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“I really didn’t think it would come to that. We went too far. I thought we were doing it for my son’s own good.”—Takayuki Tanooka, father of a 7-year-old Japanese boy who went missing since May 28 and was found safe, in Hakodate, northern Japan. Yamato Tanooka was found unharmed on Friday, nearly one week after being abandoned by his parents as punishment in a forest, in a case that had set off a nationwide debate about parental disciplining. AP

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“When an icon like Muhammad Ali passes away, it’s very emotional. It’s also gratifying to know that a guy, one man, would sacrifice so much in his individual life knowing that it would better the next generation of men and women after him. Today I can go to China and all over the world, and people know my name and know my face. I give all credit to Muhammad Ali, because he was the first icon. He is the Goat. He’s the greatest of all time, and it has zero to do with his accomplishments inside the ring.” —NBA star LeBron James, on Muhammad Ali. AP

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Tuesday, June 7, 2016 Vol. 11 No. 241

Pangilinan-Sobrepeña tie-up to fix MRT looms By Lorenz S. Marasigan

@lorenzmarasigan

t doesn’t matter who does what, as long as passengers riding Metro Manila’s main train line will have some relief in the shortest time possible.

Why oil prices and power rates keep on rising Database

Cecilio T. Arillo Part Four

Increase in IPP contracts and liabilities

or his part, President Fidel V. Ramos, Mrs. Aquino’s successor, deliberately convinced Congress to grant him emergency power to deal quickly with the worsening power situation. Republic Act (RA) 7648, or the Electric Power Crisis Act (Epca) of 1993, allowed the Ramos administration to enter into negotiated contracts with independent power producers (IPPs).

Subsequently, his administration complemented Epca with RA 7718, or the expanded build-operatetransfer (BOT) law, which granted the private sector a broad range of investment incentives. Continued on A11

“To put it simply, the arbitration case actually has gone beyond the jurisdiction [of a UN arbitration panel].”—Rear Adm. Guan Youfei, director of the foreign affairs office of China’s National Defense Ministry, on China ignoring the decision of an international arbitration panel in the Philippines’s lawsuit against Beijing’s sweeping territorial claims in the South China Sea. AP

Thus said officials of infrastructure conglomerate Metro Pacific Investments Corp. (MPIC), which has a pending proposal before the transport department to fix, rehabilitate and modernize the Metro Rail Transit Line 3 (MRT 3). MPIC Chairman Manuel V. Pangilinan said his company is open to partnering with other parties—

like MRT Holdings Inc. (MRTH) Chairman Robert John L. Sobrepeña—for this endeavor. “We’re always open to talk with them,” he told the BusinessMirror in an interview. David J. Nicol, the CFO of the listed infrastructure giant, said separately that his company will review the proposal of the group

The proposed investment of Sobrepeña for the upgrade of MRT Line 3

of Sobrepeña and compare it with MPIC’s unsolicited offer. “I think, for the moment, Metro Pacific has some proposals to the MRT, and the government seems interested. We just need to find a way to work together; and so the general focus is on how to quickly improve the service without getting Continued on A2

Duterte bloc wields social media to push federalism

President-elect Rodrigo R. Duterte answers questions from the media during a news conference at dawn on May 26 at his hometown of Davao City. King Rodriguez, Office of the City Mayor Davao via AP

@PsycheRoxas

Second of three parts

RESIDENTS have consistently attempted to change the 1987 Constitution that was crafted during the administration of the late President Corazon

PESO exchange rates n US 46.4930

C. Aquino. The effort—from the time of Presidents Fidel V. Ramos, Joseph E. Estrada, Gloria Macapagal-Arroyo and Benigno C. Aquino III—spans almost 21 years. None of these attempts proved successful. During her lifetime, Mrs. Aquino blocked every maneuver to change

Govt could scrap ‘slow-moving’ $504-M e-trike

By Cai U. Ordinario

$800M D

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the Constitution, citing “extension of term limits” as reason for her protest. Retired University of the Philippines Mass Communication Prof. Benito O. Lim said, however, that “Aquino’s anti-Charter-change [Cha-cha] role notwithstanding, Continued on A2

@cuo_bm

ue to delays in its implementation, the Nat iona l Economic and Development Authority (Neda) on Monday said it could recommend the cancellation of the $504-million electric-powered tricycle (e-trike) project. Neda Deputy Director General for Investment Programming Rolando G. Tungpalan told the BusinessMirror this is one of the courses of action the government can take for “slow-moving projects.” “We expressed concern to the Department of Energy [DOE] about the slowness of the project implementation. We said we need an action plan, so we could see…whether we should scale it down or cancel it altogether,” Tungpalan said. The Market Transportation through Introduction of Energy

100,000 The units of electricpowered tricycles to be produced under the E-Trike Project

Efficient Vehicles Project, or ETrike Project, is financed by the Asian Development Bank (ADB). The project, approved by the Neda Board in March 2012, has yet to deliver the initial tranche of 3,000 units of e-trike. Canceling the project will save Filipino taxpayers from paying more commitment fees to the ADB, which extended a loan of $300 million for the project. As of December 2015, the national government has paid the ADB a total of P44.8 million Continued on A2

Next Congress eyed to plug loopholes in laundering law By Butch Fernandez

@butchfBM

he Senate, running out of time as the 16th Congress adjourned its final session on Monday, is leaving it up to the next Congress to enact remedial legislations proposed by the Blue-Ribbon Committee to prevent a repeat of the $81-million moneylaundering scheme involving funds stolen by hackers from the Bank of Bangladesh account at the Federal Reserve in New York. Sen. Sergio R. Osmeña III, who spearheaded the inquiry, said Blue Ribbon panel chairman Sen. Teofisto D. Guingona III is set to file the report on Tuesday. The report, containing their findings and recommendations resulting from seven committee hearings, is expected to be pursued by the members of the 17th Congress that convenes in July. “Yes. That is the system,” Osmeña told the BusinessMirror. The committee listed legislative and policy recommendations that the Senate probers endorsed for the members of the 17th Congress to pursue in order to avert another big-time money-laundering scandal involving casinos and the local banking system, which tainted the Philippines’s image in the global financial community.

Osmeña also confirmed that among the recommendations is the early passage of a law that will include casinos among covered institutions under the antimoney-laundering law, in effect amending Republic Act 9160, to strengthen the powers of the Anti-Money Laundering Council to check and impose sanctiotns against violators.

The recommendations include the early passage of a law that will cover casinos under the antimoneylaundering law.”—Osmeña The committee, likewise, endorsed easing bank secrecy restrictions, as well as amendments to the foreign-currency deposit law. Specifically, the next Congress is also expected to fast-track passage of a refiled version of Senate Bill 2106, entitled “an Act Designating Casino Operators as See “Congress,” A12

n japan 0.4363 n UK 67.2754 n HK 5.9860 n CHINA 7.0966 n singapore 34.2616 n australia 34.2514 n EU 52.8021 n SAUDI arabia 12.3988

Source: BSP (6 June 2016 )

A2 Tuesday, June 7, 2016

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Duterte bloc wields social media to push federalism Continued from A1

the failure to effect Cha-cha is more a result of its proponents’ inability to reach out to the public and explain Charter change in detail.” “Wala silang detalye [They offer no details],” Lim said. “There is a call to action, but not enough detail on the reasons for the call. They should explain the advantages local governments will have, and the benefits that can be derived by all from Charter change.”

Pirma

AS stated in the 1987 Constitution, there are three ways to amend or revise the Constitution. All three require ratification by a majority vote in a national referendum. The first option is by constitu-

ent assembly, where members of the Senate and the House of Representatives convene to propose constitutional amendments. Threefourths of all the senators and representatives should vote in favor of an amendment before such can pass. Holding a constitutional convention (Con-con) is the second option to change the Charter. Delegates to the Con-con are elected and those elected will craft the Charter amendment or amendments. The third option is through people’s initiative (PI), where 12 percent of the voting population (at least 3 percent for each voting district) will sign the petition stating the amendments to the Constitution. The PI option was chosen during the administration of Mr. Ramos. Known as People’s Initiative for

Modernization and Action (Pirma), the move called for a shift from presidential to a parliamentary form of government and the lifting of term limits of elected officials.

Paid ad

A full-page, paid advertisement of Pirma that came out on December 5, 1996, in the Manila Standard newspaper established the accomplishments of then-President Ramos and the wisdom of changing the Charter. It said: “For millions of Filipinos, President Ramos has been a good leader. The successful hosting of [the] Apec [Asia Pacific Economic Cooperation summit] is just one of his government’s achievements that make us proud to be Filipinos. There have been many more accomplishments

during his term that have given Filipinos confidence and hope in the future,” the statement said in its introductory paragraph. The statement added that “to prepare the Philippines for its ‘coming out party,’ [Mr. Ramos] pushed for a program of peace and development. He reached out to communist, military and Muslim rebels. He solved the energy problem. Recently, he forged peace with the Muslims of the South and formed the SPCPD that has successfully drawn multimillion investment for the development of Mindanao.” “He [Mr. Ramos] achieved economic reforms through democratic means against all odds. Today the Philippine economy is robust— with an expected GNP [gross national product] of more than 7

percent this year, inflation at a single-digit level and international reserves at a record high. Both exports and imports have increased tremendously and the Philippine stock market is one of the best performing in Asia. “During his presidency, the Philippines has regained its prestige. For this, [Mr.] Ramos deserves credit and praise. Among leaders, [Mr.] Ramos has been unstinting in promoting his country and its role in the world state. ‘The Philippines is Asia’s New Tiger,’” declared Newsweek magazine. “But what of the future? Will the success of the Ramos government just fade into the past? What will happen to [Mr.] Ramos’s program of reforms? In the next few weeks and months, the Filipino people

Pangilinan-Sobrepeña tie-up to fix MRT looms Continued from A1

to stark on who is making which proposal so that we can get some action to it,” he told the BusinessMirror. Sobrepeña was the first to float the possible partnership with Pangilinan for the upgrade of the MRT Line 3. In an earlier interview with the BusinessMirror, Sobrepeña said: “It could be a joint undertaking between the two of us. It’s something that we are proposing, and we look forward to working with them.” He reiterated that desire to work with the Pangilinan group on Monday. “Yes, of course [we are open to that partnership].” Nicol acknowledged that it will take a lot of effort to improve Metro Manila’s most congested railway line, which, according to Sobrepeña, was mismanaged by the government. Manila gave birth to the 17-kilometer mass-transit system in 1999 — almost a decade after it was first conceived — with the primary pur-

pose of decongesting the capital’s main artery, the Epifanio de los Santos Avenue (Edsa). The build-lease-transfer contract was awarded to Metro MRT Corp., whose parent company is the MRTH, two decades ago, when it acquired the company’s original contractor due to its botched agreement with the government. The 25-year contract essentially provides that the private partner builds the line, the government leases the transport system and the infrastructure will be transferred to the state at the end of the concession period. When it was built, observers, at first, thought it was a f lop, as its average daily ridership only hits the 40,000-passenger mark back then. Despite this, the private company that built the train system still insisted to the government that major expansion programs must be undertaken to prevent congestion in the railway line.

The state, however, refused, saying that the train system must first hit the 350,000-passenger mark before it does anything as drastic as an expansion of the line. It hit its rated capacity in four years’ time, but still, the government failed to approve proposals to add capacity to the train system. As the years went by and the Philippine economy grew faster, the train line’s passengers increased until it hit its crush load, which, in layman’s term, is its maximum capacity. Still, the government failed to hear the cries of both the consumers and the private partner for modernization. This led to worse situations along Edsa, as the train line snakes through the middle of the thoroughfare, eating up at least three lanes in the process. “A lot of work has to be put into all of this,” Nicol said. Metro Pacific’s proposal involves an investment of $524 million to

overhaul the line. The venture would effectively expand the capacity of the railway system by adding more coaches to each train, allowing it to carry more cars at faster intervals. The multimillion-dollar expansion plan would double the capacity of the line to 700,000 passengers a day, from the current 350,000 passengers daily. It was submitted in 2011, but the transportation agency’s chief back then rejected the proposal. The group revived its proposal before Congress in 2014. On the other hand, Sobrepeña’s proposal involves an $800-million investment that will be spent in three phases. Under the three-phase proposal, the private sector will start fixing the train line’s immediate problems, namely, the system’s dilapidated rails, outdated signaling system and its failing train cars. The next phase involves the upgrade of the whole system, which

costs about $400 million. It involves the replacement of all elevators, escalators and the makeover of the stations. The private proponent will also buy 48 new cars to double the capacity so 1 million to 1.2 million passengers could ride the train system daily. The third phase involves the linking of the MRT to the Light Rail Transit (LRT) Line 1’s Monumento Station. All these, according to Sobrepeña, could be completed in a matter of three to three-anda-half years, almost half of a term of a president. The only catch to this proposal is this: the government has to agree to pass on the management of the train line to the group of Sobrepeña through an operations and maintenance contract. The Aquino administration has repeatedly ignored the proposals offered by several private parties, but has proceeded with its own P9.7-billion rehab program.

must assert their right and power through a people’s initiative as enshrined in the Constitution to make sure that [Mr.] Ramos’s program of democratic economic reforms will continue to be sustained.” No names or signatures appeared at the end of the statement by Pirma except for the group’s Makati City post office box number 2897. Pirma’s campaign to change the Charter was challenged by a protest rally organized by the Catholic Church on September 21, 1997. Police estimate of the crowd was half-a-million people. On September 23, 1997, the Supreme Court, then under Chief Justice Andres Narvasa, dismissed Pirma’s petition to amend the 1987 Constitution through PI. To be continued

Govt could scrap ‘slow-moving’ $504-M e-trike Continued from A1

in commitment fees for undisbursed loan balances. Delays also caused the etrike project to be included in the list of “at risk” projects under the Neda’s Monitoring and Evaluation Staff (MES) Alert Mechanism. The Alert Mechanism flags projects which require priority monitoring and facilitation by classifying them into “potential” and “actual” problem projects based on certain criteria, such as timetable and cost. Actual problem projects are further classified into two alert levels: Level I, which is the Early Warning Stage; and Level II, which is the Critical Stage. The e-trike project was already placed under Alert Level II in the 2014 ODA Portfolio Review. However, the Neda said the status can change, pending the developments on the delivery of the units and details of the DOE’s action plan. “If [the e-trike] project is making progress, we can continue, if it’s not moving, we can recommend cancellation,” Tungpalan said. Initially dubbed as the Energy Efficiency Tricycle (E-Tr ike) Project, it involves replacing aging and two-stroke gasolinefed tricycles with 100,000 electricity-run units. The project targets the distribution of e-trikes to local government units in Metro Manila; Boracay, A klan; Puerto Princesa, Palawan; Cabanatuan City; Nueva Ecija; and Davao City. Apart from the $300-million ADB loan, it is also being financed through a $100-million loan and a $5-million grant from the Clean Technology Fund (CTF). As early as January 2012, civil-society organizations (CSOs) have expressed concern for the involvement of CTF in the e-trike project. International and local CSOs, like NGO Forum on ADB, Greenpeace Southeast Asia and the Freedom from Debt Coalition, urged the Trust Fund Committee of the Washington-based CTF to reconsider the grant of funds for it. The CSOs said e-trikes are “not needed” in Philippine streets and that the design of these units are “flawed.” They also urged the use of the CTF funds for more “innovative” programs.

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Incoming DAR chief Mariano vows deeper probe into agrarian-reform ‘underspending’

By Jonathan L. Mayuga

@jonlmayuga

afael V. Mariano, the incoming secretary of the Department of Agrarian Reform (DAR), says he will look into the billions of pesos of the agency’s unused appropriation from 2011 to 2014, and will seek an explanation from outgoing Secretary Virgilio R. de los Reyes. During the said period, the DAR has a total budget of P80.9 billion. But records will also show that during the same period, the DAR had accumulated unused appropriations amounting to P31 billion. Of the total unused appropriations, P23 billion was unreleased, while another P8 billion was disbursed but, likewise, remained unspent. Mariano is hopeful that the funds are recoverable. “Even half of that amount…will have a big impact when used for support services,” Mariano said. President-elect Rodr igo R . Duterte will be sworn in as the country’s 16th president on June 30. As incoming DAR chief, Mariano said he is obligated to inform the people of the reason behind the underspending, considering that

the agency in charge of implementing the Comprehensive Agrarian Reform Program (CARP) is also mandated to provide various support services to CARP beneficiaries. Speaking mostly in Tagalog, the DAR chief also said he might as well be prepared for answers in defending the DAR’s budget request in the future. “How will I face Congress and the Senate when asked? How come the DAR had P31-billion unused appropriations? As incoming DAR chief, I have to explain,” Mariano said. “I can’t point them to DBM [Department of Budget and Management] Secretary Butch Abad or Secretary Virgilio de los Reyes,” Mariano said, adding that he looks forward to a meeting with the outgoing DAR chief to receive the transition report,

and get the answers to his queries. “That is why our meeting is important because I want to know everything,” said Mariano, who earlier vowed to review the implementation of the agrarian-reform program from 1972 to 2016. Meanwhile, in a separate interview, de los Reyes told the BusinessMirror that a complete transition report will be handed to Mariano during a meeting on Wednesday. “The report will give him a complete detail and I will be there to explain to him,” he said. De los Reyes admitted there was, indeed, an underspending during the period Mariano pointed to, but said the P31 billion amount Mariano is referring to “is less” in terms of total amount. “It is less than P31 billion. I’ve always explained in the past, when we set our target in the past, we use available data. The data we inherited are erroneous. That is why there [was] underspending,” he said. De los Reyes said the “internal and external data” of the land acquisition and distribution target he inherited is problematic. This, he said, has been corrected and the incoming DAR chief will inherit a credible data for future budget planning or preparations,” he said. The budget process, de los Reyes added, requires a two-year preparation. “When I stepped in 2010, the budget for 2011 was already there. It was prepared before I came in,” he

₧31B The unspent appropriation allocated for CARP from 2011 to 2014

said. “The budget for 2012, because of the problematic data we inherited, was based on a budget proposal from the data submitted to us,” de los Reyes added. “The 2017 data down to the last landholding will be more clear,” he said. On the underspending for support services, de los Reyes said, as DAR chief, he decided to review all the projects and decided to stop projects with “questionable” bidding procedures. “What I want was to spend government money for the right projects and at the right cost. I don’t want to spend government money to projects without proper bidding,” he said. De los Reyes also said he is prepared to explain to Mariano his query on the Hacienda Luisita issue, which the incoming DAR chief considers among his top priorities. The distribution of the former sugar estate of the CojuangcoAquino clan in Tarlac, which was distributed by the DAR a year after

the Supreme Court issued an order mandating the distribution in April 2012, was completed early in 2014. “The transition report is ready and I can explain everything he wants to know about Hacienda Luisita, too,” de los Reyes said. The farmer-leader and former Anak-pawis party-list lawmaker said his advocacy for genuine agrarian reform for the landless farmers will not falter and will work “to make things right.” With high expectations from fellow advocates and farmers pinning hopes on his appointment to the DAR, Mariano will be facing a big challenge, considering the program’s land acquisition and distribution component had expired on June 30, 2014. Mariano also vowed to review all contracts involving land lease agreement facilitated by the DAR covering around 1.2 million hectares. According to Mariano, he wants to know whether the farmers, whose land were leased as part of various DAR undertakings with the private sector, truly benefited. Mariano is bent on pushing for the passage of the Genuine Agrarian Reform Bill which he said will “free farmers” from the bondage of poverty. He said that, as the incoming DAR chief, he will also conduct an inventory of land acquisition and distribution accomplishment of the DAR from 1972 up to 2016.

“So far, what I have are figures up to 2014. We need to review this, including all the orders involving exemption, exclusion, conversion, retention and cancellations of the DAR,” Mariano said. He said based on Land Bank of the Philippines data released in September 2013, out of the total 730,00 agrarian-reform beneficiaries, only 77,000 have actually paid in full their CARP-awarded land. This is only about 9.7 percent of the total number of farmers who were awarded with land. “This means that in every 10 farmers, only one farmer can proudly say that he is now the owner of the land awarded by the government and nine who are tillers are still landless,” Mariano said. He said from 1972 to 2014, around 4.6 million hectares were distributed by the DAR with over 2 million agrarian beneficiaries. “The 77,000 is just 2.8 percent have fully paid for the lands. What will happen to the rest? We don’t want the government to take them back,” he added. “I know that the existing agrarian-reform program has many limitations. There are loopholes and with that, we can only do so much,” Mariano said. “But it will not diminish my resolve to implement a genuine agrarian reform, because I believe it is the only way to free our farmers,” Mariano said.

Shoal may become military line in sand on South China Sea 3,200 acres G lobal defense chiefs meeting in a plush hotel in Singapore on the weekend were faced with one of Asia’s biggest looming security challenges, but left without any tangible sense of how to tackle it. The elephant in the room at the Shangri-La security forum was an uninhabited shoal about 230 kilometers (143 miles) from the Philippine coast, a triangle of reef and rocks that barely stretches above high tide. Occupied by China since 2012, the Scarborough Shoal threatens to become the biggest flash point in disputes over the South China Sea. US Admiral John Richardson raised the prospect of China building on the shoal in March and, the following month, the US sent air force planes into its vicinity. An airstrip there would add to China’s network of runways and surveillance sites that US Pacific Command chief Harry Harris said last year would create “a mechanism by which China would have de-facto control over the South China Sea in any scenario short of war.” The potential motivation for China to build on the shoal is a coming international arbitration ruling on a case brought by the Philippines against its South China Sea claims. China didn’t take part in the hearings, arguing the tribunal lacks jurisdiction. If the nonbinding ruling is unfavorable to China, it might respond by putting structures on the shoal to give it a military outpost right on the Philippines’s door. Chinese Admiral Sun Jianguo said on Sunday China will not accept the tribunal’s ruling, expected by midyear. While countries, including the US, have warned China against doing so, it’s unclear how they might respond if it it did. Speaking at the Singapore forum, US Defense Secretary Ashton B. Carter said the US, as an ally of the Philippines, would take action, without elaborating on the consequences of a Chinese move. Carter said on Saturday he had

The size of China’s reclamation on seven features on the Spratly Islands with some military infrastructure

nothing new to say on any Chinese activities in the area around the shoal, but “any actions there would be provocative and destabilizing.” Southeast Asian defense chiefs avoided commenting on the possibility. China contests more than 80 percent of the South China Sea, through which more than $5 trillion in seaborne trade passes every year, overlapping claims from the likes of Vietnam and Malaysia. It has reclaimed 3,200 acres of land on seven features in the Spratly Islands and added some military infrastructure. Carter “was very careful to choose his words to leave the impression that there would be some action taken, but not to draw any red lines,” said Bonnie Glaser, a senior adviser for Asia at the Washington-based Center for Strategic and International Studies. “This is a critically important question,” she said. “I believe they want to restrict US access over time.” The US has been wary of setting red lines after the Obama administration promised in 2012 that, if Syrian President Bashar al-Assad used chemical weapons against his people, he would cross one. After his regime killed at least six people and injured dozens in a chlorine gas attack, the US failed to act, undermining its credibility.

Air zone

The US says it doesn’t take sides on the South China Sea claims, but its officials have sought to deter China from consolidating its hold over the waters. Secretary of State John Kerry said on Sunday in Mongolia the US would consider the establishment of an air-defense identification zone (Adiz) over the area to

Philippine Marines raise the Philippine flag on the first day of their deployment on the dilapidated Navy ship LT 57 BRP Sierra Madre at the disputed Second Thomas Shoal, locally known as Ayungin Shoal, on March 30, 2014, off the South China Sea. AP/Bullit Marquez

be “ provocative and destabilizing,” repeating Carter’s phrase. China declared an Adiz over part of the East China Sea in 2013, where it claims islands contested by Japan. Analysts consider China as yet unequipped to patrol such a zone over the South China Sea, but the possibility it might one day do so has spooked countries that border the waters. To deter China from installing more military equipment on the Spratlys, the US since October has sent warships three times within the 12 nautical mile zone around several artificial islands China has created, to demonstrate the right to transit what it considers international territory. “The South China Sea’s freedom

of navigation hasn’t been impeded because of the territorial disputes,” Sun said in a speech on Sunday. “If freedom of navigation is undermined, then China would not be to blame.”

‘Exclusion zone’

China’s foreign ministry says it has the right to build on the features because they are its “indisputable” territory and it’s mainly to provide civilian services, like search and rescue. Still, security analysts are concerned China will continue taking actions that are too minor to prompt a response, but which over time equate to substantial change. “The question is whether we should allow China to establish an exclusion zone in the South China

Sea, which would effectively turn it into a Chinese lake,” Richard Heydarian, a professor of political science at De La Salle University in Manila, said on the sidelines of the forum. “Who knows what happens down the road,” he said. “China may impose restrictions on other countries, depending on what is its whim.” For the moment, it isn’t likely that China will rush to build on Scarborough, according to Luo Yuan, a retired People’s Liberation Army major general and deputy general secretary of the China Society of Military Science in Beijing. “For the time being, China is trying to maintain the status quo, mainly because of the size of the project, the investment required and the sensitivity of the issue,” Luo

said on the sidelines of the meeting. But the question that remains is, should China decide to proceed, how can the US and others prevent it from going ahead without risking setting off a full-scale conflict. “I would like to think that what Carter said was a polite way of publicly alluding to a red line that has been privately communicated,” Rory Medcalf, head of the National Security College at the Australian National University, said on the sidelines of the forum. “Nothing will roll back their physical presence, but if China doesn’t achieve some kind of defacto extension of authority as a consequence of the island-building, then that is still a significant effect that the international community has achieved.” Bloomberg News

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Cambodia wants Asean to stay neutral on sea row

tiny Southeast Asian nation that in 2012 torpedoed a regional leaders’ statement on the South China Sea now says those countries won’t take sides in the disputes with China over the waterway. “Asean tries to keep centrality,” Vuth Reth, assistant to Cambodia’s Deputy Prime Minister Tea Banh, said on Sunday, referring to the 10-member Association of Southeast Asian Nations. “We don’t say we tend to this side or that side,” Reth said in an interview on the sidelines of the ShangriLa security dialogue in Singapore.

Everything moves along and everyone agrees with what is the result. Peace and prosperity will follow with that.” —Reth Reth’s comments come as a Hague arbitration tribunal is expected to rule within weeks on a Philippine challenge to China’s territorial claims in the South China Sea. China, Asean’s biggest trading partner, contests more than 80 percent of the waterway and has built some military infrastructure and reclaimed 3,000 acres of land in the past few years. Asean countries, including Vietnam and the Philippines, have overlapping claims in the area, through which more than $5 trillion in seaborne trade passes every year. “Everything moves along and everyone agrees with what is the result,” Reth said. “Peace and prosperity will follow with that.” Asean works as a bloc on the basis of consensus and has yet to establish a code of conduct with China for the South China Sea. While it has called for tensions to be lowered in the waters, it has never referenced China in its statements. Indeed in 2012, Asean failed to reach common ground on the South China Sea issue, ending a regional conference without a joint statement—the first in its 45-year history. Cambodia held the rotating chair of Asean that year. After the meeting collapsed, Cambodia denied it had fallen prey to pressure from China to avoid raising the issue in the statement. China had warned nations beforehand to not mention the territorial spats. China has in recent months sought to canvass support within Southeast Asia for its position on the South China Sea, emphasizing that, even as it opposes the Philippines’s legal challenge, it stands for cooperation and peace.

Malaysian opposition squabbles give Premier Najib breathing room

fter Malaysia’s opposition fielded multiple candidates for some seats in a state election last month, splitting the vote and giving Prime Minister Najib Razak’s coalition a bigger majority, they vowed not to repeat it. Four weeks later, they are at it again.

Two opposition groups on Sunday nominated candidates to run against Najib’s United Malays National Organization (Umno) in two by-elections this month, increasing the chances of Umno retaining seats it currently holds by a narrow margin. One seat it won in the 2013 general election by just 1.1 percent in a straight fight, the other by less than 4 percent in a three-way race that included an independent. The opposition infighting shows how its alliance has failed to capitalize on gains made in 2013, when it won the popular vote for the first time. Najib was returned to office despite the worst performance by the ruling coalition in more than five decades in power, helped by the votes of Umno’s voter base— ethnic Malays. In the aftermath of the last election the opposition splintered amid policy differences, with one leader in jail and another investigated by the anticorruption commission. That disarray, combined with decisions to compete against each other, is enabling Najib to weather a yearlong donations scandal, multiple probes into a debt-ridden state fund and efforts by a former leader to remove him.

‘Already broken’

“The opposition’s back is already broken,” said Ibrahim Suffian, an analyst at the Merdeka Center for Opinion Research in Kuala Lumpur. “Despite the scandals, there are no practical means for any political backlash to affect Najib, because his opponents have become fragmented and ineffective in mobilizing the public through electoral means.” Parti Islam se-Malaysia (PAS) whose conservative faction defeat-

ed moderates in internal leadership polls a year ago, left the opposition alliance in 2015. Ties frayed with the mostly ethnic-Chinese Democratic Action Party over efforts to implement the Islamic penal code in a PAS-controlled state. Another group, Parti Amanah Negara is made up of moderates who left PAS last year. Both PAS and Amanah named candidates for the June 18 by-elections, triggered when Deputy Plantation Minister Noriah Kasnon and Wan Mohammad Khair-il Anuar Wan Ahmad, chairman of the Malaysian Palm Oil Board, were killed in a helicopter crash in Sarawak. PAS has said the seats have traditionally been contested by it. The presence of multiple opposition candidates may skew what would otherwise have been a litmus test of the voter mood on Najib. Confidence among consumers, businesses and investors has faltered amid a slowing economy, global investigations into state fund 1Malaysia Development Bhd., and residual public anger over the implementation last year of a goods and services tax. Najib has denied wrongdoing and was cleared by the attorney general this year of graft over revelations that $681 million appeared in his accounts before the 2013 vote. The opposition won that election with 51-percent support, though gained fewer seats due to the country’s British-style first-past-the-post counting system. Complaints about Najib’s leadership on social-media forums and among some Umno chiefs in private have failed to lure voters to the opposition. Chinese voters who flocked to it before 2013 have expressed concern about the possibility of Islamic law in the state of Kelantan.

NAJIB

Splitting votes Opposition party leaders have said little in public about their faltering support. Still, the rifts are increasingly apparent. “It will split the votes of those who disagree with the current administration,” PAS Vice President Idris Ahmad was quoted as telling reporters on Sunday, commenting on Amanah’s decision to join the race. “However, we are confident and hope that voters will support us and send a strong signal to the government.” “They just don’t learn from past mistakes,” said Faisal S. Hazis, head of the Centre for Asia Studies at the National University of Malaysia. “People are just fed up with the bickering.” Even Najib’s most vocal critic is exasperated by the opposition infighting. Former Premier Mahathir Mohamad led Umno for two decades and had repeatedly said it

cannot win the next election, due before end-2018, with Najib at the helm. After efforts to turn Umno against Najib failed, he teamed up with political foes to try to force the prime minister out.

‘Two ways’

That soured when his motives were questioned by some in the opposition, including Anwar Ibrahim, who was sent to jail again last year for sodomy, a charge he denies. Now, the 90-year-old says the opposition disunity means Umno is unlikely to be at risk. “There’re only two ways to unseat Najib,” Hazis said. “One is through Umno, which Mahathir failed to do. Second is when a united, cohesive and viable opposition coalition wins the next general election. The second option is not what Mahathir is willing to take.” In the meantime, Najib has tightened his grip on Umno and its divi-

sional chiefs have publicly backed him. Najib is also cementing his hold on power by further wooing the ethnic Malay majority. He has reached out to PAS and proposed the parties work to promote Islam’s doctrines, and the opposition group is reacting to his overtures. At an opening ceremony of a recent PAS youth wing annual meeting, leaders abandoned their usual Arabic robes and came in traditional Malay costumes complete with a Keris—a dagger regarded as a symbol of the race’s supremacy. PAS leader Abdul Hadi Awang said the party will abandon the old political style of opposing for opposing’s sake, and will work with anyone who can advance the principles of Islam. “It’s not certain how PAS will reconcile with their former allies,” Ibrahim of the Merdeka Center said. Unless they can patch up, “it will be hopeless” for the opposition, he said. Bloomberg News

Three-part plan urged for Thailand’s launch of digital-economy project

Wooing nations

Ahead of the arbitration ruling, its diplomats have made trips to nations in the region and met with senior officials from countries including Cambodia and Lao PDR, which holds the Asean chair this year. Chinese Adm. Sun Jianguo said at the forum in Singapore on Sunday that territorial disputes haven’t impeded freedom of navigation in the waterway. The US has been conducting freedom of navigation operations in the South China Sea, with its Navy sailing ships near reefs claimed by countries, including China. “How can other people rather than your own homeowner play around in your house, if I may say,” Reth said of the China-US tensions. “It’s like a thief.” Who’s the thief? “I know and you know,” Reth said, laughing. Bloomberg News

Editor: Max V. de Leon • Tuesday, June 7, 2016 A5

KAMPUCHEA KROM RITES

Cambodian King Norodom Sihamoni’s representative, Samdech Sisowath Pong Neary Monipong (center), prays in front of Buddhist monks (right) during a ceremony at Chroy Changvar village in Phnom Penh, Cambodia, on Saturday. Several hundreds people of Kampuchea Krom community, including Buddhist monks, on Saturday celebrated the 67th anniversary to commemorate the Kampuchea Krom territory’s return to Vietnam by the French government. Kampuchea Krom, southern Vietnam, was part of Cambodia. AP

reater collaboration from the private sector, rapid construction of hard infrastructure and a change in the role of the regulator are the three key elements in the first stage of developing the country’s digital economy, according to a panel of industry experts. Suthichai Cheunchoosil, senior vicepresident of Advanced Info Service, said greater business participation in the digital-economy project should be encouraged by state authorities to ensure success. In addition, eight digital-economy laws are needed to accelerate digital development, he said on Sunday at a seminar, entitled “Digital Economy Laws, a Hope for Digital Industrial Revolution.” Suthichai said telecom companies have played a crucial role in the development of the country’s ICT infrastructure development for decades, given their financial resources and technological know-how. In his view, the National Broadcasting and Telecommunications Commission (NBTC) needs to change the role it plays by shifting from a governor to a supporter in order to drive the digital-economy policy alongside the private sector. Raweepun Pitakchatiwong, senior vice president and head of the legal division at Total Access Communication, urged the regulator to outline a

320 MHz The remaining available bandwidth in Thailand

clear road map for telecom spectrum by year-end. There is clear demand for mobile broadband services, he said. The NBTC must, therefore, define which frequencies will be allocated in the short term to enable operators to provide affordable wireless services. As Raweepun put it, spectrum is considered the most important factor in the success of digital-economy development. Just 320 megahertz of overall spectrum bandwidth is available in Thailand. Nearly half has not been used for the most efficient purposes. “Regarding the existing 320 MHz of bandwidth, the amount is not sufficient if the government wants to drive the country’s digitization nationwide by 2020,” Raweepun said. Prasong Ruangsirikulchai, a technical expert and deputy president of the Telecommunications Association of Thailand, urged the government to provide tax incentives to private companies that want to invest in the submarine cable network. MCT

The W

Business

A6 Tuesday, June 7, 2016 • Editor: Lyn Resurreccion

Ex-World Bank economist leading in Peru election

IMA, Peru—A former World Bank economist was edging out the daughter of imprisoned ex-President Alberto Fujimori in Peru’s presidential election on Sunday, according to early results from a vote widely seen as a referendum on the disgraced strongman’s legacy. With about half of polling stations counted, Pedro Pablo Kuczynski had 50.6 percent of the votes compared with 49.4 percent for his rival Keiko Fujimori, whose lead evaporated in the final weeks of campaigning. While votes from Peru’s hinterland, where support for Fujimori is strongest, will take days to come in, Kuczynski supporters were optimistic they’d prevail after two unofficial quick counts based on samplings of voting stations showed him winning by at least 1 percentage point. While that is within the statistical margin of error of the counts, the pollsters have a track record of accuracy. Late Sunday night Kuczynski addressed cheering supporters waving red-and-white Peruvian flags from the balcony of his campaign headquarters, urging them to be vigilant against fraud at the ballot box but otherwise sounding as if he had already been declared the winner. “We’re going to have a government built on consensus. No more low blows or fights,” said the

50.6 The percentage of votes garnered by leading candidate Pedro Pablo Kuczynski against the 49.4 percent of his rival Keiko Fujimori

economist, who supported fellow conservative Fujimori in the 2011 runoff won by President Ollanta Humala. But Fujimori showed no sign of conceding defeat. “We’re going to wait with prudence because all night votes will be coming in from the provinces, from abroad and from the rural voters of deep Peru,” she said, while dancing to her campaign theme song on a campaign truck parked outside the Lima hotel where she awaited results. With 52 percent of voting stations counted late on Sunday night, Kuczynski had

4,724,897 votes compared to 4,613,861 for Fujimori. A potential swing vote in a close race could be the 885,000 Peruvians eligible to vote abroad—about 3.8 percent of the electorate. Many of those votes will take days to be tallied, according to Peru’s electoral authority. It would be a stunning turnaround for Kuczynski, who managed to narrow Fujimori ’s lead by abandoning his above-thefray, grandfatherly appeal and attacking her as a risk to Peru’s young democracy. “Peru is on the threshold of becoming a narco-state,” the 7 7- y e a r - ol d c a nd i d at e , w ho would be Peru’s oldest president, told supporters at his closing campaign rally in Lima. The reference wasn’t just to Alberto Fujimori’s well-known ties to corruption, organized crime and death squads, for which he’s serving a 25-year jail sentence, but an attempt to draw attention to a string of scandals that have hobbled Fujimori in the final stretch. The most notable scandal was a report that one of her big fundraisers and the secretary-general of her party was the target of a US Drug Enforcement Administration investigation. Peru is the world’s largest producer of cocaine. Her running mate, Jose Chlimper, a Cabinet member at the end of Alberto Fujimori’s government, also found himself in hot water for orchestrating the broadcast of a doctored audio tape in an attempt to clear the name of the party boss. PPK, as Kuczynski is almost universally known in Peru, also

benefited from a last-minute endorsement by the third-place finisher in the first round of voting, leftist congresswoman Veronika Mendoza, the protagonist of a massive anti-Fujimori demonstration this week the likes of which Peru hasn’t seen since the turbulent end of Fujimori’s rule 16 years ago. Fujimori, who served as first lady in her father’s administration after her parents’ divorce, has tried to contain her rival’s rise by taking distance from her father’s crimes, even signing a pledge not to pardon him if elected. Kuczynski during the campaign said he’d consider allowing Fujimori finish his prison sentence at home. At the same time, she’s vowed to bring back the “iron hand” style of government for which many still revere the elder Fujimori, who is credited with taming Maoist Shining Path rebels, as well as the country’s hyperinflation. Instead of rebels, Keiko Fujimori promised to wield an iron fist against crime, a top voter concern. Among her proposals: build jails in high-altitude prisons in the Andes to punish and isolate dangerous criminals. She also tried to cast her rival, the son of a Jewish-Polish immigrant who is married to an American and spent decades in business outside Peru, as part of the white elite establishment that has traditionally overlooked the needs of the poor. Regardless of who wins, Keiko Fujimori has already reshaped Peru’s political landscape. In April her Popular Force party won 73 of 130 seats in the unicameral congress, compared to just 18 for Kuczynski’s movement. AP

Muslim women perform an evening prayer called tarawih, marking the first eve of the holy fasting month of Ramadan, at Istiqlal Mosque in Jakarta, Indonesia, on Sunday. During Ramadan, the holiest month on Islamic calendar, Muslims refrain from eating, drinking, smoking and sex from dawn to dusk. AP/Tatan Syuflana

Muslims begin fasting for Ramadan D

UBAI, United Arab Emirates—Millions of Muslims around the world mark the start of the holy month of Ramadan starting on Monday, a time marked by intense prayer, dawnto-dusk fasting and nightly feasts. Saudi Arabia’s state TV announced the new moon of Ramadan was spotted on Sunday evening. Local media in Indonesia, the world’s most populous Muslim country, also said Muslims there would begin fasting on Monday, as will Muslims in Singapore, Yemen, Lebanon, Syria, Qatar, Kuwait, Jordan, Egypt, the United Arab Emirates, Afghanistan and the Palestinian territories, among others. Following these announcements, a mosque in Tampa, Florida,

announced to its followers that they, too, would celebrate the first day’s fasting on Monday. Muslims follow a lunar cale nd a r a nd a mo on - s i g ht i n g methodology that can lead to different countr ies declar ing the start of Ramadan a day or two apart. By Sunday evening, Pakistan and Iran had yet to officially announce Monday as the first day of Ramadan. Traditionally, countries announce if their moon-sighting council spots the Ramadan crescent the evening before fasting begins. The faithful spend the month of Ramadan in mosques for evening prayers known as taraweeh, while free time during the day is often spent reading the Koran

and listening to religious lectures. Each day for the month of Ramadan, Muslims abstain from eating and drinking from sunrise to sunset. Even a sip of water, coffee or a cigarette can invalidate one’s fast. There are exceptions to fasting for children, the elderly, the sick, women who are pregnant, nursing or menstruating, and people traveling. Many break their fast as the Prophet Muhammad did around 1,400 years ago, with a sip of water and some dates at sunset followed by prayer. It is common for Muslims to break their fast with family and friends and charities organize free meals for the public at mosques and other public spaces.

The fast is intended to bring the faithful closer to God and to remind them of the suffering of those less fortunate. Fasting during Ramadan is one of the five pillars of Islam, along with the Muslim declaration of faith, daily prayer, charity and performing the hajj pilgrimage in Mecca. Non-Muslims or adult Muslims not observing the fast who eat in public during the day in Ramadan can be fined or even jailed in some Middle Eastern countries, such as Saudi Arabia and the United Arab Emirates, which is home to large Western expatriate populations in Dubai and Abu Dhabi. Muslims celebrate the end of Ramadan with a three-day holiday called Eid al-Fitr. AP

Trump: US allies should pay for military protection

ASHINGTON—Donald Trump, the presumptive Republican presidential nominee, said US allies, including Japan, Germany and Saudi Arabia, should be compelled to pay in full for American military protection. “We’re providing a tremendous service,” Trump said in a recorded interview shown on CNN. The US “is stone cold broke,” he said. Asked about statements that seemed to support a nucleararmed Japan as a deterrent to potential North Korean or Chinese aggression, Trump said that while the US is bound to defend Japan in the event of an attack,

the reverse isn’t true. “That’s up to them,” Trump said, adding that the US had to be prepared to walk away from agreements that are costing it billions of dollars. Reminded that he was talking about major US allies, Trump said “it has to work both ways.” Trump also responded to Democratic frontrunner Hillary Clinton’s description of him as temperamentally unfit for the presidency. “You can’t have that success without good temperament,” the Republican said, citing his success in real-estate development, television and, now, politics. “I have a temperament that is totally under control.” Bloomberg News/TNS

In tiny Lebanon, a Little Brazil

ULTAN YA ACOUB, Lebanon—At the eastern edge of the rural Bekaa Valley, where the rocky hillsides are stippled with cherry trees, a generations-old kinship with Brazil has imbued two Lebanese villages with a Latino spirit. Lusi and Sultan Yaacoub are home to more than 1,000 Brazilian nationals, many of whom speak Portuguese as fluently as they do Arabic. The villages are deeply influenced by Brazilian culture, but this is not apparent at first glance. The Islamic call to prayer reverberates through the zigzag alleys five times a day and the pale stone houses resemble any others in the Bekaa Valley. But residents mix Portuguese and Arabic in nearly every conversation and the local cuisine is unmistakably Brazilian. Though there are no official statistics, one municipal council representative said “99 percent” of the community are Brazilian nationals. Almost everyone said they had lived in South America at some point. Christina Hindi’s Portuguese bakery—or pastelaria—sells savory pastries, such as pao de queijo, empada and coxinhas, as well as sweet treats, like churros, deepfried dough. Tropical drinks, such as coconut milk and guarana soda, are popular local refreshments. When Brazil’s national soccer team plays, “everyone raises the Brazilian flag,” said the mayor of Sultan Yaacoub, Ahmad Jaroush. Nobody misses the match. “You feel here as if you are living in Brazil,” said Fatima Wehbe, a Brazilian-born member of the Sultan Yaacoub municipal council, proudly. Since the late-19th century, people have been driven out of L eba non— a nd espec i a l ly it s mounta inous hear t lands—by economic hardship, famine, conscription or war. Some traveled to the Americas, settling in the United States, Mexico, Argentina, Cuba—and, of course, Brazil. The Brazilian Foreign Ministry estimates that between 7 million and 10 million Brazilians are of Lebanese descent. Brazil’s acting

president, Michel Temer, is the son of Lebanese immigrants, though his family is from the northern mountains, not the Bekaa. Many of these emigrants have maintained strong ties with their homeland, including through marriage. Lusi residents said an average of 20 weddings take place each summer between a man or woman from the village and a suitor from Brazil. Many of these couples choose to stay, or at least to maintain a home, in the Bekaa Valley. Hindi, the pastelaria owner, was born in the Brazilian city of Sao Paolo in 1970, and moved to Lusi with her parents in 1985. A year later, she married a young man from the village, before returning with him to her country of birth. They moved to Brazil because her husband is a farmer, and in Lebanon “the crop was weak,” she said. A decade or so later they returned to Lebanon with their daughter, for many of the same reasons they had left. “The Brazilian economy is weak, and there’s no security,” Hindi said. Residents also cite their attachment to their Lebanese heritage and, sometimes, loneliness as reasons for returning to Bekaa. “You want to marry someone of your own religion and tradition,” said Yazdeh Hindi, Christina’s younger sister. The community is predominantly Muslim, and its emigrants have mostly adhered to a conservative reading of their faith. Still, many in the community who moved to Brazil have stayed. Jaroush, the mayor, estimates some 4,000 to 5,000 locals from the village and their descendants live in Brazil. Many families have accumulated their wealth through trade or remittances from Brazil. The homes in Lusi and Sultan Yaacoub are larger than average for the region; some are gated and have manicured gardens. Jaroush said the population swells in the Lebanese summer, especially during boom years in Brazil, when expatriates return to invest in their homes and enjoy the company of friends and family. AP

3 dead, 9 hospitalized in Belgium train wreck

RUSSELS—A late-night passenger train slammed into the rear of a halted freight train in eastern Belgium, derailing two cars and killing three people and injuring nine more, some critically, authorities said on Monday. “The passenger train is really in a lamentable state,” Francis Dejon, mayor of the commune of Saint-Georges-sur-Meuse, told a news conference. “We very lucky there weren’t more victims.” Twenty-seven other passengers were treated as a result of the accident, which authorities said took place around 11 p.m. on Sunday. RTL broadcasting said the passenger train was carrying about 40 people when, at a speed of 90 kilometer per hour, it slammed into the freight train at Hermalle-sous-Huy on the banks of the Meuse river near Liege. Two cars from the passenger train derailed

and tumbled onto their side. The first car, Dejon said, was so badly damaged “it was curled back on itself.” It took rescuers up to three hours to free people from the wreckage. Some of the nine injured people hospitalized were in critical condition, and the death toll could rise, the mayor said. He said prosecutors were at the scene and were investigating the cause of the accident. “The SNCB will participate closely in the investigation,” Belgium’s national railway operator said in a statement. Its services have been seriously affected by a recent wave of strikes, especially in French-speaking parts of the country. The train wreck halted rail service between Namur and Liege, two of Belgium’s largest cities. Nathalie Pierard, an SNCB spokesman, said it could take several days to clear the tracks. AP

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www.businessmirror.com.ph | Tuesday, June 7, 2016

China’s Xi opens US talks

r esident X i J i n p i n g opened an annual meeting of top US and Chinese officials by listing areas where cooperation brought success, striking a cooperative tone even as tensions simmer over China’s economic policy and land-reclamation work in the South China Sea. The world’s two biggest economies have seen tangible benefits in the areas of economic-policy communication, military exchanges and a landmark climate-change agreement last December, Xi said at the start of the two-day Strategic and Economic Dialogue in Beijing. He said China and the US shouldn’t fear disagreements. “It’s not scary to have disagreements,” Xi said. “The key is not to use disagreements as an excuse for confrontation. Some disputes may not be solved in a short time. Both sides should put themselves in each others’ shoes and manage them in a pragmatic and constructive way.” While Xi didn’t mention any points of contention, the two sides have butted heads over the US pivot to the region and China’s more assertive foreign policy, which has included land reclamation on

disputed islands and reefs in the South China Sea. That issue dominated discussions at a security forum in Singapore over the weekend, with US Defense Secretary Ash Carter saying China risked building a “Great Wall of self-isolation” through its actions on the South China Sea. The Chinese president didn’t name any specific sticking point between the two powers. Nonconfrontation and shelving disputes to seek mutual benefits was the message he chose to send in the most senior-level annual dialogue mechanism between two countries. China and the United States have “vast common interests” in the Asia-Pacific region, which should not become “an arena of competition,” he said. The annual dialogue is taking place today and on Tuesday, and is led by Vice Premier Wang Yang and State Councilor Yang Jiechi on the Chinese side, and Secretary of State John Kerry and Treasury Secretary Jacob Lew on the US side. Ahead of the talks, Lew urged China to improve monetary-policy communication, as it takes on an increasingly large role in the global economy. Bloomberg News

Swiss reject measure on basic income

he Sw iss rejec ted t wo popular initiatives that con s t it ut e d t he l at e s t threat to the country’s businessfriendly environment. Voters dismissed a measure that would have reduced the pay of Swisscom AG’s chief executive officer by three quarters and also shot down a proposal to establish a universal basic income, the federal chancellery said on Sunday. While surveys indicated the latter would fail, the outcome of the former—the so-called Pro Service Public initiative—had been considered too close to call. Sunday’s vote “reinforces Switzerland as a favorable place to do business and be fiscally prudent,” said Jon Cox head of Swiss equities at Kepler Cheuvreux in Zurich, adding that it would likely have a positive effect on the stock market. “It’s a relief for business and for Switzerland’s reputation.” Plebiscites are a key feature of the country’s direct democracy, with votes typically held four times a year on a wide range of topics, and 100,000 signatures are required to make the national ballot. Voters also rejected an automobile infrastructure-financing measure, but backed the government’s proposed change to the asylum-granting process. Pro Service Public, which aimed at improving public services at Swisscom, rail-road operator SBB and the national postal service, is the latest in a series of popular initiatives critical of high-earners and big business and follows a 2013 plebiscite that introduced some of the world’s toughest rules on executive pay. In 2014 they voted for immigration curbs, despite warnings of damage to the economy. Pro Service Public contained the requirement that an executive be paid no more than a government minister. It would also have banned cross-subsidization between companies and stopped firms from aiming to post a profit in the area of basic services. Restricting top earners’ incomes would have triggered a cascade of pay cuts, affecting more than 7,000 people at the three companies, according to a study conducted by University of Zurich commissioned by the “no”committee. Swisscom, in which the state holds a 51-percent stake, issued a statement welcoming the outcome of the vote. Voters “weren’t seduced by

the title” of the initiative, said Transport Minister Doris Leuthard, who had argued the measure would weaken rather then improve public services. “It’s a sign of political maturity.”

High salaries

Still, curbs on executive pay at state-controlled companies aren’t yet off the table. According to SonntagsBlick newspaper, Social Democrat lawmaker Corrado Pardini will propose a motion in parliament for a wage ceiling of 500,000 francs ($512,350). “Criticizing high salaries is a powerful argument,” said Patrick Emmenegger, a professor of political economy at the University of St. Gallen. “People have trouble understanding the rationale behind paying large sums to individuals.” As for the basic income measure, it was launched to guarantee everyone “a decent existence” in one of the world’s wealthiest countries. While the initiators had left it up to the government to decide how large the stipend should be, they suggested 2,500 francs for an adult and a quarter of that sum for a child. They estimated the plan would have cost 200 billion francs a year, with funding stemming from current state and social welfare programs. T he gover nment arg ued it would have forced tax increases and created a disincentive to work, potentially leading to shortages of skilled employees and prompting companies to move outside of Switzerland.

International attention

The idea of paying everyone a stipend, regardless of how much they work, isn’t unique to Switzerland. Finland enacted an initial study on the matter last year, and it has also drawn interest in Canada and the Netherlands. Among the best-known proponents of the endeavor is former Greek Finance Minister Yanis Varoufakis, who contends it would help offset the ill effects from automation, which eliminates jobs. “There has been an enormous interest from abroad, we started a trend,” Daniel Haeni, one of the initiators of the basic income proposal, told SRF. “It would have been naive to expect the basic income to be accepted in the first try. In Switzerland all big changes need several attempts to pass.” Bloomberg News

People dine at outdoor cafés and walk along Lincoln Road Mall, a pedestrian area featuring retail shops and restaurants in Miami Beach, Florida. Americans are treating themselves with more restaurant meals after slogging through a dreary seven-year recovery from the worst economic crisis since the Great Depression. AP/Lynne Sladky

US economists uncertain about US growth this year

conomic growth will slacken in 2016 to its slowest pace in four years, as uncertainty about the presidential election weighs on the outlook, according to a survey of forecasters by the National Association for Business Economics (Nabe). They see GDP expanding 1.9 percent this year on a fourth quarter-to- fourth quarter basis. That’s down from a projected 2.5-percent gain in the last quarterly survey released in March and compares with growth last year of 2 percent. Almost 60 percent of forecasters say uncertainty surrounding the November presidential election will hurt the economy, the association said. Economic unease has shaken up the upcoming presidential race. Americans especially worried about the economy have been more likely to support outsider

1.9% The projected growth in GDP this year

candidates, like Donald Trump and Sen. Bernie Sanders. The crucial California Democratic primary is on Tuesday. “If I’m an owner of a medium-sized business and I’m hearing very rattling news about

the election, on the margin I’ll be a little more cautious about hiring or making an investment,” said Lisa Emsbo-Mattingly, president of Nabe. Emsbo-Mattingly, who is also director of research for asset allocation for Fidelity Investments in Boston, said the biggest factor behind the markdown in the 2016 outlook is weak business investment. Spending on equipment, structures and intellectual property is projected to stall in 2016, after expanding 2.8 percent last year. Forty-nine percent of the economists in the Nabe survey see a positive impact on economic growth this year from low oil prices, as opposed to 18 percent viewing it as a negative. For next year, 55 percent see the impact as positive and 7 percent as negative. The economists expect home prices to increase 5 percent for the fourth quarter, unchanged from the March forecast. The median estimate is for the growth in home prices to slow to 4.3 percent next year, just above the 4-percent

forecast in March. Another negative political factor for economic growth: the rise of nationalist views such as trade protectionism around the world was chosen by 38 percent of those surveyed as the factor most likely to significantly reduce global growth in the next two years. Sixteen percent chose terrorism. Corporate profits are forecast to fall this year for the first time since 2011, when they declined 2.9 percent, according to the survey. The Nabe panel sees a 2-percent drop in after-tax profits without inventory valuation and capital consumption adjustments after a 3.3-percent advance last year. The survey of 48 economists was conducted from May 2 to 17, before last week’s release of the monthly jobs report that saw payrolls rise at their slowest pace in almost six years. The Nabe panel projects the economy will gain ground in 2017, with GDP climbing 2.3 percent, according to the median forecast. Profits are also projected to recover and rise by 3.9 percent next year. Bloomberg News and AP

Brexit fears spurring investors to buy volatility, trim equities

rexit is back, and investors from Australia to Thailand are ducking for cover. The pound tumbled and volatility surged on Monday, after two polls showed more Britons favor a vote to leave the European Union at a June 23 referendum than those who want to stay. That prompted a money manager 10,500 miles away in Sydney to buy stock-market protection, while a brokerage in Bangkok is advising clients to trim equities and hold extra cash. “I don’t want to sound scary, but the market isn’t prepared for this,” said Nader Naeimi at AMP Capital Investors Ltd. in Sydney, a company that oversees more than $110 billion. He’s been buying futures contracts on European and US equity volatility, even as he forecasts voters will choose to stay in the EU. “It makes sense to buy

some protection. Fear, worry and volatility are likely to intensify as we get closer,” he said. State Street Global Advisors, which oversees $2 trillion, recommends selling UK and European equities. Win Udomrachtavanich, chairman of Ktb Securities (Thailand) Co., says savers should cut the amount of equities they hold and keep the money in cash. Goldman Sachs Assets Management, which oversees more than $1 trillion, said last week it would be heading into the Brexit vote “with little UK risk in portfolios.” Markets reeled on Monday in Asia from the latest polls. Sterling weakened against all 16 major peers, while Hong Kong’s Hang Seng Index and Japan’s Topix index both traded lower. Weakerthan-expected US jobs growth last month also weighed on sentiment

amid concern growth in the world’s largest economy is struggling. A YouGov poll for ITV found 45 percent would choose “Leave” at the June 23 referendum, compared with 41 percent picking “Remain.” A separate survey by TNS showed 43 percent for Leave and 41 percent for Remain. Meanwhile, futures on the UK’s FTSE 100 Index climbed 0.6 percent as of 5:20 a.m. in London. “I advise clients to take profit on local stocks and hold cash because Britain’s exit from the EU may create turmoil in global equity markets,” said Ktb Securities’s Udomrachtavanich in Bangkok. “Most investors had too much optimism that Britain would continue their stay in the EU. The chance of an exit is rising.” AMP’s Naeimi bought futures on the Euro Stoxx 50 Volatility

Index, known as the VStoxx, as well as futures on the VIX Index, as the Chicago Board Options Exchange Volatility Index is known. These trades will be profitable if the gauges climb, which happens when investors ascribe a higher chance of future stock swings. His fund, which isn’t limited to any one asset class, has beaten 75 percent of peers over the past five years, Bloomberg data show. “Our concern is, if the Brexit gets up, it’s going to be basically an ongoing period of problem after problem after problem after problem,” Mark Wills, Sydneybased head of investment solutions group for Asia Pacific at State Street Global, said by phone on Monday. “It’s just going to make Europe on a relative basis uninvestible.” Bloomberg News

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IS kills dozens of its men in hunt for spies

AGHDAD—In March a senior commander with the Islamic State (IS) group was driving through northern Syria on orders to lead militants in the fighting there when a drone blasted his vehicle to oblivion.

The killing of Abu Hayjaa alTunsi, a Tunisian jihadi, sparked a panicked hunt within the group’s ranks for spies who could have tipped off the US-led coalition about his closely guarded movements. By the time it was over, the group would kill 38 of its own members on suspicion of acting as informants. They were among dozens of IS members killed by their own leadership in recent months in a vicious purge after a string of air strikes killed prominent figures. Others have disappeared into prisons and still more have fled, fearing they could be next as the jihadi group turns on itself in the hunt for moles, according to Syrian opposition activists, Kurdish militia commanders, several Iraqi intelligence officials and an informant for the Iraqi government who worked within IS ranks. The fear of informants has fueled paranoia among the militants’ ranks. A mobile phone or Internet connection can raise suspicions. As a warning to others, IS has displayed the bodies of some suspected spies in public—or used particularly gruesome methods, including reportedly dropping some into a vat of acid. IS “commanders don’t dare come from Iraq to Syria because they are being liquidated” by air strikes, said Bebars al-Talawy, an opposition activist in Syria who monitors the jihadi group. Over the past months, American officials have said the US has killed a string of top commanders from the group, including its “minister of war” Omar al-Shishani, feared Iraqi militant Shaker Wuhayeb, also known as Abu Wahib, as well as a

top finance official known by several names, including Haji Iman, Abu Alaa al-Afari or Abu Ali Al-Anbari. In the northern Iraqi city of Mosul, the biggest city held by IS across its “caliphate” stretching across Syria and Iraq, a succession of militants who held the post of wali, or governor, in the province have died in air strikes. As a result, those appointed to governor posts have asked not to be identified and they limit their movements, the Iraqi informant told The Associated Press (AP). Iraqi intelligence officials allowed the AP to speak by phone with the informant, who spoke on condition of anonymity, fearing for his life. The purge comes at a time when IS has lost ground in both Syria and Iraq. An Iraqi government offensive recaptured the western city of Ramadi from IS earlier this year, and another mission is under way to retake the nearby city of Fallujah. Rami Abdurrahman, who heads the Britain-based Syrian Observatory for Human Rights, said some IS fighters began feeding information to the coalition about targets and movements of the group’s officials because they needed money after the extremist group sharply reduced salaries in the wake of coalition and Russian air strikes on IS-held oil facilities earlier this year. The damage and the loss of important IS-held supply routes into Turkey have reportedly hurt the group’s financing. “They have executed dozens of fighters on charges of giving information to the coalition or putting [GPS] chips in order for the aircraft to strike at a specific area,” said Abdurrahman, referring to IS in Syria.

Israelis hold annual march through a tense Jerusalem city

NPR journalist Gilkey, translator killed in Afghanistan

ERUSALEM—Thousands of Israelis marched through Jerusalem’s Old City amid high tensions on Sunday to commemorate the capture of the city’s eastern sector in the 1967 Mideast war. The marchers, waving Israeli flags and chanting, paraded through the ancient center, which is home to the city’s most sensitive holy sites. The march snaked through the heart of the Old City’s Muslim Quarter, where revelers danced and blew horns. The march comes amid a nearly nine monthlong wave of Israeli-Palestinian violence. In a sign of the strain, Israel’s Supreme Court earlier on Sunday limited the march’s duration in a bid to “cause minimum friction with Muslim residents,” and police beefed up security to ensure calm. But no incidents were reported by nightfall, the police said, adding that more than 30,000 marchers participated. The Police took extra precautions because the march may have coincided with the start of the Muslim holy month of Ramadan, which begins on Monday. Israel captured east Jerusalem in the 1967 war and considers it part of its eternal, undivided capital. The Palestinians want the eastern sector as the capital of their hoped for state. Earlier on Sunday, Israeli authorities said they had obtained “high-value information” about the Hamas militant group’s tunnel network in the Gaza Strip after arresting a 17-year-old fighter. The Israeli military said the teen was nabbed last month after crossing a border fence and entering Israel. AP

Fighters from the al-Qaeda linked Islamic State of Iraq and the Levant, now called the Islamic State (IS) group, marching in Raqqa, Syria. The IS group has killed dozens of its own members over the past weeks in a hunt for spies and informants after USled coalition air strikes hit a number of high-level jihadis. Militant Website via AP

The militants have responded with methods of their own for rooting out spies, said the informant. For example, they have fed false information to a suspect member about the movements of IS leader Abu Bakr al-Baghdadi, and if an air strike follows on the alleged location, they know the suspect is a spy, he said. They stop fighters in the street and inspect their mobile phones, sometimes making the fighter call any unusual numbers in front of them to see who they are. After the killing of al-Anbari, seven or eight IS officials in Mosul were taken into custody and have since disappeared, their fates unknown, the informant said. “Daesh is now concentrating on how to find informers because they have lost commanders that are hard to replace,” said a senior Iraqi intelligence official in Baghdad, using the Arabic acronym for the IS group. “Now any IS commander has the right to kill a person whom they suspect is an informer for the coalition.” Another Iraqi intelligence official said at least 10 IS fighters and security officials in Mosul were killed by the group in April on suspicion of giving information to the coalition because of various strikes in the city.

Mosul also saw one of the most brutal killings of suspected informants last month, when about a dozen fighters and civilians were drowned in a vat filled with acid, one senior Iraqi intelligence official said. In the western province of Anbar, the Iraqi militant Wuhayeb was killed in a May 6 air strike in the town of Rutba. Wuhayeb was a militant veteran, serving first in al-Qaeda in Iraq before it became the IS group. He first came to prominence in 2013, when a video showed him and his fighters stopping a group of Syrian truck drivers crossing Anbar. Wuhayeb asks each if he is Sunni or Shiite, and when they say Sunni, he quizzes them on how many times one bows during prayer. When they get it wrong, three of them admit to being Alawites, a Shiite offshoot sect, and Wuhayeb and his men lay the three drivers in the dirt and shoot them to death. After Wuhayeb’s killing, IS killed several dozen of its own members in Anbar, including some midlevel officials, on suspicion of informing on his location, and other members fled to Turkey, the two intelligence officials said. They spoke on condition of anonymity because they were not authorized to talk to the press.

A SH I NGT ON — Dav id Gilkey, a veteran news photographer and video editor for National Public Radio (NPR), and an Afghan translator, Zabihullah Tamanna, were killed while on assignment in southern Afghanistan on Sunday, a network spokesman said. Gilkey and Tamanna were traveling with an Afghan army unit near Marjah in Helmand province when the convoy came under fire and their vehicle was struck, the network’s spokesman, Isabel Lara, said in a statement. Two other NPR journalists, Tom Bowman and producer Monika Evstatieva, were traveling with them and were not hurt. Secretary of State John Kerry called the attack that killed Gilkey and Tamanna “a grim reminder of the danger that continues to face the Afghan people, the dedication of Afghan national defense and security forces to securing their country, and of the courage of intrepid journalists—and their interpreters—who are trying to convey that important story to the rest of the world.” Gilkey had covered conflict and war in Iraq and Afghanistan since the September 11, 2001, attacks on Washington and New York, and was committed to helping the public see the wars and the people caught up in them, NPR Senior Vice President of News and Editorial Director Michael Oreskes said in a statement. “As a man and as a photojournalist, David brought out the humanity of all those around him. He let us see the world and each other through his eyes,” Oreskes said. Tamanna was a freelancer who often worked for NPR, Lara said in

David Gilkey (right), a veteran news photographer and video editor for National Public Radio, and Zabihullah Tamanna, an Afghan translator, were killed in southern Afghanistan on Sunday. Monika Evstatieva/NPR via AP

an e-mail. Known as Zabi, he also worked as a photographer and reporter, taking pictures for China’s Xinhua news agency and writing for Turkey’s Anadolu News Agency. The stories he covered ranged from the inauguration of the new president, to the daily attacks and drone strikes in the war-ravaged country. Veteran correspondent Phillip Reeves, who recruited Tamanna to the network, called him “a great colleague.” “He was a lovely man, with a

great eye for a story and deep wisdom about his country,” Reeves said in a statement. “He clearly loved his family.” Gilkey covered both national and international news for the radio network and its web site and had made numerous trips to Afghanistan and Iraq, according to NPR’s web site. His work has been recognized with numerous awards, including the prestigious George Polk Award and a national Emmy. The White

The number of Islamic State members the group had executed on suspicion of acting as informants

Some of the suspects were shot dead in front of other IS fighters as a lesson, the Iraqi officials said. After the Tunisian militant Abu Hayjaa was killed on the road outside Raqqa on March 30, IS leadership in Iraq sent Iraqi and Chechen security officials to investigate, according to Abdurrahman and alTalawy, the Syria-based activist. Suspects were rounded up, taken to military bases around Raqqa and the purge ensued. Within days, 21 IS fighters were killed, including a senior commander from North Africa, Abdurrahman said. Dozens more were taken back to Iraq for further questioning. Of those, 17 were killed and 32 were expelled from the group but allowed

House News Photographers Association named Gilkey their Still Photographer of the Year in 2011. In 2015 he became the first multimedia journalist to receive the Edward R. Murrow Award for his coverage of international breaking news, military conflicts and natural disasters. Twenty-seven journalists have been killed in Afghanistan since 1992, according to the Committee to Protect Journalists (CPJ), not counting Gilkey and Tamanna. They include Anja Niedringhaus, a photographer for The Associated Press (AP) who was shot dead in 2014 while covering the national elections for president and provincial councils. AP special correspondent for the region, Kathy Gannon, was also in the car and wounded in the attack. Worldwide, nearly 1,200 journalists have died since 1992, according to CPJ’s website. In addition to Iraq and Afghanistan, Gilkey covered the conflict between Israel and Hamas in Gaza, the devastating earthquake that shook Haiti in 2010, the fall of apartheid in South Africa, famine in Somalia, and war in Rwanda and the Balkans. “The things to do were amazing and the places to see were epic,” Gilkey once said of his work. “But the people, the people are what made it all worth the effort.” Gilkey’s first journalism job was with the Boulder Daily Camera in Colorado, where he covered local assignments for the paper and overseas assignments for Knight Ridder, according to NPR. He later joined the Detroit Free Press until he began working for NPR in 2007. AP

to live, Abdurrahman and al-Talawy said, both citing their contacts in the militant group. Among those brought to Iraq was the group’s top security official for its Badiya “province,” covering a part of central and eastern Syria. His fate remains unknown. Non-IS members are also often caught up in the hunt for spies. In the Tabqa, near Raqqa, IS fighters brought a civilian, Abdul-Hadi Issa, into the main square before dozens of onlookers and announced he was accused of spying. A masked militant then stabbed him in the heart and, with the knife still stuck in the man’s chest, the fighter shot him in the head with a pistol. Issa’s body was hanged in the square with a large piece of paper on his chest proclaiming the crime and the punishment. IS circulated photos of the killing on social media. According to al-Talawy, several other IS members were killed in the town of Sukhna near the central Syrian city of Palmyra on charges of giving information to the coalition about IS bases in the area, as well as trying to locate places where alBaghdadi might be. Sherfan Darwish of the USbacked Syria Democratic Forces, which has been spearheading the fight against IS in Syria, said there is panic in IS-held areas where the extremists have killed people simply for having telecommunications devices in their homes. “There is chaos. Some members and commanders are trying to flee,” Darwish said. The US-led coalition has sought to use its successes in targeting IS leaders to intimidate others. In late May, warplanes dropped leaflets over IS-held parts of Syria with the pictures of two senior militants killed previously in air strikes. “What do these Daesh commanders have in common?” the leaflet read. “They were killed at the hands of the coalition.” The jihadis have responded with their own propaganda. “America, do you think that victory comes by killing a commander or more?” IS Spokesman Abu Mohammed al-Adnani said in a May 21 audio message. “We will not be deterred by your campaigns and you will not be victorious.” AP

Ex-Maldives VP gets 10 yrs on terror charge

ALE, Maldives—A Maldives court has convicted the country’s former vice president on a terrorism charge for possession of firearms and sentenced him to 10 years in prison. The decision by the Criminal Court on Sunday, in a session closed to the media, made Ahmed Adeeb the fourth high-profile politician to be jailed on a terrorism charge since President Yameen Abdul Gayoom was elected in 2013. Former President Mohamed Nasheed, former Defense Minister Mohamed Nazim and head of a leading political party, Sheik Imran Abdulla, are the others to get lengthy prison terms. Nasheed has since been granted asylum in Britain. The cases have been criticized for a lack of due process. Adeeb still faces charges of trying to assassinate Gayoom when an explosion hit the presidential speedboat last year. Gayoom made his trusted young protégé Adeeb his vice president last July after sacking his running mate in the 2013 election. However, Adeeb was arrested just days after the September blast on Gayoom’s speedboat. The blast wounded the president’s wife, an aide and a bodyguard. Later, authorities charged him with possessing firearms prohibited under the country’s terrorism law, and with corruption. The government says the mysterious blast was an assassination attempt even though Federal Bureau of Investigation investigators said they found no evidence of a bomb explosion. Human rights groups have criticized Gayoom for jailing opponents and potential challengers in order to tighten his grip on power. Nasheed along Gayoom’s running made Mohamed Jameel, who also lives in Britain, and supporters of Nazim and Adeeb formed a united opposition in exile last week with the aim to oust Gayoom. AP

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Editor: Lyn Resurreccion A9 Tuesday, June 7, 2016

Blue mineral fueling war vs Afghan govt

ABUL, Afghanistan—Afghanistan’s mineral wealth is helping fuel the war that has long ravaged the country, with armed antigovernment groups—including the Taliban—earning up to $20 million a year from illegal mining of lapis lazuli, a London-based corruption watchdog said on Monday. The group, Global Witness, appealed in its new report that lapis lazuli, a blue stone almost unique to Afghanistan, be classified as a “conflict mineral.” The lapis lazuli mines are mostly concentrated in northern Badakhshan province, which has been “deeply destabilized” by violent competition for control of the mines between local strongmen, lawmakers and the Taliban, the group said. Badakhshan is also a microcosm of what is happening across the country, as mining has become the Taliban’s secondbiggest source of income, after drugs. The Taliban control the production of opium poppies, mostly in the southern province of Helmand, the raw material for most of the world’s heroin. The drugs trade is worth up to $3 billion a year, experts have said. The Taliban have been fighting to overthrow the Kabul administration for 15 years. Afghanistan’s mineral and petrochemical assets are believed to be worth billions of dollars, but the government does not have the money or expertise to develop them, and international firms are deterred by the security situation, which is deteriorating. Global Witness said that, if properly developed, these assets could earn the government $2 billion in annual revenue. The report says the government lost at least $17.5 million in revenue from lapis lazuli alone in 2014, and $10 million in 2015. The total earned by armed groups in 2014 was $19.9 million, the group added, noting that a local strong man identified as Abdul Malek had paid $750,000 in protection money to the Taliban out of proceeds from the illegal lapis lazuli mining. Last year Malek paid the Taliban $4 million, the report says. Without government regulation or control, mining assets have slipped out of Kabul’s control. Global Witness said the Badakhshan lapis lazuli mines have also become a “strategic priority” for Afghanistan’s Islamic State affiliate, which emerged over the past year mostly in the country’s east, along the border with Pakistan. “Unless the Afghan government acts rapidly to regain control, the battle for the lapis mines is set to intensify and further destabilize the country, as well as fund extremism,” the Global Witness report said. AP

US sailor arrested on drunken driving in Japan

OKYO—The US Navy banned drinking and restricted off-base activity on Monday for its personnel in Japan, after a sailor was arrested on suspicion of drunken driving on the island of Okinawa in the latest incident where suspected criminal activity has sparked public anger. Crimes by US military personnel, especially on Okinawa, where the public is fighting to get rid of US bases, are often pointed to as reasons the US soldiers should go. In the latest incident, Petty Officer 2nd Class Aimee Mejia, 21, assigned to Kadena base in Okinawa, was arrested on Sunday after driving the wrong way on a freeway and smashing head-on into two vehicles, police Spokesman Takashi Shirado said. Mejia was not hurt, but two people in the other cars were slightly injured, he said. Under Monday’s order, US Navy personnel will not be allowed to drink at all, off or on base, and cannot freely leave the base grounds, except for commuting from an off-base home to work, or for necessary errands, such as picking up children or groceries. The order will remain until training is carried out and the military feels comfortable everyone understands “responsible behavior,” a Navy statement said. “These measures are not taken lightly,” Rear Adm. Matthew Carter said. “For decades, we have enjoyed a strong relationship with the people of Japan. It is imperative that each sailor understand how our actions affect that relationship, and the US-Japan alliance as a whole.” Okinawa Gov. Takeshi Onaga expressed anger about the recurring misbehavior of American soldiers, noting US measures taken so far had not been enough. “There needs to be a fundamental resolution,” he told reporters. AP

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A12 Tuesday, June 7, 2016

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China fuels PHL’s Jan-April visitor arrivals despite diplomatic issues By Ma. Stella F. Arnaldo

Special to the BusinessMirror

OLITICAL tensions between both countries notwithstanding, the Chinese market continues to help fuel the growth in visitor arrivals to the Philippines. Latest data from the Department of Tourism (DOT) showed Chinese tourists rising close to 89 percent to 238,523 from January to April 2016, from 126,293 in the same period last year. The robust growth in Chinese visitors has enabled the market to edge out the Japanese as third-largest source of foreign tourists for the period in review. China accounted for an 11.5percent share of the 2.07-million total visitor arrivals in the first

11.5% The share of China in the 2.07-million total visitor arrivals in the first four months of 2016

four months of the year. On a month-on-month basis, Chinese tourists grew 62.44 percent to

54,011 in April 2016 alone. Total foreign visitor arrivals in the Philippines were up 14.25 percent, from the same period in 2015. China and the Philippines continue to lock horns over ownership of islands and atolls in the West Philippine Sea (South China Sea), even as the International Court of Justice at The Hague is expected to render its decision on the territorial dispute this month. Sources f rom t he Tour ism Promotions Board, the marketing arm of the DOT, underscored the increased f lights between the Philippines and China as a reason for the rising number of Chinese tourists. There are also “new players,” such as Xiamen Airlines and China Airlines, which have stepped up their charter services between Beijing and Manila, Beijing and Kalibo, and Beijing and Cebu, on top of the charter services also supplied by Philippine Airlines

(PAL) and Cebu Pacific Airways. Starting July 1, PAL’s direct flights between Manila and Beijing will be eight times a week from the current four times a week, which the TPB sources said would further expand visitor arrivals from China. Philippine hotels have also stepped up their game as far as attracting more tourists from China, said Arthur Lopez, president of the Philippine Hotel Owners Association Inc. In a text message, he said the hotels have been employing unique marketing strategies to attract Chinese tourists “from attending trade shows in China, to sales calls to potential and producing accounts, to hosting familiarization tours for top Chinese agents, and Chinese media.” He added that “some hotels print collaterals in Chinese. Hotels, in particular, resorts also employ Chinese-speaking staff, especially at the reception area and [have] web

Next admin likely to nix new DOF, Neda buildings

ncoming Finance Secretary Carlos G. Dominguez III on Monday expressed his opposition to the construction of new buildings for the Department of Finance (DOF) and the National Economic and Development Authority (Neda). Dominguez said the next administration

wants to reconsider the project before bidding for it commences, noting that government priorities have to be “thoroughly thought out.” “The new offices are an example of skewed priorities when a lot of [Supertyphoon] Yolanda survivors still don’t have a roof over

₧4.5B The cost of the new Department of Finance headquarters

their heads,” Dominguez said in a statement. The proposed 20-story DOF building, which will be constructed inside the Bangko Sentral ng Pilipinas (BSP) compound, was earmarked P4.5 billion. Finance Undersecretary Gil S. Beltran said the government is targeting to complete the construction of the new DOF headquarters within two years. The design contract for the new DOF building was awarded to the firm of Arch. Felino Palafox Jr. The project has a multiyear obligational authority (MYOA) from the Department of Budget and Management (DBM), assuring the availability of funds on succeeding budgets of the government. Meanwhile, the construction of the new Neda building was allocated a budget of P2.7 billion, of which P20 million will be spent for a design and engineering study. Construction of the new Neda building will kick off in 2017 and will be completed in 2020. “The proposed project...is the construction of a modern 15-story office building that will house some 999 employees of the Neda central office, as well as attached agencies,” the DBM said in a statement. The Neda’s central office is currently in Pasig City. Starting 2017, the construction of the new Neda building will get an allocation of P573.9 million. This will increase to P592.9 million in 2018, P747.7 million in 2019 and P769.4 million in 2020. “Contrary to statements, the Neda building is justified on economic terms and will affect spending for other infrastructure projects,” a Neda official said. Rea Cu and Cai U. Ordinario

Congress. . .

Continued from A1

Covered Persons Under Republic Act 9160 [Amla] of 2001.” The bill was first proposed in the 16th Congress to regulate casinos and prevent their use as channels to stash funds intended to bankroll terrorist acts. Under SB 2106, casino operators, with respect to their gaming operations, will be designated as covered persons under Republic Act 9160.

sites in Mandarin.” For her part, Aileen Clemente, president of Rajah Travel Corp., said local tour operators have also been actively pursuing and offering specific packages tailored to the requirements of the Chinese tourists. “I believe the different tour operators are also pursuing this market, some of whom deal with charters and concentrate on beach destinations, shopping and the casinos, while some others pursue high-end family tourists who want a staycation on the islands.” According to data supplied by the DOT, South Korea still accounts for the largest source of visitors from January to April 2016, with 481,596 arrivals. The market grew some 6 percent, from the same period last year. In second place is the United States, with 303,951 arrivals (up 7.2 percent); followed by China; Japan, with 183,620 visitors (up 9.6 percent); Australia, with 88,496

arrivals (up 5.9 percent); Taiwan, with 71,656 arrivals (up 29 percent); Canada, with 68,288 arrivals (up 12.4 percent); the United Kingdom, with 63,039 arrivals (up 16.5 percent); Singapore, with 61,033 arrivals (up 1.7 percent); and Malaysia, 2.35-percent share, with 48,835 arrivals (down 3.2 percent). In a press statement, DOT Spokesman and Undersecretary for Tourism Development Benito C. Bengzon Jr. said: “These encouraging tourism figures can be attributed to the DOT’s aggressive marketing activities, international events held in the country, and the foreign markets’ increasing awareness of the product offerings of the different Philippine destinations.” He added that tourism receipts also ref lected the continuing strength in visitor arrivals, with earnings up 12.34 percent to some P87 billion in the first four months of 2016.

Dominguez defends Duterte to investors I ncoming finance chief Carlos G. Dominguez III sought to reassure investors that his new boss is a pragmatic leader who’ll build on the gains that have made the Southeast Asian economy one of the fastest growing in the world. While President-elect Rodrigo R. Duterte makes the headlines mainly for his brashness, foul language and anticrime rhetoric—including threats to kill criminals—Dominguez wants investors to look beyond that, and consider Duterte’s track record as mayor of Davao City. Duterte plans to spread the policies that helped the wider Davao region, which includes the city, expand 9.4 percent in 2014, the fastest in the country, he said. “He has done it by, first of all, assuring there is peace and order, that the laws are fair and uniformly implemented, and he has been business-friendly,” Dominguez, a childhood friend of Duterte and a former agriculture secretary under the late President Corazon Aquino in the 1980s, said in an interview in Manila on June 3. “You can ask the medium- and smallsized businesses and, I think, they will all tell you that the president-elect runs a city where the red tape is minimal, where corruption is absent in all levels, where the laws are strictly implemented,” he said. “Just look at that, and judge for yourselves.” Duterte, who will take office on June 30, inherits an economy that grew faster than China last quarter, won its first investment-grade credit rating under outgoing President Aquino and has ample fiscal room for the new government to boost spending. Duterte plans to pursue policies that will create jobs, boost economic growth and lead to higher credit ratings, Dominguez said. “We are going to certainly keep the successful macroeconomic policies that have allowed our ratings to be improved, that have stabilized our finances,” he said. The new government will seek at least another two rating upgrades, he said. Dominguez, a 70-year-old businessman who owns Marco Polo Hotel in Davao,

outlined plans to cut income taxes and increase borrowing, as the new government seeks to invest more in infrastructure and create more jobs. The unemployment rate was 5.8 percent in January, among the highest in Asia. “The big elephant in the room here is the underemployment and the unemployment and we have to grow faster to give those guys more participation in the economy,” he said. “We have to make sure we have strong investment in human capital, in physical capital, where we encourage competition, where the business regulations are not restrictive and where we look toward creating that environment and confidence in the Philippines.” Duterte won the May elections with his tough talk to fight crime and deal decisively with transport bottlenecks, especially traffic-clogged roads in Manila. The economy, which expanded 6.9 percent in the three months through March from a year earlier, is forecast by the International Monetary Fund to grow 6 percent in 2016. The Philippine Stock Exchange index rose 1 percent to the highest in 10 months, while the peso gained 0.5 percent, the most since May 10, to 46.22 per dollar as of 12 p.m. in Manila on Monday. The yield on the benchmark five-year peso bonds fell to 2.98 percent, the lowest since February 2015, according to Philippine Dealing & Exchange Corp. Benjamin E. Diokno, who will take over the budget portfolio, said in an interview last week the new government is seeking to cut income taxes and borrow more, as it widens the budget deficit to a “comfortable” target of 3 percent of GDP. That would be the biggest shortfall since 2010. Dominguez said he is open to borrowing in dollars and local currency, and may consider diversifying to yuan and sukuk debt, depending on what is the “best deal.” The government will focus on boosting tax revenue, with Dominguez saying he has strong confidence in the new tax and customs chiefs. Bloomberg News

The president-elect runs a city where the red tape is minimal, where corruption is absent in all levels, where the laws are strictly implemented.” —Dominguez

A10 Tuesday, June 7, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

We are no longer ‘the Bosses’

he people of the Philippines have been constantly told for the last six years that they are the “Bosses” of the government. If that is true, then we all did a terrible job and we should have been terminated a long time ago. We, the Bosses, were unable to protect our country’s economic interests in the waters off our shores. We have been unable to assure a clean, reliable and cost-effective power system. As the Bosses, we were unable to decrease smuggling, reduce our drug-abuse problem, or create an economic environment to attract enough needed foreign investment. We did well with attracting tourists, but they came to one of the worst air and sea transportation infrastructures in the world. But the truth is, as the Bosses, we had almost no authority or power over our “employees.” We wanted an absolute end to the Executive branch’s ability to dispense government money through a “pork-barrel” scheme. Even hundreds of thousands of Bosses rallying around the nation accomplished little. It took the Supreme Court to declare pork barrel to be illegal for it to stop. No matter how much we complained about the disaster, known as Metro Manila transportation, our employees responded with the thought that they were doing the best they could possibly do. And, besides, no one probably died waiting two or three hours in the hot sun or rain waiting to commute. We wanted a way to end decades of war and poverty in Mindanao and were given a “take it or leave it” choice that undermined our national sovereignty. An elected official who tells the people they are the Bosses of the government is doing nothing more than mouthing meaningless, feel-good nonsense. The relationship between the elected government and the people is a partnership where each side of the equation has duties and responsibilities to fulfill. The people place trust and authority in government officials to be honorable and to make good decisions. The government officials accept this, knowing that soon they, too, will return to be ordinary citizens once again and must live with the consequences and results of their actions. When people banded together in formal communities, certain full-time positions were needed, such as law enforcement. Certain ordinary citizens were chosen for that job. No longer did they have to work the farms to provide food. Instead, they were given the job of protecting the community in return for the necessities of life. The people were expected to follow the rules that their law enforcers laid down. The law enforcers were expected not to abuse their authority. It was a partnership for the good of all. With a new presidential administration, it is time to retire, once and for all, this idea of the people being “the Bosses.” We all are—or should be—equal in the eyes of the law. We all have our own jobs to do for the betterment of the nation.

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Safe environment biggest incentive for business Manny B. Villar

THE Entrepreneur

he problem of peace and order cannot be underestimated, because it is directly linked to the persistent and long-standing problems of poverty and unemployment.

In a report on the country’s security situation, Arangkada Philippines, which is published by the foreign chambers of commerce in the country, says: “The Philippines has a serious crime problem. Poverty and joblessness create an incentive for petty crime, which the average Filipino is very likely to encounter in his daily life.” Usually, the amount of investments coming to a country, or a country’s attractiveness to investors, is tied to economic indicators, like interest rates, incentives offered by a government and available pool of skilled manpower or size of domestic market. In reality, the typical businessmen look at the peace-and-order situation in the place where they plan to put up businesses. Fear of criminals is a deterrent to investments. In an information guideline for

British investors in the Philippines, the Foreign and Commonwealth Office of the United Kingdom said: “One of the main concerns among investors and business groups is peace and order….” Crime and violence also has a business cost, according to Arangkada Philippines. The Philippines ranked lowest among the six major economies of the Association of Southeast Asian Nations (Indonesia, Malaysia, Singapore, Thailand, Vietnam and the Philippines) in the 2012-2013 Global Competitiveness Report. It is no wonder that the Philippines is still playing catchup with its peer economies in terms of inflows of foreign direct investments. The Philippines, according to Arangkada, has the highest murder rate among all the 10 members of Asean—three to 15 times higher than the other countries, except Thailand.

The foreign chambers believe that the estimated 1.2 million unlicensed firearms in the country contribute to the Philippines’s ranking as No. 10 worldwide for gun homicide. Kidnapping for ransom, which also involves foreigners as victims, has long been a problem in the Philippines. These activities, including the kidnapping of 21 tourists from six countries from Sipadan Island Resort in Malaysia, who were taken by the Abu Sayyaf to their base in Jolo in 2010, have earned the Philippines the reputation as “kidnap capital of Asia.” During his tenure as mayor of Davao City, incoming President Rodrigo R. Duterte had shown that a safe environment is good for business. I have been doing business in that city for many years, so I personally know that it is a safe place to invest.

PSE: It’s only the beginning John Mangun

OUTSIDE THE BOX

hen the Philippine Stock Exchange (PSE) bottomed out at the election, I asked then who would take credit— Rodrigo R. Duterte or President Aquino—if the PSE index (PSEi) made an historic high before June 30. I was not being funny. Commentary about the PSE is usually so off the mark, it is like a magician that makes you look at his right hand while the left hand is making the “magic”. It seems like every time the market goes down, it is because of the potential of the US Federal Reserve (Fed) raising its interest rates. I wrote repeatedly in 2015 that the Fed would not raise rates until the last moment—which they did—and that the increase would be so insignificant as to make little difference, which it was. The rate hike that has been repeatedly predicted for this month has been pure fantasy. Everyone has known for months that the British would be voting on June 23 to leave

the European Union. This is the most significant political event on the continent since 1966, when Charles de Gaulle pulled France out of the North Atlantic Treaty Organization. This is the most significant economic event since the introduction of the euro currency in 1999. No one knows which way this vote is going to go or how the markets will react if the British vote to leave. For the Fed to raise rates before the vote would be the common sense equivalent of burning down your house because you don’t like your next-door neighbor. Even a rate increase at the July Fed meeting is now a failed dream. The latest US job-creation data

The Philippine stock market offers sensible and riskprudent investments for the P5,000 mutual-fund buyer to the P200 million account that accumulates the bluechip stocks and everything in between. Do yourself a financial favor; buy the PSE.

released this past Friday offered the worst monthly numbers since September 2010 and came with downside revisions for April. The number of net jobs created was so bad and so below expectations—38,000 versus 164,000—that it is being blamed on climate change and Donald Trump being the Republican Party’s candidate for US president. Meanwhile, the PSE had a great month of May with the PSEi up 3.38 percent and the All-Share Philippines Stock Exchange All Share index gaining 4.4 percent. While the “experts” were focused on the US instead of the Philippines, the property issues rose 6.47 percent, with the financial shares up 5.37 percent. Had they looked at the PSE, they might have also mentioned that on a monthly

Based on a report from the Philippine Statistics Authority, the Davao region’s economy recorded the fastest growth among the country’s 17 regions in 2014. The region grew by 9.4 percent in 2014, faster than the national economy’s growth of 6.1 percent in terms of GDP and the National Capital Region’s growth of 5.9 percent. Thus, I welcome the new President’s tough stance against crime, which has been cited as one of the major factors behind his overwhelming victory in the May 9 elections. His initial appointments, which include the heads of law enforcement agencies, reflect his commitment to the pursuit of peace and order throughout the country. These are the Philippine National Police, Philippine Drug Enforcement Agency and the National Bureau of Investigation. Peace and order is the biggest single incentive for investments. When a country has a good peace-and-order record, then that’s the biggest attraction for investors. After all, businessmen know how to make money on their own. Just provide them with a safe environment to conduct their business. For comments, e-mail mbv.secretariat@ gmail.com or visit www.mannyvillar.com.ph.

close basis, the property index is at an historic high as is the holding company index. To the 1 million Filipino stockmarket investors, good job. To my subscribers who have been buying on any pullbacks since May 13, thank you for your confidence. To those that still think the PSE is manipulated, a zero-sum game when there are the same number of losers as winners, or an “Old Boy’s Club,” you are “thinking” yourself out of great profit opportunities. Abotiz Equity Ventures is up 34 percent in three months. Ayala Corp. shares increased 6 percent in two weeks. Speculative gaming issue Premium Leisure Corp. gained about 10 percent on Monday. The Philippine stock market offers sensible and risk-prudent investments for the P5,000 mutual-fund buyer to the P200 million account that accumulates the blue-chip stocks and everything in between. Do yourself a financial favor; buy the PSE. E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Tuesday, June 7, 2016 A11

Why oil prices and power Something is very wrong when govt disregards contracts rates keep on rising Ernesto M. Hilario

Cecilio T. Arillo

database Continued from A1

etween them and Mrs. Gloria Macapagal-Arroyo, a total of 46 IPP contracts were signed, with NPC playing the lead role for the government’s overall power project.

Before the end of Ramos’s term, NPC gradually went down into bankruptcy; its liabilities grew, as income declined over the years, while the ratio of loans to capital expenditure consistently increased. In terms of debt-to-equity ratio, NPC had become increasingly dependent on debt, registering from 60-40 in 1993 and 82 in 1997, just 10 years after the fall of the Marcos regime. According to the Bureau of the Treasury and the Freedom from Debt Coalition (FDC), obligations to the IPPs rose to P244 billion, from only P35 billion in 1995, while long-term debts had risen to P441 billion in 1997. The heavy financial losses, the huge capital requirement for upgrading power facilities and so-called inefficiencies of the public sector eventually became the government’s major reasons for pushing the passage of the Omnibus Electric Power Industry bill. More compelling reasons, however, lay in new loans dangled by international financial institutions (IFIs), the approval of which depended on the enactment of the proposed measure, FDC said. First filed in 1996, the power bill met sustained opposition from people’s organizations, among them were Sen. Juan Ponce Enrile and FDC, who exposed some of the onerous contracts and the many threats they posed to consumer’s interests.

IMF and other IFIs intervention

In December 1999 the International Monetary Fund (IMF) intervened. In a letter addressed to the Lower House Committee on Energy, Markus Rodlauer, IMF chief mission officer, called for the immediate passage of House Bill 8457, or the Omnibus Power bill, stressing the importance of “investor confidence and the adherence to international financing institutions’ conditionality.” The letter further noted: “We are disappointed to learn that the ‘Electricity Reform bill,’ which you have sponsored, appears to have run into some further delays in passing through the House of Congress. As you are aware, the program supported by the IMF expected passage of this bill before the end of the year, which already represented a significant delay from earlier schedules.” The IMF had included the privatization of NPC as part of its “exit program” prescription for the Philippines. As stated under the Memorandum of Economic and Financial Policies of the Philippine government, “The structural reform agenda of the country will increase the resiliency of the corporate sector mainly by improving the enabling legal framework; continuing trade and investments liberalization; developing of the domestic capital market; additional privatization; and further strengthening external debt management.”

The memorandum explicitly emphasized that the government remains committed to carry out its privatization plan in the coming years…. “Going forward in privatization efforts will focus on disposing of remaining major items, which are strategically vital to industrial development, particularly the National Power Corp.” The IMF pressure was part of its Precautionary Standby Arrangement for the Philippines, worth $1.4 billion for the years 1998 and 1999. To stop the country’s financial hemorrhage, President Joseph Estrada ordered to end the practice of issuing sovereign guarantees when he assumed office from Ramos. According to FDC, the main architects of power-sector reforms were the World Bank and the Asian Development Bank (ADB). Their policy toward power-sector reform stemmed from the perspective that developing countries need energy, particularly electric power, for social and economic development. Today their primary focus is on rural electric cooperatives (RECs), allocating almost $201.3 million thus far. Other energy projects in the Philippines with World Bank loans amounted to $1.5 billion. One of these, $65.5 million in loan, was extended to the country’s biggest distribution company, the Manila Electric Co. (Meralco). The World Bank’s other lending window, the Global Environment Project, financed some $442 million in different Philippine power projects. These projects carried sovereign guarantees. Another indicator of significant international financial institutions’ involvement in power privatization is the role of the ADB, whose biggest lending in the Philippines goes also to the power sector. The bank’s investments are designed to create a competitive market in the electricity sector through the privatization of NPC and the restructuring of the entire sector. In line with this, the FDC said, other loans and technical assistance support were granted for the restructuring and privatization of the industry, particularly private-sector generation expansion, reinforcement and expansion of the transmission grid, and consolidation of distribution of utilities. By 2002 the ADB lending in the power sector had reached $2.257.6 billion. For power restructuring, the ADB funded $300 million. The World Bank and the Japan Bank for International Cooperation provided additional funding of $400 million, while the USAID released several more millions of dollars in the form of technical assistance grants. To be continued To reach the writer, e-mail cecilio.arillo@ gmail.com.

ABOUT TOWN

ost local and foreign business groups have expressed support for the incoming Duterte administration’s eight-point economic agenda. This agenda includes continuing current macroeconomic policies; accelerating infrastructure spending to 5 percent of the GDP; and amending constitutional provisions restricting foreign investments. The Management Association of the Philippines (MAP), for one, welcomes President-elect Rodrigo R. Duterte’s plan to lift the constitutional restrictions on foreign investments. The Canadian Chamber of Commerce of the Philippines also sees the eight-point economic agenda as “fairly progressive and very reasonable.” Another big concern of the business community, however, apart from lifting the restrictive economic provisions of the 1987 Charter and improving poor public infrastructure, is putting an end to erratic business policies and making the government honor its contracts with private partners. The government’s penchant for changing business rules in midstream has been among the complaints of foreign investors, who have chosen, instead, to park their money elsewhere. Incoming Budget Secretary and UP economics Prof. Benjamin E. Diokno believes that the next government should ensure the attractiveness of the Philippines to foreign investors, not just by addressing restrictive economic provisions in the Constitution, but also by taking

steps to make it easier for investors to do business in the country. Generating more foreign direct investments (FDI) is crucial for Diokno, as this would “create decent jobs and introduce into the country modern technologies, which, in turn, would improve the competitiveness of the economy.” In fact, during the 2011-to-2015 period, the Philippines attracted just $20.4-billion FDI compared to Singapore’s $305.6 billion, Indonesia’s $107.6 billion, Malaysia’s $56.6 billion and Thailand’s $42.0 billion. One reason for the hesitation of investors to come in is that infrastructure projects take an eternity to take off. The Public-Private Partnership (PPP) Program targeted over 50 projects, but only 12 have actually been started in six years due to unwarranted delays in the review processes of overseer agencies and the failure of the government to meet its contract commitments, like the delivery of right-of-way or turnover of facilities. More than this, the government has failed to honor its obligations, as stipulated in its contracts with water-delivery providers and toll-

Maverick lawmaker Subramanian Swamy, claiming to speak for much of the ruling Bharatiya Janata Party, has taken the lead in demanding Rajan’s exit. He says Rajan has kept monetary policy too tight for too long—and that the central-bank governor isn’t “fully Indian.” The first charge is wrong; the second is unworthy of discussion. Rajan, a distinguished University of Chicago scholar and former chief economist of the International Monetary Fund, is best known for anticipating the 2008 subprime lending

on International Trade Law in Geneva, Switzerland, to recover about P3 billion in foregone revenues, arising from the failure of the Toll Regulatory Board (TRB) to grant its proposed toll-fee adjustments at the North Luzon Expressway in 2012 and 2013, as stipulated in their operation and maintenance agreement. And five, the case filed by Cavite Infrastructure Corp. before an arbitration court in New York to recover P877 million in foregone revenues, brought about by the TRB’s similar inaction on its contract-mandated rate-hike petitions since 2011. The Ayala Cor p.-controlled MWC has a pending claim of P79 billion, while the Metro Pacific Investments Corp. (MPIC) group has pending claims amounting to P11 billion in foregone revenues, resulting from MWSS and the TRB inaction on contract-provided tariff adjustments in their water delivery and toll-road businesses. The Light Rail Management Corp. (LRMC), a joint venture of MPIC and the Ayala Corp. that won the PPP contract on the P64.9-billion Light Rail Transit Line 1 Cavite Extension Project, also has a P1.9billion claim against the government over contract violations, including the latter’s failure to carry out a fare adjustment, improve train platforms and deliver 100 light-rail vehicles (LRVs) in working condition to LRMC. The government only managed to deliver 77 LRVs and LRMC was forced to shoulder the cost of rehabilitating the trains. Will the incoming administration fare better in honoring contracts with the private sector? Let’s wait and see. E-mail: ernhil@yahoo.com.

Muhammad Ali transformed the image of Islam Noah Feldman

BLOOMBERG

oxing made Muhammad Ali famous, but his conversion to Islam—and the meaning the world attached to it—made him a global historical figure. Ali’s conversion came to be understood as an act of transnational identification with the oppressed wretched of the earth. And through Ali, Islam itself was symbolically transformed for many observers from a conservative, quietist faith to a force for radical protest against Western power. This remarkable story says more about Islam in the last half-century than it does about Ali personally. Nevertheless, there remains something truly astonishing about how the first AfricanAmerican athlete to achieve global celebrity could make that celebrity into a platform for religio-political activism, not patriotism or consumerism. When Ali was publicly accepted into the Nation of Islam in 1964, that remarkable movement was doubly peripheral. The numerically tiny Nation was very much at the margins of American religious life. In theological and social terms, it was almost completely alien to international Islam in its various mainstream forms. Seen in the context of American religious history, the Nation of Islam was one of numerous self-fashioned African-American religious groups. Founded in Chicago in 1930, its religious beliefs represented both an outgrowth of Christian Protestantism and a

rebellion against the Christianity that was seen as the religion of slave-holders. The group’s founders told an origin story that elevated blacks over whites. Their thinking about Africa was complex; but by the time Ali joined, the Nation had followed Marcus Garvey’s Pan-Africanism in seeking a connection with Africa, from which enslaved African-Americans had been brutally cut off. Although the Muslims of the Nation self-identified with Islam, their original practices would not have been recognizable to the overwhelming majority of the world’s other Muslims. They did not read the Koran in its original Arabic, nor did they pray in the Prophet’s language. Elijah Muhammad, the group’s most important thinker and leader, taught that the world was 76 trillion years old and that white people had been created by devil named Yakub, teachings utterly unfamiliar to Sunni, Shiite or Ismaili Muslims. Given this background, it’s little

India’s central bank chief is an economic asset

or the past several years, Raghuram Rajan has distinguished himself as the head of India’s central bank. He’s met opposition along the way, though, and critics don’t want him reappointed when his term expires in September. Questions about his fate are now damaging confidence among investors; bonds and the rupee both fell after an unconfirmed report that he’d declined a second term. India’s government would be wise to keep him on—and to declare that intention soon.

road operators, prompting several concessionaires or contractors to file cases before arbitration tribunals abroad in the hope of seeking compensation for losses or foregone revenues stemming from government inaction. Right now, there are five business-related arbitration complaints pending before arbitral tribunals overseas. One, the case filed by Manila Water Co. (MWC) in April 2015 before the arbitral tribunal of the Internal Chamber of Commerce (ICC) in Singapore seeking to recover P79 billion that MWC expects to lose over the rest of its 25-year concession, resulting from the unexpected move of the Metropolitan Waterworks and Sewerage System (MWSS) to reject MWC’s petition for a rate adjustment in 2013, and disallow this contractor from passing on its income taxes to its customers in Metro Manila’s East Zone. MWC signed a concession deal with the Ramos administration in 1997 that allowed the concessionaire to pass on such taxes to its customers and to adjust tariffs once every three years. Two, the case filed by Maynilad Water Services Inc. (MWSI) in October 2013 before the ICC court in Singapore after the MWSS rejected its petition for tariff adjustment for its West Zone customers. Three, the second case filed by MWSI before the ICC court in Singapore in March 2015 seeking compensation from the government for P3.44 billion in foregone revenues after MWSS ignored a December 2014 decision by the ICC to grant its petition for a rate hike. Four, the case filed by Manila North Tollways Corp. in April before the United Nations Commission

crisis. His record at the Reserve Bank of India (RBI) speaks for itself. He took office in September 2013, with the rupee plummeting on fears of higher US interest rates. He stabilized the currency and bolstered India’s reserves. The external deficit has been reined in, and inflation has fallen from double digits to 5.4 percent in April. India is currently the world’s fastest-growing big economy. In a country plagued by weak institutions, Rajan has improved the central bank’s standing and strengthened

the country’s financial sector. The RBI, like most of its peers, has adopted a formal inflation target, which makes policy clearer and promotes stability. By licensing several new banks, Rajan has helped widen access to banking services. He’s also pressed the biggest banks to deal with bad loans. Dealing with impaired loans isn’t easy and may crimp growth in the short run, but the financial sector, as a whole, should emerge stronger. Together with a new bankruptcy code, the policy can break a familiar

short of stunning that Ali’s conversion gripped the imagination not only of Muslims worldwide, but of non-Muslims in what was then coming to be known as the Third World. Part of this was that in the pre-Internet era, headlines mattered more than details. “Heavyweight Champion of the World Converts to Islam” had a power that made it irrelevant that Ali had joined a denomination most Muslims had never heard of. It mattered, too, that in the Cold War, America’s combination of hard and soft power guaranteed that the story of an American champion would travel everywhere. Equally or more important, however, was Ali’s own agency and incomparable communicative genius. For him, conversion to Islam was as much or more political as it was religious. He took his skill at making the news—using poetry, slogans and epic charisma—and turned it to his core message: resistance to white American hegemony. In this sense, there was a straight line between “Float like a butterfly, sting like a bee” and “Ain’t got no quarrel with them Viet Cong.” The Vietnam War was the canvas on which Ali painted his self-portrait of resistance. His refusal to fight combined the argument against American racism with the assertion of solidarity with Vietnamese victims of US violence. His arrest, conviction and eventual vindication by a unanimous Supreme Court made him the most prominent individual in the world to have taken on the US government and won. All this made Ali a global symbol, as became clear in the run-up to his 1974 fight with George Foreman in Kinshasa, Zaire. As dramatized in the terrific

documentary When We Were Kings, and to a lesser degree in writings by Norman Mailer and George Plimpton, Ali was treated by Zairians as a champion of Africa. The unfortunate George Foreman became the heavy, a stand-in for US global power. What’s rarely acknowledged about this symbolic process is that Ali was one of the first global figures—arguably the first—through whom Islam itself could be seen as a crucial vector for Third World resistance and revolution. Ali had become a Muslim, and by that act, he had simultaneously become a politically conscious Third World resister to the power and militarism of the West. That identity could be appreciated by Third World Muslims and non-Muslims alike, as in Zaire. A nuanced recounting of the complex history of Islamic radicalism over the last half-century would have to include an accounting of how Ali’s symbolic role transformed Islam into a potential tool of anti-imperial, anticolonial, anti-Western activism. To be sure, Ali’s own professed pacifism was a very far cry from the militant Islam that would eventually emerge in the 1980s. That militancy grew from the mélange of the Palestinian liberation movement, the Iranian revolution, the American-funded Afghan jihad and a range of other factors too numerous to be recounted here. But all these different streams of militancy had in common an identification of Islam with the Third World liberation. Muhammad Ali made himself a living symbol of that resistance. Against the master’s house he used the master’s tools—and others of his own devising.

destructive cycle: State banks funnel cheap loans to favored tycoons, then keep the enterprises afloat regardless of performance. As inflation has moderated, the RBI has lowered its policy rate, and Rajan has said further easing should follow. To make this possible, he’s urged the government to maintain its commitment to fiscal discipline —and the government complied in its most recent budget. But continued success shouldn’t be taken for granted. In a series of speeches, Rajan

has been blunt about the reforms India still needs and has lamented what he sees as rising intolerance. This outspokenness is not universally admired. Yet, Rajan’s willingness to face up to India’s long-standing problems and to critique policy mistakes lends him credibility that many of India’s public figures lack. He’s a great asset to a reform-minded government, and Prime Minister Narendra Modi would do well to say so now, rather than let the current uncertainty linger. Bloomberg View