Businessmirror june 03, 2016

“I said, ‘Let’s call you @RealDonaldTrump—you’re the real Donald Trump. He thought about it for a minute and said, “I like it. Let’s do it.’”— Peter Costanzo, who helped turn Donald Trump into @RealDonaldTrump, Trump’s Twitter account, a centerpiece of the presumptive Republican nominee’s presidential campaign and his vehicle of choice for pumping out political attacks and self-promotion to more than 8 million followers. AP

media partner of the year

United nations

2015 environmental Media Award leadership award 2008

“Do you know that China has lifted more than 600 million people out of poverty? And do you know that China is now the second-largest economy in the world from a very low foundation?... And do you know China has written protection and promotion of human rights into our constitution?”

Chinese Foreign Minister Wang Yi, publicly berating a Canadian journalist for asking a question about his country’s human-rights record. AP

“The world, as a whole, is in need of a good laugh.”—Candace Payne, the Texas woman who posted on Facebook a video of herself laughing wildly as she spontaneously donned a Chewbacca mask. The video garnered more than 135 million views. AP

BusinessMirror A broader look at today’s business

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Friday, June 3, 2016 Vol. 11 No. 237

‘AQUINO’S SELF-SUFFICIENCY PROGRAM EXPENSIVE, WRONG POLICY’

It’s food security, not rice self-sufficiency, for Pernia

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INSIDE

By Cai U. Ordinario

he Philippines would be better off importing rice from neighboring Southeast Asian countries than implementing an expensive rice self-sufficiency program, the incoming economic planning chief said on Thursday.

Kia Negros Exploration Drive: A world made bigger

Economic Planning Secretary Ernesto M. Pernia told the BusinessMirror that the Aquino administration’s rice selfsufficiency program was a “wrong policy.”

“The rice self-sufficiency [program],

motoring

@cuo_bm

that’s a wrong policy. We will push for food security not self-sufficiency, because we should be doing things that we have comparative advantage in,” Pernia said.

“Obviously, we don’t have compara-

P25.00 nationwide | 5 sections 34 pages | 7 days a week

Duterte to make P-Noy’s PDP really inclusive

2.4 MMT

The volume of rice imported by the Philippines in 2010

tive advantage in rice. It’s cheaper to import rice from [countries like] Thailand,” he added.

Pernia’s pronouncement runs counter to the announcement made by Peter T. Laviña, spokesman of President-elect Rodrigo R. Duterte. Laviña said the incoming Duterte administration is gunning for rice self-sufficiency in two years.

Continued on A2

E1

Legally speeding: The jaguar f-type experience

DUTERTE

I

ncoming Economic Planning Secretary Ernesto M. Pernia said the Duterte administration may only tweak the existing Philippine Development Plan (PDP) according to its priorities, instead of crafting one from scratch.

“There is already a medium-term development plan. I’m not going to junk that. I’m just going to fine-tune that according to our vision,” Pernia told the BusinessMirror.

The economic and social priority of the Duterte administration, Pernia said, is addressing inequality.

He said the poor, not only the rich, should benefit from the country’s economic gains.

The uneven distribution of wealth, Pernia said, is the reason the Philippines continues to struggle from high poverty rates.

The average full-year poverty incidence in 2012 was at 25.2 percent. Succeeding first-semester poverty figures were also not that encouraging.

The Philippine Statistics Authority (PSA) said that poverty incidence among Filipinos in the first semester of 2015 was estimated at 26.3 percent, lower than the poverty incidence among Filipinos of 27.9 percent in the first semester of 2012.

See “Duterte,” A2

motoring

E2 Children play on a makeshift structure in the Manila North Cemetery in the Philippines. Los Angeles Times/TNS

New porsche 911 RSR enters test phase

Adoption of abandoned kids T hindered by state ineptitude

M a z d a Skyactiv-D: Breaking

motoring

IS THIRD TELCO PLAYER STILL POSSIBLE IN PHL?

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E4

he Manila North Cemetery, where Michelle Sambalilo was abandoned as a young child, is a sprawling, trash-strewn squatter camp where thousands of people eat, sleep and play among acres of colorful crypts.

Rescued from life among the dead, Sambalilo then lived for years among the Philippine capital’s notoriously negligent staterun shelters. Throughout, she dreamed of someday belonging to a family of her own.

But, in the end, all it took was one document

PESO exchange rates n US 46.6880

—one blow from the country’s adoption authorities—to send her dreams crashing down to earth.

The Philippines has an abandonedchildren problem. About 1.8 million children in the country, more than 1 percent of its entire population, are “abandoned or neglected,” according to the United Nations’ Children’s Rights & Emergency Relief Organization.

Some are victims of extreme poverty; See “Adoption,” A12

1.8M The estimated number of children in the country who are abandoned or neglected

By Lorenz S. Marasigan

@lorenzmarasigan

he National Telecommunications Commission (NTC) on Thursday said PLDT Inc. and Globe Telecom Inc. have returned a total of 85 megahertz (MHz) across 2G and 4G bands after their acquisition of the prized 700-MHz band to allow a third player to enter the market.

In an interview with the BusinessMirror, NTC Deputy Commissioner Edgardo V. Cabarios listed the returned frequencies as follows: 20 MHz of the 700-Mhz band; 15 MHz of the 2,500 to 2,700MHz band; 40 MHz of the 3,400 to 3,500-MHz band, and 10 MHz of the 800-MHz band.

The rational behind the returned frequencies is to allow a third player to enter the market, according to officials of PLDT and Globe Telecom.

This development came after President-elect Rodrigo R. Duterte threatened to open up the lucrative telco sector to foreign players, if Internet services in the country will not improve.

But are these returned frequencies enough to build a strong third player in the future?

See “Telco,” A2

n japan 0.4263 n UK 67.3148 n HK 6.0086 n CHINA 7.0949 n singapore 33.9179 n australia 33.8862 n EU 52.2485 n SAUDI arabia 12.4498

Source: BSP (2 June 2016 )

A2 Friday, June 3, 2016

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news@businessmirror.com.ph

It’s food security, not rice self-sufficiency, for Pernia Continued from A1

Despite rolling out various measures and spending billions of pesos to achieve rice self-sufficiency, the Philippines continued to import rice to plug the gap in shortfall and beef up its buffer stocks under the Aquino administration.

In 2015 the country’s rice imports reached nearly 1.8 million metric tons (MMT). This volume included the 500,000 metric tons (MT) contracted in February and

Telco. . .

Continued from A1

While both telcos believe they are enough for another competitor, Cabarios and analysts interviewed think otherwise.

“I think the entry of a third player is still viable, provided that they maximize the frequencies available for mobile telecommunications,” Cabarios said.

He noted, however, that the prospective third player will find it hard to compete if it will simply rely on its own assets.

“A third player really has to strategize. It can partner with small players, for example, to create a big group. It can still be done,” Cabarios said.

But for Pierre Tito Galla, who founded consumer group Democracy.Net. Ph, the probability of the entry of another mobile services provider at this point in time would be close to impossible.

“The frequencies returned to the government are not at all enough to create a strong third player,” he told the B usiness M irror, explaining that such an act is simply another pragmatic business call on the part of the two telco giants.

Galla pointed out that the returned frequencies are merely 20 percent of each band’s entirety.

“It appears to be a token effort, which seems to be designed to placate the Philippine Competition Commission [PCC],” he said. “Also, the return of the frequencies reduces the spectrum user fees required to be paid. It’s merely another pragmatic business decision, not fair mindedness on the part of the telcos.”

He added that, for a new competitor to effectively enter the mobiledata hungry market, several other frequency bands should be relinquished to the NTC.

the 250,000 MT contracted in June.

The private sector was also allowed to import some 800,000 MT of rice under the minimum-access volume scheme.

Manila frontloaded the importation of 500,000 MT of rice for this year. The imports arrived in the country in March.

While the volume was lower than the 2.4 MMT imported in 2010, the Philippines remained a significant player in the international rice market despite its

efforts to wean itself away from imports.

What compounded the problem for farmers was their inability to cope with the ill effects of climate change. Weather phenomena, such as El Niño, and strong typhoons, such as Yolanda, made it difficult for the government to achieve its rice self-sufficiency goal.

Drought and strong typhoons made it difficult for the Department of Agriculture (DA) to increase paddy rice output to at least

20 MMT—the volume required to allow Manila to drastically reduce its rice imports.

The government’s rice self-sufficiency bid also put a strain on public funds for other crops and prevented famers planting other crops to benefit from government funds.

In 2013 PIDS senior fellow Roehlano M. Briones said the government’s rice spending reached P37.44 billion in 2012, almost half of the government’s total agriculture spending for that year.

“For a third or more telco to enter and be able to compete on a level-playing field, the bands that should be returned, as well, should be from 900, 1800, 1900 and 2100 MHz bands. Failing that, any potential third telco cannot compete in the lucrative cellular-mobile market,” he said.

Spectrum is the real estate on which telecommunication operators develop their respective network to deliver services to customers.

The amount of spectrum assigned to a telco has an impact on the cost to build capacity, overall network performance, ability to offer new multimedia services and general customer experience of wireless services.

The duopoly, in a rare feat, partnered to buy San Miguel Corp. out of the telco market, as the food-toinfrastructure firm’s plan of launching a new player threatened the pair.

Under normal circumstances, a prospect of another telco operator might not shake the tandem that much. But in this case, the conglomerate’s valuable assets—the 700-MHz band—poses a huge threat to their existence. Operating mobile Internet services under the 700-MHz spectrum is cheaper and more efficient than operating under higher frequency bands.

The 700-MHz band is key to expanding mobile broadband into the outlying islands and rural provinces, enabling mobile operators to reduce capital and network costs, thereby accelerating rollout and lowering prices for end users.

Utilizing the 700-MHz spectrum would allow the deployment of a high-capacity LTE-based wireless and fixed broadband network to deliver higher data rate and LTE wireless broadband service. With the use of the 700-MHz frequency, broadband prices can go down further,

benefiting consumers.

San Miguel used to own 90 percent of this through several subsidiaries, until the PLDT and Globe acquired these companies for roughly $1.5 billion.

With the transaction, the two telcos agreed to each get 35 MHz of the 700MHz band, and return the remaining 20 MHz to the regulator.

PCC Chairman Arsenio M. Balisacan has said his office is guided by a memo that indicates transitory rules governing mergers and acquisitions, while the implementing rules and regulations (IRR) of the Philippine Competition Act (PCA) is still being crafted.

According to the memo, a merger or acquisition agreement, wherein the transaction value exceeds P1 billion, and which will be executed before the effectivity of the IRR, should notify the commission of details, such as the parties to the merger or acquisition; the type of transaction (whether a merger or an acquisition); the consideration; the key terms of the transaction; and the timing for the execution or implementation of the transaction.

The telcos may also seek exemption from prohibited mergers and acquisition, provided they will prove that the deal will lead to market efficiency.

Section 21 of the PCA outlines exemptions from prohibited mergers and acquisition. Among the exemptions are if the parties can establish that the deal has brought about or is likely to bring about gains in efficiencies that outweigh the limitation on competition.

allocation in the Philippines.

“For me, the bigger question is whether the telcos can just choose which spectrum to return, which ones to get and which ones to hold on to, without much scrutiny by the government,” she said.

Santos asked: “Is there not a process for spectrum assignments? If so, why is frequency being passed around like a used car?”

‘Passed around like a used car’

But for Mary Grace Mirandilla-Santos, an independent researcher on information and communications technology (ICT) and telecommunications policies, the transaction poses quite a number of questions as to the state of frequency

More accountability

The Philippines is touted as one of the countries with the slowest Internet speeds in the Asean, and telcos blamed such a moniker for the “uneven” distribution of frequencies and the bureaucratic red tape in government.

But now that they have access to the digital dividend—the 700-MHz band—the two companies promised to deliver better services in the next six months.

This places them on a higher position for accountability, according to International Data Corp. (IDC) Philippines Country Head Jubert Alberto.

“This puts bigger accountability on their part. There should not be other reasons behind slow connectivity,” he told the BusinessMirror.

However, he noted that the government must also do its part in fasttracking the process of constructing infrastructure.

“The government should still prioritize streamlining the processes behind critical telco activities, such as building cell sites and addressing bureacratic red tape,” Alberto said.

Currently, it takes a telco eight months to build a tower due to the long process it takes to secure permits.

“Addressing this issue should be a good opening salvo not only for incoming President Duterte, but more so for the newly created Department of Information and Communications Technology,” he added.

Data showed that the government spent a total of P62.64 billion for agriculture-related programs and projects. This was significantly higher than the P14.38 billion spent in 2005. Briones noted that government spending for other crops, like corn, only amounted to P951 million in 2012; high-value crops, P1.63 billion; coconut, P2.08 billion; livestock, P2.72 billion; and 3.308 billion for fisheries.

He said one possible reason for this is that rice remains the biggest

Duterte. . .

Continued from A1

Uneven wealth distribution

“In the past, what has been happening is, the distribution is going more to the rich, mas malaki ang nakukuha nila kaysa mga mahihirap [they benefit from growth more than the poor].

Kaya walang improvement in poverty [this is why there is no improvement in poverty],” Pernia said.

Apart from better wealth distribution, the Duterte administration will also focus on implementing an effective population policy.

Pernia, who was the lead author of the University of the Philippines School of Economics position paper supporting the reproductive health law in 2008, said this will help the poor limit the number of children they have.

He said the poor are often burdened with more children than they can afford because they have no access to effective family-planning services.

With more children, poor households often scrimp of financing the education and health of their children just to make ends meet. This prevents children from poor households to move out of poverty in the future.

“The poor wants to limit the number of children. They’re having more than they can afford and, yet, they have not been able to do that because they haven’t had ready access to effective family-planning services. So I think to attack the poverty problem, we have to work on the economic side, as well as the population side,” Pernia said.

12% growth goal

Pernia said these will be the priorities alongside efforts to catch up to the Philippines’s Asean neighbors in terms of economic growth.

In a television interview, Pernia said that, to catch up, the Philippines needs to grow 12 percent annually.

This will enable the country to raise its per-capita income to around $7,000, the level of income in many Asean countries, from the current $3,500.

However, this is highly unattainable in the next six years. What would be more prudent is to focus on the existing problem of inequality that will give a major boost to attaining higher economic growth.

“Given our growth deficit na naiwanan na talaga tayo ng mga neighbors natin sa Asean, to be able to catch up with them, we probably need to double our GNI [gross national income] per capita from $3,500 to $7,000 and to do that, over the next six years, we would need about 12-percent growth rate to double,” Pernia said.

“Of course, that is not attainable, it is not likely to be achieved, highly unlikely. I think what we should be more concerned about is the distribution of economic growth,” he added.

In a recent statement, the National Economic and Development Authority (Neda) said the consultations for the Philippine Development Plan (PDP) 2017 to 2022 will start in August 2016.

The Neda Sustainable Development Goals (SDGs) and the data obtained from the AmBisyon Natin 2040 will be part of the crafting of the country’s next medium-term socioeconomic blueprint.

The SDGs, or Agenda 2030, is a set of 17 global goals and 230 indicators. The global goals were adopted by countries, like the Philippines, in September 2015.

The AmBisyon Natin 2040 is the long-term visioning project of Neda.

It articulated the long-term aspirations of Filipinos, and will serve to frame future development plans.

contributor to the output of the entire agriculture sector. Rice output usually accounts for 15 percent of annual farm output.

The support for the rice sector also includes a huge irrigation budget, according to Briones.

The Philippine rice sector also enjoys protection from the deluge of cheap rice imports via the quantitative restriction (QR) on rice.

Manila was allowed by the World Trade Organization to continue imposing the QR until 2017.

Looser fiscal policy

The incoming administration of Philippine President-elect Rodrigo R. Duterte signaled its willingness for looser fiscal policy and higher borrowing, as it seeks to ramp up spending on infrastructure and cut taxes.

Benjamin E. Diokno, who will be Duterte’s budget secretary when the new government takes office on June 30, said a fiscal shortfall of 3 percent of GDP is a “comfortable deficit target.” That would be the highest since 2010 and a departure from the more conser vative approach adopted

by President Aquino, which resulted in the nation’s first investment-grade credit ratings.

Duterte, a firebrand mayor who won support with promises to fight crime and fix transport bottlenecks, has pledged to reform the country’s tax regime. The new government plans to cut personal and corporate taxes within six months of taking office and borrow more, Diokno said.

“I don’t mind borrowing now, because it’s quite cheap,” he said. “Rates now are a lot lower than before.” He questioned why the nation wasn’t borrowing more, adding that “we need to fund and invest in infrastructure and social capital.”

Investor support

Investors may support a widening in the deficit target because the government plans to use the additional fiscal space to improve public infrastructure, Diokno, 68, said. He is currently a professor at the University of the Philippines’s School of Economics and was also budget chief under President Joseph Estrada.

“Investors would be willing to look past any potential increase in the deficit depending on the details of the fiscal policy,” said Michael Wan, an economist at Credit Suisse Group AG in Singapore. “A broad overhaul of the tax structure could put more money in the hands of consumers, while more spending on infrastructure, education and health would boost the Philippines’s growth potential.”

The new government’s immediate priorities include building infrastructure faster, solving Manila’s traffic woes and investing in agriculture, Pernia said in an interview with ABS-CBN News Channel on Thursday.

Aquino’s administration had cut the budget deficit to 0.9 percent of GDP in 2015, from 3.5 percent in 2010.

A key concern for Fitch Ratings is the nature of the planned higher spending, as a wider budget deficit would be a shift from trends seen in the past few years.

“We would be waiting to see more details regarding this planned higher deficit,” Sagarika Chandra, Fitch sovereign ratings associate director in Hong Kong, said in an e-mailed reply to questions. “Also, it remains to be seen whether the targeted level of spending would be achieved.

In the past, government spending has typically been below what has been budgeted.”

Outgoing Finance Minister Cesar V. Purisima said on May 20 he will submit tax-reform recommendations to the new administration, including a proposal to lower personal and corporate income taxes to 25 percent. The company rate is currently 30 percent, while personal rates are as high as 32 percent, according to the International Monetary Fund.

Cai Ordinario, Bloomberg News

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Friday, June 3, 2016 A3

Meralco: Void ERC, DOE rules T

By Lenie Lectura @llectura

HE Manila Electric Co. (Meralco) has asked a local court to declare null and void two Energy Regulatory Commission (ERC) resolutions and one circular of the Department of Energy (DOE), which prohibits, among others, distribution utilities (DUs) from participating in the competitive retail electricity market as suppliers.

The utility company also asked to declare null and void Sections 2 and 3 of another ERC resolution.

In particular, Meralco asked the Regional Trial Court (RTC) Branch 157 in Pasay City to issue a temporary restraining order (TRO), and subsequently, a writ of preliminary injunction enjoining the DOE from enforcing DOE Circular DC2015-06-0010; and Article I, Sections 2 and 3 of ERC Resolution 05; Resolution 10; and Resolution 11, all Series of 2016; and after due hearing, render judgment declaring as null and void the said rules issued by the two government agencies.

In particular, the DOE circular and the ERC resolutions prohibit DUs’ local retail electricity

suppliers (RESs) from participating in the Retail Competition and Open Access (RCOA) as suppliers of electricity. While they allow DUaffiliate RESs from participating in the RCOA, ERC Resolution 11 “unduly imposed a 30-percent market cap whereby all RESs shall not be allowed to supply more than 30 percent of the total average monthly peak demand in the retail market.”

The same resolution also prohibits RESs from supplying more than 50 percent of the capacity requirements of their affiliate contestable customers (CC).

The DOE circular and ERC Resolution 10 also provide for mandatory contestability and excludes local RESs in their scope.

The latter issuance also imposes

penalties for CC that fail to enter into RCSs retail supply contracts.

Under t he RCOA , customers with monthly average peak demand of at least 1 megawatt, dubbed as CC by the ERC, are now able to choose the supplier of their energy requirement.

These suppliers, commonly known as RES, will directly negotiate and contract on a wholesale level with power-generation companies, so they can sell electricity to CC at competitive rates.

These rates will be reflected in the generation-charge portion of the bill, which typically comprises at least 50 percent of the monthly electrical bill.

When a CC chooses an RES to supply his needs, this RES will also be in charge of the customer’s monthly billing and collection of payments.

MPower, Meralco’s local RES, accounts for about 50 percent of the market share of the contestable market within its franchise, or 18 percent of the national total.

In its 91-page petition for declaration relief filed before the RTC Branch 157 in Pasig, Meralco said the prohibition and the market cap are invalid because they contravene the provisions of the

Meralco linemen work on new wiring and check the transformer of an electric pole in Las Piñas City, in preparation for the coming rainy season. In a pleading, the electric company asked a local court to declare null and void two Energy Regulatory Commission resolutions and one circular of the Department of Energy prohibiting, among others, distribution utilities from participatiing in the competitive retail-electricity market as suppliers. NONIE REYES

Electric Power Industry Reform Act (Epira).

“To begin with, there is no provision under the Epira regarding the prohibition of DUs to participate in the supply business,” Meralco said, adding “Nowhere in the law or IRR [implementing rules and regulations] does it provide the ERC can effectively place a market cap on any industry player, much less bar a

In cases of conflict between the law and the rules and regulations implementing the law, the law shall always prevail.”—Meralco

local RES from fully participating in the market to prevent anticompetitive behavior.”

In fact, the prohibition against DU’s local RES embodied in the DOE circular and the ERC resolutions is contrary to the express provision of Section 29 of the Epira, which expressly recognizes the DUs’ right to supply electricity to the contestable market,” Meralco said.

Moreover, Section 1, Rule 8 of Epira’s IRR also does not prohibit the DUs to engage in the business of supplying electricity.

Meralco said administrative regulations could not supersede the law. “In cases of conflict between the law and the rules and regulations implementing the

law, the law shall always prevail.”

Meralco said the DOE and the ERC singled out MPower due to the latter’s market leadership.

“What the DOE and ERC actually want is to curb MPower’s market leadership for fear that it is causing a monopoly on the market, effectively preventing new entrants and curtailing the growth of other suppliers in the industr y,” the utility firm in its petition said. “Such fear is completely baseless and wildly speculative.”

T he ERC resolut ions were meant to promote competition a nd protec t c u stomer i nter est. Meralco, however, believes instead of promoting competition, the DOE and the ERC would be destroying competition and granting unwarranted advantage and benefit to existing and prospective generation company (genco)-affiliated RESs. “The undue advantage given to prospective genco-affiliate RESs is even more pronounced with Section 1 of the DOE circular, which categorically mentions a genco-affiliate RES and, yet, ex pressly prohibits local RESs,” Meralco said.

As such, the prohibition imposed by the DOE and the ERC, as well as the market cap violate the constitutional right to equal protection of the laws, Meralco said in its petition.

The ERC, when sought for comment, said the Office of the Solicitor General is currently drafting the appropriate pleading.

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A4 Friday, June 3, 2016

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Duterte’s strong policy pronouncements against criminality boost PNP’s morale

T

By Rene Acosta

@reneacostaBM

he Philippine National Police (PNP) will adhere to the policy laid down by incoming President Rodrigo R. Duterte to embark on an all-out fight against criminality by sustaining the PNP’s intensified crackdown against criminals, especially those involved in illegal drugs.

PNPSpokesmanChiefSupt.Wilben Mayor said that with the policy direction of Duterteagainstcrime,thepolice have been encouraged to operate without let up against criminals, especially those involved in the proliferation of shabu and other illegal substances.

Duterte has encouraged state agents, particularly policemen to kill drug couriers, drug lords and all of those who involved in the illegaldrugs business. The tough-talking incoming president even dangled reward money for those who could neutralize drug personalities.

With the consistent pronouncements of the incumbent Davao City mayor, more than a dozen drug suspects have been killed around the country during the past weeks, as policemen continue to haul in shabu worth more than a billion pesos in a series of operations.

Just this week, anti-illegaldrugs operatives from Camp Crame swooped down on a clandestine shabu laboratory in Angeles City, Pampanga, reportedly being operated by a Taiwanese and seized illegal drugs component and laboratory equipment.

The laboratory yielded various chemicals and equipment used in manufacturing dangerous drugs, 45 gallons of liquid shabu, estimated to be at least P1.1 billion, four freezers,

various hydrogen tanks and more or less 2 kilos of white crystalline substance suspected as shabu.

The laboratory had been categorized as a “megaindustrial” shabu laboratory, since it can produce more than 50 kilograms of the illegal substance in one production cycle.

Mayor said that, while the PNP is treating the continuing and successive operations against illegal drugs as part of its normal operations, policemen are emboldened by the strong and repeated statements of Duterte against criminality.

“That is part of normal police functions. When we enforce the law, there is nothing wrong with it. When we invigorate our operation[s], there is nothing wrong with it,” he said.

However, Mayor said they also took note of the policy direction of Duterte for the government to go all-out against criminality.

“Because of that particular pronouncement, our troops are encouraged, and their morale is boosted to conduct operations, especially against drugs,” Mayor said.

With or without Duterte’s clear policy against criminality, Mayor said, the PNP would still conduct their operations since these were not meant to impress the incoming president.

“Let us always give chance to

President-elect Rodrigo R. Duterte is hounded by supporters and the media shortly after voting at a polling precinct in his hometown of Davao City on May 9.

After the smoke clears, the policeman should be standing up and the criminal lying down. They [the criminals] should be the ones dead and not [anyone of] us.”

—de la Rosa

people who perform, and let us not judge our organization on things that have yet to start,” he said.

Amid the crackdown against illegal drugs, the PNP, however, could not say whether the demand for shabu in the market has gone down, but what is certain was the crackdown and even the killings of drug suspects, has sent a strong message to illegal-drug personalities.

AP

Incoming PNP chief, Chief Supt.

Ronald de la Rosa has said that in operations, criminals should be the ones killed and not the operating elements, and this would even be his command guidance when he assumes the post.

“After the smoke clears, the policeman should be standing up and the criminal lying down. They [the criminals] should be the ones dead and not [anyone of] us,” he said.

South China Sea state of play: China, US gear up for ruling W 20% hen a United States guided missile destroyer sailed within 12 nautical miles of a Chinese-claimed island in the disputed South China Sea last month, it set off a volley of protests from Beijing.

“The US is challenging and provoking the new maritime order by wielding its military power,” Foreign Ministry Spokesman Lu Kang said. China’s defense ministry said it would bolster its capabilities in the area as needed.

The resumption of US “freedom of navigation operations” in the South China Sea—with three since October after a three-year hiatus—reflects the global focus on a maritime route that carries $5.3 trillion of global trade a year. Tensions between China and Southeast Asian nations over the waters sit at the center of a rivalry between the US, overseer of the region’s security network for decades, and a rising China intent on becoming the region’s dominant power.

“The South China Sea has become one of the main sticking points in Sino-US relations, which used to be more troubled by trade and currency,” said Zhou Qi, director of the National Strategy Institute at Tsinghua University. “As the US increasingly pivots to the Asia Pacific, boosting partnerships with old allies and building new friendships—many of which have territorial disputes with China—Beijing feels the pressure.”

Hague ruling

After years of simmering friction, the disputes have taken on some urgency, as an international arbitration court in The Hague prepares to rule on a case brought by the Philippines against China. A ruling seen as unfavorable to Beijing could undermine its claims

Projected rise in defense procurement of the Philippines between 2016 and 202

to more than 80 percent of the waters.

The Philippines has asked the court to rule on the status of features China claims, as well as the legal basis of its “historic rights” claim, based on a 1940s map showing a vague dashed line looping down about 1,800 kilometers (1,119 miles) south of Hainan island and covering around 1.4 million square miles. The area overlaps claims from Vietnam, Malaysia, the Philippines, Brunei Darussalam and Taiwan.

China—which has declined to participate in the case—and the US have embarked on a diplomatic and publicrelations frenzy before the ruling, expected within months. The US is not a claimant but has championed free navigation in the area.

The Group of Seven nations expressed concern about instability in the South China Sea at a meeting in Japan last month.

For its part, China claims the support of countries as varied as Russia, Gambia, Belarus and Kazakhstan. In recent week more than a dozen Chinese ambassadors—from the UK to Sierra Leone—have published articles backing the country’s stance, and this week a paid supplement arguing the case was published in the Jakarta Post.

“China is going to lose and that will be humiliating for them, so they

are putting forward an alternative argument which isn’t really well defined,” said Bill Hayton, author of The South China Sea: The Struggle for Power in Asia. Hayton reckons China will lose at least half of the 15 submissions the Philippines made to the court. “There is a massive effort to try and show that China has international support for its position.”

Defense budget rising

Rising tensions around the disputed South China Sea are expected to drive defense spending in the Asia- Pacific region during the next five years.

Total regional defense spending is forecast to increase by nearly 23 percent, from $435 billion in 2015 to $533 billion in 2020, according to IHS Inc., the leading global source of critical information and insight.

“By 2020, the center of gravity of the global defense-spending landscape is expected to have continued its gradual

shift away from the developed economies of Western Europe and North America, and toward emerging markets, particularly in Asia,” said Paul Burton, director at IHS Jane’s. “In terms of overall growth in each region between 2015 and 2020, Asia Pacific is expected to solidify its position as the engine of global defense growth.”

Asia Pacific has seen a long-overdue process of military modernization move up the political agenda in several countries. “A number of the South China Sea’s littoral states appear to be responding to China’s more assertive stance in the region and there is no sign of this trend coming to an end,” said Craig Caffrey, principal analyst at IHS Jane’s.

According to IHS Jane’s Defense Budgets, between 2016 and 2020, Indonesia and Vietnam are expected to grow their defense spending at a compound annual growth rate of 5-percent and 6 percent respectively, while China

will see a 5 percent increase. Investment in defense procurement will also grow rapidly over the same period, by around 20 percent in the Philippines, 30 percent in China and 40 percent in Indonesia.

“The Indonesian government appears committed to raising defense spending significantly,” Caffrey said.

“The strong economic outlook in Indonesia, coupled with long-standing government plans to increase the defense budget as a percentage of GDP, should ensure that spending on the military increases rapidly over the next decade.”

“Vietnam’s government is finally making a concerted effort to inject more money into the modernization of its armed forces,” Burton said.

“Now, with the US arms ban lifted, Vietnam is expected to diversify its supplier base beyond Russia more aggressively.”

US enters picture

The US inserted itself into what had been previously a mostly regional dispute when, in 2013, China started to dredge and dump millions of tons of sand and coral onto seven features in the Spratly chain, which lies in the southeast of the South China Sea. China has created artificial islands covering 3,200 acres of land—more than three times the size of Central Park in New York.

China’s foreign ministry says the country has the right to build on the features because they are its ”indisputable” sovereign territory and, in any case, it’s mainly to provide civilian services like maritime search and rescue.

That isn’t how the US views it.

“We assess that China has established the necessary infrastructure

to project military capabilities in the South China Sea beyond that which is required for point defense of its outposts,” James Clapper, the director of national intelligence, said in March.

US officials have said they are concerned China is taking actions that are too minor to prompt a response, but which over time equate to substantial change. They contend that China’s eventual aim is to establish forward military bases and push back the US Navy.

China argues it has not hindered commercial navigation. But when it seized the Scarborough Shoal from the Philippines in 2012, it restricted banana imports from the country, citing health reasons. In 2010 China effectively banned the export of raw earths to Japan, amid tensions over disputed islands in the East China Sea. China is increasingly relying on its coast guard and armed fishing boats to assert its claims. The coast guard, though, lies outside its navy, which has an agreed code with the US for unplanned encounters at sea, and with whom it has occasionally taken part in multilateral exercises.

“In turning away from tactical aggression, Beijing has refocused on passive-assertive actions to consolidate a new status quo in maritime Asia,” wrote Ashley Townshend and Rory Medcalf in an April report by the Sydney-based Lowy Institute for International Policy.

They said that because it is now v irtually impossible to compel China to roll back its outposts, the priority for the US and its partners should be to “deter further militarization.” Bloomberg News, AP

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AseanFriday BusinessMirror

Indonesia risks declining, whatever the ‘label’ says

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ountries routinely obsess about certificates of good housekeeping.

At times, they are important for credibility. During the Asian financial crisis, for instance, South Korea slipped nine rungs on Standard and Poor’s (S&P) ladder in less than three months. No surprises then that when the economy started healing, and the rating company finally restored Korea to investment grade in January 1999, the bond market heaved a huge sigh of relief.

Far more often, though, the craving for investment grade is a vanity project. Or at least that’s what it was in 2013 in the Philippines, and now it appears it’s Indonesia’s turn to join the craze.

It’s been almost half a decade since the country got the muchvaunted stamp of safety from Fitch Ratings and Moody’s, but all this while S&P has left Indonesia hanging from the top hook of a junk-bond rating. Even now, it’s refusing to oblige.

Does a clean bill of health from all three doctors matter? It will surely give President Joko Widodo some bragging rights. But Indonesian borrowers—and global investors—aren’t exactly waiting with bated breath.

To see why, take all of the country’s publicly traded companies with outstanding bonds. Their average probability of default over the next year is now slightly more than 0.75 percent, according to a proprietary Bloomberg scoring model. While that’s still not in safe territory, the likelihood of the group missing its obligations has slid from as high as 1.6 percent over the past year. What has mattered to investors is this improvement and not any credit score.

As a commodity exporter,

Indonesia couldn’t possibly have escaped the rout in resource prices. The country is home to some of the most distressed borrowers in Asia, including Bumi Resources and Berau Coal, with their US currency debt trading below 30 cents on the dollar.

Leaving aside basket cases, there’s reason for optimism. Oiland-gas producer Medco Energi is doing a rights issue to lower its debt-to-equity ratio of 225 percent and to finance a $2-billion bid, together with other investors, for Newmont Mining’s Indonesian operations. Medco’s dollar bonds are trading above par.

Then there are noncommodity borrowers, such as Siantar Top, which has a 60-percent share of the local snack-noodles market. The company has liabilities of about 2.5 times its Ebitda, and a $37-million investment plan for this year, mostly funded by debt, according to local rating company Pefindo. But investors are sanguine.

Ditto for construction company Adhi Karya, which plans to invest in a light rail transit project, as well as toll roads in Sumatra and Java. The company’s default likelihood, according to Bloomberg’s risk metric, has crashed since September last year, and is now low enough for it to be considered investment grade. The company’s 2019 rupiah bonds, which pay a 9.8-percent coupon, are trading almost on a par.

Indonesia could still turn unprofitable for investors if the rupiah, the second-most volatile Asian currency in the past year, becomes more jittery, as US interest rates rise. With that risk discounted, though, Indonesia’s high yields can be rewarding. Never mind the rating labels. Bloomberg News

Editor: Max V. de Leon • Friday, June 3, 2016 A5

Singapore crackdown signals cost jump for Asia private banks

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ingapore’s move to shut down scandal-plagued BSI Bank Ltd.’s operations in the country is reverberating through private banks facing surging costs to combat money laundering and protracted screening of new clients.

Financial-industry costs to curb money laundering were already forecast by LexisNexis Risk Solutions to reach a record $1.5 billion in Asia this year. Catering to Asia’s swelling ranks of wealthy individuals is one of the industry’s fastest-growing sectors, and banks, such as Credit Suisse Group AG are investing more in that business.

Singapore’s clampdown on BSI over its ties to a Malaysian stateinvestment fund—its most stringent action in three decades— underscores how regulators are increasingly determined to root out money laundering. For Asia’s $1.5-trillion private-banking industry, that probably means more spending to vet prospective clients and keep watch for illicit flows, according to LexisNexis.

The Monetary Authority of Singapore (MAS) on May 24 ordered BSI’s local unit to shut and imposed financial penalties of about $10 million for breaches of money-laundering rules. The central bank also referred six senior BSI executives to the city’s public prosecutor in a broad sanction that came as Swiss authorities took action against the bank related

$1.5T The combined size of Asia’s privatebanking industry

to money flows from 1Malaysia Development Bhd. (1MDB).

Rising costs

“Scrutiny on anti-money laundering, counter-terrorist financing, anti-bribery and corruption as well as tax transparency will endure and intensify in Asia,” said Thomas C. Brown, LexisNexis SVP of global market development and US commercial markets. “The MAS move last week may cause banks to increase their compliance spend pace even further.”

Asian financial firms with more than $100 billion in assets spend an average of $15.8 million on anti-money-laundering (AML) compliance each year, according to a

LexisNexis survey published in April. Some 82 percent of respondents expected those costs to rise this year, with a third projecting an increase of at least 20 percent, the Georgia-based provider of technology and data for risk management said. Personnel costs account for more than 80 percent of AML spending in Asia, with the rest in technology, LexisNexis said. Its survey covered 210 respondents from financial firms in Hong Kong, China, Singapore, Malaysia, Indonesia and Thailand. BSI’s penalties in Singapore are linked to 1MDB, the Malaysian state investment company at the center of money laundering and embezzlement investigations around the world. BSI introduced 1MDB to a Cayman Islands fund that received a $2.32 billion investment, according to a report from a Malaysian parliamentary hearing. That investment and transactions related to it are the subject of criminal probes, including those conducted in Singapore.

Malaysia’s government and 1MDB have repeatedly denied any wrongdoing. BSI has said it cooperated fully with the 1MDB investigations by the Singapore and Swiss authorities.

Scrutiny of private banks goes beyond BSI: Barclays Plc. was fined more than $100 million in November for failing to fully investigate a group of “politically exposed” clients tied to a £1.9-billion transaction.

Meanwhile, Geneva prosecutors have widened a probe into Credit Suisse and one of its ex-wealth managers in a case looking into unauthorized trades on the accounts of rich eastern Europeans, according to people familiar with the investigation.

Heavy penalty

Tighter regulatory oversight means the banks may spend more time vetting individuals before accepting them as customers. Fiftyseven percent of respondents in the LexisNexis survey said it took more than four hours on average to complete due diligence on private banking or wealth-management customers.

MAS’s actions against BSI far exceeded previous punishments handed down in recent years for money laundering and financing terrorism. In 2014 the regulator imposed financial penalties on six financial institutions ranging from S$1,000 ($725) to S$700,000, it said in a report last July, without naming the firms. In 2013 five institutions were fined between S$12,000 and S$450,000. What’s more, the direct referral of BSI executives to prosecutors indicates that bank officers in the region will have to be personally accountable for failures in antimoney-laundering policies and procedures, said Henry Balani, global head of strategic affairs at technology provider Accuity.

Least corrupt

“There is a clear message from the MAS that the industry needs to pay attention to ensuring the soundness of their AML compliance framework,” said Radish Singh, who leads Deloitte & Touche Financial Advisory Services’s Southeast Asia anti-money laundering and forensic team in Singapore. Singapore was the only Asian country among the 10 least-corrupt nations as measured

by Transparency International’s 2015 Corruption Perceptions Index.

Bloomberg News

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A6 Friday, June 3, 2016

‘Terrorists won’t halt travel boom’

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he global airline industry association’s head said terrorist attacks on aircraft, airports and tourist destinations of the kind that have ripped through Europe and parts of northern Africa in the past year won’t stem surging travel demand.

While such outrages have an impact on the industry and people’s perceptions, the effect is generally localized and temporary, International Air Transport Association (IATA) CEO Tony Tyler said on Wednesday in an interview.

“The business impact of these events tends to be quite isolated and it’s often not as long-term, as some people may think,” Tyler told Bloomberg Television. “People don’t get frightened off by these thugs. Most people, I think, if they want to travel will travel.”

Tyler spoke as investigators probing the loss of an EgyptAir jet in the eastern Mediterranean on May 19 picked up pings likely to coming from black-box flight recorders that should reveal whether the plane was the latest target in an 18-month spate of terrorist attacks focused on Europe and North Africa.

The spree has already seen the main terminal at Brussels airport blown up, Paris devastated by blasts and shootings, a Russian jet downed by a suspected Islamic State (IS) bomb and dozens of tourists killed in Tunisia and Turkey.

100,000 The total number of daily flights worldwide Brussels factor

Tyler said most people nevertheless view flying as a very safe way to travel. “These outrages must be stopped, but I think that in business terms, it’s not something that has a big impact, certainly not at recent levels,” he said.

IATA, which represents 260 airlines accounting for 83 percent of air traffic, said on Monday the March 22 attacks on Brussels had been a factor in passenger-traffic growth slowing to 4.6 percent in April, the slowest pace since January 2015.

Data released to Bloomberg by flight-scheduling firm OAG shows that, while locations targeted by terrorists will see steep reductions in capacity this summer, carriers are transferring thousands of seats to unaffected markets.

This means that, while Egypt and

Rights question prompts scolding from Chinese FM

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TTAWA, Ontario— China’s visiting foreign minister publicly berated a Canadian journalist on Wednesday for asking a question about his country’s human-rights record.

Chinese Foreign Minister Wang Yi said it was “irresponsible” of a journalist from the Web outlet IPolitics to ask about human rights and the jailing of a Canadian, Kevin Garratt, who is charged with espionage.

Wang appeared visibly angry as he delivered the scolding in the lobby of Global Affairs headquarters at a joint news conference with Canadian Foreign Affairs Minister Stephane Dion.

“Your question is full of prejudice and against China…. I don’t know where that comes from.

This is totally unacceptable,” Wang said through a translator.

“Other people don’t know better than the Chinese people about the human-rights condition in China and it is the Chinese people who are in the best situation, in the best position to have a say about China’s humanrights situation,” he continued.

“So I would like to suggest to you that please don’t ask questions in such an irresponsible manner. We welcome goodwill suggestions but we reject groundless or unwarranted accusations.”

The IPolitics question was agreed to by a number of journalists representing several news organizations at the event. Wang asked the journalist if she’d ever been to China.

“Do you know that China has lifted more than 600 million people out of poverty? And do you know that China is now the second-largest economy in the world from a very low founda-

tion?... And do you know China has written protection and promotion of human rights into our constitution?”

Earlier, in response to the question that offended his counterpart, Dion said he raised Garratt’s case with Wang and never misses an opportunity to raise human rights and difficult consular cases.

Garratt was indicted by prosecutors in Dandong, a city on the North Korean border where he and his wife ran a popular coffee shop and conducted Christianaid work for North Koreans. He and his wife Julia were arrested in August 2014 by the state-security bureau. His wife was later released on bail.

Dion said he and Wang had honest and frank conversations on human rights and consular affairs. Wang also met Prime Minister Justin Trudeau.

Wang said he believes Canada and China are headed for a “new Golden Age” in relations, citing Justin’s father’s establishment of diplomatic relations with China in 1970 and gains made by former liberal prime ministers Jean Chretien and Paul Martin.

Wang made no mention of former Conservative Prime Minister Stephen Harper, whose neardecade in power started on a frosty note when he was accused of snubbing Beijing.

Trudeau made positive strides with Chinese President Xi Jinping during his first round of international travel last fall.

The Chinese leader praised the vision of Trudeau’s late father, Pierre, for establishing diplomatic relations with the People’s Republic in 1970 during a meeting at the Group of 20 in Turkey. AP

Paris are experiencing tougher times, destinations, such as Spanish resorts and Italian cities, are set to enjoy a boom in visitors.

Tyler said the airline industry is continuing to explore options for ending the reliance of crash investigations on the physical retrieval of flight recorders, something the United Nations-backed International Civil Aviation Organization has made mandatory for all new aircraft from 2021.

Bandwidth issue

“We all feel strongly that it would be a very good thing if we weren’t in the situation we are now, yet again,” he said of the EgyptAir search. “But if it was easy, we would be doing it already.”

While saying the live streaming of data is an attractive idea, Tyler cautioned that with 100,000 flights a day worldwide, there are significant issues concerning the provision of the required spectrum and bandwidth, and how information would be stored or processed.

The use of black boxes that automatically eject in the event of a crash in water is the other main option, Tyler said, while adding that the technology “is not necessarily a simple issue nor an enhancement of safety.”

The IATA chief spoke the day before the group’s annual meeting, where he’ll provide an update on its latest earnings projection for carriers worldwide. A December forecast said that global earnings would reach a record $36.3 billion this year, spurred by the lower cost of jet fuel. Tyler’s term at the helm of the organization ends this week, and members are set to appoint Air France-KLM Group CEO Alexandre de Juniac as his successor. Bloomberg News

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US declares N. Korea ‘primary money-laundering concern’

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ASHINGTON—The United States on Wednesday proposed new restrictions to close off North Korea’s access to the international financial system and to prevent the reclusive communist country from using banks to launder money that could be used for its nuclear weapons program.

The Treasury Department declared North Korea a “primary money-laundering concern,” the latest step toward severing US banking relationships with North Korea and deepening its economic isolation.

US banks are generally prohibited now from dealing with North Korea.

A proposal under Treasury review would prevent foreign banks from using their accounts for dealings with US banks to process financial transactions on behalf of North Korean banks.

“Basically, they have put everyone on notice, if you do financial transactions with North Korea, you are subject to investigation by US bank regulators who may exclude you from the US market,” said Marcus Noland, an expert on North Korea at the Petersen Institute for International Economics.

The Treasury Department was required by legislation enacted in February to consider whether to make the moneylaunder designation. Having made that determination, the government can impose penalties after a 60-day comment period.

Adam Szubin, acting undersecretary for terrorism and financial intelligence, urged other countries to take similar steps to sever banking ties with North Korea. After the North conducted atomic and missile tests early in 2016, the United Nations in March issued its toughest sanctions yet.

“It is essential that we all take action to prevent the regime from abusing financial institutions around the world—through their own accounts or other means,” Szubin said in a statement.

Despite the international censure, North Korea has pressed ahead with weapons testing. The US and South Korean militaries reported that North Korea conducted the latest in a series of failed ballistic-missile launches on Tuesday.

But in Beijing, Chinese President Xi Jinping met with a high-ranking North Korean envoy on Wednesday, in an apparent move aimed at easing strains between the two countries.

China remains North Korea’s biggest source of diplomatic support and economic help, but Beijing this year agreed to the new UN sanctions, and observers say trade exchanges between the two have declined dramatically.

Noland said major Chinese banks have stopped doing business with North Korea, and in the past month, Russian banks have followed suit, although smaller banks that have less to lose from being excluded from the US market may still consider it worth their risk to conduct North Korea-related transactions.

The US took a similar step in 2005 against a Macau-based bank, Banco Delta Asia, which held about $25 million in North Korean funds. Treasury declared the bank a primary money-laundering concern, and the sanctions cut Banco Delta Asia off from the international dollarbased financial system and almost caused it to collapse.

The US later lifted that restriction to facilitate nuclear talks with North Korea, but the stigma it created meant most banks have since avoided transactions with the North Korea even when they are not expressly banned. AP

Children’s asylum approvals vary by US region

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OS ANGELES—For unaccompanied immigrant children seeking asylum in the US, where they apply seems to make a world of difference.

Youngsters, whose applications are handled by the US government’s regional offices in San Francisco and Los Angeles, are far more likely to win approval from asylum officers than those applying in Chicago or Houston, according to data obtained by The Associated Press (AP) under a Freedom of Information Act request.

The figures offer a snapshot of how the government is handling the huge surge over the past two years in the number of Central American children arriving at the US-Mexico border unaccompanied by adults. Tens of thousands of youngsters—many of them fleeing gang violence in El Salvador, Guatemala and Honduras—have overflowed US shelters and further clogged the nation’s overwhelmed immigration courts.

Under federal law, these children can apply to remain in the country in a process

that involves an interview with an asylum officer from one of US Citizenship and Immigration Services’ eight regional offices.

To win their cases, they must show that they have been persecuted or are in danger of persecution.

As of January, asylum officers had rendered decisions in the cases of nearly 5,800 such children who arrived since May 2014, according to the figures obtained by the AP. Overall, 37 percent were granted asylum, but the rate varied dramatically from 86 percent at the San Francisco office, which handles applications for a swath of the Pacific Northwest, to 15 percent in Chicago, which covers 15 states from Ohio to Idaho.

Los Angeles, which covers parts of California and Nevada, Arizona and Hawaii, granted asylum in 53 percent of its cases, while only 16 percent were approved by Houston, which handles Texas, Colorado, New Mexico and other states.

The asylum offices in New York; Miami;

Newark, New Jersey; and Arlington, Virginia, had approval rates in the 20s and 30s.

Immigration lawyers said they expected some differences among regional offices, given that some parts of the country are more sympathetic toward immigrants. But they said there shouldn’t be such large disparities.

“The quality of justice should not be like a crapshoot. It shouldn’t be a lottery,” said Karen Musalo, director of the Center for Gender and Refugee Studies at the University of California, Hastings College of the Law. “It is not just disappointing—it has life-or-death consequences for these children.”

US Citizenship and Immigration Services had no explanation for the disparities.

Asylum claims are evaluated on a case-bycase basis, and all children’s applications get an additional review by a supervisory officer, Spokesman Claire Nicholson said.

Several members of the House Judiciary Committee blasted the disparities. AP

Residents of fire-damaged Canadian oil city return

A burned-out car and boat sit in a yard as residents look around their house as they reenter their home in Fort McMurray, Canada, on Wednesday. Residents started to return to the fire-damaged city in northern Alberta on Wednesday, but officials have warned that they should not expect everything to be running normally right away. Jason Franson/The Canadian Press via AP

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ORT MCMURRAY, Alberta— Residents of the Canadian oil sands city of Fort McMurray began cleaning up their homes and property on Wednesday, as people who fled a massive wildfire at the start of May returned to see what’s left.

The fire destroyed 2,400 structures, or about 10 percent of the city, when it ripped through last month, forcing more than 80,000 residents to flee. Officials expected thousands of evacuees to return to the city on Wednesday—the first day of a staged reentry.

Residents in areas that were not damaged were asked to come first.

Alberta Premier Rachel Notley said about 7,500 arrived in the city on Wednesday.

One of Mike Maloney’s first

tasks was to mow the messy lawn in front of his home, while his wife and three kids cleaned inside.

“It’s sad to see what did burn,” he said. “It’s tragic for those people.

But I think, all in all, everybody will survive.”

Pilar Ramirez spent the night sleeping in the back of a truck in Anzac, Alberta, about 40 minutes southeast of Fort McMurray.

She got to work cleaning as soon as she got into her downtown house, which she shares with co workers at a concrete company. Her reaction when she first opened the door: “Oh, it’s so disgusting!”

“It smelled terrible, the food.

Flies everywhere—and big ones. I said, ‘Oh, my God, what happened here?’”

People driving in on the only

highway into the area found the forest on both sides blackened about half-an-hour out of town.

The devastation is apparent from the road just inside city limits and a strong smell of smoke hangs in the air.

Billboards that read “Safe Resilient Together” and “We Are Here. We Are Strong” greeted people as they drove in. A huge Canadian flag hung between the extended ladders of two fire trucks parked on a bridge over the road.

Bob Couture, director of emergency management for the regional emergency operations center, said everything has been orderly and according to plan. The Red Cross was prepared to bus in as many as 2,000 residents who don’t have their own cars.

Returning residents were being warned that it won’t be business as usual and to bring with them two weeks worth of food, water and prescription medication, as crews continue to work to get basic services restored. Workers have been laboring to get critical businesses, such as banks, grocery stores and pharmacies running again.

Supplies of some items may be limited in the beginning and the government said some things may need to be rationed.

Notley said the day was not one for celebration and noted years of work are ahead.

“To the people of Fort McMurray heading home—we will be with you every step of the way,” Canadian Prime Minister Justin Trudeau tweeted. AP

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Friday, June 3, 2016

A7

Slavery persists for millions in India

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UCKNOW, India—Every day, as Kamla dug through the mud and molded bricks for a north Indian kiln, her two hungry children would cry out to her for food. The 200 rupees ($3) she made for producing 1,000 bricks at a time wasn’t nearly enough to feed her family. Her daughter died of malnutrition before she turned 4.

Kamla’s story, told to one of the many charities fighting forced labor in India, is common enough to explain how slavery persists in the country, despite rapid development that has helped make India the world’s fastest-growing economy.

On Tuesday the South Asian democracy topped a global slavery index, counting 18.35 million modern slaves—or 40 percent of a global total of 45.8 million. The report, released by The Walk Free Foundation, included children and adults forced into labor, often unpaid or to pay off a debt, as well as child brides, child soldiers and migrant workers in 167 countries.

“These poor and deprived people are forced to leave their homes because of poverty. This is clear reflection of the failure of the welfare state,” said Lenin Rghuvanshi of the People’s Vigilance Committee on Human Rights, the charity which put together a December report based on testimony from 450 people rescued from slavery and bonded labor in India last year, including Kamla.

“Bonded labor is a contemporary type of slavery,” he said. “The government, which is supposed to provide them basic necessities, has

18.35M

The number of slaves in India, or 40 percent of the global total of 45.8 million

failed them.”

Officials with the Indian Labor Ministry declined to comment on the slavery index report, though the government’s minister for women and child development, Manekha Gandhi, reportedly trashed it.

“I totally disagree with their findings,” Manekha Gandhi told The Hindustan Times newspaper in Patiala, a city in the northern state of Punjab.

She objected to the report classifying poorly paid domestic workers, midwives and other household servants as slaves. “I can say they don’t know how to analyze slavery.... It’s totally wrong.”

The report also showed China a distant second to India with some 3.39 million modern slaves counted. China’s foreign ministry did not immediately respond to a faxed request for comment. North

A child works outside a local snack shop in Lucknow, India. A global slavery index puts India at the top of the list with the world’s highest number of bonded and child laborers, far more than in second-place China. AP/Rajesh Kumar Singh

Korea was found to have the highest per-capita rate of modern slavery, with 4.37 percent of its population affected.

The problem of slavery in India—including child marriage and bonded labor—has long been a challenge and cause for shame. Just last week, the chairman of the US Senate Foreign Relations Committee lambasted India’s record on human rights, asking how India could have so many slaves.

“I mean, seriously, do they have just zero prosecution abilities, zero law enforcement? I mean, how could this happen? It’s on that scale, it’s pretty incredible,” Sen. Bob Corker of Tennessee said.

Many had seen the 2014 Nobel Peace Prize for children’s rights activist Kailash Satyarthi, who

‘Myth-busting’ Obama tries to debunk G.O.P. on economy

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LKHART, Indiana—President Barack Obama went on a “myth-busting” mission on Wednesday aimed at undermining Republican arguments about the economy, working to give cover to Democrats to embrace his policies ahead of the presidential election.

Officially, Obama came to this hardscrabble town in northern Indiana to illustrate how steps he took in the first days of his presidency had ultimately paid off and pulled the economy back from the brink. Yet his rally at a high school in Elkhart blurred the lines between governing and campaigning, marking the president’s most aggressive and direct foray to date into the roaring campaign to replace him.

“The primary story that Republicans have been telling about the economy is not supported by the facts. It’s just not,” Obama said. “They repeat it a lot, but it’s not supported by the facts. But they say it anyway.

Now why is that? It’s because it has worked to get them votes.”

When Obama came to Elkhart seven years ago on his first major presidential trip, the unemployment rate was soaring and the White House struggling to secure support for injecting hundreds of billions of federal dollars into the economy. Though the economy has improved measurably, Republicans have been reluctant to give Obama credit.

As Obama returned to Indiana, GOP Gov. Mike Pence said the state had recovered “in spite of Obama’s policies”—not because of them. And the Republican National Committee dismissed his visit as a “campaign trip” designed to help Hillary Clinton sell a weak Obama record as if it were “really a success story.” So with all the vigor he displayed on the campaign trail years ago, Obama attempted a nearly line-by-line takedown of claims Republicans have made about his policies holding the economy back. He dismissed those GOP voices as “antigovernment, anti-immigrant, antitrade and let’s face it, antichange.”

“My bigger point is to bust this myth of crazy, liberal government spending,” Obama said. “Government spending is not what is squeezing the middle class.”

He avoided mentioning Donald Trump by

name, but was met with shouts of “Donald’s crazy” from some of the 2,000 people packed in a brightly lit gymnasium. Asked later why he rarely mentions Trump’s name, Obama said the businessman is better at marketing himself than the Democratic candidates.

“You know he seems to do a good job mentioning his own name,” Obama said in a town hall meeting hosted by “PBS NewsHour.” ‘’So, you know, I figured I’ll let him do his advertising.”

Republicans have mostly settled on Trump as their nominee, albeit begrudgingly, while Clinton and Bernie Sanders continue competing for the Democratic nomination. Though White House aides are eager to see the primary wrapped up, Obama has tried to avoid showing favoritism, which has limited his ability to engage in the campaign.

Obama predicted that his party’s primary was “almost over” and said he’d have plenty of time to campaign for the nominee. He said the Democratic contender should be clear by next week, following June 7 primaries in California, New Jersey and elsewhere.

He also offered a few subtle nods of approval for the Democrats. Obama praised Clinton’s husband, former President Bill Clinton, for cutting federal deficits, and railed against a system rigged for the uber-rich in an implicit embrace of Sanders’s campaign mantra.

The president’s approval ratings have finally improved to levels where his fellow Democrats feel comfortable running on his policies, especially on the economy.

Clinton has proposed steps that build directly on Obama’s actions, while Sanders has praised his accomplishments.

Yet, Obama and his aides have long signaled frustration that as the economy has improved, the public’s perception of his decisionmaking hasn’t tracked the same trajectory.

Opposition to the president has been particularly unrelenting in conservative stretches of the Midwest, like Indiana, which Obama won in 2008 but lost decisively four years later.

Elkhart County Commissioner Mike Yoder, a Republican, paused for 15 seconds and laughed when asked whether Obama deserved any credit for the recovery. AP

was awarded along with Malala Yousafzai of Pakistan, as a sign that India would be forced to better protect its 1.25 billion citizens from abuse.

But child labor, the trafficking of sex workers and bonded labor remains widespread, despite India’s rapid economic growth over the past decade. Laws meant to keep children in school and out of the workplace are routinely flouted, as millions are forced into difficult and sometimes toxic jobs, including rolling cigarettes, blowing glass in factories, mining in stone quarries or dyeing leather in tanneries.

Some activists blamed the government for maintaining a topdown economy where illegal labor can still flourish because of high unemployment and abject poverty

in the countryside. While the official jobless rate has hovered around 10 percent since 1983, some economists say that counting only the number of people actively looking for work ignores the masses who have only part-time jobs or who have simply given up.

“The laws are there, but there is no political will on the part of the government to implement them,” peace activist Swami Agnivesh said. “The government can’t afford to annoy rural rich, as well as the urban rich who are exploiting the situation.”

Amid the rising criticism, the Indian government on Monday published draft legislation to curb human trafficking without punishing its victims.

“At present the law says the traf-

ficked and the trafficker are both criminals and they both go to jail.

Now, we are saying the victim will not go to jail,” said the government minister Gandhi, according to Press Trust of India.

Still, some activists said the situation was improving in India, thanks to public awareness, legal reforms and police-backed raids on factories employing workers illegally.

“We get 20 complaints per day from family members and public in general” reporting labor abuse—a sign that awareness of the problem was growing, said Ramesh Senger from Satyarthi’s Save the Childhood Movement.

He noted that India’s carpet industry used to employ 300,000 trafficked children just a decade ago, but that the number has come down to an estimated 5,000 to 10,000.

Meanwhile, the number of children forced to work making plastic bangles in parts of the northern state of Uttar Pradesh is now negligible, whereas thousands worked in the industry 10 years ago.

India’s garment industry hub in the Indian capital has also eliminated child labor, Sanger noted as an example of how police-backed raids can make a difference.

“We rescued nearly 400 children in the area between 2012 and 2014,” he said. “The garments industry in the area no longer employs child labor.”

But for those still mired in forced labor, the scourge can’t be ended soon enough. And with little recourse against abusive employers, they can only hope to be rescued by a charity intervening.

Radha, kidnapped from her family by a woman from her village and forced into bonded labor at a brick kiln near Varanasi, told the People’s Vigilance Committee on Human Rights she was raped daily by the factory’s owner when she was not cooking and cleaning for him, and then was beaten when she tried to object.

“I was so scared,” she said. “I’m still in pain from the rapes.” AP

A8

Friday, June 3, 2016

The World BusinessMirror

Fallujah fight stalled by fierce fighting, civilian concerns

Fighters take a selfie while firing artillery during fight against Islamic State militants in Fallujah, Iraq. Iraqi forces this week pushed into the city’s southern sections after securing surrounding towns and villages. AP/Anmar Khalil

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AMP TARIQ, Iraq—The Iraqi military’s advance into Fallujah was stalled on Wednesday by fierce resistance from Islamic State (IS) fighters and concerns over protecting tens of thousands of civilians still trapped inside the strategic city, officials said.

With the operation in its second week, convoys of special forces could only inch forward on the dusty southern outskirts of the city as a handful of air strikes sent up plumes of white smoke above clusters of low buildings on the fringes of the city’s dense urban terrain.

More than 50,000 people are believed to be still inside Fallujah, and the UN estimated that 20,000 of them are children, warning that they face a dire humanitarian situation in addition to the risk of forced recruitment by the extremists.

In a visit to the front line, Prime Minister Haider al-Abadi noted the slow pace and emphasized the priorities of the operation were protecting civilian lives and minimizing Iraqi casualties, but he praised the progress so far as a “remarkable advance.”

Government troops will “hoist the Iraqi flag inside Fallujah in the coming few days,” vowed al-Abadi, wearing the black fatigues of the counterterrorism force.

The operation to free Fallujah from the more than two-year grip of the Islamic State was launched on May 22, and it involves the Iraqi

special forces, militias consisting of mainly Shiite fighters, and US-led air strikes.

Retaking the Sunni-majority city 65 kilometers west of Baghdad would represent a huge victory for the Iraqi government because Fallujah was one of the first major urban areas to fall to the IS extremists in 2014 and has been a bastion of support for militant anti-government sentiment in Iraq since the 2003 US-led invasion.

In 2004 Fallujah also was the site of some of the bloodiest urban combat between American forces and the IS group’s predecessor, alQaeda in Iraq. More than 100 US troops died and another 1,000 were wounded fighting insurgents in house-to-house battles.

“Today’s offensive on Fallujah is different from the one the Americans fought in 2004,” Brig. Haider al-Obeidi said. Unlike the insurgency that US forces fought in Fallujah and elsewhere in Iraq, IS fighters are operating like a conventional military in addition to carrying out suicide attacks and planting hidden bombs.

Progress against the IS militants has been slow due to their intense resistance and the need to protect the civilians, army Gen. Jalil alSharifi said.

The prime minister, speaking from the main operations room at a sprawling military base just east of the center of Fallujah, said IS was using civilians as human shields, and the government was urging residents to leave via safe corridors or stay inside their homes.

“The main goal of the military operation now is to reduce civilian and army casualties,” al-Abadi said.

The fight for Fallujah is expected to be long and hard because IS has had more than two years to dig in and because of the dense urban setting. Once Iraqi forces are in the city center, calling in air strikes will become more difficult due to the many civilians and the proximity of friendly forces, according to the USled coalition.

Lt. Gen. Abdul Ghani al-Asadi said he expects to find more sympathy among Fallujah’s population for the Sunni-led militants of IS, which some estimates have put at 500 to 700 fighters. That will make it harder to differentiate between friend and foe.

“Given the long period IS controlled the city and how IS runs the city, many of the population support them,” al-Asadi said. Since the operation began, the United Nations said it has received reports that about 500 men and boys have been detained for questioning because they were identified as suspected IS sympathizers.

Thousands of civilians have fled Fallujah’s mostly rural outskirts over the past two weeks.

Iraqi forces have imposed a tight blockade on the city, and IS mili-

50,000

The number of people believed to be trapped inside Fallujah, with an estimated 20,000 of them children

tants are reportedly preventing residents from leaving.

Estimating the number of children still in Fallujah at 20,000, United Nations Children’s Fund called on all parties to protect them and “provide safe passage to those wishing to leave the city.”

Such an arrangement is unlikely to happen because it would require negotiations between both sides.

The UN also said that violence in Iraq killed at least 867 people in May, an increase from the previous month.

In its monthly report, the UN mission to Iraq said at least 468 civilians were among the dead, while the rest were members of the security forces. A total of 1,459 Iraqis were wounded last month, it said.

In April at least 741 Iraqis were killed and 1,374 wounded.

The figures do not include casualties from Anbar province, which includes Fallujah.

Baghdad was the worst affected in May, with 267 civilians killed and 740 wounded, mainly in bombings targeting security forces and the Shiite majority.

Fallujah is the last major urban area controlled by the extremist group in western Iraq. The militants still control Iraq’s second-largest city, Mosul, as well as smaller towns and areas in the west and north. AP

news@businessmirror.com.ph

‘Professor killed in U.C.L.A. was brilliant and kind’

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OS ANGELES—University of California, Los Angeles (UCLA) students went to school on Wednesday expecting to take on routine end-of-school-year tasks: final exams and presentations. But those concerns were forgotten around 10 a.m., when cell phones buzzed to life across campus, announcing that a shooting had taken place.

Within minutes, thousands of students found themselves racing for cover, building makeshift barricades against classroom doors that wouldn’t lock and arming themselves with anything they could find as information about the gunfire—some of it rumor about a wave of assailants—spread across campus via text messages and social media.

In the end, it was a murder-suicide involving two men inside an engineering building near the campus’s south side, Los Angeles Police Chief Charlie Beck said.

Several sources identified the victim as William S. Klug, 39, a professor of mechanical and aerospace engineering who studied the interaction between mechanics and biology and was the father of two young children.

Klug, 39, was described as both brilliant and kind, a rare blend in the competitive world of academic research, colleagues said.

“I am absolutely devastated,” said Alan Garfinkel, a professor of integrative biology and physiology who worked with Klug to develop a computer-generated virtual heart. “You cannot ask for a nicer, gentler, sweeter and more supportive guy than William Klug.”

Melissa Gibbons, one of Klug’s former PhD students, said he was an exceptional mentor. She recalled that Klug noticed another student struggling in his finite element modeling class and asked Gibbons to tutor her. “He didn’t want to see her fail.

To care that much in an undergraduate class says a lot about his character,” she said.

Klug, an El Segundo resident, loved surfing and frequently took his family to Los Angeles Dodgers games.

He earned his undergraduate degree in engineering physics from Westmont College in 1997, his master’s degree in civil engineering at UCLA in 1999 and his PhD in mechanical engineering from the California Institute of Technology in 2003.

With school shootings so often in the news in recent years, many UCLA students feared that the situation unfolding on their normally serene campus might evolve into something far deadlier.

“It’s unfortunate it happened here,” said Andrew Avelino, 23, a senior majoring in history. “You see school shootings happening on the news at high schools, on other campuses, at other places. But you never thought it would happen here until it does.”

The wave of panic and adrenaline, slew of campus alerts and swarms of police were all too familiar for Jeremy Peschard. The 22-year-old geography major transferred to UCLA from UC Santa Barbara, near where a student’s rampage left six people dead and 14 injured in Isla Vista in 2014.

“It’s crazy to go through this again,” said Peschard, who said he experienced flashbacks of the attack as he hid inside a UCLA office. “It’s sad that it’s normalized at this point. It’s like I almost know the drill.”

Wednesday’s shooting took place inside the university’s engineering complex in a small office, according to Beck, who confirmed at a noon news conference that the shooter was one

of the two dead men.

“The campus is now safe,” he said.

Authorities did not identify the victims and a motive was not immediately clear. Andy Neiman, the Los Angeles Police Department’s (LAPD) chief spokesman, confirmed a note was found at the scene, but investigators had not determined whether it was connected to the shooting.

Based on the appearances of the deceased, police believed that a professor was shot by someone young enough to be a student, who then turned the gun on himself, a lawenforcement source also told the Los Angeles Times.

Los Angeles City Councilman Paul Koretz, whose district includes UCLA, said LAPD officers had told him it appeared “a professor was the victim” and that little was known about the shooter.

When police first discovered the two men who had been fatally shot, they feared they were the first victims of an active shooter, Koretz said.

“We’re at a point in this country where there’s some kind of small massacre every day, somewhere,” he said.

The campus was locked down for about two hours, ending around 12:05 p.m. Classes were canceled after the shooting but will resume on Thursday, the university said.

The shooting prompted a massive response from local and federal law enforcement. Police officers in riot gear ran across campus, guns and battering rams drawn, while students exited buildings with their hands above their heads.

Neiman said the first 911 caller reported at least three gunshots and possible victims. A number of additional 911 calls and social-media postings suggesting there was an active shooter led police to send hundreds of officers toward Westwood.

“It’s much easier to tell people it’s OK to come out, than to have to go and tell their families that they’re not coming home,” Neiman said.

Students hid in buildings across campus. Many said they struggled to lock the doors of the classrooms where they sought shelter and were forced to use their belts, nearby projectors and furniture to barricade themselves against any potential threat.

While Beck said there were no other suspects, many students said they received mass text messages and social-media blasts announcing that as many as four shooters may have been roaming the campus. ”There’s a ton of information spreading over social media and group messages and it’s hard for everyone to sort out what is true and what isn’t,” Rafi Sands, vice president of UCLA’s student government, said as he hid with 30 other students inside Haines Hall during the lockdown. “They are saying there are multiple shooters, one near here.”

Christos Kampouridis, 23, said he found the door to his engineering class inside Boelter Hall locked at 9:50 a.m., then turned to find a man with a gun walking through a nearby hallway. The man, who had a rifle at his side and appeared to be wearing a tactical belt, yelled, “Come here.”

Kampouridis said he fled immediately, and shouted at nearby students to run. He burst out of the building and called 911, then began sending messages to friends and posting social-media updates urging them to “stay away from Engineering.”

He was unsure whether he saw a police officer or the gunman, but wanted desperately to warn friends either way. Los Angeles Times/TNS

Syria refugees kept behind fences in Jordanian camp amid security risk

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ZRAQ REFUGEE CAMP, Jordan—A barbed wire-topped fence encircles a section of this bleak United Nations-run camp, isolating thousands of recent arrivals—whom Jordan considers a potential security risk—from other Syrian refugees.

This camp-within-a-camp, called “Village 5,” was set up in late March as part of an uneasy trade-off between Jordan and international aid agencies trying to speed up admissions of tens of thousands of refugees stranded in remote desert areas on the kingdom’s border.

Under the deal, Jordan agreed to let in

about 300 Syrians a day, or five times more than before, on condition that newcomers are isolated in Azraq for more security checks.

Jordan says strict vetting is crucial to prevent Islamic State (IS) extremists, who control large areas of Syria, from infiltrating the kingdom.

In turn, aid agencies agreed to put traumatized war survivors behind barbed wire, if only temporarily.

Yet, neither side expects the new admissions deal to empty out two rapidly growing encampments on the SyrianJordanian border. Instead, the population

there—currently at 64,000, half of them children—is expected to reach 100,000 by the end of the year if fighting in Syria continues.

The two encampments sit between low earthen mounds, or berms, that run in parallel lines, about 2 kilometers apart in an area where the border isn’t clearly marked.

Refugees live in tents or shelters made of tarp, wood scraps and even women’s scarves, exposed to the desert’s extreme cold, heat and sand storms. Lack of latrines and trash collection has led to the spread of diarrhea and infections.

Delivering aid to the berm has become

one of the UN refugee agency’s most challenging and costly operations in the Middle East, said spokesman Ariane Rummery, citing “remoteness of locations, extreme weather conditions, lack of access roads, and risk of escalating insecurity.”

Other aid officials worry that ramping up support will inadvertently transform the jumble of shelters into de facto refugee camps in unsafe areas.

Yet, saving lives trumps any misgivings at a time when Syrians are increasingly trapped in their homeland, said the officials, who spoke on condition of anonymity because they were not autho-

rized to talk to reporters about the conditions at the berm.

Neighboring Turkey, Lebanon and Jordan, which have absorbed the bulk of close to 5 million Syrian refugees since 2011, have severely restricted admissions, while doors to Europe are slamming shut.

Jordan has taken in about 650,000 refugees and says it has already done more than its share.

Those now waiting at the border are the responsibility of the international community, said Jordanian government spokesman Mohammed Momani. In allowing some asylum-seekers to enter, “Jordan is doing

its best to balance its security needs with humanitarian concerns,” he said.

Jordan argues that all those at the border are still on Syrian soil, a claim disputed by the international group Human Rights Watch. The border is believed to run between the two berms and most tents are pitched closer to the southern, Jordanian-controlled berm, said researcher Adam Coogle.

The head of the Norwegian Refugee Council in Jordan, Petr Kostohryz, said Jordan is “perhaps the only country in the region retaining at least partially open borders.” AP

BusinessMirror

World The

A9 | Friday, June 3, 2016 • Editor: Lyn Resurreccion

The first train drives out of the tunnel’s North portal on the opening day of the Gotthard rail tunnell near Erstfeld, Switzerland, on Wednesday. The construction of the 57-kilometer-long tunnel began in 1999, the breakthrough was in 2010.

After the official opening on June 1, the commercial operation will commence in December 2016. Laurent Gillieron/Keystone via AP

Swiss inaugurate $12-B rail tunnel, world’s longest

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ENEVA—Just like Hannibal in ancient times, Swiss engineers have conquered the Alps.

More than 2,200 years after the commander from the ancient North African civilization of Carthage led his army of elephants and troops over Europe’s highest mountain chain, the Swiss have completed another gargantuan task: Burrowing the world’s longest railway tunnel under the Swiss Alps to improve European trade and travel.

European dignitaries on Wednesday inaugurated the 57-kilometer Gotthard Railway Tunnel, a major engineering achievement deep under the Alps’s snow-capped peaks.

It took 17 years to build at a cost of 12.2 billion Swiss francs ($12 billion)—but workers kept to a key Swiss tradition and brought the massive project in on time and on budget.

Many tunnels crisscross the Swiss Alps. The Gotthard Pass itself already has two—the first, also for trains, was built in 1882. But the Gotthard base tunnel is a recordsetter eclipsing Japan’s 53.8-kilometer Seikan Tunnel as the world’s longest—and it also bores deeper than any other tunnel, running about 2.3 km underground at its maximum depth.

The tube bores through the Gotthard massif that includes the 2,500-meter Piz Vatgira on the way to Italy. It is part of a broader, multitunnel project to shift the haulage of

goods from roads to rails amid concerns that heavy trucks are destroying Switzerland’s pristine Alpine landscape.

The tunnel’s impact will be felt across Europe for decades.

The thoroughfare aims to cut travel times, ease roadway traffic and reduce the air pollution spewed from trucks traveling between Europe’s north and south. Set to open for commercial service in December, the two-way tunnel can handle up to 260 freight trains and 65 passenger trains per day.

Swiss planners have dreamed of such a tunnel for decades, and Gotthard’s 17 years of construction don’t include the many years spent to scope out suitable paths.

Switzerland pulled out all the stops for Wednesday’s inauguration.

Chancellor Angela Merkel of Germany, President François Hollande of France and Italian Prime Minister Matteo Renzi all came to southern Switzerland for an upbeat, glitzy celebration featuring musical bands, dancers and even a theme song for the tunnel.

Under purple neon lights, performers dressed in orange miners’ suits and protective helmets danced atop a moving rail car, while others in skimpy outfits feigned wrestling and trapeze artists hung from chains or ropes.

The tunnel runs between the German-speaking Swiss town of Erstfeld in the north to the Italianspeaking town of Bodio in the south, cutting through central Switzerland.

The tunnel journey takes about 20 minutes for passenger trains.

Split-screen TV images on Wednesday showed two trains in opposite directions entering and leaving the tunnel entrances nearly simultaneously.

The project, funded, in part, by Swiss taxpayers and fees on trucks, received financial support and industrial know-how from around the European Union (EU). Although Switzerland isn’t one of the bloc’s 28 members, the EU railway network gets a big boost from this shortcut through the Alps, notably on the route from Germany to Italy.

“The new tunnel fits into the European railway freight corridor, which links Rotterdam and Genoa”—key ports in the Netherlands and Italy, said Swiss President Johann Schneider-Ammann. “Aside from saving time, more merchandise can be carried through the Alps.”

A test run by the EU leaders on Wednesday turned into a sort of minisummit beneath real Alpine summits: Merkel, Renzi, Hollande and Schneider-Ammann sat face-to-face for a ride in first class through the tunnel. A band played Rossini’s “William Tell Overture” after they arrived.

Merkel said it was a “wonderful feeling” to be on the train.

Though “more than 2,000 meters of rocks” were above, she said she felt a “feeling of security, because I believe in the security of the Swiss civil engineers.”

She congratulated the punctual

Swiss and noted how costs were kept within targets.

“That’s something Germany still needs to strive for,” she added Hollande, host of the UN climatechange summit held in Paris last year, pointed to the tunnel’s environmental benefits.

“You have created a great European infrastructure,” Hollande said at the tunnel’s southern exit. “It will be able to reduce greenhouse gas emissions, redirect traffic from the road to rail and move passengers and goods faster.”

He also used the chance to remind Britons of the unity that the tunnel under the English Channel has brought between Britain and the continent—comments that came just weeks before Britons vote June 23 on whether to stay in the EU or leave.

“More than 20 years ago, a construction was completed between France and the United Kingdom: The Channel Tunnel,” Hollande said.

“Since then, we are united like never before, and I hope the British remember that when the time comes.”

Renzi echoed that connective symbolism, despite the current discord in the EU over how to best handle a surge of migrants from the Middle East, Africa and Asia.

“At a time when some are thinking about building walls...today Switzerland gives us a beautiful signal about building a tunnel, connecting, and making chances for meeting,” Renzi said.

Swiss forces took no chances with security for the inauguration. Almost 2,000 additional Swiss troops were called, helicopters buzzed overhead and air space restrictions were put over the tunnel area. AP

U.S. econ grows modestly as job market tightens

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he US economy expanded at a modest pace across most of the country since mid-April, causing the labor market to tighten as employers continued adding jobs and nudging wages higher, a Federal Reserve report showed.

“Employment grew modestly since the last report, but tight labor markets were widely noted,” according to the Fed’s latest Beige Book, an economic survey published eight times a year. “Wages grew modestly, and price pressures grew slightly in most districts.”

Fed officials have made clear they expect to raise interest rates in the coming months, possibly as early as this month, if the US economy continues to improve.

The policy-making Federal Open Market Committee (FOMC) meets in Washington on June 14 and 15. After raising rates last December, the committee has balked at a second increase because of worries over global growth and financial-market turbulence.

Prices in federal funds futures contracts imply that investors see a 24-percent chance of a rate increase this month, with odds rising to 53 percent by the FOMC’s July session.

Wednesday’s Beige Book may do little to change officials’ outlook for the economy. It characterized the economy as slowly gaining ground, using versions of the word “modest” or “moderate” 23 times in

the report’s six-page summary.

The terms were used to describe gains in overall growth, consumer spending, employment, loan demand and financial services. Manufacturing results were reported as mixed, while the energy industry, still ailing form the decline in the price of oil, remained weak.

Among the Fed’s 12 districts, Chicago and Kansas City reported slowing growth, while Dallas said the economy grew “marginally.” New York characterized activity as “generally flat.” Other districts reported modest or moderate growth.

Several districts reported rising demand for labor, particularly for highskilled workers. Atlanta and Richmond

noted that low-skilled positions were also becoming harder to fill. “Wages grew modestly since the last report, with increases concentrated in areas of labor tightness,” the report stated.

The report, prepared by the Minneapolis Fed, was based on information collected before May 23. It summarizes comments received from businesses and other contacts outside the Fed system.

Economic data have shown steady if unspectacular improvement in the US following a disappointing first quarter.

The Commerce Department reported on Tuesday that consumer spending in April rose by the most in almost seven years. Bloomberg News

Trudeau woos China amid Japan standoff C anadian Prime Minister Justin Trudeau is pivoting to China by hosting a senior Communist Party official after a visit to rival Japan heightened regional tension.

Fresh from attending a Group of Seven (G-7) summit that riled the Chinese government, Trudeau met with Foreign Minister Wang Yi in Ottawa on Wednesday. It’s the second such meeting with a senior Chinese official in the past month and helps set the stage for the prime minister’s trip to China this fall.

Trudeau is burnishing a family legacy with the renewed diplomatic push. His father, former Prime Minister Pierre Trudeau, is revered in China after establishing ties in 1970 and was lauded by Chinese President Xi Jinping in his first meeting with the current Canadian leader.

China bristled, however, at the final G-7 communiqué, which saw leaders including Trudeau condemn aggression in the South China Sea. The prime minister said he’d nonetheless work to build ties with all countries in the fast-growing region.

“Canada is a country that has a tremendous history of positive engagement everywhere in the world,” Trudeau told reporters in Ise-Shima, Japan. “I look forward to deepening my relationship with all of Asia, including China.”

Canada-China commerce has surged over the past decade, and the two countries are said to be eyeing a freetrade deal. The Canadian government hasn’t yet committed to that publicly but two officials, speaking on condition of anonymity as talks are private, wouldn’t rule out completing a pact by the next election in 2019.

Father’s shadow

The elder Trudeau was enamored by China, publishing a book on the country the year he took power and establishing ties there a year before the current prime minister was born. It was a legacy cited in November, when the younger Trudeau first met Xi in Turkey.

“That was an extraordinary political vision,” the president told him. “China will always remember that.”

Trudeau’s legacy remains strong in China, according to David Mulroney, a former Canadian ambassador to Beijing who now serves as president of the University of Toronto’s Saint Michael’s College. “The Chinese have a real reverence for Pierre Trudeau because he presided over the formula that Canada adopted” that opened the door for other Western countries to establish ties, Mulroney said in a phone interview.

Yet, that may not play to the current prime minister’s advantage if the Chinese expect him to replicate his father’s policies.

“They have a way of putting the golden handcuffs on you, so you have to resist that,” Mulroney said. “Manag-

ing the relationship is going to be even more difficult for Justin than it was for Pierre.”

Trade push

China is Canada’s second largest-trade partner after the US Exports to China totaled C$21.5 billion ($16.5 billion) in 2015 and imports were C$38.9 billion.

Total trade with China has more than doubled in the last decade, up 119 percent, according to data compiled by Bloomberg. Trade with the European Union and the US, meanwhile, grew at more modest paces of 34 percent and 9 percent.

Trudeau’s meeting with Wang comes on the heels of a visit last month by Hu Chunhua, the Communist Party’s secretary for Guangdong province. It also follows Trudeau’s encounter with Prime Minister Shinzo Abe last week in Tokyo before the G-7 summit, in which the Japanese leader hailed Canada’s shared concern over the South China Sea. “Nothing that happened in Tokyo will be a barrier,” said Gordon Houlden, a former Canadian diplomat who heads the China Institute at the University of Alberta in Edmonton. “The Chinese, looking at the communiqués and the statement, will blame Japan and the US, in that order.”

Past ‘unpredictability’

While in Japan, Trudeau criticized Canada’s approach to China over the previous decade. Former Prime Minister Stephen Harper’s Conservative government brought in restrictions on foreign investment after approving the sale of oil and natural gas producer Nexen Inc. to state-owned Cnooc Ltd. Trudeau’s Liberals have said Canada needs to be more consistent.

“One of the challenges over the past decade of Canada’s engagement with China was a lack of constancy, and unpredictability, in how the previous government engaged,” the prime minister told reporters.

“I’ve made it very clear I’m looking for a positive and constructive relationship with China where we benefit economically from further ties and speak directly to each other on issues of concern.”

Gerry Ritz, a Conservative lawmaker and Harper’s former agriculture minister, countered that Trudeau needs to balance expanding trade with pushing China on human rights and pursuing ties with its neighbors. The prime minister, for instance, hasn’t yet taken a position on the Trans-Pacific Partnership (TPP) trade deal that excludes China.

“I am very concerned that he seems to be rebuffing TPP while at the same time holding out a hand to the Chinese,” Ritz said in an interview. “I don’t disagree with expanding our trade with China, but you do it in the right time and place.” Bloomberg News

A10 Friday, June 3, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Does PHL hold the US ‘China Card’?

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he IISS Shangri-La Dialogue, or the 15th Asia Security Summit, will be held from June 3 to 5 in Singapore.

This event is sponsored by the International Institute for Strategic Studies, “where Asia-Pacific defense ministers engage in dialogue aimed at building confidence and fostering practical cooperation.”

Presumably, representatives from the Philippine government will be there as defense ministers, as from as far away as France and India, along with regional governments, will be in attendance.

This year’s meeting is critical because it is the last chance for the United States and China to discuss the situation in the South China Sea before the announcement of the decision in the case brought by the Philippines before the International Court of Arbitration. The summit comes on the heels of the election of Rodrigo R. Duterte and the recent lifting of the US arms embargo on Vietnam. Both of these events have the potential to influence the outcome of these talks.

Those that wish to dismiss China’s action in the area as simply the act of a militarily toothless tiger being a mere bully are dangerously naïve. It is well to remember that a Chinese vessel attacked and sunk a Vietnamese fishing boat near the disputed Paracel Islands in 2015. Further, a look at a recent map of the region shows Chinese fighter jets and missiles stationed on Woody Reef and military grade runways on Fiery Cross Reef, Subi Reef and on Mischief Reef—the latter a mere 250 kilometers west of Palawan Island.

Security experts say the US will try to convince other Southeast Asian countries, as well as India and Japan, to publicly support any positive arbitration decision that favors the Philippines. However, the other side of that coin is that “The value of the case is the long-term reputational damage and the pressure on the Chinese. That only works if you have a big coalition that can keep this in the public eye,” said Greg Poling, director of the Asia Maritime Transparency Initiative at Washington’s Center for Strategic and International Studies think tank. But if the Chinese gets a ton of countries to abstain, that deflects a lot of that criticism, according to a Reuters report.

Into the picture steps the Duterte administration that, in the words of incoming Foreign Affairs Secretary Perfecto R. Yasay Jr. “is bent on dealing with China through peaceful dialogue. There’s no other way but to go bilateral.”

As the Shangri-La Dialogue opens, China has threatened to impose an Air Defense Identification Zone (ADIZ), a tool by which to monitor and control foreign aircraft entering a given national airspace. China did the same in the disputed Senkaku Islands early this year but the difference is that Japan occupies those islands. If China enforces an ADIZ in the South China Sea, it will cover the reefs on which they have military aircraft. The US is not going to participate in an economic or military war over an area that is not its sovereign territory. Yet, it cannot afford to lose its power in the region. Direct talks between the US and China would probably prove useless as China would contend the US has no business interfering in this regional issue.

However, talks between China and the Philippines with the “consultation/ approval” of the US might be a way to further Philippines’s interests. And China is fully aware that by the end of the year, both the Philippines and the US will be under new leadership.

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The road to 2016: Voter registration James Jimenez

spox

W

hen people think about the Commission on Elections’s (Comelec) election preparations, they typically think only in terms of the gun ban, the filing of certificates of candidacy, campaigns and common poster areas and, naturally, the votecounting machines (VCMs) used on election day. Few realize that preparing for the polls started much earlier.

The road to 2016 began for the Comelec as early as May 2014, with the reopening of the system of continuing registration, under Republic Act (RA) 8189. Coincidentally, this also marked the beginning of the big biometrics push that would eventually come to be known as the Comelec’s “No Bio, No Boto” campaign.

RA 8189 mandated the creation of one permanent list of voters per precinct in every city or municipality in the country, which would then be continually updated as opposed to scrapped after every election. This meant that there would no longer

be general registration events where the Comelec had to build a list of voters from the ground up before every scheduled election. Instead, there would only be continuing registration—hence, the name—which would simply add new names to the existing list.

This was a very good solution to the practical problem posed by a growing electorate, but multiple registrations were still an issue.

Circa 2002-2004, the Comelec introduced biometrics for firsttime registrants. By pairing a person’s identity with the now wellknown trifecta of digitally stored

The “validate it or lose it” tone struck by the “No Bio, No Boto” campaign lent a definite air of urgency to the registration process, which probably contributed to the massive public awareness of the necessity for voter registration and validation prior to the elections. photograph, fingerprints and signature, the Comelec would be able to identify instances where those three data points showed up in different cities and municipalities, thereby eliminating multiple registrations. Again, a good start, but because previously registered voters were not required to subject themselves to biometric capture, large numbers of voters could still have multiple registrations.

The obvious solution was to make biometrics mandatory. One way to achieve this was to obligate people to validate their identities by presenting themselves for biometrics capture, at the risk of not being allowed to vote in the coming election. Which was exactly what happened when, in 2013, RA 10367,

or the Mandatory Biometrics Law, was enacted, with full implementation targeted for the 2016 elections.

The “validate it or lose it” tone struck by the No Bio No Boto campaign lent a definite air of urgency to the registration process, which probably contributed to the massive public awareness of the necessity for voter registration and validation prior to the elections. Good thing too, since the successful conclusion of the registration process in October 2015 was a critical element in the Comelec’s other preparations for the Presidential polls.

With continuing registration ended (for the meantime, at least), the Project of Precincts—essentially the assignment of individual voters to specific election day polling places —could be completed. This, in turn, allowed the Comelec to flesh out the operational details of the elections, from the number of fingerprinting ink pads to be allocated per precinct, to the number of ballots needed to be printed, to the number of VCMs that the Comelec would need to lease.

James Arthur B. Jimenez is director of the Commission on Elections Education and Information Department.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Friday, June 3, 2016 A11

How a Trump presidency would threaten democracy

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By Jonathan Bernstain | Bloomberg View

don’t know whether a President Donald Trump would be able to destroy US democracy by crushing the institutions that share power with the Executive. I tend to agree with Brian Beutler that the institutions Trump might go after would fight back effectively— though I’m not eager to test that proposition.

Nonetheless, I think Trump is dangerous to democracy in a different way, and even if he doesn’t win: He would damage the political system’s ability to offer healthy representation.

Representation is the process by which politicians make promises as they run for election, then interpret those promises once they are elected, govern with those promises in mind and explain their actions in terms of those promises (and eventually run for reelection with a new set of promises).

Those promises are not only specific commitments on public policy (such as building a border wall), but include how a candidate will act in office, and even who the candidate will be. So a politician may run as an expert on policy, as “one of us,” or as a member of a particular group within the district.

This matters because promises appear to significantly constrain politicians in office. Presidents try to keep their policy promises. Politicians also try to keep other types of promises.

Bill Clinton ran on a promise to stay in touch with rank-and-file voters (and criticizing President George H.W. Bush for not doing so), and then once in office he staged events to demonstrate that he was keeping that commitment.

Politicians can suffer consequences if they break their promises. Clinton said during his 1992 campaign that he would “focus like a laser beam” on the economy. When controversies about other issues erupted at the beginning of his presidency, he probably was hit harder because it appeared that the uproars meant he was breaking the “laser beam” promise.

So what exactly is Trump promising?

We know he isn’t particularly focused on specific policy proposals; even his much-touted wall appears to be more a symbol of anti-immigrant sentiment than a real effort to solve a publicpolicy problem.

Perhaps, his real promise simply involves designating his enemies.

Prominent among those are Mexican

immigrants and Muslims, which has led to a perception that his campaign relies on appeals to bigotry. And yet, his enemies list is a lot longer than simple bigotry could explain, and it changes constantly—he hates the media, and publications pop on and off his list.

His only consistent promise is “winning”—that he will reverse a perceived string of losses endured by the US. And yet, this sounds empty, promising more than anything real political leaders in a democracy can offer. Does anyone hear Trump and believe that, yes, we’ll have nothing but winning if he is elected? Do his supporters just appreciate someone striving to “win” (whatever that means)? Or do they just enjoy being entertained?

Trump does appear to be promising something about who he would be if he won. After all, a significant portion of his stump speeches is devoted to talking about himself. But even that promise is murky. Is he promising to be a real-estate dealmaker? Is he promising to be the character he played on reality television? Certainly not the guy behind the shady dealings of Trump University, right?

It matters. Because if there are no promises, there’s no representation.

And representation, as James Madison realized, is the only way for large-scale democracy to work. Democracy needs ways for constituents to influence the promises politicians make and how those are interpreted, and it needs politicians to take those promises seriously.

In large part, the political parties are supposed to ensure that happens, and Trump is running without one. If he wins, he would be the least constrained president in US history.

Or, to put it another way, if all he’s promised is to be Trump, he can do pretty much whatever he wants and still claim to be keeping his core campaign promise.

And if he gets away with it, others will follow him. Healthy representation will be the victim. Along with meaningful democracy.

The function of demons Tito Genova Valiente

annotations Man’s enemies are not demons, but human beings like himself.—Lao Tzu

A

5-month-old infant dies, because it had no milk to drink.

The mother suffered a stroke while giving birth to this child. The other child, a 3-year-old daughter, was raped by the amaun, or stepfather, in front of her mother. This young girl suffered lacerations and contusions on her thin, fragile body. The young girl also died.

Going viral some weeks back was the video of a young man who butchers dogs by beating them with a big wooden stick, holding them by the tail and bashing them against the wall.

Sometimes, Glenn, a young colleague, was driving when he started

talking about the infant who died.

He asked that we steel ourselves for the next part of the story, which was about the rape of a child. He was nervous for us, that we would not be able to listen to this tale of abuse.

But, he was himself not quite ready to tell us about the crime.

“A demon, isn’t that how we call him?” Glenn was half-explaining, half-puzzling about how a stepfather could use his 3-year-old stepdaughter as a sex tool, and did it in front of his paralyzed partner.

In another village, long time ago, a grandson came home, drunk and found no food in the kitchen. He was angry, and started shouting.

His grandmother, who was having a nap, woke up and tried to calm him down. The grandson, who grew up in the care of the old woman, pulled the grandmother by the hair to the kitchen. There he hacked to death his grandmother.

At the jail, the grandson said he did not remember anything.

He just heard voices telling him to do something.

The grandson was not into drugs. He could be the demon.

In the cities, when a person is caught stealing, he tells us he has done it because there is no food on the table. As a father, he could not

bear to see his children go hungry.

When a massacre happens in towns, drugs and depression, and even revenge, are accepted as causes. Then, we are able to sleep.

When a grandmother is brutally killed by a grandson because there is no food, then it is time to summon the demon as the cause.

It is only the demon that can best explain the crime. The stepfather was not mad. He must be the demon himself. He has ceased to be a human being. No human person, we assure ourselves, can do that.

This is the function of the demon in our world.

Then we can rest our weary brains. Then we look to our hearts.

Then we thank ourselves as we gaze into the sleeping forms of our loved ones that they are safe with us. Finally, we thank our guardian angels. We do not thank the demons.

E-mail: titovaliente@yahoo.com.

How to bridge the divide Structural reforms must begin at the margins over the South China Sea

By Cui Tiankai Bloomberg View

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he differences between China and the US over the South China Sea issue have become a matter of concern and even anxiety. But some of the perceptions in the US and elsewhere about China’s policy and intentions in the area are misplaced. A pressing task is to understand the facts and China’s intentions correctly so as to avoid real danger and consequences as a result of misinterpretation and miscalculation.

The issues in the South China Sea revolve around territorial and maritime jurisdiction. China believes it is doing nothing more than maintaining and defending legitimate territorial claims and maritime rights. Reclamation and construction works have taken place on islands and reefs that have long been under China’s control, and many of the facilities are for civilian purposes and public good, such as navigation and rescue services, emergency relief, scientific research and environmental protection. There are limited defense facilities, but they do not represent a“militarization” of the area. We believe that recent statements and military deployments by the US have had the effect of escalating tension in the region and, if not curbed, risk the very militarization we all wish to avoid.

Some people have called on China to abide by the United Nations Convention on the Law of the Sea, and to agree to international arbitration, which was initiated by the Philippines. But these same people are denying China’s rights under the convention. Our view is that the convention does not cover sovereignty and territorial issues—yet, the

very subject of the arbitration is territorial sovereignty. China will therefore neither participate nor accept the arbitration, for we maintain that the tribunal has no jurisdiction in this realm.

Besides, it is ironic that the US seeks to use against us a United Nations convention that it itself has refused to ratify.

The concept of freedom of navigation is frequently used to justify actions by the US in the South China Sea. This is an additional irony. The US has used “freedom of navigation” operations to challenge the very concept as it was defined by the convention, believing treaty provisions would restrict its navy’s ability to move freely around the world.

Worst of all, China’s policy on the South China Sea has been grossly misperceived as a strategic move to challenge US dominance in the AsiaPacific region and the world. Some people even go so far as to raise the idea of a so-called Asian version of the Monroe Doctrine. However, China believes that the concept of sphere of influence is out-of-date in the 21st century.

China consistently strives for regional cooperation, and we respect America’s traditional presence and legitimate interests in the Asia-Pacific region. The reality is not that China is trying to drive anyone out, but that there are attempts to deny China’s legitimate and expanding interests in its own region.

Indeed, China has long called for peaceful and direct negotiations with relevant claimant-states to manage and eventually resolve the South China Sea disputes. This remains unchanged —just as we remain open to working to forge a code of conduct for the region with the 10 Asean countries.

Leonardo A. Lanzona

EAGLE WATCH

T

he just-concluded elections highlighted the need to elevate local welfare into the national perspective. In fact, Presidentelect Rodrigo R. Duterte has vowed to undertake major changes that will ensure the distribution of the fruits of national economic progress to the local communities.

Ironically, this call for changes came during the months of unprecedented growth, making the Philippines the fastest-growing economy in the region. Because of this, the eight-point program of Duterte seems far from the type of change Duterte was advocating during the campaign. If anything, the program seems to emphasize continuity more than change. As the incoming secretary of finance recently mentioned, the gains of the Aquino administration had even exceeded its target.

In light of these developments, how can institutional change proceed? Much of the change that had been promised seems to be pointing toward continuity. Even the composition of the Cabinet does not inspire much, given that all the appointees seem to be coming from the previous administrations. Fundamentally, the change seems to be mainly originating from the “political will” that Duterte has claimed his other presidential rivals do not have.

Unfortunately, much more than political will may be needed to undertake the reforms. A significant part of the problem is the fact that

institutions are path dependent. This means the institutions are products of long years of historical processes, which can take more than six years to revise. Of course, if and when the structure of economic incentives and constraints is altered by events that may reasonably be regarded as “exogenous innovations” (independent from the current state of relevant knowledge, or in the present regulatory institutional regime), the previous historical structures may be destroyed, freeing the system to endogenously begin to evolve some new configurations.

But to claim that the political will itself be sufficient to dispose of the notion of a persisting inefficient institutional lock-in is the same as assuming that Schumpeter’s concept of “creative destruction” will be blowing continuously at full force, through every nook and cranny of the economy. Consequently, it may lead to a dead end. Nevertheless, one’s failure to make sense of the variations in the flow of events through time is what make histories interesting to read.

For instance, an obvious instrument to redistribute economic gains

is through asset reform. But the current asset (or capital) structure is complementary to the industry system. This industry is characterized by high capital intensity and, to some extent, linked to high-level skills. This system may seem inconsistent to the huge amounts of labor resources. Hence, while creating a more labor-intensive and less capital-using industry may be the right policy, this route can cause further dislocation in the economy, pushing us out of the current growth path.

For Duterte, this is a difficult choice. The pronouncements that he has made during the campaign can, indeed, be overwhelming.

The institutional features of the economic structure, thus, create a political economy that is in favor of resilience. Against this backdrop of severe reform obstacles in the core of the system, piecemeal reforms at the margins would seem to be the only viable reform strategy. By contrast, comprehensive reforms are more feasible in cases where policymakers either do not face powerful veto players (in the other branches of government) or where they can rely on an infrastructure for multigroup discussions and a sufficient level of trust among the actors to negotiate social pacts. Accordingly, the Philippine political system, with its highly decentralized structure and weak coordination mechanisms, impedes encompassing reform strategies.

Following the idea of incremental change, a sequential process of transformation can be undertaken in key sectors. Starting from the adverse circumstances for institutional change, a reform trajectory can be designed where each step provides

for some ad-hoc adjustment to some urgent problem pressure and, at the same time, shapes the conditions for subsequent steps. As opposed to a fundamental comprehensive reform, a long-term, systematic and coordinated consideration of the problem solutions must prevail. In the short run reform stages can even be contradictory. But this should be seen only as a stage in the long-term process. What is important is that the desired change will eventually occur. The outcomes from the marginal reform should cascade toward a favorable convergence, where the main goals of inclusion and growth are achieved.

For instance, if the aim is agricultural productivity, the agencies directly assigned to the sector should make the initial moves, followed by subsequent programs and policies by all the other departments designed to reinforce such initiatives. By addressing the consequent blocks, inconsistencies and hindrances, all conflicts in the short run can eventually be resolved in order to achieve the final goals. This process can be likened to guiding a symphony, which starts with a single, perhaps inaudible, note but finishes with a flourishing combination of tones, timbres and textures.

This process, of course, will require a competent and knowledgeable conductor who can coordinate all the sounds and movements.

Whether Duterte can be such a conductor remains to be seen.

Leonardo Lanzona Jr. is professor of Economics at the Ateneo de Manila University and a senior fellow of Eagle Watch, the school’s macroeconomic research and forecasting unit.

2nd Front Page BusinessMirror

A12 Friday, June 3, 2016

DTI told to halt issuance of ICC to steel importers

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By Catherine N. Pillas

@c_pillas29

omestic steel makers appealed to the Department of Trade and Industry (DTI) to suspend the issuance of import commodity clearance (ICC) for imported steel products.

The Philippine Iron and Steel Institute (Pisi) made the appeal following the entry of imported steel-reinforcing bars that have not undergone proper certification and testing in April.

The shipment of 5,000 metric tons (MT) of deformed steel rebars is the subject of an ongoing dispute between Pisi, the DTI-Bureau of Product Standards (BPS) and the importer, Mannage Trading Resources Inc., at the Bureau of Customs (BOC).

Pisi directed its grievance toward the BPS, questioning its authority to issue a provisional ICC, as the group alleged that it has no legal basis.

According to Department Order 5:2008 of the DTI-BPS, importers of

Adoption. . .

Continued from A1

others of natural disasters and armed conflicts in the country’s riven south. The Department of Social Welfare and Development

critical products—or those posing a threat to health and safety of the public—are covered by a mandatory product-certification scheme.

The importers of covered products must apply for the ICC per shipment of the product prior to distribution. Products compliant to the Philippine National Standards are issued an ICC. The BPS, according to Pisi, has fast-tracked the testing and sampling of the shipment of steel bars, and without a witness from the BOC or from the Federation of Philippine Industries.

This facilitated entry is in contrast to the requirements of local steel manufacturers that have to conduct tests on every 20 (DSWD) is responsible for ensuring that many of these children find homes. (Some end up overseas. American families adopted 1,350 Filipino children between 2009 and 2015, according to the US State Department.)

Yet, the country’s adoption

MT produced, while only three pieces out of the 500,000 rebars in Mannage’s shipment were reportedly tested.

Aside from steel rebars, local steel makers have alerted authorities to the alleged unregulated distribution of steel angle bars, and sought a review of ICCs and conditional issued to importers, like New Fruit Life.

According to documents, the said company has imported almost 3,000 MT of steel angle bars from January to May this year. The industry appealed to the DTI to check the ICC of the company and if it has complied with mandatory product standards.

In light of the reports and other alleged lapses in regulations, Pisi said there should be a freeze on the issuances in the Philippine Standard (PS) certifications for locally manufactured steel and ICC for imported ones.

“Suffice it to say that as of now, we have strong reasons to believe that the integrity of the PS Certification and ICC schemes for steel products has been severely compromised,” Pisi President Roberto Cola said in his letter to the DTI. Pisi on Thursday filed graft charges against DTI Zambales Director Leonila Baluyut and BPS Director Anne Claire Cabochan for allowing the entry of the deformed steel rebars.

Cabochan has not responded to requests for comment on the matter.

Trade Undersecretary for Consumer Protection Victorio Mario A. Dimagiba said in a text message that the agency will reserve comment on the case pending the ruling of the BOC. As for the angle bars, the DTI is, likewise, mum on the issue, deferring comment until more details are uncovered.

The integrity of the PS certification and ICC schemes for steel products has been severely compromised.”

—Cola bureaucrac y is so forbidd ing that scores of aspiring adoptive parents are left in the cold, and abandoned children left to grow up without parents. In 2014 a privately funded child-care agency prepared to place Sambalilo with an American adoptive family.

Then the DSWD determined that she was 15 years old, two years older than previously assumed, and too old to be adopted. It denied her application. “My dream was to be adopted, so that someone will love me,” Sambalilo said on a sweltering morning in early May, staring down at her polka-dotted pajama bottoms and anxiously grasping her hands.

She is now a slight 18-year-old with full cheeks and a shy smile.

“When I found out I was too old to be adopted, I was really sad, because I really wanted to have a family.” Then she looked off to the side, wiped away her tears, and fell silent.

“I’m just continuously worried that the government feels these children are not the priority,” said Eric Mallonga, a British-educated family lawyer and founder of Meritxell Children’s Home, the agency that is sheltering Sambalilo.

“These children are not prioritized, they’re always on the back burner, and so more children are lost to crime, to prostitution, to neglect, and a lot of street families are growing.”

He said or phanages in the Philippines are scarce and poorly staffed; that government agencies frequently demand documents that are impossible to procure; and that even with the necessary paperwork, simple procedures can drag on for months. Many of the children who come into his care remain there for three to four years before they are legally cleared for adoption.

“It’s ineptitude on the part of many, many social workers,” he said. “Incompetence and ineptitude.” Alita C. De Ocampo, a social worker in charge of the DSWD’s Adoption Resource and Referral Section for Metropolitan Manila, said in a phone interview that she is one of two social workers in the area, a city of nearly 12 million people, who can clear children for adoption.

She added that hiring more staff and establishing guidelines for different government agencies to share documents could speed up the adoption process. “We are always working to make [the adoption process] as quick and as fast as possible,” she said. “We are always innovating techniques or even ask-

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‘Speedy proclamation boost to trading, peso’

By Butch Fernandez @butchfBM

S

enators hailed the swift proclamation of Presidentelect Rodrigo R. Duterte and other winners in the May 9 national and local elections, seen as a major factor that boosted the robust trading at the Philippine Stock Exchange, as well as the impressive rally of the Philippine currency.

The Senate and the House of Representatives convened as the National Board of Canvassers and officially proclaimed Duterte and Camarines Sur Rep. Maria Leonor G. Robredo after only three days of canvassing, or barely 21 days after the May 9 elections, compared to the 2010 presidential elections, which took 30 days to proclaim outgoing President Aquino.

Senate President Franklin M. Drilon, who presided over the presidential canvass proceedings, cited efforts of the Commission on Elections (Comelec) and Smartmatic, the voting machines provider, which, he said, resulted in a speedy electronic count and canvassing. He said it was “a job well done.”

Sen. Aquilino Pimentel III, who co-chaired the Senate-House panels that facilitated canvassing

ing suggestions or recommendations from child-care agencies or [local governments] to make our system faster.”

And those are the relatively lucky children. Many children still live at the Manila North Cemetery.

During a reporter’s recent visit, they wandered in packs, resting on the pavement between tombs and swinging from the frames of half-built mausoleums. Sambalilo said she has no memory of her life at the cemetery.

When asked about her time there, she just said she “feels sad.” According to her personal file at the Meritxell Children’s Home, she was found there in May 2005. Social workers could not determine Sambalilo’s parents’ identities—all she knew was her name—so they sent her to the Reception and Action Center, a government shelter for street children. Scores of children were packed into tiny rooms, with few toilets or baths.

In 2014 pictures of a morbidly emaciated child there went viral on Filipino social media, drawing accusations of concentration camp-like conditions. After about a week, social workers sent her to Boystown, a state-run institution that enrolled her in school but, according to her recollection, gave her little to eat.

T here, author ities administered a denta l-aging test and a p s y c h o l o g i c a l e v a lu at i o n .

W hen the Mer it xell Children’s Home gained custody of her five years later, its staff was told that she was 9 years old.

T he follow ing year, Mer it xell began seeking government permission to put her up for adoption. The hurdles were endless, Ma llonga reca lled.

T he aut hor ities demanded documents that he could not procure, including Sambalilo’s birth certificate and death certificates for her parents. “The DSWD said that we didn’t have the complete, necessary paperwork,” he said.

“The term here is ‘necessary,’ that’s their interpretation.”

The authorities sat on the application for years. Then, in 2014, a Meritxell social worker made an unlikely discovery: She found Sambalilo’s birth certificate beneath a mound of papers at the Boystown

procedures held at the House of Representatives, also commended Comelec and Smartmatic “for the record-breaking” speed of transmission and canvassing of votes cast in the presidential elections, which was also seen to have eased electoral tensions that attended past elections.

It was also noted that the official proclamation of 12 winners in the senatorial election was also completed in record time, barely 10 days after the May 9 polls.

With 84 percent of all results transmitted a few hours after the polls closed, most of the winners at the local levels were, likewise, declared in quick fashion, some on election night or the |following day.

In a news statement, Smartmatic Philippines G​eneral M​anager Elie A. Moreno, however, noted that “the success of the May 9 elections doesn’t stop at the speedy electronic count and the high voter turnout, among other positive outcomes.”

“We also saw the fastest canvassing of votes for national positions, which were performed and finished within days,” Moreno added. The May 9 elections saw the largest turnout since 1986, with 81 percent of the registered voters or over 44 million Filipinos, casting their votes.

orphanage. Mallonga immediately knew that Sambalilo’s future was at stake. He had assumed that she was 12; in fact, she was 14.

According to Philippine law, children 15 and over cannot be adopted. Meritxell had already found willing adoptive parents, a couple from Louisiana who had previously adopted from the home, and she had been speaking with them by phone. He pleaded with the DSWD to expedite her application but the agency never answered.

By the time Sambalilo was cleared for adoption, she had just turned 15. Her application was denied. “The [Intercountry Adoption] Board just rejected her outright,” Mallonga said. “It could have been easy, if the DSWD just cleared her immediately after receiving the birth certificate....

That was supposed to be the last document, after all that searching.” Sambalilo was heartbroken. “It’s unfair,” she said. “Even if we’re over 15, you should still adopt us, because we still need a family, and someone who will love us. “A family,” she said, means “no one is left alone.”

Sambalilo now helps take care of younger children at the home, most of them less than half her age. It’s summer vacation, and the days are long and hot. A hair salon has offered to give her professional training, but she would prefer to finish school, which could take until her mid-20s. “She’s young for her age, not so mature,” said Elizabeth de la Victoria, a Meritxell “house mother” who is looking after Sambalilo.

“In her mind, she acts like a 14-year-old. It’s hard for her to understand that all of a sudden she’s almost an adult.” She is happiest, workers say, when she is distracted from her past. Trying to recall her time at the cemetery sends her into emotional spasms.

“There were so many places [my parents] could have left me,” she said. “Why in a cemetery?” And then she burst into tears.

De la Victoria said that she has grown distant since her application was denied. “She’s not ready to understand or accept her new situation—her thoughts are far away now,” she said, her speech trailing off. “It’s like her thoughts are far away.” TNS