of the government to give up their arms and continued their resistance while holed in fortified buildings and structures,” he pointed out. “They are employing sniper fires and homemade bombs against everyone—from government security forces, to relief and rescue workers,

to civilians—who get in the way of their fanatical desire to dismember Marawi from the Philippines and establish it as an Isis [Islamic State in Iraq and Syria] province in this part of Asia,” he added. Padilla said that, to break the resistance of the group and its will to fight, the Armed Forces has decided to use combat support arms. “Hence, we employed armor, artillery and airpower capabilities in support to our infantry units to breach the fortified walls, decks and undergrounds of buildings constructed to be virtual fortresses,” he added.

Duterte vows to continue campaign against terrorism

PRESIDENT Duterte, meanwhile, assured that the government will continue to fight those who sow terror in Mindanao. “They gave me sufficient information and I asked them, ‘Are we already in the critical level?’ And there was an almost unison, and redundant even, statements that delikado tayo sa Mindanao, given the practice of the Isis in the Middle East, just exploding everything in their hands,” Duterte said. “Today [Wednesday], Iraq had two, in a market place and in an icecream parlor. They lose people by the hundreds every day. We cannot allow it to happen here. We will have to die fighting them,” he added. The President also assured that his administration is prioritizing the acquisition of equipment for the Armed Forces and the National Police. “I will have my time. I have five years. I will acquire more jets, air assets and boats. And I will make the Philippine Armed Forces a little bit stronger by the time, InShaAllah [God willing], I go out as President,” he said. PNA

Rights group on Duterte threat to arrest Government forces kill 8 NDF consultants: He is running amok foreign bandits in Marawi By Marvyn N. Benaning Correspondent

T

HE threat of President Duterte to arrest peace consultants of the National Democratic Front (NDF) returning from the Netherlands violates the terms of the agreements the Philippine government has signed with the NDF. This was said by Karapatan Secretary-General Cristina Palabay, who noted that Duterte issued the threat at the Sasa Wharf in Davao City on May 31 after the Communist Party of the Philippines ordered the New People’s Army to defend civilian communities in Mindanao under attack by the military. “Mr. Duterte, your attempt at a strongman persona, especially predictable when addressing the military, is not helping the already concrete gains achieved throughout several rounds of the peace process. Talking tough, threatening peace consultants with arrests and state-

ments that completely disregard the Joint Agreement on Safety and Immunity Guarantees [Jasig] are counterproductive. Just and lasting peace is at the best interest of this country, but it is not based on simply surrendering arms but rooted far more deeply in resolving issues of injustice, poverty, landlessness and trespasses against our sovereignty,” Palabay said. Jasig is among the basic agreements agreed and signed by both the government and the NDF in February 1995. The document binds both parties and provides safety and immunity guarantees that protect the rights of negotiators, consultants, staff and personnel participating in the peace process. Palabay added, “The disregard of Jasig, a binding agreement, adds to the lack of conducive, reliable and enabling environment for the continuation of the talks, apart from other major detrimental factors, such as the

continuation of rights violations under the counterinsurgency program Oplan Kapayapaan and war against drugs, which was further legitimized by the declaration of martial law in Mindanao. Such threats also beg the question: Will the government simply discard signed and binding agreements at their disposal?” The peace negotiations are already tackling provisions of the Comprehensive Agreement on Socio-Economic Reforms (Caser), which will serve as basis for much-needed reforms, such as free land distribution. “If finalized, Caser can pave the way toward national development which translates to a dignified life for the poor majority in the country,” Palabay said. “We call on President Duterte to exercise sobriety in his pronouncements, which have profound effects on policies and processes on the ground. We reiterate the call for continue the peacetalks between the government and the NDF,” Palabay added.

Diarrhea kills two NBP inmates By Joel R. San Juan @jrsanjuan1573

T

HE Department of Justice (DOJ) disclosed that diarrhea killed two New Bilibid Prisons (NBP) inmates as health authorities are still trying to determine the cause of the diarrhea outbreak that started on May 26. Justice Secretary Vitaliano N. Aguirre II said the two inmates died owing to hypovolemic shock and Type 2 diabetes. Hypovolemic shock is a life-threating condition that results from the loss of 20 percent or more of body fluids.

Prison authorities have yet to reveal the names of the inmates pending notification of their relatives. The DOJ has already distributed 1,008 bottles of intravenous fluid and 50,000 water-purification tablets to the NBP, courtesy of the Department of Health (DOH). Health authorities are still determining whether the outbreak was due to food poisoning or contaminated drinking water. “The caterer already denied that it was the milkfish and pointed at the possible contaminated drinking water, but we are still looking into it,” Aguirre said.

“We wish to reassure the public, particularly the families of the inmates who are down with diarrhea, that we are addressing the problem. The health and the welfare of our inmates, under the present circumstances, are paramount,” Aguirre noted. Aguirre said persons or parties who will be found responsible for outbreak will be held accountable. Prisons Director Benjamin de los Santos said NBP authorities are coordinating with the leaders of each inmate brigada to ensure cleanliness and prevent the spread of diarrhea.

D

EFENSE Secretary Delfin N. Lorenzana on Thursday confirmed that eight foreign fighters were among the bandits killed by security forces in Marawi City. Lorenzana said it was Mindanao Development Authority (MinDA) Secretary Datu Abul Khayr Dangcal Alonto who informed him of the identities of the foreigners. “There were two from Saudi Arabia, two from Malaysia, two from Indonesia, one from Yemen and one from Chechnya,” he said. “We don't have any record of them coming through the proper channel, through the airports. There's only one way, maybe coming from Indonesia or from Malaysia, Sabah,” Lorenzana said. In the meantime, he said said they could not confirm if there were more foreign fighters killed or fighting along with the local bandits. So far, he said that only 33 of the 95 bandits killed in the fighting, including the eight foreigners have been identified. “There could be more. There could be more that we killed that we have not identified because we have already – as of our body count – we already killed about 95 of them. So 33 lang ang may identities eh, the others cannot be identified,” he said. Identifying foreign militants of Malay descent is also difficult, he said. “When the people from Marawi see foreign fighters… Because if you are.… If a Malaysian and Indonesian who look exactly like us who will go there, huwag lang silang magsalita akala mo Pilipino ‘yan eh,” Lorenzana said.

Lookout bulletin

THE Department of Justice (DOJ) on Thursday issued a Immigration Lookout Bulletin Order (Ilbo) against

138 Maute and Abu Sayyaf Group members who were ordered arrested by the Department of National Defense (DND). Justice Secretary Vitaliano Aguirre II issued the Ilbo in connection with the arrest order made by Lorenzana, who also sits as the as administrator of martial law in Mindanao. It was the first arrest order issued under the implementation of martial law and suspension of writ of habeas corpus in the region following the ongoing clashes between government troops and Maute members in Marawi City. The four-page order, which has 138 subjects whose names are mostly aliases, was made public by Aguirre in a press conference at the National Bureau of Investigation (NBI) on Wednesday evening. It was directed at the Armed Forces, the National Police and NBI for implementation. “As a matter of fact ang tawag doon ay arrest order number one. Because of that I ordered the issuance of an Ilbo at least dun sa individuals listed in that arrest warrant,” Aguirre told reporters in chance interview. He added that he is also determining whether there is still a need to come up with a new order for the Bureau of Immigration, in lieu of a hold depature order, which only the court has the authority to issue. Aguirre called the new measure as a “DOJ Detention Order” which would compel immigration authorities to arrest and immediately detain those in the arrest order list provided by the DND even without a hold departure order. “Kinakailangan natin a new name to warn our Bureau of Immigration officers or anybody na these are dangerous people na they are subject to arrest immediately,” he explained. PNA

Economy

A4 Friday, June 2, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

news@businessmirror.com.ph

Government eyes crafting of innovation road map to enhance industry production

T

By Catherine N. Pillas

@c_pillas29

he Department of Trade and Industry (DTI) is eyeing to craft an Inclusive Innovation Roadmap this year to coordinate and synchronize efforts of the government, business and academe to push for innovation in industries.

“We hope that after this conference, we could already be able to start formulating the Inclusive Innovation Roadmap. This won’t just be the DTI, but also the Department of Science and Technology [DOST], Commission on Higher Education [CHED] and the private sector, plus universities,” Trade Assistant Sec-

retary for Industry Development Dr. Rafaelita M. Aldaba said at the sidelines of the 2017 Inclusive Innovation Conference. Aldaba said the end-result of this road map is creating “industry-led and market-driven” research that could be commercialized by industries.

This would mean that Philippine industries will inform the DOST and academe of the skills and knowledge they need in their operations to scale up. The need for innovation has been cited by the DTI’s Industry Development Group, specifically in its Comprehensive National Industrial Strategy, as a challenge. In the manufacturing sector, for instance, the dearth in new technology is seen as a hindrance from moving up production value chains, and hiring more local work force with the needed skills. Trade Undersecretary Ceferino S. Rodolfo underlined the need to create an “innovation ecosystem”, and the first step to this would be the road map. This would also mean consolidating the “fragmented” relationship between government agencies in spurring and seeking out

new technology. “From what we see in the existing relationship between the DTI and industry, the DTI can act as the lead facilitator in bringing industry closer to the DOST and CHED and, in that way, the innovation efforts will be well-

coordinated, and together, we can decide on the goals and the targets,” Aldaba added. The DTI signed a memorandum of understanding with the DOST at the close of the two-day conference to formalize the coordination mechanism.

From what we see in the existing relationship between the DTI and industry, the DTI can act as the lead facilitator in bringing industry closer to the DOST and CHED and, in that way, the innovation efforts will be well-coordinated, and together, we can decide on the goals and the targets.” —Aldaba

‘IT-BPO future in Mindanao remains strong’

By Lorenz S. Marasigan @lorenzmarasigan

M

anila and Doha signed last Sunday a new air services agreement (ASA), increasing the total number of flights per week between the two cities by almost a third, a senior official said on Thursday. Civil Aeronautics Board Executive Director Carmelo L. Arcilla said the Philippine air panel, led by Transportation Secretary Arthur P. Tugade, signed a new memorandum of understanding amending the

18 The total number of flights between Manila and Doha, following the signing of a new ASA between the Philippines and Qatar

L

ong-term prospects for Mindanao remain strong, as information technology and business-process outsourcing (IT-BPO) companies will continue to explore the southern part of the Philippines despite the declaration of martial law in Mindanao. “Demand [is seen] to continue in the IT-BPO sector despite what’s happening in Mindanao. So, it’s business as usual,” Rick Santos, chairman and CEO of Santos Knight Frank, formerly CBRE Philippines, said in a news conference on Thursday. He added the business sector is looking at the declaration of martial law in Mindanao as a practical and shortterm solution to address lawlessness in the region. “With regard to martial law, it’s a temporary measure to take care of some of the lawlessness,” Santos noted. Earlier this week, Trade Secretary Ramon M. Lopez stressed that martial law will not harm economic activities in Mindanao. “The fighting itself imposed concern, but not the martial law,” the government official said. Moreover, Santos Frank Knight said ITBPO companies are aggressive in expanding outside Metro Manila, particularly into markets of Cebu and Davao. “Overall, office market expected to remain healthy as the outsourcing industry continues to grow,” Santos said. “The country remains as the most attractive inbound investment destination in the region for IT-BPO companies, which are eager to capitalize on the country’s favorable demographics, strong dollar, competitive labor cost and continuous infrastructure development,” he added. It was noted that provinces stand to benefit from the country’s attractiveness for IT-BPO sector, as more foreign firms are eyeing to invest in the Philippines. “Investments are expected to come from Qatar, Mexico, Israel, the UK, Canada and China,”

New ASA hikes Manila-Doha flights–CAB

Essence of garlic

Workers unload a cartful of imported garlic in Divisoria, Manila. The Department of Agriculture is urging importers to procure more of the commodity in the foreign market to augment local supply. ALYSA SALEN

Group to Cimatu: Keep tight watch on remaining virgin forests By Jonathan L. Mayuga

T

@jonlmayuga

he cutting of trees, especially in the country’s remaining virgin forests, should be stopped even within or near mining tenements, environmental group Kalikasan-People’s Network for the Environment (Kalikasan-PNE) said. Clemente Bautista, national coordinator of Kalikasan-PNE, said Roy A. Cimatu should revoke the exemption given to all mining firms under former President Benigno S. Aquino III’s Executive Order (EO) 23, which declared a moratorium on the cutting and harvesting of timber in natural and residual forests. “What he should do is revoke the exemption given to mining companies and enforce EO 23—[a] no exemption [policy],” Bautista said in Filipino. EO 23, or Aquino’s “total logging ban”, he said, “exempts mining companies from cutting trees within its mining tenement because they can easily get tree-cutting permits from the Department of Environment and Natural Resources-Mines and Geosciences Bureau [DENR-MGB] or other concerned offices. “Like in Brooke’s Point, Ipilan Nickel Corp. was able to cut trees even with [a] dubious tree-cutting permit,” Bautista added. He said the exemption to mining companies rendered Aquino’s EO 23 “useless”, because mining companies are allowed to cut trees even in virgin forests. A total log ban on the country’s remaining virgin forest, Bautista said, should be put in place, whether they are within or near areas covered by Mineral Production Sharing Agreements (MPSAs).

“We only have less than 5-percent virgin forest of our remaining forest cover. How hard could that be?” Bautista said. The policy mandating mining companies to plant 100 trees in place of every tree they cut is “not enough”, he added. “It will only justify the cutting of trees and will be used by mining companies over and over to cut trees in virgin forests,” Bautista said. Planting 100 trees in place of a century-old tree, he added, is not justifiable and should not be allowed. “What Secretary Cimatu should do is make sure that our virgin forests are maintained. He should stop mining companies from further destroying our remaining forests,” Bautista said. He also mentioned Cimatu’s alleged “kneejerk” reaction to the “massacre” of trees by Ipilan in Brooke’s Point. “He should have rescinded the contract of Ipilan Nickel because of its grave violation of environmental laws,” Bautista said, instead of merely canceling its the tree-cutting permit, “which is dubious in the first place”. Meanwhile, according to the DENR, the felled trees within the 2,835-hectare mining area of Ipilan area now being retrieved. Hundreds of mix of old-growth and secondary trees were reportedly cut by the mining company. According to a statement released by the DENR, DENR-Mimaropa Regional Director Natividad Bernardino said a total of 34 forestry officers and workers, 18 from the DENR regional office and 16 from Palawan provincial government, have been deployed to Ipilan mining area in Brooke’s Point town to do an inventory and retrieve the felled trees, which

are considered government property. Bernardino said her office has been coordinating with concerned local government executives, particularly Palawan Gov. Jose D. Alvarez and Brooke’s Point Mayor Mary Jean Feliciano, in transferring the felled trees to a secured location, which both the DENR and the local government unit (LGU) have identified to prevent them from getting poached. She said they plan to complete the retrieval operations within one-and-a-half months. “Transferring these trees to a secured place would become difficult once the rain season kicks in,” Bernardino pointed out. Based on initial reports, the company cut down some 7,000 trees within 30 hectares of its entire MPSA, or mining area programmed for mining operations for years 1 and 2, and for development of road network covering an area of 52.15 hectares. Majority of the felled trees are reportedly premium native species, such as malabayabas, apitongbaboy, nato and agoho. According to Conrado Corpuz, DENR-Community Environment and Natural Resources officer (Cenro) for Brooke’s Point, the retrieval operation would need boom trucks and off-road 10-wheeler trucks that have four-wheel drive capacities that can negotiate through the area, which is inaccessible to ordinary vehicles. “We are now coordinating with DENR central office and our LGU counterparts to have these needed assets in our operations,” Corpuz said. According to him, most of the felled trees are slumped over a meter-wide gulleys or pits, each measuring over 25 meters deep and about 25 meters apart and that the pits are from the firm’s exploration activities.

existing agreement between the Philippines and Qatar. “The new memorandum increased the maximum number of flights between Manila and Doha, from the current total of 14 flights per week to a total of 18 flights per week for the airlines of each country,” he said in a text message. Qatar Airways currently operates 14 flights per week between Doha and Manila, plus seven flights per week to Clark, while Philippine Airlines currently operates four flights between Manila and Doha. The new memo will increase the flights of Qatar Airways to Manila by four additional flights. “The new memo is a landmark agreement because it includes as a condition to the operation of the additional four flights to Manila by Qatar Airways, that it, likewise, operate between Doha and Davao within one year from commencement of the four additional flights to Manila,” Arcilla said. He added that it is likely that Qatar Airways will commence the operation of the four additional flights to Manila by October 2017 or March 2018. “It is perceived that the expansion of traffic rights between the Philippines and Qatar under the new memorandum will enhance the connectivity between the two countries that will enable the further expansion of trade, investment, services and people-to-people exchange between the two countries,” Arcilla added. More important, he said, the inclusion of Davao in the route structure of Qatar Airways will provide much-needed connectivity for Davao to the major markets of the world, especially that Qatar is directly connected to 161 international destinations. “This connectivity will support Davao’s emergence as a major economic and commercial hub of the Philippines,” the official said. The said air talks was the culmination of the bilateral talks between Tugade and Minister Jassim Saif Ahmed Al Sulaiti, Qatar Minister of Transport and Communications, held on occasion of the visit of President Duterte to the Middle East on April 16.

Agriculture/ Commodities BusinessMirror

A5

Editor: Jennifer A. Ng • Friday, June 2, 2017

SL Agritech to hike hybrid-rice seeds output in Bangladesh By Jasper Emmanuel Y. Arcalas

L

@jearcalas

ocal hybrid-rice seed producer SL Agritech Corp. (SLAC) said it is expanding its production of hybrid-rice seeds in Bangladesh over the next three years to help farmers in the South Asian country increase their harvest. The company signed a memorandum of agreement (MOA) with Bangladesh-based EnP Solutions Ltd. (EnP) on Wednesday for the F-1 seed production, distribution and marketing of the SLAC hybrid-rice seed variety, SL-18H. “We are expanding our seed production. SL Agritech has a lot of other seed varieties, such as SL-18H, which can rival SL8H,” SLAC Chairman and CEO Henry Lim told reporters in a news briefing. Bangladeshi farmers gained access to the company’s technology when it started producing hybrid-rice seeds in the South Asian country in 2009. “We are happy to collaborate with EnP Solutions, and in the next few years, we target to hit bigger seed production, so that Bangladesh farmers will have access not only to SL-8H, but also SL-18H,” Lim added. Under the MOA, SLAC will export 20 metric tons (MT) to 50 MT of SL-18H seeds to EnP annually. SLAC will also train EnP personnel in producing SL-18H seeds in Bangladesh. “Initially, EnP Solutions will import seeds from us since we have not yet started producing it. They will find a suitable place in Bangladesh where F1 seeds for SL-18H can be produced,” Lim said. He added the initial production area could cover up to 15 hectares of land. “After three years, this will expand to about 500 hectares to 800 hectares. By that time, we can produce 1,600 MT of seeds, because

[the average yield] is 2 MT per hectare.” Lim said EnP will be responsible for the marketing and distribution of the SL-18H seeds to Bangladeshi farmers. EnP Cha ir man Syed Mahmudul Huq said the production of the high-yielding SL-18H seed variety is a “viable” answer to his country’s problem of shrinking rice farms due to the conversion of agricultural lands. “Bangladesh has a small landmass of about 55,000 square miles with a population of 160 million. Every year, we are losing our arable land due to demographic pressure,” Huq said. “Now, we’re getting something in Bangladesh, an average production of 3 MT to 5 MT of rice per hectare. But, [with SL18H] we expect average production to reach more than 10 MT per hectare,” he added. Bangladesh Ambassador to the Philippines Asad Alam Siam said one of the priorities of his government is technology transfer in agriculture, particularly those that could help farmers improve their productivity. “Bangladesh is a small country with a big population. Farm lands are shrinking while population is increasing. Chasing the target of providing staples to the people is a huge challenge,” Siam said. “SLAC’s hybrid-rice seed technology will help Bangladesh ensure food security and allow our farmers to grow other agricultural crops,” he added.

Mango production declined by 7.8% in January-March

P

ests and bad weather reduced the country’s output of mango and calamansi in the first quarter of 2017, according to the latest report of the Philippine Statistics Authority (PSA). In its quarterly report, titled “Major Fruit Crops Quarterly Bulletin”, the PSA said mango production in the January-to-March period declined by 7.8 percent to 107,830 metric tons (MT), from 117,000 MT recorded a year ago. “The incidence of capsid bug and cecid fly in Zambales resulted in poor quality of fruits and premature fruit drops and the decrease in yield in Nueva Ecija and Pangasinan was due to rainshowers during flowering,” the report read. The PSA noted that the Ilocos was the top mango-producing region during the quarter, accounting for 55.6 percent of total output during the period. However, production in the region dropped by 3.6 percent to 59,990 MT, from 62,205 MT a year ago. First quarter production of calamansi declined by 4.4 percent to 14,990 MT, from 15,690 MT recorded in the same period last year, according to the PSA. “This decline in output was caused by the following factors: the decrease in the number of bearing trees in Quezon due to Typhoon Nina in December 2016; and the drop in yield in Batangas due to the effect of fruit flies during flowering, and in Davao del Norte due to

damages brought by heavy rains during the flowering and fruiting stages,” the report added. The production of other fruits being exported by the Philippines increased during the period, according to the PSA. The agency noted that expansion of harvest areas caused the country’s output of bananas and pineapples to go up by 2.6 percent and 3.8 percent, respectively. “For the period January to March 2017, production of banana went up by 2.6 percent from 2.05 million metric tons (MMT) in 2016 to 2.1 MMT this year,” the report read. “This was brought about by the following: increase in area and number of bearing hills harvested for Cavendish variety on corporate farms in Bukidnon, Sultan Kudarat, Davao City, Davao del Norte and Davao Oriental; and bigger bunches harvested in Misamis Oriental, Saranggani, South Cotabato, Compostela Valley and Davao del Sur, due to sufficient rainfall,” it added. The PSA said pineapple production in the first quarter reached 613,526 MT, from 591,249 MT recorded a year ago. “The increment could be traced to the increase in area harvested on corporate farms in Bukidnon and North Cotabato and increase in yield in South Cotabato due to sufficient soil moisture,” the report read. Jasper Emmanuel Y. Arcalas

A6

Friday, June 2, 2017

The World BusinessMirror

www.businessmirror.com.ph

Growth slowdown challenges India’s hawkish central bank

A

Workers on an assembly line at a Huajian International shoe factory, which makes shoes for Ivanka Trump and other designers, in Dongguan, China, on December 5. As workers at the factory and others in China complain of excessive hours and seek higher pay, the factory owner is sending more jobs to Africa where labor is cheaper. Gilles Sabrie/The New York Times

Ivanka Trump’s shoes, now made in China–but not forever

D

ONGGUAN, China—The Chinese factory workers who make shoes for Ivanka Trump and other designers gather at 7:40 every morning to sing songs.

Sometimes, they extol worker solidarity. Usually, they trumpet ties between China and Africa, the theme of their employer’s corporate anthem. That is no accident. With many workers here complaining about excessive hours and seeking higher pay, the factory owner wants to send their jobs to Ethiopia. T he employer, Huajian International, now faces scrutiny from labor activists for how it treats workers. Chinese authorities this week detained an activist who went undercover in the company’s factory here for a labor-rights group. Two other activists who worked at Huajian are missing; it is unclear whether they were detained. The activists’ focus on Huajian’s factories points to changing labor conditions in China as manufacturers try to get more work out of an increasingly expensive labor pool. Trump’s father campaigned for the US presidency on a platform of bringing back overseas manufacturing jobs. But deep economic and demographic shifts mean a lot of low-end work—like making shoes—does not offer huge profit in China. As President Donald J. Trump accuses China of stealing jobs, those jobs are now leaving for other shores. Huajian, which makes shoes for a number of American brands, was a major beneficiary of the decadeslong shift of manufacturing jobs away from the US. Global brands

14 hours The number of hours per day numerous workers have to work flocked to China to tap into the country’s cheap and willing labor pool. Today, Chinese workers are less cheap and less willing. More young people are going to college and want office jobs. The blue-collar work force is aging. Long workdays in a factory no longer appeal to those older workers, even with the promise of overtime pay. In inter views last December and again on Sunday and Monday outside Huajian’s vast industrial complex in this southern Chinese factor y city, numerous workers inter viewed by The New York Times complained about 14-hour days. While many liked the overtime pay, they said the days were too long, especially since they often included up to three hours of unpaid breaks for lunch and dinner. The workers insisted on anonymity for fear of retaliation by management. China Labor Watch, the advocacy group investigating the factories, said it found that employees had worked longer weeks than Chinese labor law allows, even excluding breaks. Such violations

are common in Chinese factories. A Huajian spokesman, Wei Xuegang, said the company knew nothing about the activists. Asked about the accusation from China Labor Watch, he said Huajian scheduled extra hours during busy times but paid workers according to the law. In a December interview, Zhang Huarong, the company’s founder and chairman, said Huajian followed overtime laws. The Ivanka Trump brand declined to comment on the labor conditions or the activists. In terms of bringing jobs back to the US, the company said, it was “looking forward to being a part of the conversation”. Suc h tensions a re f ue l i ng the drive of Huajian’s founder, Zhang, to move work to Ethiopia. A former drill sergeant in the Chinese military who sometimes leads his workers on paradeground drills, Zhang says work like making shoes will never return to the US and is increasingly difficult in China, as well. “Do Americans really like to work, to do these simple and repetitive tasks?” said Zhang, in the December interview. “Young Chinese also don’t want to do this after they graduate from college.” In many respects, China’s economy is maturing. The number of people who turn 18 each year and do not enroll in college—the group that might consider factory work—had plummeted to 10.5 million by 2015, from 18.5 million in 2000, government data shows. Because of the effects from China’s former “one-child” policy, the figure is on track to fall below 7 million by 2020. Costs are rising too, as the government raises minimum wages and benefits in an effort to shift China’s economy away from cheap manufacturing. Wages in Dongguan have increased ninefold

May’s skipping TV debate slammed by party leaders

T

heresa May’s decision to skip a televised election debate threatened to rebound on her as other party leaders lambasted her absence, saying it proved she’s unfit to lead Britain. The prime minister’s place was taken at the BBC debate in the university city of Cambridge on Wednesday night by one of the most senior ministers in her Conservative government, Home Secretary Amber Rudd. She went through with the appearance even though her father died earlier this week, according to two Tory officials who asked not to be named as the information wasn’t public. “The prime minister is not here tonight. She can’t be bothered,” Liberal Democrat leader Tim Farron told viewers at the end of the 90-minute debate. “You’re not worth Theresa May’s time. Don’t give her yours.” May decided to stick to her decision not to take part even though Labour Party

leader Jeremy Corbyn announced he would do so earlier on Wednesday. His challenge to the prime minister followed a week during which May has seen her previously 20-percentage-point lead over Labour dwindle to as little as 3 points, according to a YouGov poll for the Times newspaper published on Wednesday evening. On Tuesday a projection by YouGov Plc. suggested the June 8 vote could lead to the Tories losing their majority in Parliament. “Theresa May called this election because she is taking you for granted,” Leanne Wood, who heads the Welsh nationalist party Plaid Cymru, said in her opening statement. “She won’t turn up to these debates because her campaign of soundbites is falling apart.” Others soon joined in, with the Scottish National Party’s leader in the UK Parliament, Angus Robertson, dubbing May “not so much the iron lady as the U-turn queen”. Rudd herself sometimes gave the

impression of wishing to be somewhere else. “Thank you, Tim, for that pass,” she told Farron after his attack on her absent boss. At another point she turned to Robertson. “Don’t give up on me yet, Angus,” she said. “Theresa May may not be here, but I hope to make a good fist of setting out Tory policy.” Then, in a slip that might hint that she has ambitions for the top job herself, she asked him: “Have you not read my manifesto?” May’s absence was even mocked by the Netflix series House of Cards, about a fictional US president. In a tweet addressed to the prime minister, it said: “They respect you more when you show strength. Or show up.” Corbyn himself did not directly attack the prime minister for her absence, choosing instead to address criticism of his own leadership style. That, he said, was about being able to listen and not being “high and mighty”. Bloomberg News

since the late 1990s, Zhang said. Workers said they resented the hours, especially the unpaid breaks. One employee’s printed schedule last December showed the factory required 60 hours and 10 minutes of paid work per week. Chinese laws require that workweeks average no more than 44 hours and limit overtime to 36 hours per month. On Monday in the middle of China’s three-day Dragon Boat Fest iv a l hol id ay, t h rongs of workers filed into the factory. Asked whether he would be eating zongzi, the traditional rice dumpling served during the holiday, one worker replied that they do not get to celebrate. Another said Huajian gave each worker two small dumplings and an egg for the holiday. One worker, a middle-aged woman with the surname Du, said her children had gone home to central China. Du wished for time off to celebrate, so she could make rice dumplings for them. Zhang said his company kept working hours within legal limits, despite workers who want more overtime pay. “ We cannot let them work extra hours just because they have low pay,” Zhang said in a lengthy interview. “We have thought about it, but we want to do business well.” China Labor Watch said on Tuesday it had lost contact with three undercover activ ists at Huajian factor ies. T he w ife of one in the factor y in Dong guan said he had been detained by the police. Li Qiang, who started China Labor Watch 17 years ago, said the group’s activists had never before been detained by the police. “I’m very worried about their safety,” he said. “The longer I’ve lost contact with them, the more I worry.” New York Times News Service

surprise slowdown in Indian growth along with record-low inflation has thrown the central bank’s hawkish monetary-policy bias into question, with some economists suggesting an interest rate cut may be back on the table. GDP expanded by 6.1 percent in the January to March quarter, the slowest in two years and undershooting economists forecasts in a Bloomberg survey by a full percentage point. The economy grew 7.1 percent for the fiscal year ended in March, down from 8 percent in the previous year. The Reserve Bank of India (RBI) meets on June 6 and 7 to decide on monetary policy. “ The weak GDP print for the January to March quarter combined with recent declines in India’s CPI [consumer price index] inf lation rate to just 2.99 percent in April opens the door for the RBI to ease policy rates f ur t her,” R ajiv Biswas, A siaPacific chief economist for IHS Markit said in an e-mail. “ The recent easing of world oil prices is helping to keep India’s inf lation dragon at bay, and with bank credit growth very weak, the RBI has a stronger case for further monetary-policy easing.” The figures showed manufacturing and construction slowing in Asia’s third-largest economy while the impact of Prime Minister Narendra Modi’s shock ban on high-denomination notes in November continued to weigh. A private-sector survey released on Thursday also showed the factory sector slowing in May from a month earlier. Analysts also speculated the country’s bad-loan crisis was beginning to impede growth. Sovereign bonds gained, with the yield on benchmark 10-year notes falling two basis points to 6.65 percent at 11:54 a.m. in Mumbai on Thursday, set for lowest close since May 15. Still, many analysts don’t expect the central bank to cut rates in near term but will likely dial back its tighter policy rhetoric. The RBI’s monetary-policy committee, having changed its stance to neutral from accommodative in February, will be reluctant to reverse course so soon, especially when the US Federal Reserve is likely to raise rates further. “GDP numbers have surprised markets,” Suyash Choudhar y, Mumbai-based head of fixed income at IDFC Asset Management Co. “This may very well feed the current market hypothesis that RBI may tone down its hawkishness. Irrespective, we expect that bar for any action from RBI remains very high.”

Inflation recedes

Recent he a d l i ne i n f l at io n prints have consistently come under the central bank ’s own expectations. The RBI aims to

keep inflation near 4 percent in the medium term. In related economic data, India’s budget gap reached 100 percent of its target for the year. “While we think that the RBI will acknowledge a down shift in the inflation trajectory and revise its forecasts lower, this might not be enough for the stance of monetary policy to change immediately. We also expect no change in the policy rates on June 7,” said Indranil Pan, chief economist at IDFC Bank, Mumbai. Analysts and the RBI still expect growth to pick up in the rest of the year. A normal monsoon is poised to boost rural incomes wh i le i nc rea sed gover n ment spending, and higher allowances for workers in the public sector may bolster activity and consumption in the $2-trillion economy. “We also expect growth to remain supported due to expectations of firmer consumption and exports,” Shashank Mendiratta, economist at Australia and New Zealand Banking Group Ltd., said in a note. The bank is maintaining its fiscal 2018 forecast for 7.5-percent growth, he said.

Soured loans

Looming over the economy is also the introduction of a national goods and services tax, scheduled for July 1, which could cause shortterm disruption to activity. According to Kaushik Das, chief India economist at Deutsche Bank in Mumbai, India’s growth and inflation dynamics are different from the last time the country was growing strongly at the start of the decade. Then, real GDP growth averaged about 9.5 percent, but CPI inflation was also running high at about 12 percent. Those heady days saw significant leveraging in the corporate sector. But once growth dropped of f, companies were sadd led with huge debt which continues to cause stress on their balance sheets, not to mention the banking sector. That’s forcing many companies to put off investments and driving demand for loans from the private sector to a decade low. Meanwhile, the central bank has ramped up efforts to solve the bad-debt problem. “It is imperative to get inflation and inflation expectations down, to achieve higher and sustainable growth and investments. From this perspective, there is no tradeoff between growth and inflation in the long term,” Das wrote in a note this week. There are also niggling questions about the quality of growth and whether the economy is creating enough jobs. To be sure, the economy needs to grow at more than 10 percent consistently to absorb a steady inflow of new workers. By 2050, about 1.1 billion Indians are expected to comprise the workingage population of 15 to 64, according to the United Nations. Bloomberg News

www.businessmirror.com.ph • Editor: Lyn Resurreccion

The World BusinessMirror

Friday, June 2, 2017

A7

Job seeker Xavier Butler works on his résumé during the Opportunity Fair and Forum employment event in Dallas on May 19. Butler is currently employed through a temp agency but is looking for a permanent job. AP/LM Otero

Steady jobs, but with pay, hours that are anything but

M

irella Casares has what used to be considered the keystone of economic security: a job. But even a reliable paycheck no longer delivers a reliable income. Like Casares, who works at a Victoria’s Secret store in Ocala, Florida, more and more employees across a growing range of industries find the number of hours they work is swinging giddily from week to week—bringing chaos not only to family scheduling, but also to family finances. And a new wave of research shows the main culprit is not the so-called gig economy, but shifting pay within the same job. This volatility helps unravel a persistent puzzle: why a belowaverage jobless rate—4.4 percent in April—is still producing an above-average level of economic anxiety. Turbulence has replaced the traditional American narrative of steady financial progress over a lifetime. “Since the 1970s, steady work that pays a predictable and living wage has become increasingly difficult to find,” said Jonathan Morduch, a director of the US Financial Diaries project, an in-depth study of 235 low- and moderate-income households. “This shift has left many more families vulnerable to income volatility.” Ever-changing schedules at Victoria’s Secret, for example, make it difficult for Casares, 27, to find care for her 2-year-old and 6-yearold and to cover the bills. “The lowest hours I’ve gotten is 15 and the highest I’ve gotten is 39,” said Casares, who started in October, earning $10 an hour. The schedule is usually posted a month in advance, she said, but there are frequently last-minute changes. Stability is worth a lot to workers. On average, employees are willing to give up a fifth of their weekly wage to avoid a schedule set by an employer on a week’s notice, according to a field experiment where workers were offered a range of alternative hours at different pay levels. “That is totally the story,” said Morduch, who watched household incomes in his study rise and fall. “And that instability and insecurity are increasingly a part of middle-class life, too.” In the course of a year, for example, the monthly income of a California family with one child that Morduch’s team tracked jumped to $5,279 from as low as $1,175. The husband supplemented his steady $400-a-week salaried construction job with extra remodeling work that could add from $323 to $1,588 a month to his total. His wife picked up from zero to $1,824 a month from babysitting, and from selling jewelry, clothing and flowers. Monthly expenses can pendulum as much as income, but the two do not necessarily move in tandem. An analysis of 250,000 bank accounts by the JPMorgan Chase Institute, a nonprofit research arm of the bank, found that roughly 80 percent of households had an insufficient cash buffer to manage the mismatch between income and expenses in a given month. Few people can comfortably ride out the inevitable financial bronco ride. “Only households that earn

$105,000 or more a year are secure against the volatility they are exposed to,” said Diana Farrell, the institute’s president and CEO. “It’s not just about the unemployed or the poor.” Middle-income households, for example, saw their monthly expenses deviate by nearly $1,300, the equivalent of a month’s rent or mortgage payment. And one uh-oh expense—usually in the form of a medical, tax or carrepair bill—can wreck a family’s balance sheet for a year or more. Even a single month’s volatility can have a cascading effect. One month, a family copes by using the money earmarked for, say, the utility bill to cover the cost of replacing a busted water heater. The next month, it is the telephone company that goes unpaid, as the family struggles to make up the missed utility bill plus late fees and interest—and so on. Emergencies are not the only source of expense spikes. So are bridal showers, Christmas gifts and outgrown winter coats. May turned out to be an expensive month for Tomika Waggoner, 44, a nursing home aide in Newport, Kentucky. Her daughter was graduating from high school, and she needed a few hundred dollars to pay for her cap and gown, commencement fees, a prom ticket and a dress. Waggoner’s work schedule depends on her ability to find care for her 15-year-old son, who has epilepsy. So sometimes she works a weekend at $17 an hour and sometimes three $15-an-hour weekdays. For the Waggoner family, and many others with low and moderate incomes, a tax refund offered a once-a-year lifeline. That $700 check and a contribution from her mother covered most of the graduation costs and helped pay off the debt on some furniture. (Doctor’s visits and medical payments are frequently scheduled to coincide with tax refunds, according to the JPMorgan Chase Institute.) “I also went to a couple of food pantries,” Waggoner added. “We ate a lot of bologna.” Rather than causing jolts in income, the gig economy is, for many people, what smooths them out. Only about 0.5 percent of the labor force is working in the gig economy. And while bonuses, extra commissions and overtime bump up a worker’s average income, unwelcome reductions in hours, particularly at the lower end of the income ladder, more often shrink an expected paycheck. “Stable, predictable work schedules are essential to economic security,” said Susan J. Lambert, a professor at the University of Chicago who is studying new data supplied by the General Social Survey, a respected national survey that began asking in-depth questions about work schedules only last year. The latest data show that 41 percent of all hourly workers say they are not given more than a week’s notice of their schedule; nearly half have little or no say on their work hours. “It’s not just service, or femaledominated jobs, but some of the most challenging schedules are production and constr uction jobs,” Lambert said. New York Times News Service

Cattle graze in a pasture against a backdrop of wind turbines that are part of the 155-turbine Smoky Hill Wind Farm near Vesper, Kansas. Even if President Donald J. Trump withdraws US support for the Paris climate-change accord, domestic efforts to battle global warming will continue. AP/Charlie Riedel

US states, cities pledge action on climate even without Trump

I

f President Donald J. Trump withdraws support for the Paris climate change accord, will efforts in the US to fight global warming dry up?

Hardly. Dozens of states and many cities have policies intended to reduce emissions of greenhouses gases and deal with the effects of rising temperatures. And plans for more are in the works. In left-leaning locales, it’s good politics. Even in red states where resistance is strong to the idea that humans are causing the planet to heat up, flood prevention and renewable energy (RE) are considered smart business. Yet, much remains uncertain about how a dramatic shift in federal policy would affect state and local initiatives—particularly if Congress slashes funding for them, as Trump wants. A look at what states and cities are doing about climate change and their potential to fill in if the Trump administration drops out:

States step up

Even as more than two dozen states filed lawsuits that hamstrung the Obama administration’s Clean Power Plan, which sought to limit carbon-dioxide emissions from power plants, many states have made considerable progress toward hitting its targets. Forty states are on track to meet their 2030 goals under the plan, according to the Environmental Protection Agency. Thirty-five already comply with interim requirements for 2022, in part because utilities decided

40

The number of US states that are on track to meet their 2030 goals under the Clean Power Plan

to close coal-fired plants and switch to natural gas. Twenty-nine states and Washington, D.C., require electric utilities to produce specified amounts of electricity from renewable or alternative sources, such as wind, solar and geothermal power, according to the nonprofit Center for Climate and Energy Solutions. California and New York have ordered their utilities to deliver half their electricity from renewables by 2030. Maryland’s Legislature in February overrode the governor’s veto and boosted its standard to 25 percent by 2020. M ic h i g a n , w h ic h s up p or t e d Trump in the November election and has a Republican governor and legislative major it y, last

month boosted its standard from 10 percent to 15 percent by 2021. Most states also have “climate action plans” packed with ideas on topics as diverse as land use, transportation and land management. California is encouraging ownership of electric cars with tax breaks and access to highspeed lanes. Massachusetts Gov. Charlie Baker awarded more than $1.8 million in grants to 19 communities for climate-related projects. But such expenditures fall well short of the billions that the federal government has provided.

Cities focus on adapting

Many cities are big enough to make a difference with emissions limits. Mayor Rahm Emanuel announced in April that all of Chicago’s public buildings would be powered entirely with RE by 2025. Others are stepping up the use of public transit. O t he r c it ies ac k nowle d ge the climate is already warming and are preparing to deal with the effects, particularly flooding and powerful storms. In conservative areas where c limate change is a toxic subject, officials often describe their efforts with terms such as “resilience” and “adaptation”. They are constructing break waters, i mprov i ng sewage -t reat ment systems to avoid overflows and encouraging use of rain gardens and other “green infrastructure”. Charleston, South Carolina, is recommending that all planned construction assume a sea-level rise of 1.5 feet to 2.5 feet over the next 50 years. Florida is especially vulnerable to sea-level rise, yet the state has taken little action. Cities have tried to fill the void. Under a regional compact, Miami and

surrounding areas have worked to gird homes, roads and infrastructure against flooding. Even Tulsa, Oklahoma, home of Sen. James Inhofe, who calls global warming a hoax, has moved over 12,000 homes and businesses from a floodplain.

Is it enough?

States and cities whose leaders favor strong action on climate c hange say they’ll defy Trump and push forward. California, which has 39 million residents and one of the world’s largest economies, has shown an ability to influence environmental policy elsewhere, as with its tough auto tailpipe emission standards. Gov. Jerry Brown told The Associated Press his state would continue reducing its pollution that warms the planet while using its alliances with China, Mexico and other countries to encourage international action. “Mr. Trump is not only up a g a i n s t C a l i f o r n i a , h e ’s u p against the rest of the world, not to mention science itself,” Brown said. “And it’s very obvious who’s going to win.” Yet, others say despite their good intentions, states and cities are no match for natural forces, such as rising sea levels and damage to fish populations from warming oceans. And with the federal administration not only rejecting the global accord but openly skeptical of the need for action at home, some worry that state and local officials may lose heart. “This moment is a test of whether the states will remain engaged when there’s no federal pressure or international agreement to move them,” said Barry Rabe, professor of public policy at the University of Michigan. AP

A8

Friday, June 2, 2017

The World BusinessMirror

Editor: Lyn Resurreccion • www.businessmirror.com.ph

Deadly Kabul bombing one of Afghan war’s worst strikes

Two wounded men leave a hospital after receiving first aid treatment, a few blocks away from where a truck bomb exploded in central Kabul, Afghanistan, on May 31. The bombing, near the Afghan presidential palace and several major foreign embassies, struck early on Wednesday, killing at least 80 people and wounding hundreds, officials said. Andrew Quilty/The New York Times

K

Japan’s destroyer JS Sazanami (left) the United States’s Arleigh Burke-class guided missile destroyer USS Sterett (center) and South Korean destroyer ROKS Dae Jo Yeong (right rear) are anchored in the waters off RSS Singapura Changi Naval Base on May 15 in Singapore. As part of the Republic of Singapore Navy’s 50th anniversary celebrations, 28 foreign warships from 20 navies gathered at the naval base and its surrounding waters to mark the occasion. AP/Wong Maye-E

China’s growing naval might challenges US supremacy in Asia

S

hip by ship, port by port, China has over the past two decades been assembling one of the essential engines of global power: a modern navy capable of projecting force far from home. China’s “blue water” navy—and how to respond to it—will be on the minds of Australian Prime Minister Malcolm Turnbull, US Defense Secretary James Mattis and others gathering in Singapore this weekend for Asia’s most highprofile security conference, the Shangri-La Dialogue. From the East China Sea to the Horn of Africa, the growing presence of Chinese warships is already shaping world affairs, a trend that will only accelerate. “By 2030, the existence of a global Chinese navy will be an important, influential and fundamental fact of international politics,” said Patrick Cronin, director of the Center for a New American Security’s Asia-Pacific security program. The US and its allies “need to begin preparing for a ‘risen China’, rather than a rising China.” By one measure, the People’s Liberation Army (PLA) has already caught up with the US—

183

The number of cruisers, destroyers, small surface ships and submarines China had last year, compared with 188 for the United States Asia’s preeminent sea power since World War II. China had 183 cruisers, destroyers, small surface ships and submarines last year, compared with 188 for the US. That’s according to a Center for a New American Security (CNAS) analysis of data supplied by the International Institute for Strategic Studies, which organizes the Shangri-La meeting.

CNAS projected in a March report that the PLA Navy will deploy 260 such ships by the end of the next decade, surpassing an estimated 199 for the US. That growth has helped fuel calls for a US shipbuilding surge, with the Navy’s operations chief, Adm.John Richardson, saying earlier this month in Singapore that America needed to build more warships—and fast. W hile President Donald J. Trump has called for increasing the US fleet by more than 25 percent, his first budget proposal released last week included funds for only two small Littoral Combat Ships. To be sure, projecting naval power across oceans often means aircraft carriers. And deploying carrier strike groups around the world—like the 10 the US now operates—requires a network of overseas bases. China lacks both. Frigates and other small vessels are ex pected to comprise the bulk of the country’s future f leet. Chinese President Xi Jinping is nonetheless making preparations to be able to project force i nto t he I nd i a n a nd Pac i f ic oceans, which surround the country’s growing economic interests in Africa, the Middle East and Southeast Asia. China launched its first domestically built aircraft carrier in April, the second of as many as six such vessels.

The country is also developing its first overseas base—Chinese officials call it a “support facility”—in the East African country of Djibouti, where the French and the US also have military installations. Such opportunities are expected to grow as China helps develop ports around the world under Xi ’s 21st Century Maritime Silk Road trade-andinfrastructure program. How to respond to China’s growing naval power has preoccupied many of the admirals, ministers and defense contractors who are expected to begin assembl ing on Fr id ay at t he Shangri-La Hotel in Singapore. Chinese defense spending is on track to exceed the rest of East Asia, South Asia, Southeast Asia and Oceania combined this year, according to estimates from the Stockholm International Peace Research Institute. China’s neighbors are now expanding their own fleets. This year a lone, India, Singapore, Taiwan and Thailand have announced plans to build or acquire submarines. India aims to add 60 warships over the next decade to amassing a 200-vessel fleet. The proliferation of submarines prompted Singapore’s naval chief, Rear Admiral Lai Chung Han, to call for a code of conduct earlier this month to reduce the risk of accidents. Bloomberg News

Trump’s cell-phone use worries security experts W ASHINGTON—President Donald J. Trump, who blasted Hillary Clinton for using a personal e-mail server, might be a walking magnet for eavesdropping and malware if he is using an unsecured cell phone to chat with foreign leaders. Trump has been handing out his cellphone number to counterparts around the world, urging them to call him directly to avoid the red tape of diplomatic communications. The practice has raised concern about the security and secrecy of the US commander-in-chief’s communications. In today’s world of cyber espionage, cell-phone security exper ts say such a policy is not only unorthodox, but dangerous. Voice calls can be intercepted. A cell phone’s signals to nearby phone towers can give up its precise location. Even cellular networks are vulnerable. And knowing someone’s number makes it easier to infect a phone with malware.

“Hillary Clinton’s e-mail server was like Fort Knox compared to Trump just carrying around a regular cell phone,” said Andrew McLaughlin, former deputy chief technology officer for the Obama administration. “That’s how bad the vulnerabilities are.” Running against Clinton for the presidency, Trump repeatedly criticized his rival for using a nongovernment e-mail account while she was secretary of state. Trump argued that Clinton should not be given access to classified information because she would leave it vulnerable to foreign foes. But Trump may be running into problems of his own. He has urged the leaders of Canada and Mexico to call him on his cell phone, according to former and current US officials with direct knowledge of the practice. Trump, who disdains working through official channels, also exchanged numbers

with French President Emmanuel Macron when the two spoke after France’s election earlier this month, according to a French official, who would not comment on whether Macron intended to use the line. All the officials demanded anonymity because they were not authorized to reveal the conversations. Neither the White House nor Trudeau’s office responded to requests for comment. Trump administration officials also wouldn’t say what type of cell phone the US president was using or describe any security upgrades it might include. “I think it’s a really bad idea,” said Matthew Green, who teaches at the Johns Hopkins Information Security Institute and previously served as senior technical staff member at AT&T Laboratories. Green said cellular phones are not terribly secure and the communications traverse a cellular network with well-

known vulnerabilities. He was referring to the Signaling System 7 (SS7), which links mobile-phone networks. If a phone has been hacked, a person can listen and monitor the device even if the president is using an encrypted phone. Rep. Ted Lieu, a California Democrat with a degree in computer science, sent a tweet to the president on Wednesday: “Please do not use your cell phone for sensitive calls. SS7 flaw in networks allows foreign intel to monitor conversations.” When former President Barack Obama wanted to continue using his Blackberry, US security officials gave him a modified one that allowed him limited use with enhanced security. The White House said at the time that Obama was permitted to keep his Blackberry through a compromise that allowed him to stay in touch with senior White House staffers and a small group of personal friends. AP

A BUL , A fghanistan—A truck bomb devastated a central area of Kabul near the presidential palace and foreign embassies on Wednesday, one of the deadliest strikes in the long Afghan war and a reminder of how the capital itself has become a lethal battlefield. In one moment, more than 80 lives ended, hundreds of people were wounded and many more were traumatized, in the heart of a city defined by constant checkpoints and the densest concentration of Afghan and international forces. President Ashraf Ghani, whose palace windows were shattered in the blast just as he had finished his morning briefing, called it “a crime against humanity.” President Donald J. Trump called him to offer condolences. The bombing happened just as the United States was weighing sending more troops, deepening its entanglement, to tr y to slow or reverse government losses to the Taliban insurgency this year. “The attack demonstrates a complete disregard for civilians and reveals the barbaric nature of the enemy faced by the Afghan people,” Gen. John W. Nicholson Jr., the commander of US and North Atlantic Treaty Organization (Nato) forces in Afghanistan, said in a statement. He appl auded t he A fg h a n security forces for having prevented the truck from entering the Green Zone, the area that houses the headquarters of the coalition forces as well as several foreign embassies. But Kabul’s vulnerability to such an attack spoke volumes to the frustrations of stabilizing the country despite 15 years of US-led military intervention to thwart the Taliban, coupled with hundreds of billions of dollars in foreign aid to a population that for the most part has only known war. Security has steadily worsened since 2014 and the end of the main Nato combat mission, which at its peak involved more than 100,000 US troops and tens of thousands more from alliance partners like Britain. The current international force in Afghanistan numbers about 13,000—about 8,400 of them are American—mostly tasked with training and advising the Afghan forces. The Trump administration and military commanders are debating whether to send as many as 5,000 more troops to stem the government’s losses. Although the main Taliban spokesman claimed the group had nothing to do with the Kabul bomb, the Afghan intelligence agency, the National Directorate of Security, blamed the Haqqani wing of the organization. Over the years, the Haqqanis have made an industry of largescale attacks on the capital, and

the militant cell has become integrated in the central leadership of the Taliban. The deputy interior minister, Gen. Murad A li Murad, said besides the more than 80 people killed, with the death toll sure to rise, at least 463 had been wounded. Still, the general said the attacker had actually failed to get all the way to his most likely target: Security cameras showed the truck stopped by police officers who guarded the entrance to the street housing the German and Indian embassies, as well as compounds for the coalition forces. But for an explosion that shattered windows within a mile, a few steps off target made little difference. With most of the city fasting to observe the holy month of Ramadan, residents urgently took up what has become a routine: sweeping broken glass, calling loved ones and calling others in search of news. In different corners of the city, workers and relatives dug graves for the ones who, with life having become a game of chance, just were not lucky. Parents arrived to escort panicking children home from school, holding their hands and cautiously walking close to walls—as if walls could protect against such violence. For more than two hours, smoke rose from the blast site, a 13-foot crater centered on a vast circle of destruction. The German Embassy, where officials said employees had retreated deeper into the compound after an earlier warning of a threat against them, was extensively damaged, with dozens of windows blown in. “There was a big tremble, and then we heard a massive explosion,” Ramin Sangar, a cameraman at a television channel near the bombing site, said as he was loaded into an ambulance. “All the windows are broken. Our studios collapsed.” As security forces established a wide cordon and ambulances whizzed between hospitals and the street, dozens of people gathered on each side of the cordon, inching closer in hopes of hearing any good news about their missing. There was a heavy security presence, including forces from the US-led coalition, and helicopters circled overhead. Emotions were running high, as the Afghan security forces and emergency medical workers, too, were working while fasting. Intelligence officers closely checked the paperwork of emergency workers, fearing that they might have been infiltrated by militants planning a follow-up attack. At one point, after a senior police official tried to pass the cordon with a large entourage of guards, a scuffle broke out, and the police officers and intelligence officers faced off with their weapons ready. But the situation was quickly defused. New York Times News Service

The Regions BusinessMirror

news@businessmirror.com.ph

Editor: Efleda P. Campos • Friday, June 2, 2017 A9

DMPC temporarily restores power in Masbate

A

By Lenie Lectura

@llectura

day after DMCI Masbate Power Corp. (DMPC) discontinued delivering electricity to Masbate Electric Cooperative (Maselco), the company said on Thursday that power was temporarily restored pending discussions to resolve the electric cooperative’s overdue obligation amounting to P240 million.

“This is to inform the customers of Maselco that DMPC has agreed to temporarily restore its power supply to the electric cooperative effective 8 a.m. today [June 1],” said the Consunji-led firm. DMPC was compelled to discontinue its service to Maselco on May 31 due to the continued nonsettlement of the latter’s overdue obligation. The amount excludes Maselco’s partial payment of P20 million on May 30. “Despite our repeated requests for payment and demand letters, we have yet to receive any reasonable and acceptable commitment from Maselco to promptly and fairly settle this matter,” DMPC

said on Wednesday. On Thursday DMPC said both parties resumed discussions as to Maselco’s firm and acceptable commitment to settle its overdue obligations, as well as the upgrading of the electric cooperative’s distribution system to ensure reliability of the power supply to its customers. DMPC is also negotiating with its creditors and suppliers for cooperation and support to ensure temporary supply of electricity to Maselco. “We appreciate the assistance of Governor Antonio Kho, the Department of Energy, the National Electrification Administration

[NEA] and other local government units, all of whom have assured us that the necessary reforms to resolve the issues will be implemented,” it said. DMCI Power Corp. (DPC), one of the biggest off-grid power producers in the Philippines, has longterm power-supply agreements with Palawan Electric Cooperative (Paleco), Oriental Mindoro Electric Cooperative (Ormeco) and Maselco. In 2016 DPC posted a 14-percent growth in energy sales volume, from 212 gigawatt-hours (GWh) to 240 GWh, mainly due to higher power demand and dispatch across all cooperatives accounted.

Dispatch to Maselco went up by 11 percent, from 85.81 GWh to 94.91 GWh, following a 5-percent increase in the cooperative’s line connections. Palawan registered the highest sales growth at 17 percent, rising to 91.27 GWh from 78 GWh. This was mainly on account of increased economic activity in the province and the installation of a satellite plant in Brooke’s Point. Power sales to Ormeco also grew 11 percent, from 46.24 GWh to 51.76GWh brought about by the full-year operations of the company’s 15-MW bunker-fired diesel power plant in Calapan City.

Former US bases in Central Luzon dubbed as Duterte’s ‘twin turbo engines of growth’ By Ashley Manabat Correspondent

S

UBIC BAY FREEPORT—This seaside freeport and the Clark Freeport Zone in Pampanga, which is home to the Clark International Airport (CIA), are dubbed the “twin turbo engines of growth of Northern and Central Luzon”, by the executive of the state-run Subic Bay Metropolitan Authority (SBMA). “The Port of Subic and Clark airport should serve as a super duo that can help to alleviate urban blights, like vehicular traffic and port congestion in Manila,” lawyer Wilma Eisma, SBMA administrator, said on Wednesday at the at the Subic Bay Freeport Zone during the fifth leg of CIA’s North Luzon Road Show.

Eisma added that mutual cooperation is vital in achieving President Duterte’s directive to connect Clark and Subic free ports and turn Central Luzon into a major logistics hub. Clark International Airport Corp. (CIAC) Officer in Charge Alexander Cauguiran said Clark and Subic free ports will complement each other in efforts to disperse economic activities in the regions. “Since Day One, President Duterte has encouraged more carriers to utilize Clark airport and with our more than 21 million potential passengers from our catchment population, we expect more flights via Clark in the months to come,” Cauguiran said. Duterte’s infrastructure plan for Central Luzon includes the multibillion-peso Clark airport’s New

National Maritime Polytechnic passes ISO 9001:2008 audit By Elmer Recuerdo Correspondent

T

ACLOBAN CITY—The National Maritime Polytechnic’s Quality Management System (NMP-QMS) maintained its ISO 9001:2008 certification after passing the surveillance audit conducted by the Anglo Japanese American (AJA) Registrars Limited. The audit was done at its main campus in Tacloban City and extension office in Makati City on May 24 and 25. Olivia Eco and Capt. Nicanor Altares, AJA auditors, reviewed the agency’s quality procedures, quality manuals and other systems documentation as against the standards. The areas that were examined include service realization, provision of resources, competence of trainers, systems compliance with regulatory requirements, enrolment and other customer-related activities, customer satisfaction and communication, control of trainees’ records, responses to complaints, personnel training, recruitment process, purchasing, management responsibility and internal-audit activities. NMP’s Maria Sandra Gallardo, head of Quality Management Section, and Capt. Emmanuel Jesus Laguitan, head of Maritime Train-

ing and Assessment Division, were present during the conduct of the audit. In the exit meeting, Eco, the audit team leader, relayed her appreciation on the NMP’s established QMS, as well as the monitoring processes in place for its continual improvement. The audit result, however, also raised an observation and a minor nonconformity. NMP is given 30 to submit the plan of action together with the objective evidence in addressing the nonconformance. Nonetheless, the NMP-QMS was recommended for continued certification. “We consider the audit findings as a constructive comment that will continually help improve our processes and services,” NMP Deputy Executive Director Mayla N. Macadawan said. As an agency that commits to continuous enhancement of seafarers, maintaining ISO Certification of its QMS confirms the agency’s relevance in carrying out its mandate of upgrading the qualifications of Filipino seafarers and providing responsive maritime industry researches. In the interim, preparations are underway for another audit before the end of the year. This is with regards the NMP’s intention to upgrade its existing standards to ISO 9001:2015.

Terminal Building Project and the construction of a railway system linking the free ports of SubicClark to Metro Manila and other parts of Luzon that is planned for completion before the end of Duterte’s term. The interconnecting railway project is expected to hasten the improvement of passenger volume at CIA and lure in more local and foreign investments, especially in this free port. “This will definitely be a come-on for local and foreign investors and will spell further growth in the local economy of Zambales and the rest of Central Luzon,” Cauguiran said. CIA is looking to increase passenger traffic to as much as 1.5 million passengers by year-end and

its new terminal building project, spearheaded by Transportation Secretary Arthur P. Tugade and Bases Conversion and Development Authority (BCDA) President and CEO Vivencio Dizon, is projected to be completed by the first quarter of 2020. The Clark airport logged in a total of 6,205 international and domestic flights, with 950,732 passengers for local and foreign routes in 2016. The present Ninoy Aquino International Airport (Naia) grows at an average of 2 million passengers a year for the last seven years, prompting the national government

Zamboanga increases local development budget to P4.23B

Z

AMBOANGA CITY—The City Development Council (CDC) has increased the budget of the 2017-2019 Local Development Investment Program (LDIP) to P4.23 billion. In a statement, City Mayor Maria Isabelle ClimacoSalazar, who chairs the CDC, said the council approved on Wednesday the adjusted budget for fiscal year 2018. Salazar said on Thursday the CDC has increased its appropriation for infrastructure (capital outlay) to P1.74 billion; equipment in the amount of P488 million; maintenance and other operating expenses in the amount of P952 million; and personnel services of P1.049 billion. The previous budget of the LDIP is around P2.9 billion. Among the identified infrastructures are the construction of new school buildings and road networks. Under the plan, Salazar said the general services will account, for P1.379 billion, followed by social services, with P1.375 billion, economic services, P1.159 billion; and other services, P319,203 million. The LDIP is the basic document that translates local plans into programs, projects and activities, which were identified from a series of consultations with stakeholders. The bulk of the funds will be sourced out from the national budget. But it was pointed out in the resolution that in its effort to optimize the utilization of its financial resources, “the city government of Zamboanga has to exercise prudence in planning and fiscal management.” The adjusted budget was made following consultations and workshops with non-governmental and people’s organizations and government offices and line agencies the city had conducted on Wednesday. Annually, the CDC convenes to determine if there is a need for the LDIP to be adjusted. The three-year LDIP is in parallel to the major thrusts of the local government, especially in the delivery of basic services, peace and order, and to boost the local economy. PNA

₧400,000 set for antipoverty program of NegOcc ARB

B

ACOLOD CITY—The Department of Agrarian Reform (DAR) has allocated P400,000 for the implementation of the Partnership Against Hunger and Poverty (PAHP) with Barangay Banog-Banog Agrarian Reform Farmers Association (BBARFA) in Isabela, Negros Occidental, as the beneficiary. Provincial Agrarian Reform Program Officer II Lucrecia Taberna said in a report on Thursday the DAR in Negros Occidental entered into a memorandum of agreement (MOA) with the Municipality of Isabela. The PAHP, a collaboration between the DAR, departments of Agriculture (DA) and of Social Welfare and Development (DSWD),

seeks to reduce hunger and poverty in selected rural communities by increasing the income of households of agrarian-reform beneficiaries (ARBs). Taberna said Barangay Banog-Banog was the lone recipient of the PAHP project in Negros Occidental. The project, which includes project-related technology training, and purchase of machinery and equipment, will start within the year, benefiting at least 1,000 residents, particularly farmer-members of BBARFA headed by president Rodito Balasabas. The MOA states that the local government will serve as the procuring party of the food

products produced by the BBARFA for its supplemental feeding program with the DSWD. The municipality will also provide additional support to the recipient-ARB organization through provision of technical guidelines to ensure the project’s sustainability. BBARFA, which will initiate the construction of the facilities, will serve as integrator of the whole endeavor, especially in the production of vegetable and other crops, and operation and maintenance of the facilities as its joint venture with the individual farmerbeneficiaries. It will set up 1,000-square-meter area to be used as demo farm and project site. PNA

to optimize the use of Clark airport for some operations of domestic and international airlines. Cauguiran said Clark’s domestic and international flights were increased in only the first quarter of this year. CIA serviced 950,732 passengers in 2016. This year it is projecting to service approximately 1.5 million passengers by end of 2017.

CIA, at present, has 138 weekly international flights and 118 weekly domestic flights; the figures are expected to grow as Philippine Airlines mounts more flights later this month for Tagbilaran, Cagayan de Oro and Bacolod, and within the year, the expansion of operations of other domestic carriers specifically Cebu Pacific Air, Air Asia, Wakay Air and SEAIR Philippines.

A10 Friday, June 2, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

How far should govt be allowed to go?

T

he nationwide “smoking ban”, made law by a presidential executive order rather than by Congress, will soon go into effect. In addition to reaffirming and strengthening the Tobacco Regulation Act of 2003, there are specific designations of “No-Smoking Areas”. It probably makes some sense, as smoking is an obnoxious habit to the vast majority who do not like tobacco smoke. There are, of course, health risks associated with smoking. But one can wonder where the line should be drawn on whether the government should allow the use of tobacco products at all. The idea of an outright ban starts the argument of personal rights and, of course, how much the government would lose in tax revenue. Maybe the tax-revenue issue is more important than the personal freedom idea. We expect and believe that the government has an obligation to protect the public from certain hazards. Meat should be inspected, as well as fruits and vegetables, to ensure that these are free from harmful substances. The government should close companies that produce substandard and dangerous products. We, the people, have a right to demand that the government guard us from the misdeeds of others. The government probably also has the responsibility to change general patterns of behavior that we have come to accept, such as banning plastic bags. Most people, when talked to like adults, will come to understand that certain things considered acceptable in the past were not necessarily a good idea. But how far should the government be allowed to go? The Department of Health is onboard with proposed legislation banning the sale of sugary drinks and candies in schools. Again, that probably makes sense. But some legislators are raising the tax on those drinks to help reduce consumption. There seems to be a strange logic. It is almost as if they are saying, “Sugary drinks are OK as long as you pay more taxes to the government.” The reality is that for the majority of the Philippine population, to pay a few pesos more is not going to reduce consumption. The argument that a higher tax on cigarette products has reduced consumption may be true, but what economic groups have cut back on cigarette purchases—the “rich” or the “poor”? The worrisome trend is the government moving farther and farther into protecting people from themselves. Is that the job of a government? And why does that “protection” always lead to more revenue for the government? In Sydney, Australia, all bicycles must be equipped with a bell. Failure to do so results in a A$400 fine, higher than almost all traffic tickets. Riding without a helmet has a fine of A$300, and that law is probably more in the public interest. In the US state of Tennessee, a law fines you if your pants are hanging too low in an “indecent manner”. Violators pay $250. In San Juan Capistrano, California, it is against the law to have a Bible study in your house without first obtaining a “conditional use permit”. You also need to pay for a city permit to hold a wedding at any venue other than a church. Some people are always going to push the boundary of their “personal freedom” to extremes by society’s standards of what is acceptable. But what do we do about the government when it pushes its authority just as far? Since 2005

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

T. Anthony C. Cabangon Jun B. Vallecera Max V. de Leon Jennifer A. Ng Dionisio L. Pelayo Vittorio V. Vitug Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos

Online Editor Social Media Editor

Ruben M. Cruz Jr. Angel R. Calso

Creative Director Chief Photographer

Eduardo A. Davad Nonilon G. Reyes

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

Judge Pedro T. Santiago (Ret.) Benjamin V. Ramos Adebelo D. Gasmin Marvin Nisperos Estigoy Aldwin Maralit Tolosa Dante S. Castro

BusinessMirror is published daily by the Philippine Business Daily Mirror

HOM

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

www.businessmirror.com.ph

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

Moot James Jimenez

spox

E

arlier this week, on Wednesday, the First Regular Session of the House of Representatives in the 17th Congress adjourned without passing a bill postponing the conduct of the 2017 Barangay and Sangguniang Kabataan (SK) elections. Of course, there really is nothing preventing the House from getting that legislative ball rolling as soon as they resume session but, for now at least, it seems the elections are pushing through as scheduled. Elsewhere in the Philippines, however, it would also appear that the whole idea of needing a law to postpone the elections might be moot. Look. Section 5 of Batas Pambansa 881—also known as the Omnibus Election Code—prov ides: W hen for any ser ious cause, such as violence, terrorism, loss or destruction of election

paraphernalia or records, force majeure and other analogous causes of such a nature that the holding of a free, orderly and honest election should become impossible in any political subdivision, the commission, motu proprio or upon a verified petition by any interested party, and after due notice and hearing, whereby all interested parties are afforded equal opportunity

to be heard, shall postpone the election therein to a date which should be reasonably close to the date of the election not held, suspended or which resulted in a failure to elect but not later than 30 days after the cessation of the cause for such postponement or suspension of the election or failure to elect. Thus, if the current troubles in Mindanao continue until the end of this year, it becomes highly likely that a petition to postpone the holding of elections there will be filed before the Commission on Elections (Comelec). In fact, with many Comelec officers having been forced to flee Marawi with the outbreak of fighting there, it might even happen that the recommendation to postpone elections could come from within the Comelec itself. Note that the same provision explicitly states that the elections should be held anyway—either at a date reasonably close to the original schedule, or at a date not later than 30 days after the reason for the postponement has ceased.

Oh dear, the Trumps keep multiplying

T

By Gail Collins | New York Times News Service

he kids are not alright. Let’s see now. Donald J. Trump’s son-in-law, Jared Kushner, is under investigation for weird cloak-and-daggerish meetings with the Russians. Ivanka just took a bunch of money from the Saudis for her favorite charity. Eric and Don Jr. are traveling the world to promote Trump hotels and golf courses while being looked after by the Secret Service on our dime.

Tiffany is going to law school. If only the others were in law school. Pop question: Who’s your favorite mini-Trump? I’m sort of attached to Eric, the one who compared waterboarding to a fraternity hazing. In theory, Eric and Don Jr. are supposed to be totally unconnected to the government, running the family business in a manner so separate from the president that they might easily be working in a totally different dimension. Hahaha. “I do not talk about the government with him, and he does not talk about the business with us. That’s kind of a steadfast pact we made, and it’s something we honor,” Eric told Forbes earlier this year. Then, Forbes reported, about “two minutes later” that Eric volunteered that he’d still be making “profitability reports and stuff like that” to the president. He and dad are, Eric added, “pretty inseparable”. Darned tootin’. Besides traveling the world to publicize Trump golf courses and hang out with potential investors, Eric and Donald Jr.

are also working the political side of the street. The boys recently met with Republican leaders to discuss 2018 election plans. (Don Jr., by the way, is the one who was recently off shooting prairie dogs during their breeding season.) Eric’s wife, Lara, was at the meeting, too. More relatives! When she’s not talking with Republican leaders, Lara is active in an animalrights group called the Beagle Freedom Project. It helps find homes for dogs that were used in scientific studies, which is commendable. On the other hand, one of its leaders spent six years in jail for harassing research workers. Her father-in-law isn’t really into pets, which is now looking like a good thing. Given the way he operates, if Trump had, say, a cocker spaniel, it would probably now be deputy secretary of agriculture. Lately, the Trump relatives we’ve been hearing most about are Ivanka, an official presidential adviser, and her husband, Jared, whose portfolio includes modernizing government and bringing peace to the Middle

East. They recently accompanied the president on his overseas trip—the one that began in Saudi Arabia with fun festivities and the glowing orb. While the Trumps were there, the Saudis and the United Arab Emirates announced they were honoring Ivanka by donating $100 million to a World Bank fund for women entrepreneurs. Perhaps you remember a presidential debate last fall in which Trump denounced the Clinton Foundation for accepting money from conservative Arab nations like, um, Saudi Arabia. (“You talk about women and women’s rights? So these are people who push gays off buildings. These are people that kill women and treat women horribly. And yet, you take their money.”) Ah, well. Jared’s current issue is the mysterious back channel he attempted to set up with the Russians. Like so very many things involving this administration, it’s a controversy in which the most positive interpretation is that he had no idea what the hell he was doing. Last December Kushner met with Sergey Gorkov, the head of a Russia bank, to talk about setting up a special communication system, apparently so he could talk without US intelligence overhearing. It had to be disastrous in some way, since Mike Flynn was involved. Among the possible explanations: A) The incoming administration had directed a 36-year-old real-estate

Clearly, this is not the same scenario imagined by proposed legislation, which calls for the holding of the Barangay and SK elections a year (or longer) hence. Or is it? What if the reason for the postponement—violence or terrorism, in particular—is never officially declared to have ceased? In such a case, the 30-day deadline will obviously never arrive either, resulting in what would amount to an indefinite postponement of the polls. And considering the oft-repeated warnings that martial law might be declared nationwide, it becomes reasonable to ask: Will the violence or terrorism (which form the casus belli for martial law) then be used as justification for a nationwide postponement of the Barangay and SK elections? Hardly inconceivable. Might this possible sequence of events be the reason that no law has been passed, in apparent frustration of the much-ballyhooed desire of many elected officials to postpone barangay elections? I guess we’ll have to wait to find out.

developer with no government experience to solve the Syrian crisis while keeping the whole thing secret from everybody except Vladimir Putin. B) Jared was trying to do a favor for his sister-in-law Lara by setting up a channel to smuggle abused beagles out of Russia. C) This is something about Russian money backing Trump businesses. I am, of course, going for the beagles. But feel free to be cynical. “We know Kushner’s business operations are in constant need of loans and investors. It’s highly suspicious,” said Fred Wertheimer of the goodgovernment group Democracy 21. He used to specialize in campaign finance reform, but now Wertheimer lives in a world where a president’s daughter joins Dad at a dinner with the Chinese president the very same day she receives trademark rights for selling Ivanka Trump glitz in China. And speaking of sleazy contacts with foreign investors, last week Senate Judiciary Committee Chairman Chuck Grassley called for an investigation into “potentially fraudulent statements and misrepresentations” made by a Chinese company promoting deals that seemed to involve US visas for financiers who made big investments in a luxury condo project in New Jersey. The condos are being developed by Kushner Cos. and were being marketed by Jared’s sister. Yes! There’s no end to them. Stay the course, Tiffany.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Benefitting from China’s ‘One Belt, One Road’ initiative

Caritas Manila sends help for families affected by violence in Marawi City Rev. Fr. Antonio Cecilio T. Pascual

SERVANT LEADER

Alvin Ang

EAGLE WATCH

A

group of social scientists from the Ateneo de Manila University is currently in China to understand better the “One Belt, One Road” (Obor) initiative. Coming from the recent Obor Summit held on May 15 and 16 in Beijing and attended by President Duterte, this trip is expected to provide academics a deeper perspective of how the Philippines stands to benefit or lose in this East-led development agenda. Midway into our visit, we had the opportunity to listen and exchange views with academics from the Sun Yat Sen University (SYSU) on Obor. The main objective of China in pursuing Obor is to improve ties and stimulate growth and development along its geographic periphery. It means that it will essentially connect Asia to Europe and Africa by tracing the historical Silk Road and providing a maritime counterpart. This initiative will cover about 60 emerging markets/economies, 4 billion in population, 65 percent of land trade and 30 percent of water trade with a total value of $21 trillion. Early gainers from this is Kenya, which just opened its first fast train service from the capital Nairobi to its Mombasa port. China funded its construction cost of $3.8 billion (through a loan with China Exim Bank), which will eventually connect to other countries in East Africa. The project was completed six months ahead of schedule with construction completed in two-and-a-half years covering 610 kilometers. Within China, Obor has now become the core economic development strategy, as guidelines to promote it across the country has been released. According to our SYSU colleagues, in terms of scope and significance, Obor is now similar to the 1978 economic reforms of opening China to the world. By the sheer size and expanse of this initiative, it seems logical for the Philippines to take advantage to be part of this. According to our SYSU counterparts, China currently has surplus of capital and is experiencing industrial overcapacity. It also has rich experiences in infrastructure construction. These mean that it has the resources (financial and engineering) to assist developing countries in their infrastructure development. With the Philippine Development Plan focused on massive infrastructure development, these resources are available for the country to consider. Furthermore, with the US foreign policy shifting to a protectionist stand, there seems to be a rebalancing of economic power toward the East. Germany and the European Union are currently exploring more trade with China in the light of President Donald J. Trump’s tirades against its trade imbalances with Germany. Obor seems to provide a workable trade alternative against the emerging protectionism of the US. Notwithstanding these positives, our exchanges with our SYSU counterparts reveal that Obor is not without challenges. In particular, it is unclear how much China will be able to afford, considering that a number of developing countries across the Obor path may be willing to

tap its expertise and finance. This is a challenge, because within China itself, there remains a huge income imbalance and inequality between the richer coastal eastern provinces and the poorer central and western provinces. It is also unclear what kind of institutional arrangements will form bases of the Obor and its relationship with other trade arrangements, such as the Asia Pacific Economic Cooperation and the Regional Comprehensive Economic Partnership with the Asean and its various free-trade agreements with different countries. China may have the resources, but it may lack the institutional experience and capacity to implement a full Obor. With these observations and current developments in the Philippines, taking part in the Obor initiative requires both pragmatism and prudence. Pragmatism because the global economic order is shifting, and we need to be open to other trading partners in finding new markets and new value chain linkages for our economy. Also, the current challenge in Mindanao, particularly in Marawi, will require huge rebuilding and reconstruction finance that is not factored in the present government budget. Despite the possible approval of the tax-reform package, the government will require more resources than what it has originally programmed for the next years of the development plan. Prudence is needed, in such a way that the country should separate the benefits that will be gained from Obor from that of the existing challenge in the West Philippine Sea. This is a balancing act that needs a careful evaluation beyond economic benefits, from trade and investments to internal benefits that the country could not access, and from present gains and future gains. To do this, the country should also work within the soft component of the Obor. This is essentially the cultural exchange component to deepen understanding within the two countries beyond economics and more into how China and the Philippines can foster the “Huang Pu” spirit. Huang Pu is the military camp jointly established by the Nationalists and the Communists to help unite China in 1924. It implies the spirit of cooperation despite having differing opinions and ideologies in achieving a common goal. In this case, China and the Philippines can cooperate despite having differences into the common goal of inclusive and sustainable development for both nations.

C

aritas Manila sent help for families displaced by ongoing fighting between government forces and a local terrorist group in Marawi City.

The lead social services and development program of the Archdiocese of Manila sent P500,000 in cash and 100 cavans of rice as initial help to the residents affected by the crisis in Marawi City. In an interview over Church-run Radio Veritas, the Prelate of Marawi, Most Rev. Edwin dela Peña, DD, expressed his heartfelt gratitude for the help being sent to his kababayan. “Nagpapasalamat po kami sa inyong maagap na pagtugon sa pangangailangan ng ating mga evacuees, at talagang kailangang kailangan nila ang inyong tulong at ang patuloy

Bloomberg View

F

or the first time ever, China is facing a dreaded prospect: the inverted bond yield curve. The phenomenon, in which longterm interest rates sink below shortterm interest rates, has caused some conster n at ion a mong m a rketwatchers, who know it’s traditionally a harbinger of recession. The inversion suggests markets expect interest rates to fall eventually as monetary authorities move to stimulate economic activity. In other countries, the curve is such a reliable indicator of a downturn that the Cleveland Federal Reserve maintains a recession probability measure based on short- and longterm government bond prices. The

bank writes that bond yields “predict whether future GDP growth will be above or below average”, although it acknowledges that the measure “does not do so well in predicting an actual number, especially in the case of recessions”. In other words, bond yields provide good evidence about the direction of economic growth, if not specific levels. One needs to be careful about drawing similar conclusions in China, however. For one thing, the central government bond market remains relatively small, while the remaining bond market is overwhelmingly shortterm. Government bonds account for roughly a third of the total market, and of those, only a third mature after 2027. These factors, as well as the relative immaturity of the Chinese bond market, defy any strong comparisons

ninyong pagpaparating at paghahatid ng tulong para sa kanila,” the prelate said. On May 23, the residents of Marawi City were shaken by explosions and gunshots when the fighting erupted between the military and local terrorist groups. Fires also raged, affecting a church, two schools and the city jail. The electricity supply was also cut off. Residents have been taking refuge at different evacuation centers in Iligan City and in nearby towns. The violence prompted President Duterte to declare all of Mindanao

under martial law for 60 days. Caritas Manila and Veritas 846 Radio Totoo are asking for prayers for divine protection and for the help we can offer to our kababayan who were affected by the clashes between the military and the local terrorists, and are moving away from the fighting in Marawi City. Cash, as well as donations in kind, such as food items (halal), hygiene kits, water and blankets are accepted. Donations can be made online via http://ushare.unionbankph.com/ caritas/ or by bank deposit: Banco De Oro—Savings Account No.: 5600-45905 Bank of the Philippine Islands – Savings Account No.: 3063-5357-01 Metrobank—Savings Account No.: 175-3-17506954-3 For dollar accounts: Bank of the Philippine Islands— Savings Account No. 3064-0033-55 Swift Code—BOPIPHMM Philippine National Bank— Savings Account No. 10-856660002-5 Swift Code—PNBMPHMM Donations can also be made via

Cebuana Lhuillier (free of charge) or dropped off at Caritas Manila, 2002 Jesus Street Pandacan, Manila, or at Radio Veritas on West Avenue corner Edsa, Quezon City. For proper acknowledgment of your donations, kindly fax a copy of the deposit slip to 563-9306, or e-mail a scanned copy to caritas_manila@yahoo.com. Please indicate your name and complete address. Caritas Damayan is one of the programs of Caritas Manila, the social-development ministry of the Archdiocese of Manila. Through its Disaster Risk Reduction and Management Program, Caritas Manila has put in place a disaster-management program that allows for quick response relief operation and effective crisis intervention. To know more about Caritas Manila, visit www. caritasmanila.org.ph. For your donations, call our DonorCare lines 563-9311, 564-0205, 0999-7943455, 0905-4285001 and 0929-8343857. Make it a habit to listen to Radio Veritas 846 in the AM band, or through live streaming at www.veritas846.ph. For comments, e-mail veritas846pr@gmail.com.

Leadership lessons we learned from our moms

“Work is not your whole life, so don’t let it define you. How you are as a human being will define you. And whatever you do, try to always be kind [kind, but still straightforward and direct], especially to those who are less advantaged.”—Neva Talladen, founder of Swoop. “Always finish what you start and do it with heart; otherwise, it will show in the results.”—Cherry Kho, chief brandstormer and CEO, Bluethumb Creatives. “Presence of mind. Perseverance. Diligence. Focus. It is never too late to pursue your passion, change course and continue to learn. She trained in Dermatology at age 50 and got her master’s degree in Theology in her 60s. She taught me the value of developing one’s clinical eye and nurturing human connection (with clients, patients and all kinds of people). Serving people generously, but also knowing the value of what you do.”—Kay Bunagan, psychologist, teacher and founding partner of Better Steps Psychology. “My mom was a union carpenter

for around a decade growing up. I learned never to give up despite what anyone says. To use our talent for anything that makes the world better and makes us happy. And make cool stuff.”—Erica Grigg, keynote speaker, coach, entrepreneur. “From my mother, I learned the power of stillness, ritual and celebration. Before a busy day of work, she’d always make time to drink her coffee while sitting. What many call mindfulness, she called ‘taking some time.’ She also made sure we celebrated victories with a toast and speechmaking at the table. In both good and difficult times, she knew how to stop the madness and create alignment around a single purpose. These tools are a natural and valuable part of my skill set when leading a meeting or a workshop.”—Jesica Davis, facilitator and workshop leader. “1) Fear has no permanent place in the heart of a strong woman. Faith does; 2) Life will always throw curveballs at you. Don’t duck. Don’t catch. Hit; 3) Someone who makes a decision and follows through is better off than someone who sits on something for ‘consultations’; 4) Give when someone is in need. It truly comes back sevenfold, and with the perfect timing; and 5) Improve lives of your people and the generations that follow them—that’s the most relevant legacy you can leave as a leader.”—Ria Salvaña, Unilever Philippines Consumer Engagement head, daughter of Teodora Marasigan, Philippine Marketing Association President (1999) and marketing research veteran. “From my grandmother, actually, I learned the power and value of education. She was adamant that I be able to support myself and not depend on anyone else to pay the bills.

She taught me the value of always having options.”—Alese Stroud, CEO, Corporate Insight Strategy. “I got an insatiable thirst for curiosity, not being afraid to get my hands dirty and constant growth from my mama! She also instilled the confidence in us to get out there and ask questions—and for what we need. This translates so beautifully to leadership because it allows for fluidity and growth within a team, and the desire to see how each person can contribute their best work.” —Beth Hall, Product Management and Counseling (therapist). “1) Give. You will never regret having done so, you will always wonder why you didn’t if you didn’t; 2) No one else is going to do it for you— my mom raised me singlehandedly, and says you cannot rely on others, only on yourself; 3) Perfection! Aim for it, anything less is not acceptable; 4) Fire and passion. What’s the point in doing anything without it?; 5) Clean as you go: not just the kitchen but your workspace and your work ethic (if there are creases, iron them out as soon as possible, dust them off and go back to work). Don’t harbor negative energy; and 6) Lead from behind. True leaders are those that equip and provide a platform for others to shine.”—Pat Dwyer, founder and director of The Purpose Business; daughter of Patty Gallardo, managing director, Amrop Philippines To our mothers, for everything that they’ve taught us, thank you!

Meanwhile, short-term wealthmanagement f unds hold large amounts of government and corporate bonds in levered fixed-income products. The government crackdown disproportionately impacts the yield curve on the short end of the term structure, pushing up yields in shorter maturities. The fact that long-term rates are more stable doesn’t matter: Wealth-management products maturing every six months simply don’t buy 30-year government bonds. This matches closely what we see. Long-dated bond yields have risen much more slowly than the shortterm debt yields, since the beginning of 2017. For instance, spot yields on two-year government bonds have increased 80 basis points, while 10- and 50-year yields have increased only 54 and 31 basis points, respectively. The

inversion in the Chinese bond market stems, not from a major fall in longterm yields, but from a large increase in short-term yields. This has important implications. Perhaps the central question among Chinese investors right now is how long regulators can sustain their game of chicken with levered investors. Thus far, the People’s Bank of China has seemed willing to let shortterm interest rates—the primary borrowing tool of investors—drift upward while providing just enough new liquidity to prevent a major selloff. Yet, clearly, long-term investors remain unfazed. This implies investors believe regulators will ease their deleveraging campaign, allowing short-term rates to come back down. This isn’t a bad bet: Historically, while Chinese of-

ficials have talked tough about reining in financial risks, they’ve always blinked when their efforts seem to be threatening growth and asset prices. If the government is to win its battle with the Chinese market, it needs to reset such expectations. It’ll have to run a monetary policy that forces firms to allocate capital more efficiently, and avoid the temptation to revert to easy money flows. So far, regulators seem to have accepted that asset prices will fall as financing options narrow. But there’s more pain ahead: Some 11 percent of shares on Chinese stock markets are pledged for loans, and the profits of steel mills, say, are dependent on prices driven up by highly leveraged shadow banks. China may not be on the verge of recession. That hardly means the path forward is going to be easy.

Niña Terol

women stepping up

L

ong before we came into contact with managers, board members and company presidents, we had our mothers. Strong, beautiful, complex (and sometimes crazy) women, they were the cofounders of the family—or sometimes, as in our family’s case, the sole proprietor—and in many cases serve as COO and CFO while also managing Human Resources, Learning and Development, Procurement, Internal Audit and many other roles that we had no idea existed until we saw them do it. My own mother had been a flight attendant and aviation trainer for decades, and while she was mostly flying to different countries when I was growing up, she taught me at an early age how to manage the household finances, how to be responsible for my two younger siblings (even standing in for her during enrollment and Parent-Teacher Association season as early as nine years old) and how to deal with people. “Different strokes for different folks,” she’d always tell me. There was no “formula” for raising kids or managing teams; people are different from each other, she’d point out to me, and we must always respect those differences when dealing with them. Seeing my mom work and manage our kooky family taught me a lot of leadership lessons that I now apply to my own work and life. As Mother’s Month came to a close, I asked other women entrepreneurs from different parts of the world what they had learned from their own mothers, and here’s what they shared:

Is China headed for a recession? By Christopher Balding

Friday, June 2, 2017 A11

to other countries. What else might explain China’s inverted curve, if not an impending recession? For much of this year, banking regulators have focused on addressing financial risks, primarily by reducing leverage. Data indicates that downward pressure on new credit growth was strongest in March and April. The crackdown has pushed up short-term interest rates and pushed down the prices of financial assets, such as stocks, bonds and commodities. Officials are nervous; they want to restrain leverage growth without triggering a fire sale of assets. With surprising regularity, Chinese politicians and regulators have come out and publicly reaffirmed that the financial system remains sound, insisting investors need not fear an uncontrolled plunge in asset prices.

Niña Terol is an author, public speaker, educator, workshop facilitator, corporate executive and entrepreneur all rolled into one. She is a founding trustee and a member of Business and Professional Women (BPW) Makati, and the proud eldest daughter of Nannette Terol, an aviation trainer and consultant.

2nd Front Page BusinessMirror

A12 Friday, June 2, 2017

www.businessmirror.com.ph

PPP Center highlights the many risks of hybrid mode in infra binge Hybrid B By Lorenz S. Marasigan

@lorenzmarasigan

ecause it chose to shift its bias toward hybrid infrastructure deals, the government will have to bear higher risks in its infrastructure buildup, and may even end up defeated due to poor judgment. Thus said Public Private Partnership (PPP) Center Executive Director Ferdinand A. Pecson on Thursday, when he issued a statement hitting the supposed skewed interest in implementing muchneeded infrastructure deals under the hybrid method. A project is considered a hybrid if the government assumes the responsibility of building the infrastructure, whether through public funds or official develop-

ment assistance (ODA), while granting the operations and maintenance (O&M) component to the private sector upon completion. Pecson somehow schooled economic managers on how to decide the mode of implementation of a project. While maintaining that there are numerous ways to pursue project implementation, he said it is most prudent for the government to first find the best solu-

The type of deal where the government builds the infrastructure stand lets private firms do the operations and maintenance

tion that will meet its objective, given the set of constraints and risks of each option. Hybrids, he said, carry huge risks. “The hybrid model works if the infrastructure is built and equipped to enable the delivery of the services expected from the O&M provider. Bidding a project on the basis of lowest construction cost, without consideration for O&M, will not naturally result in such an infrastructure,” Pecson said. He cited airports, for instance. Just recently, the government

removed the P108.1-billion Regional Airports Modernization Program from the PPP pipeline. It was one of the few projects “ripe” for bidding that the Duterte government inherited from the Aquino administration. “If passenger congestion in queues in check-in counters or security checks are to be avoided, the number and arrangement of service counters have to be designed and built accordingly. Poor airport service could result in the O&M provider being replaced,” Pecson said. T hus, t he act ive ma nage ment of this conflict between the builder and O&M provider in a hybrid model has to be planned, as soon as a decision to go hybrid is made, Pecson said. “Conflict management, if done post construction, could potentially entangle the government, the builder and the O&M provider in costly finger-pointing should

problems in the infrastructure or in service delivery later arise. This is, in fact, already happening in some hybrid projects,” he explained. One more roadblock, he said, lies on the government’s ability to fund projects under the hybrid mode. “If this constraint exists, then PPP could be a better option. But this has to be weighed against the government further taking on contingent liabilities,” Pecson noted. From a bias on deals developed under the PPP Program, the government has taken a different leaning on infrastructure growth, with its eyes now keen on building more infrastructure through bilateral loans and taxpayers’ money. Finance Secretary Carlos G. Dominguez III earlier explained that the apparent shift in bias was borne out of the nature of PPP deals, which he described as too slow in movement. But for Pecson, implementing infrastructure projects under the

PPP Program is still a viable option, if not a better one. “Compared with the integrated build-operate-maintain PPP model, the private partner manages this kind of conflict and assumes responsibility for the performance from construction all the way to operation and maintenance. The government only has to deal with one party,” Pecson said. In the end, Pecson said there is no default best option, and the choice has to be “evaluated on a case-bycase basis”. To date, only four PPP deals are up for procurement. According to the PPP Center’s database, a total of 15 deals have been awarded to their respective proponents since the agency started handling the development of projects in 2010. Before the PPP Center came into being, there were 49 PPP deals completed, the legal basis of which is the build-operate-transfer law.

P1.06B WORTH OF PIRATED GOODS SEIZED IN JAN-APRIL By Catherine N. Pillas

T

APULIT ISLAND One of the most luxurious resorts, the El Nido Resorts on Apulit Island in northeastern Palawan is famous for its exciting and exhilarating activities fit for adventure seekers. What’s more, its Maldives-like water cottages above the clear sea water are a site to behold—and a place to frolic. FAYE PABLO

DepEd OKs tuition-hike petitions of 1,013 schools By Claudeth Mocon-Ciriaco

T

Correspondent

he Department of Education (DepEd) announced that it has approved the plea of 1,013 schools for tuition and other school fee hike for school year 2017-2018. Education Secretary Leonor Magtolis-Briones said the average increase across the regions is 8 percent. Data obtained from the department showed that that National Capital Region (NCR) has the highest number of private schools with approved petitions at 183 out of 2,032 schools, followed by Region 11 with 154 out

of 564, Region 3 with 104. The DepEd has 17 regional offices (excluding the Autonomous Region in Muslim Mindanao). Briones assured that schools with approved tuition-hike petitions had taken steps to ensure that the increase is reasonable and in accordance with DepEd guidelines. The DepEd chief was referring to the 2010 Manual of Regulations of the agency that states: “70 percent of any tuition hike should go to the upgrading of teachers salaries, 20 percent for the improvement of school facilities and equipment and 10 percent as return on investment of the

12,890 The total number of private schools in the country, according to DepEd data

school owners.” Schools were also asked to submit necessar y documentation that proves consultations between the schools and their stakeholders occurred. According to the latest data from the DepEd, the number of private schools nationwide cur-

rently stands at 12,890. The Commission on Higher Education (CHED) earlier announced that it has approved the applications filed by 268 private highereducation institutions (HEIs) in the country for increase in their tuition and other school fees for academic year 2017-2018. In a statement, CHED Chairman Patricia B. Licuanan said those with approved petitions for increase represent 16 percent of the 1,652 total private HEIs in the Philippines. This is lower than the reported 304 HEIs that raised their tuition and other fees last academic year. Of the 268 private HEIs, 31 will increase tuition only, 231 tuition

and other school fees and six other fees only. The average increase in tuition is 6.96 percent, or equivalent to P86.68 per unit, while the average increase in other school fees is 6.9 percent, or P243. Affected students make up about 1 percent of the total population of private HEIs. The average per-unit increase in tuition is P119.55, or 4.75 percent, for the NCR; P49.07, or 3.05 percent, for Region 4; and P49.50, or 8.64 percent, for Region 3. For other school fees, the increases are P49.82, or 5.28 percent, for NCR; P408.70, or 5.9 percent, for Region 4, and P974.26, or 10.73 percent, for Region 3.

May PMI indicates further manufacturing expansion on sustained local demand “The Philippines’s manufacturing sector remained firmly in expansion territory during May, underpinned by robust output growth and new orders. Buoyant domestic demand and business optimism augur well for the strong growth momentum to be sustained as we approach the end of the second quarter,” IHS Markit economist Bernard Aw said.

However, despite the pickup in trade demand, particularly in the region, Aw said growth in export sales was seen at a “much slower rate compared to total new orders”. Aw said this indicates that the domestic market continued to be the main engine of manufacturing growth. On the price front, Aw said greater costs prompted firms to

raise charges further to protect their margins.“While a weaker exchange rate didn’t noticeably boost foreign demand, it led to higher imported inflation. Input cost increases remained elevated, although there were signs of easing inflationary pressures,” the economist said. “In part, sustained employment growth ensured that

Continued from a1

operating capacity remained sufficient to meet demand. Business optimism and a healthy sales pipeline hint that the robust hiring pace is likely to continue. Furthermore, ongoing public infrastructure spending and domestic consumption should continue to support manufacturing activity in the coming months,” Aw said.

@c_pillas29

he Intellectual Property Office of the Philippines (IPOPHL) reported that some P1.065 billion worth of counterfeit goods were seized by the government from January to April, with optical media still accounting for the bulk of the confiscated items. In an interview at the sidelines of the second day of the Inclusive Innovation Conference, IPOPHL Deputy Director General Allan B. Gepty gave a breakdown of the P1.065-billion haul: ■ Optical media (40 percent)— P431 million; ■ Handbags/wallets (24 percent)—P262 million; ■ Footwear ( 16 percent)—P167 million; ■ Wearing apparel (12 percent) —P 125 million.

₧6.5B The value of counterfeit goods confiscated by the government last year

Gepty said the value of the seized goods is dictated by the type of items, pointing out that the office’s record-high seizure of P13.3 billion in 2014 was due to the prevalence of luxury goods in the market. With 85 percent to 90 percent of the fake goods in the local market brought in from abroad, Gepty underscored the need to intensify IPOPHL’s twin objectives of border control via the Bureau of Customs and education. “If you study the historical background of this campaign, we really have to sustain efforts, but the ultimate form of enforcement is education. The public must be enlightened that they can’t patronize these,” Gepty said. Border control must also be intensified, with closer coordination among the different agencies in the National Committee on Intellectual Property Rights (NCIPR). See “Pirated goods,” A2