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Thursday, June 8, 2017 Vol. 12 No. 238

Fitch Ratings approves of PHL tax-reform efforts

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itch Ratings, the last of the big three sovereign-rating agencies to lift the country’s credit stature, on Wednesday lauded the passage of the taxreform bill at the House of Representatives, saying the measure addresses a key weakness in Manila’s fiscal profile.

The tribute, observers said, helps boost the argument that the $292-billion economy in the southeast part of Asia is imminently close to another credit boost.

SIX FILIPINO BILLIONAIRES BUILDING A MEGAMALL IN CHINA AS BIG AS PENTAGON

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even decades ago in Manila, one of Henry Sy’s first bonanzas was buying cigarettes off of American soldiers and selling them in the city plaza at a markup. Now, heirs of the retail and property mogul behind Southeast Asia’s largest fortune may have found a jackpot of their own: They’re building a supermall in China that’s almost the size of the Pentagon. The project signals increased exposure to the world’s biggest consumer market, in line with the foreign-policy shift toward Beijing by President Duterte. Investors have come around to the tough-talking populist since his election last May, supporting a rally for Philippine equities and a surge for the stocks owned by Sy’s SM Investments Corp. as the company undergoes a generational shift. That’s made billionaires of his six children, according to the Bloomberg Billionaires Index. “Henry Sy was one of the more forward-looking and canny tycoons in the Philippines in that he paid attention to succession issues probably better than most,” said Alejandro Reyes, a Manila-born visiting professor at University of Hong Kong’s politics department. “The Philippines is an oligarchy, where you have a limited number of families who benefit when the economy is doing very well, and who control an inordinate amount of the economy.” The heirs collectively have direct stakes of around 44 percent of

GUIDOTE: “The family has learned to deal with decisions very professionally.”

SM, which has holdings in retail, property development, banking and logistics. The siblings—Teresita, Elizabeth, Henry Jr., Hans, Herbert and Harley—have a combined net worth of $10.7 billion, according to the index. Henry Sy, 92, is credited with the remainder of the clan’s share of the conglomerate, held directly, with his wife and through family-owned holding companies. T he fa m i ly ’s $17.6 -bi l l ion fortune amounts to more than 5 percent of the island nation’s annual GDP and has risen more than $3 billion since Duterte’s victory, more than any in Southe a s t A s i a , accord i n g to t he Bloomberg index. The conglomerate is viewed by investors as a proxy for the fastgrowing Philippine economy, according to Frederic DyBuncio, who assumed the presidency of SM Investments in April. Indeed, logistics company 2Go Group Inc., which counts Sy’s group among its largest stakeholders, has tripled in the past year, while property company SM Prime Holdings Inc., lender BDO Unibank Inc. and holding company SM Investments are each up more than 19 percent. See “Billionaires,” A2

PESO exchange rates n US 49.4680

“The tax package passed last week by the Philippines’s House of Representatives should widen the tax base and boost revenue. It also demonstrates the administra-

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tion’s commitment to broader tax reforms that have the potential to improve fiscal stability and support an ambitious public investment program,” Fitch said in a statement on Wednesday. Fitch’s comments marked the second time any one from the three major ratings agencies gave the thumbsup sign to the passage of the bill in Congress. This developed in the wake of a similar tribute from Moody’s Investors Service on Tuesday, saying President Duterte’s Comprehensive Tax Reform Program and its passage through the Lower House was “credit positive” for the Philippines. Continued on A2

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LABOREM EXERCENS

he problem with so-called corporate social responsibility (CSR) programs is that there's too many CSR certifications. All aimed at certifying that a given company in a given industry is promoting the 3Ps— people, profit and planet.

CSR assurance certifications or “social audits” became popular in the 1980s and 1990s with the emergence of the global production networks (GPNs) in the labor-intensive and export-oriented industries, such as the garments, footwear and electronics assembly industries. Continued on A11

Chinese market lifts PHL visitor arrivals in January-March–DOT By Ma. Stella F. Arnaldo

@akosistellaBM Special to the BusinessMirror

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HINESE tourists once more powered the visitor arrivals in the Philippines, growing by 30.3 percent in the first three months of the year to 240,354. The performance of the Chinese market comes hot on the heels of the United States, whose tourists in the Philippines grew by 11.6 percent to 258,097 in the same period. South Koreans still continued to top the list of source markets for tourists in the Philippines with 440,865 visitor arrivals for the period. Total visitor arrivals nationwide increased by 11.4 percent to 1.6 million, data from the Department of Tourism (DOT) showed. The release of the DOT’s visitor arrivals data for March/first quarter had been extremely delayed for reasons even top officials of the agency could not adequately explain. “We’re just getting it from the statistics group,” intimated one DOT insider. “We also don’t know why it’s taking them long to release it.” Usually, updated tourist arrivals data are readily available on the DOT’s web site www.tourism.gov.ph, at predictable monthly publication dates. But DOT Undersecretary for Tourism Development Planning Benito C. Bengzon Jr., who now oversees the statistics group, told the BusinessMirror: “We were waiting for the finalization of the report on revenue so we could is-

Tourism Secretary Wanda Corazon T. Teo (second from left) says improved air connectivity has helped boost visitor arrivals in the Philippines by over 11 percent in the first quarter of 2017. She was joined in Wednesday’s news conference by other Department of Tourism officials (from left) Undersecretary Benito C. Bengzon Jr., Assistant Secretary Frederick M. Alegre and Undersecretary Katherine de Castro. Image courtesy DOT

sue it with the statistical report at the same time. The revenue report is not ready yet, so we decided [on Tuesday] to release the one on statistics already.” He did not explain, however, what was causing the delay in the collection of data on tourism receipts. The last time the DOT delayed publishing its arrivals statistics was in June 2014, as it had to reconcile data with the Bureau of

Immigration, which had changed its rules on the filling out of disembarkation cards. At a ne w s con ference on Wednesday, DOT officials again reiterated their optimism that the 6.5 million visitor arrivals target this year could still be reached despite “some” cancellations by foreign visitors, especially South Koreans, to Cebu. The cancellations happened because of the

Abu Sayyaf attack in Inabanga, Bohol and when President Duterte declared martial law in Mindanao, owing to the clashes between government troops and rebels in Marawi City. Bengzon, who had just arrived from Seoul after attending the Korea World Travel Fair last week, said most of the travel agents and tourism executives he spoke See “Chinese market,” A2

n japan 0.4522 n UK 63.8879 n HK 6.3471 n CHINA 7.2806 n singapore 35.8698 n australia 37.1307 n EU 55.7999 n SAUDI arabia 13.1915

Source: BSP (7 June 2017 )

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A2 Thursday, June 8, 2017

Fitch Ratings approves of PHL tax-reform efforts Continued from A1

“Low government revenue is currently a key weakness in the Philippines’s fiscal profile—general government revenue was equivalent to just 22 percent of GDP [gross domestic product] at end-2016, compared with a median 30 percent for ‘BBB’-rated countries,” Fitch particularly noted. Fitch last validated the Philippines as a “triple B minus” (BBB-) economy with a positive outlook

PHL’s dream. . .

an LNG terminal and is open to partnering with the private sector. “The LNG facility should have been done a long time ago because the Malampaya undergoes maintenance every 18 to 24 months. Every time it goes under maintenance, it costs the consumers a lot because the power plants that are dependent on natural gas would have to switch to a more expensive fuel,” Cusi said. “In 2014 it’s something like P10 billion in additional pass-on cost to consumers. In 2016 we tried to prevent the pass-on cost, though it’s still under the process of discussion. We could have avoided that if we have LNG terminal,” he added. During the discussion, Visal Leng, GE’s Asia Pacific President for oil and gas, said other countries in the region is looking at

nearly two years ago. That recognition and commendation was based in part on the passage of the tax-reform proposal and on the speed with which the bill was processed. Fitch credited Duterte and the steps he took to convince legislators to let the package take shape at the Lower House. Fitch said the President’s intervention hastened the passage of the proposal and validated the view that fiscal reform is high up in the

Continued from A12

developing LNG terminals to take advantage of the low price on the gas market. “ You have to consider two things. One is the domestic market. Thailand has a domestic market, Indonesia has a domestic market. We talked about more than 3GW, which is power from gas in the Philippines, which is also its domestic market, which will increase. The logistics. The regional proximity is an advantage that has not been taken advantage of enough, but you also need an efficient market—exchange, safety, security, capital market that needs to work.” And I think there will still be tough competition with places like Singapore. A bit of domestic demand, efficient market and logistics,” he explained.

Chinese market. . . with understood exactly what was going on in Mindanao. “They said ‘you don’t have to explain to us what’s happening [and why martial law was declared in Mindanao]. But can you help us with the cancellation fees?’” He said he has proposed to the local hotels and resorts that they forego the cancellation fees, “on condition that the Korean tourists or travel agencies just rebook their visits at a later date.” In fact, he said, a number of the representatives from Filipino hotels and resorts who had participated in the travel fair, already made such a commitment to the Korean

Continued from A1

travel executives about foregoing the booking cancellation fees. At the same news conference, Tourism Secretary Wanda Corazon T. Teo said improved air connectivity has significantly boosted foreign visitor arrivals. About 98 percent of tourists arrived by air, she said, underscoring the number of new routes that the DOT had been able to open. For the first quarter of 2017 alone, around 788,000 international airline seats have been added to major tourism markets, such as China and South Korea. She said new direct flights to the country have been mounted from

minds of Philippine officials. “Indeed, ta x refor m is crucial to the rest of the administration’s ‘10-Point Socioeconomic Agenda’, which includes plans to ramp up investment in infrastructure, health, education and social protection,” Fitch Ratings said. “Infrastructure spending is targeted to rise by two percentage points to 7.4 percent of GDP by 2022. It will be difficult to fulfill these plans—and also keep the budget deficit within the 3 percent

of GDP target—without a mediumterm rise in the revenue/GDP ratio,” it added. Nevertheless, Fitch is apprehensive the revenue-enhancing measures in the CTRP will be watered down and add revenues equal to only 0.8 percent of GDP instead of the original 1 percent. Earlier this month the global financial services provider Credit Suisse said further dilution in projected revenues would have farreaching and negative consequences to the economy. Bianca Cuaresma

Last month Shell Philippines admitted it held exploratory discussions with the government for a possible partnership on an ambitious LNG project, but no firm decision has been made yet. “We talked to them, with Admiral Lista…. We are very open to partnerships with various groups, including PNOC,” Shell President Cesar Romero said. PNOC President Reuben Lista earlier said Shell was among those he had talked to regarding the plan of the government to also build an LNG terminal. No firm offers from Shell were made t hough, Lista added. “LNG, that’s one area we really want to successfully bring into the country. Kaya lang, it’s a bit tricky because we have to form partnerships…but the key is to be able to understand how economics would work because it is a huge investment.

An LNG facility is $600 million to $1billion, that’s why you need partners to be able to balance it off. Second, the economics must be carefully understood in terms of how the investment will be,” Romero said. Shell is among the local companies that had expressed intention to build an LNG terminal in the country. The company was mulling over to put up a new entity that would house its LNG business. Lopez-led First Gen Corp. expressed interest to partner with PNOC for the development of a LNG terminal. “First Gen acceded to be a minority partner. That I can tell you, but not the details. They have been attending our negotiations, they recognize that they need us more,” Lista said. PNOC plans to put up an LNG terminal consisting of an initial 200-MW modular power plant, storage and regasification facilities.

Chongqing, Wuhan and Chengdu (to Cebu); and from Shanghai, Hangzhou, Chengdu and Jeju, South Korea (to Kalibo). “We encouraged more airlines to mount new flights to our primary and secondary airports to improve connectivity and accessibility to our emerging destinations all over the archipelago,“ Teo said. A r r iva ls from Taiwan a lso grew substantially in the period January to March 2017, reaching 64,896, or an increase of 24.6 percent. India also showed a marked improvement in arrivals, jumping by 21.63 percent to 26,905 in the three-month period. Other top tour ism market sources for the Philippines in the first quarter of the year were Japan

at 106,251 (+15.8 percent); Canada at 60,838 (+14.2 percent); and Germany at 29,301 (+2.38 percent). While still posting huge numbers in arrivals, declines were registered by Australia at 66,807 (down 0.68 percent); the United Kingdom at 47,353 (-3.6 percent); Singapore at 40,395 (-9.1 percent); and Malaysia at 34,411 (-6 percent). For March 2017 alone, the country’s primary gateway, Ninoy Aquino International Airport, recorded 350,517 in foreign arrivals. This was followed by the MactanCebu International Airport with 113,869 arrivals, and Kalibo International Airport with 68,819 arrivals. Other top gateways were Clark International Airport and the Davao City International Airport.

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Billionaires. . . Continued from A1

Teresita Sy-Coson, the eldest of the heirs, lauded Duterte in a recent interview with CNBC or his laissez-faire approach to the economy, even as he faces scrutiny for thousands of drug war killings that watchdog Human Rights Watch has called a calamity. She declined to comment on the family’s net worth, and the family declined requests for additional comment sent through the holding company’s investor relations department. Teresita and her brother Hans have been in delegations that went with Duterte to China for talks with President Xi Jinping, a sign that the descendants of the conglomerate’s China-born founder are well-positioned to benefit from the detente, Reyes said. Visits from Chinese tourists grew by more than one-third last year, a boon for the Sys’ tenant at the City of Dreams Manila casino resort. Seven of the group’s more than 60 malls are in China. The conglomerate is building a residential project in Chengdu, with plans for Xiamen and Jinjiang, the latter being the birthplace of Henry Sy, who spearheaded the group’s push into China. A supermall in the works in Tianjin would have more than 500,000 square meters of floor space, rivaling that of the Pentagon. It was designed like a blossoming flower to symbolize growth and new opportunities, according to the company’s web site. Still, China only accounts for about 2 percent of the group’s total revenue. The expansion in China brings the fortune back to the founder’s homeland, and comes as Henry Sy attempts to execute an orderly handover of his

Qatar Airways. . . Qatar and a bloc of ME countries (United Arab Emirates, Saudi Arabia , Bahrain and Yemen), a statement from PAL spokesman Cielo Villaluna said. PAL operates 30 flights per week to the Middle East. Seven weekly to Dubai; four to Kuwait; four to Doha; five to Dammam; three to Jeddah and seven to Riyadh. “While PAL is not a party to the dispute and maintains strong bilateral ties to these countries, it shall observe guidelines issued by said nations,” Villaluna said. PAL said on Tuesday Abu Dhabi Airport immigration announced that effective immediately, all UAE nationals who are holders of all types of passport are not allowed to travel or enter Qatar or to transit through Qatar airports. All Qatari nationals are not allowed to enter the UAE or to transit through UAE Airports. Following these guidelines, PAL said it will not carry Qatari nationals into the UAE (Abu Dhabi and Dubai), or carry UAE nationals into Qatar. PAL has direct flights out of Manila to Abu Dhabi, Dubai and Doha. Foreign tourists are not included in their guideline. “PAL’s Manila-Doha flights will continue, four times a week,” the carrier said in a text message. Em i rates A i rl i nes, Et i h ad Airways, fly to Dubai, while Air Arabia have also announced they are suspending all flights to and from Doha after the UAE joined four other nations in cutting ties with Qatar. The four main UAE-based carriers said flights have completed their flight operations on June 5 according to schedule.

Solons. . .

Continued from A12

said. Fariñas said the Pagcor chief should have immediately issued the suspension of the casino operations after the havoc wreaked by alleged gambling addict Carlos. “Why do you allow them to do it voluntarily, why not by a regulation, suspend it immediately. Why is Pagcor not exercising its licensing authority? You should immediately issue revocation or suspension...[currently] it is

wealth to a new generation, which includes the appointing of professional managers from outside the family. By involving all of his children as managers and giving them an ownership stake, he’s been more proactive than some—even if he hasn’t publicly designated a successor. That transition was pushed forward in April when Henry stepped down as chairman of SM Investments and gave up a casting vote that gave him the power as a tiebreaker in cases of deadlock on the board. The company replaced him with longtime CFO Jose Sio, who holds an MBA from New York University, and named 57-year-old DyBuncio, a former JPMorgan banker, to take over Harley’s role as president. “The family has learned to deal with decisions very professionally,” said Corazon Guidote, senior vicepresident for investor relations at SM Investments. She said that, while the clan is handing management to professionals, each of the siblings still gets a vote on strategic decisions. Even so, the odds may be against a smooth transfer, which remains a challenge for many of the world’s richest families. Joseph Fan, a professor at the Chinese University of Hong Kong who studied 214 family-run firms in Taiwan, Hong Kong and Singapore, found that their stock prices dropped by almost 60 percent on average in the eight years surrounding a change of power at the top. “We have to wait and see how the relationships of his offspring evolve,” Fan said in an e-mail response to questions about Sy. ”The real test of the family’s governance is typically when the founder approaches the end stage of life.” Bloomberg News

Continued from A12

In a statement on its web site, Etihad said the airline is providing all its customers who booked flights to and from Doha with “alternative options, including full refunds on unused tickets and free rebooking to the nearest alternate Etihad Airways destinations.” Similarly, Flydubai said it was suspending all its flights between Dubai and Doha. In a statement, the carrier urged passengers who have purchased tickets to fly between Dubai and Doha, to “contact their travel agent, the Flydubai travel shop in Doha to arrange a refund”. Emirates did the same thing to its customers. “Travelers bound for Doha who are boarding their flight from airports around the Emirates network today will be advised to make alternative arrangements,” an Emirates spokesman told Gulf News by e-mail. Emirates added: “All customers booked on Emirates’s flights to and from Doha will be provided with alternative options, including full refunds on unused tickets and free rebooking to the nearest alternate Emirates destination.” Air Arabia said it was suspending Doha flights to and from both Sharjah and Ras Al Khaimah airports from June 6 onward. Bahrain-based Gulf Air, took a similar measure, announcing the suspension of all its flights between Bahrain and Doha effective midnight June 6 and until further notice. PAL said it will temporarily suspend flights to and from Abu Dhabi (PR 656/657 Tuesdays/ Thursdays/Saturdays) effective July 8 this year until further notice. voluntary, they can resume anytime,” he said. In an interview, Domingo said she sees no problem with the proposal of Fariñas. “There’s no problem with us, in fact, they said they will do what they want to do without asking us. I only work because I was appointed by the President,” she added. Meanwhile, Domingo said Pagcor is still determining whether to cancel Resorts World’s franchise. “We will issue a recommendation on Friday,” she said. “We have to review everything because we do not want to open ourselves to court cases,” Domingo said.

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Año appeals for calm in wake of cathedral burning

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HE Armed Forces chief of staff, Gen. Eduardo M. Año, on Monday called on the public to remain calm as a video clip showing Maute Group bandits vandalizing and destroying religious images inside a cathedral in Marawi City spread through the Internet. He also asked the public not to do anything that could further inflame the incident. “We don’t want to have a religious war. We know that they [Maute bandits] are doing this for propaganda purposes and to anger Filipino Christians. Please don’t [take the bait],” Año said in Filipino. He assured the public that the Armed Forces is doing everything it can to end the Marawi crisis at the soonest possible time. “We are asking for your patience as civilian lives are at stake,” he added. The video that has been making the rounds shows armed men rampaging at the Saint Mary’s Cathedral in Marawi City, destroying religious images and a poster of Pope Francis. In the three-week conflict in Marawi City, about 120 Maute bandits have been reported neutralized, while about 38 troops have been killed, and 20 civilians were executed by the bandits. At the same time, the Armed Forces called on netizens to stop circulating videos that may sow hatred among Christians and Muslims. “May I appeal to our social-media users and our netizens. There are videos circulating around regarding certain armed elements destroying a church. We have requested that this be pulled out because it may fan hatred. It may fan hate and it is intended by these militants to induce other Christian elements to fight against these armed elements or to sow hatred among Christians and Muslim,” Brig. Gen. Resituto Padilla Jr., Armed Forces spokesman, said at a briefing in Malacañang. Padilla made the appeal after an Islamic

State video was posted online that showed armed men going on a rampage inside the Saint Mary’s Cathedral in Marawi City. The armed men, who belong to the Maute Group which pledged allegiance to Islamic State in Iraq and Syria (ISIS) in 2015, were seen stomping and destroying religious images before setting the church on fire. “Please do not spread this. Let us not buy in into the plan of these terror groups to inflame the feelings of our other religions. This is not a religious war, this is a terror attack on the city of Marawi and we must be clear about it,” Padilla stressed. In Maguindanao police and military authorities arrested two local bandits claiming alliance to ISIS during law enforcement operations Tuesday afternoon. Capt. John Arvin Encinas, spokesman for the Army’s Sixth Infantry “Kampilan” Division (6ID), said joint police and Army forces raided a safe house in Barangay Dimapatoy, Datu Odin Sinsuat, Maguindanao, at 4 p.m. He said the joint operation carried out by Fifth Special Forces Battalion, 19th Infantry Battalion, Maguindanao police and 6ID intelligence unit resulted in the arrest of Butucan Raguiab and Akmad Acob, both ethnic Maguindanaon. The target of operation, Eskak Mohammad, managed to elude arrest, said Senior Supt. Agustin Tello, Maguindanao police chief. “Our troops backed the police in the lawenforcement operation after civilians in the area reported the presence of heavily armed men brandishing high-powered guns and Isis flag,” Encinas told the Philippine News Agency. Mohammad sensed the presence of government forces and quickly fled, he added. Recovered from the two were one a Barret sniper rifle, 10 long firearms, four homemade bombs and a rifle grenade. Also recovered were military paraphernalia and ammunition. PNA

Editor: Dionisio L. Pelayo • Thursday, June 8, 2017 A3

Congressmen slam security lapses at RWM casino-hotel

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By Jovee Marie N. dela Cruz

@joveemarie

AWMAKERS on Wednesday blamed security lapses that resulted in the death of 38 people, including the alleged gunman, Jessie Javier Carlos, at Resorts World Manila (RMW) last Friday.

Majority Leader Rodolfo C. Fariñas of Ilocos Norte said the hotelcasino clearly did not have enough security personnel to immediately respond to the carnage. Fariñas, who was commissioned as a reserve Army lieutenant colonel by then-President Ferdinand E. Marcos, also described the response of the RWM management to the incident as “lax in security, laxer in reaction”. “[Despite having security cameras] there was no attempt to engage

the gunman. The one in the monitor room could follow [the gunman] wherever he goes but no pursuit was done,” Fariñas said. “Mas magaling pa iyong napapanood ko na nag-e-airsoft,” Fariñas added. He also questioned the capabilities of RWM’s Safety Security and Surveillance Office chief Armeen Gomez. Other lawmakers, including National Unity Party Rep. Romeo M. Acop of Antipolo, House Committee on Public Order and Safety chairman;

and PDP-Laban Rep. Lucy TorresGomez of Leyte, House Committee on Tourism chairman, echoed that sentiments of Fariñas that there were indeed security lapses. Gomez admitted that he was dishonorably discharged from the Philippine Military Academy (PMA). He also admitted he does not have a college degree. However, Gomez said that a RWM security officer was able to wound Carlos in a shootout. For her part, Chairman Andrea Domingo of the Philippine Amusement and Gaming Corp. (Pagcor) said the casino management failed to implement Pagcor’s security advisory to beef up security following terrorist attack in Marawi City. “From our assessment, there was really lack of security at the entrance and parking lots of Resorts World Manila, because there’s hardly any presence in the area of adequate and competent and properly equipped personnel,” Domingo said. Nimfa Lanting, owner of RWM’s security agency NC Lanting Securi-

Aguirre junks de Lima’s Peza opinion

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SC gets 3rd petition against martial law

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THIRD petition was filed on Wednesday before the Supreme Court (SC) questioning the validity of President Duterte’s Proclamation 216, which imposed martial law and suspended the writ of habeas corpus in Mindanao following attacks led by the Maute Group in Marawi City. The new petition for mandamus was filed by Manila Auxiliary Bishop Broderick Pabillo, Bishop Antonio Tobias, Bishop Emeritus Deogracias Iñiguez, Mother Adelaida Ygrubay of the Order of Saint Benedict, Shamah Bulangis, Cassandra D. Deluria and former Sen. Wigberto Tañada. The petitioners specifically asked the SC to order the Senate and the House of Representatives to convene in joint session and vote jointly on the legality of Proclamation 216. They claimed that the lawmakers committed grave abuse of discretion when the Houses of Congress issued separate resolutions supporting the martial-law declaration.

“It is most respectfully prayed that this Honorable Supreme Court declare the refusal of Congress to convene a joint session for the purpose of considering Proclamation 216 to be in grave abuse of discretion amounting to lack or excess of jurisdiction and issue a Writ of Mandamus directing Congress to convene in joint session for the aforementioned purpose,” the 26page petition read. They insisted that the House and the Senate should convene and decide on the fate of Proclamation 216, saying that a “transparent and deliberative process is necessary to quell the people’s fears against executive overreach.” The petitioners stressed that the constitutional mandate of the Senate and the House under Article VII, Section 18 of the 1987 Constitution cannot be legally carried out by a separate briefings given by the Executive Branch and the Armed Forces to both Houses of Congress. Joel R. San Juan

Jehovah’s Witnesses hold 3-day bible conventions

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HREE-DAY regional conventions of Jehovah’s Witnesses in the country that will be held in various places this year with about 500,000 attendees, started early this month. The first convention was held from June 2 to 4 at the Assembly Hall of Jehovah’s Witnesses in Novaliches, Quezon City. Eleven such gatherings will follow weekly at the same venue with some 5,000 expected each week. A total of 130 other conventions will be held in various cities and towns in the country, with the last 11 scheduled from August 18 to 20. Danilo Calso, spokesman for the Witnesses, said this year marks the first time that these conventions in the Philippines will be held simultaneously with those in the United States. “Actually, close to 15 million Witnesses and interested ones from 240 countries will be expected to attend

these assemblies featuring the same Bible-based program,” he added. The theme of this year’s Bible seminar, “Don’t Give Up!”, is based on the exhortation of the Apostle Paul to Christians in Galatians 6:9, “Let us not give up in doing what is fine.” The hoice of the theme is timely and will focus on how one can remain hopeful today despite widespread problems on addiction, criminality, violence and corruption, Calso said. On Friday the chairman of the convention will deliver the keynote address, titled “We Must Not Give UpEspecially Now!”, that will set the tone for succeeding discussions, symposia and video presentations through the three days. “Bible teachings and principles will be highlighted to show how one can cultivate qualities that promote endurance, strengthen the faith and nurture hope, amid all the problems besetting us today,” Calso pointed out.

ty Specialist Agency, admitted that there was only one security guard at the entrance where Carlos came through because it was already graveyard shift. Meanwhile, RWMPresident Kingson Sian dispelled allegations that they have security lapses, saying they have, in fact, implemented emergency protocols. According to Sian, casino’s sprinklers automatically switched on when the lone gunman set the gaming tables afire. He added there were also sufficient fire exits available within the area. Sian said there are a total of 13 fire exits on the second floor covering the mall area and the gaming area, nine of which are within the gaming area. “We evacuated approximately 12,100 guests and employees in as fast as two minutes to a maximum of 27 minutes,” he said. But he said victims cannot be captured into view as the closed-circuit television failed owing to the fire.

HEALING GARDEN

Army troops and supporters plant vegetable crops at a still-unoccupied piece of land at Fort Andres Bonifacio in Taguig City on Monday. The project, dubbed “Hardin ng Lunas”, aims to develop idle camp lands and make them productive for the benefit of military personnel and their dependents. Attending the groundbreaking are Isa Cojuangco Suntay, cofounder of Tarlac Heritage Foundation (THF); Brig. Gen. Rodel Mauro Alarcon, Headquarters and Headquarters Service Group commander who represented Lt. Gen. Glorioso Miranda, Army commander; retired Lt. Gen. Anthony Alcantara, director; and Col. Michelle Anayron, Security Escort Battalion commander. NONIE REYES

DOJ orders filing of charges vs Comelec, Smartmatic execs By Joel R. San Juan @jrsanjuan1573

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HE Department of Justice (DOJ) has issued a resolution ordering the filing of criminal charges against officials of the Commission on Elections (Comelec) and Smartmatic officials for alleged violation of the provision of the Cybercrime Prevention Act. The case stemmed from the unauthorized alteration of the script of the transparency server during the canvassing of votes during the May 9, 2016, national and local elections. DOJ investigators in a 41-page resolution said there is probable cause to charge Smartmatic personnel Marlon Garcia, head of the Technical Support Team and his subordinates Neil Baniqued and Mauricio Herrera, as well as Comelec Information Technology experts Rouie Peñalba, Nelson Herrera and Frances Mae Gonzales, with violation of Sections 4(a)(1), (3) and (4) of Republic Act (RA) 10175, or the Cybercrime Prevention Act. Section 4 (a)(1) of RA 10175 penalizes the access of a computer system without any authority, while Section 3 penalizes the

intentional and reckless altering of computer data. Section 4, on the other hand, penalizes the act of hindering or interfering with the functions of a computer and computer network by inputting, deleting and altering computer data and programs, without any right or authority. Justice Undersecretary Deo L. Marco approved the resolution for Justice Secretary Vitaliano N. Aguirre II. The DOJ investigators on the other hand, exonerated Smartmatic Project Director Elie Moreno for lack of evidence. Aguirre reversed the September 28, 2016, resolution issued by the City Prosecutor of Manila, which dismissed the case that was initiated by former Party-list Rep. Jonathan de la Cruz of Abakada. “Wherefore, premises considered, the petition for review is hereby partially granted and the Resolution dated September 28, 2016, of the City Prosecutor of Manila is modified. The Office of the City Prosecutor of Manila is directed to file the information for violations of Section 4(a)(1), (3) and (4) of the Cybercrime Prevention Act against respondents before the court and to report the action taken within

10 days from receipt, hereof,” the DOJ resolution said. In his complaint filed last year, de la Cruz accused the respondents of “intentionally altering the election data without any right or authority”. De la Cruz pointed out that shortly after the unauthorized alteration of the script of the transparency server, the lead of vice-presidential candidate Ferdinand Marcos Jr. over his closest rival started to taper at a uniform rate, which experts said was statistically impossible. Marcos’s huge lead of over 1 million votes was eventually overtaken in the wee hours of the morning of May 10, the day after the elections. The Manila Prosecutor’s Office dismissed the complaint, prompting de la Cruz to elevate his case to the DOJ through a petition for review. Lawyer Vic Rodriguez, Marcos’s spokesman, lauded the DOJ resolution. “This is a most welcome development because the unauthorized change they introduced in the script of the transparency server indeed undermined the credibility of the elections,” Rodriguez said. Robredo won the vice-presidential race with 14,418,817 votes, or 263,473 more than Marcos, who got 14,155,344 votes.

HE Department of Justice (DOJ) on Wednesday released a legal opinion barring the Philippine Economic Zone Authority (Peza) from exercising power and authority to implement fire-related laws within the country’s economic zones. In a four-page legal opinion, Justice Secretary Vitaliano N. Aguirre II reversed and set aside DOJ Opinion 14 legal opinion issued by his predecessor and now detained Sen. Leila M. de Lima in 2014, which gives Peza the authority to administer and enforce the Fire Code within its boundaries. Aguirre held that it is only the Bureau of Fire Protection (BFP) that is mandated to enforce, inspect and ensure compliance of the provisions of Republic Act (RA) 9514, otherwise known as the Revised Fire Code of 2008. Such mandate, according to the justice secretary, is also provided under the Department of the Interior and Local Government Act of 1990, which states that the BFP is mandated to enforce the fire laws. “There is no provision in RA 9514 that would exempt Pezaowned-administered economic zones from the enforcement authority of the BFP. Its authority is broad enough to include the ecozones,” Aguirre explained. In issuing DOJ Legal Opinion 14, Aguirre noted that his predecessor relied heavily on the provisions of Section 9 RA 7916 and Section 5 Rule XII of the implementing rules of RA 7916, as bases to support Peza’s authority to enforce the Fire Code. “A careful perusal of the provision of Section 9 of RA 7916 would show that it refers only to the establishment of ecozones’ internal security and firefighting forces,” the DOJ’s new legal opinion read. “Nowhere in the said section does it mention, much less confer, any power or authority to Peza to enforce the Fire Code within the boundaries of the ecozones,” it added. Likewise, Aguirre said Section 5, Rule XII of the implementing rules of RA 7916 does not provide any power or authority to Peza to enforce the Fire Code as it merely allows the agency to maintain a fire-fighting force to ensure the enforcement of existing laws governing fire prevention, protection and safety within the boundaries of each ecozone. Joel R. San Juan

Economy

A4 Thursday, June 8, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

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Cimatu girds for legal battle vs mining firm linked to Palawan tree ‘massacre’

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By Jonathan L. Mayuga

@jonlmayuga

he Department of Environment and Natural Resources (DENR) is now building an “airtight case” against Ipilan Nickel Corp. for the reported “massacre of trees” within a mineral production sharing agreement (MPSA) area in Brooke’s Point, Palawan. On Tuesday Environment Secretary Roy A. Cimatu held a case briefing with top DENR officials to discuss possible legal actions against Ipilan. “The secretary wants to make an example of Ipilan,” the source said, who spoke on condition of anonymity, and added that it will be “all hands on deck” that will require the expert opinion of all DENR officials, including heads of DENR line and staff bureaus. During the meeting, the source said the media-shy Cimatu even asked DENR’s legal experts if it is possible for him to be the plaintiff in a case to be filed by the DENR. “He was advised not to [stand as the plaintiff of the case] because if he does, he will be obliged to attend court hearings,” the source said. Almost all DENR undersecretar-

ies and assistant secretaries attended the meeting, some of whom are legal experts, debating on the issue of Ipilan’s alleged violations in connection with the reported massacre of trees. Ipilan is a subsidiary of Global Ferronickel Holdings Inc. (FNI), one of the world’s top nickel exporter and the country’s largest producer of nickel. Dante Bravo, president and executive director of FNI, declined to comment. “We don’t want to comment on that for the time being in deference to their [DENR’s] ongoing investigation,” Bravo said in a text message. A DENR undersecretary corroborated the report, but said the case buildup against Ipilan is still on-going. The source, who also declined to be identified, added the consensus was to let the DENR-

Community Environment and Natural Resource Office (Cenro) in Brooke’s Point file the case. “Whether it is a central office, regional office or Cenro can file a case. But based on our regular procedures, it should be the Cenro that should file the case for violation of PD 705, a 1975 law signed by former President Ferdinand E. Marcos that revised PD [Presidential Decree] 389, or the Forestry Reform Code of the Philippines”. The DENR secretary, the source added, does not want to lose the legal battle against Ipilan if they proceed with the filing of the case in court. “The company is not a small company, and we will face a pool of highly paid lawyers, that is why the secretary wants to build a strong case, to make sure that we will win,” the source added. The source said initial findings by the DENR-Cenro and regional office show that Ipilan illegally cut hundreds of trees in areas outside its supposed tree-cutting permit, hence a case of illegal logging will be filed. The DENR is discussing the possibility of canceling the environmental compliance certificate (ECC) and other mining permits issued to Ipilan, including its MPSA, on account of the illegal cutting of trees. “We are also discussing the nittygritty about that, too. We don’t really want to be hasty,” the source said in Filipino. The cancellation of mining per-

mits, the source added, rests upon the mandates of the Environmental Management Bureau for ECC, while other permits related to actual mining, such as exploration, which is the status of Ipilan’s mining project in Brooke’s Point, rests upon the Mines and Geosciences Bureau. “Dalawang klase kasi ang kaso na nag emanate. PD 705 illegal cutting. They cut the trees in areas where they are not supposed to cut. They have no cutting permit so the case is illegal logging,” the source said. The other case is for violation of the mining law. “Even in an area covered by MPSAs, the mining company should secure tree-cutting permit. There should be an inventory. And during the tree-cutting activities, there should be a representative from the DENR and local government unit [LGU],” the source said. Environmental groups have denounced Ipilan for cutting “century-old” trees within its MPSAs, and argued that even if it plants 100 tree

seedlings for every 100-year-old tree would not justify the massacre of trees, it especially if the area is a virgin forest. Last month the DENR has started hauling the felled trees. A total of 34 forestry officers and workers—18 from the DENR regional office and 16 from Palawan provincial government—have been deployed to Ipilan mining area in Brooke’s Point town to do an inventory and retrieve the felled trees, which have been declared government property. Based on initial reports, Ipilan cut down some 7,000 trees within 30 hectares of land within the MPSA programmed for mining operations for years 1 and 2, and for development of road network covering an area of 52.15 hectares. A majority of the felled trees are reportedly premium native species, such as malabayabas, apitongbaboy, nato and agoho, DENR-Mimaropa Regional Director Natividad Bernardino said.

The secretary wants to make an example of Ipilan.… The [mining] company is not a small company, and we will face a pool of highly paid lawyers, that is why the secretary wants to build a strong case, to make sure that we will win.”—Source

Envoy: Danish firms to hike trade, investments in PHL By Leslie D. Venzon Philippines News Agency

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ore Danish companies will increase trade and investment in the Philippines over the next few years, encouraged by the opportunities offered by the country, which they refer to as “The Bright Shining Star of Asia”, and positive initiatives taken by the Duterte administration, an envoy has said. In an interview Ambassador Jan Top Christensen shrugged off worries on the declaration of martial law to solve serious security problems in Mindanao, which was based on the Constitution. He expressed hope that the government would soon resolve the problems in Marawi City and move forward with peace negotiations with the Moro Islamic Liberation Front and the Moro National Liberation Front. “The Philippines continues to attract attention from Danish companies. Big, small and medium-sized Danish enterprises are interested in doing business in the Philippines,” he said. Chr istensen added Danish firms have presence in all sectors in the Philippines, including food, pharmaceutical, agriculture and fashion industries. In 2016 four Danish delegations came to the Philippines to explore opportunities in various sectors, such as fisheries and technologies, health and pharmaceutical and energy efficiency, he added. “We also see an interest from Danish companies setting up BPOs

[business-process outsourcing offices]. Because of the English-speaking population here, it is a very attractive proposition for Danish companies to set up [BPOs],” the ambassador said. He also cited a number of Da n i sh m a r it i me compa n ies employing about 6,000 Filipinos because of the country’s welleducated people. “It is [thus] important for the Philippines to keep up the quality and the pipeline of well-educated seafarers to make sure that no other nations step in and replace the Philippines,” he said. Christensen referred to the Philippines as The Bright Shining Star of Asia, with abundant human capital and natural resources, noting that “if you use that in a rational way and develop that, you definitely have a bright shining future”. As the two countries enhance trade relations, Christensen further said Danish export to the Philippines rose 10 percent from 2015 to 2016. “With the preferential trade status, the so-called GSP+ [Generalized Scheme of Preferences], granted from the EU [European Union], the Philippine manufacturers have a golden opportunity to sell more products to the European market, including to Denmark,” he said. The ambassador stressed that the preferential trade treatment under the GSP+ is beneficial to Philippine manufacturers “ because they can get their products to the European markets without any tariff and that makes them very competitive”.

Stitch and sew

An old woman intent on putting up a modest dress shop browses through an inventory of electricity-powered sewing machine being sold near the Port of Manila over the weekend. These modern sewing machines are expected to deliver faster and better-quality stitches than previous generation foot-powered machines. ALYSA SALEN

DOE’s Cusi adopts ‘carrot and stick’ tack to keep tab on power facilities By Lenie Lectura

@llectura

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he Department of Energy (DOE) released on Wednesday a circular that formalizes the conduct of performance assessment and audit for all power generation, transmission and distribution systems and facilities. DOE Circular DC 2017-05-0008 states that “all generation companies, transmission service provider and distribution utilities shall be subject to a performance assessment and audit once every three years, or as may be directed by the DOE”. Among others, the results of the audit shall serve as a DOE tool for the assessment of the overall performance of the electric power industry, thereby paving the way for policy development vital in the attainment of a secure, reliable and affordable supply of electric power to support the economic growth of the country. The circular comes after a year since Energy Secretary Alfonso G. Cusi assumed post and made public his intention to conduct an audit following the frequent yellow- and red-alert incidents between July 25 and August 5 last year. The circular also mandates the creation of the power transmission and distribution performance assessment and audit task forces. However, the DOE may consider tapping an independent third party, and performance assessment and audit firms. “The DOE shall develop procedure on the accreditation or engagement of an independent third-party auditor,” the circular added. Sought for comment on the issuance of the circular, Cusi said that when he assumed office last year, the agency did not have much information on how the different power facilities were operating. He also said there is a need to undergo retrofit of the existing power plants, particularly aging ones. “We would like them to adopt the new technology because the other plants, because of age, their efficiency, their capacity factor is very low already and that is costly to consumers.” Cusi proposed that the budget for the conduct of the audit will be sourced from the agency’s 2018 outlay. The DOE is also considering recommending to the Energy Regulatory Commission the imposition of penalties to noncomplying participants. “Further the DOE shall develop an appropriate system of incentives and penalties on the performance of the electric power industry participants in line with the performance assessment and audit parameters as maybe determined on subject issuances,” the circular said.

House-approved TRAIN decidedly pro-poor–Salceda

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ontrary to some misunderstanding by certain sectors, Albay Rep. Joey S. Salceda said the Tax Reform for Acceleration and Inclusion (TRAIN) bill, or House Bill (HB) 5636, recently approved overwhelmingly by the House of Representatives, is decidedly pro-poor and will “deliver a total monetary impact of P354 billion annually on middle-income and poorest Filipino households.” TRAIN consolidated Salceda’s original HB 4688, Quirino Rep. Dakila Carlo E. Cua’s HB 4774 and several

others, and aims to address the gross “inequality between the elite and marginalized Filipinos”. It adopted the title and most provisions of Salceda’s bill, including the conditionalcash transfer and the proposals of the Department of Finance. Cua and Salceda are chairman and senior vice chairman, respectively, of the House Ways and Means Committee. Their measure, considered as the most significant reform under the Duterte administration, garnered 246 affirmative votes, nine negative

and one abstention on its second and third readings on May 31. President Duterte had earlier certified the measure as urgent. The approved version includes increased excise taxes on oil and vehicles, expanded value-added tax (VAT) base and tax on sweetened beverage and lotto winnings, but retains VAT exemptions for senior citizens and disabled persons, and on transactions by various cooperatives. It is designed to hike tax revenues to help underwrite the

government’s massive development programs and ultimately benefit the poorest families. Salceda said among the bill’s benefits is the transfer of some P170 billion annually from the rich to the middle class and low-income households. A noted economist, he added the measure is expected to “ultimately reduce poverty to single digit, grow the economy and transform the Philippines into an Asian economic powerhouse by 2028, with $1.2 trillion GDP.” PNA

25 LRT 1 trains complete ₧1-billion rehabilitation, LRMC head says

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ight Rail Manila Corp. (LRMC) has completed the P1-billion rehabilitation of 25 train cars that it will soon field on the tracks of the Light Rail Transit Line 1 (LRT 1). LRMC President Rogelio L. Singson said commuters can expect improved comfort when riding the train line any-

time soon, as more light-rail vehicles (LRVs) will be operating in the facility. With the restoration of 25 train cars, the train system can now operate with a fleet of 102 LRVs, roughly 32 percent more than the 77 trains it received from the government in May 2015. “With the expanded fleet, a new

train timetable will be implemented, increasing the number of trips on weekdays, from [the] current 498, to 554 trips daily, resulting to shorter queue time and reduced headway for our passengers,” he added. Currently, the company is awaiting the approval of the LRT Author-

ity for the extension of its scheduled operations. The restoration program included the sourcing of spare parts from the original European manufacturers of the 32-year-old Generation 1 trains and the 18-year-old Generation 2 trains. “Our engineers have successfully

gained the confidence of European spare-parts manufacturers, such as Alstom, Gerkens and Knorr Bremse, among others, for the supply of electromechanical parts that were essential to restore LRVs,” Singson said. The company, a joint venture led by Metro Pacific Investments Corp. and

Ayala Corp., undertook the P1-billion rehab project while awaiting the procurement of 120 new trains by the government. “With 102 LRVs available as of May 31, we can now serve the passengers better with increased capacity and shorter waiting time,” Singson said. Lorenz S. Marasigan

Agriculture/Commodities BusinessMirror

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Editor: Jennifer A. Ng • Thursday, June 8, 2017

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PHL cuts tariff for chipping potatoes

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he government has slashed the tariff for fresh and chilled potatoes for chipping to 3 percent from 40 percent, according to a report from the Foreign Agricultural Service (FAS) of the United States Department of Agriculture. In a report, the FAS in Manila said the new tariff rate for in-quota chipping potatoes would take effect on June 17. Out-quota tariffs for fresh potatoes, however, will remain at 40 percent. “The Philippines maintains an annual tariff-rate quota for fresh potatoes at 1,550 metric tons [MT],” the report read. Last year the report noted that the US exported nearly $6.6 million of fresh or chilled potatoes

to the Philippines, making it the largest exporter of potatoes to the country, followed by Germany and China. In 2013 the Philippines formally opened its market to US fresh table-stock potatoes for consumption. The report noted that prior to granting market access, almost all fresh potatoes that entered were exclusively for chipping. FAS noted that US potato

exports to the Philippines have grown to 13,000 MT in 2016, from 5,300 MT in 2013. FAS said the reduction in the tariff for chipping potatoes was contained in Executive Order (EO) 20 issued last month. EO 20 modified import duties on various products under the Customs Modernization and Tariff Act from 2017 to 2020. A study released by the Philippine Institute for Development Studies (PIDS) in 2012 indicated that national potato production jumped to 124,600 MT in 2010, from 66,000 MT in 2001. “However, importation also increased during the decade [20012010]. From a 2.2-percent share in the gross supply of potato in 2001, it became 13 percent in 2005 but decreased to 5.2 percent in 2010,” the study read. The PIDS study also noted that more than 70 percent of potatoes produced locally are consumed directly, 23.5 percent are used for processing, while 4.7 percent are used as feed and waste.

‘Lapu-lapu’ breeders make Sarangani Bay their new home

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ENERAL SANTOS CITY— Five giant lapu-lapu (grouper) spawners have been released in the protected Sarangani Bay in a bid to boost the livelihood of thousands of small fishermen, as well as spur tourism in the area, officials said. Genia Genosa, production superintendent for Finfish Hatcheries Inc., said the giant lapu-lapu, which range in weight from 80 kg to more than 100 kg each, were released recently into Sarangani Bay to help replenish the grouper population in the area. “One giant grouper can spawn 20 percent of its own body weight in eggs, meaning one of the spawning groupers can lay between 16 kg to more than 20 kg of egg per cycle,” she said in a statement on Tuesday. Genosa explained further that each kilo of giant grouper eggs can have as much as 1.2 million fries. “The reason they lay so many eggs is because the mortality of their fry is only around 5 percent but they lay so many and we hope that with the proper guidance, they can help repopulate Sarangani Bay with groupers,” Genosa said. The giant groupers were released in nearby Maasim town in

Sarangani by Finfish Hatcheries, a subsidiary of the Alcantara Group, the majority owner of the 200-megawatt coal-fired power plant operated by Sarangani Energy Corp (SEC). Lopez said since the SEC jetty area is an environmentally protected seascape, catching the groupers, among other marine species, is illegal. Coal imported from Kalimantan, Indonesia, is unloaded at the jetty. “We will ask our Bureau of Fisheries and Aquatic Resources to keep an eye on the giant groupers and help us make sure that they are safe,” Lopez said. Former Sarangani Governor Miguel Rene Dominguez, executive vice president for the Alsons Business Unit (ABU), said in the statement that “this is the first time he has heard that a private company is reseeding a marine-protected area with breeders so that they can continuously produce.” “It is a significant contribution because we are going to seed the marine-protected area with grouper breeders so that they will reproduce here in the marineprotected area and later on will become available for the fishermen to catch at the allowed fishing grounds,” Dominguez said.

He also said “this is the first time in the country or possibly the whole world where a private company is reseeding a marine protected area with breeders or brood stock so that they can continuously reproduce and make it sustainable.” “We have been restocking Sarangani Bay with milkfish but we decided to take it a step further by putting [lapu-lapu] breeders back in the wild where they belong. Not only will it help in the sustainability of the bay, but hopefully, the giant groupers will become a big tourist attraction for Maasim as divers can swim with these giant creatures [because they’re] friendly,” Dominguez added. During the event, Ruben Tungpalan, SEC corporate affairs manager, reiterated SEC’s commitment to protecting and preserving Sarangani Bay. “We are situated right infront of Sarangani Bay, which means that we have the bigger responsibility of making sure that the bay is protected and preserved,” Tungpalan said. Former President Fidel V. Ramos declared Sarangani Bay as a protected seascape through Proclamation 756, Series of 1996. PNA

file photo

NFA releases 7,592 bags of rice for Marawi evacuees

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he National Food Authority (NFA) on Wednesday said it has released a total of 7,592 bags of rice as of June 5 to various relief-giving agencies and organizations for distribution to the victims of the crisis in Marawi City. In a statement, the NFA said, the Department of Social Welfare and Development in Region 12 has withdrawn 600 bags from NFA Misamis Oriental; 3,600 bags from NFA Maguindanao; and 1,867 bags from NFA General Santos City. The Office of the Vice President withdrew 500 bags from NFA Cagayan de Oro City and the Office of Civil Defense of Cotabato withdrew 300 bags from NFA Iligan. The local government unit (LGU) of Iligan also withdrew 725 bags from the local NFA office. NFA Administrator Jason Laureano Y. Aquino, who recently visited Marawi and other NFA offices in Mindanao, said the agency’s office in Marawi remains closed. Its employees are currently holding office in Iligan. Aquino said the agency has set up an operations center in NFA Iligan to closely monitor the situation in Marawi. It also coordinates with other NFA offices in Mindanao for the release and distribution of rice to relief agencies and LGUs. On May 25 Maute members ransacked the NFA warehouse in Marawi and ran away with some 100 bags of rice. The NFA office and facilities in the area are now under military security. The NFA said its market monitoring in the whole o Mindanao indicated that rice prices remain stable in the province.

Scientist: Baby lobster count drops off US coast, Canada

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OR T L A N D, M a i n e —T h e number of young lobsters is declining in the Gulf of Maine despite years of record-breaking harvests, a University of Maine marine scientist has warned. Rick Wahle quantifies the population of baby lobsters in the gulf, a key lobster-fishing area about the size of Wisconsin, at monitoring sites in New England and Canada every year. His American Lobster Settlement Index, released this month, shows monitoring sites from New Brunswick to Cape Cod had some of the lowest levels since the late 1990s or early 2000s. The decline in baby lobsters represent an “early warning” of what might happen to the future of the lobster harvest, which is the source of a major fishery and a focus of the tourism industry in New England, Wahle said. Lobsters take several years to grow to legal harvesting size, so the drop in young lobsters would start to affect lobstermen in

Justin Sullivan/Getty Images/Bloomberg

future years, he said. “If we were to see a collapse in the lobster catch, it would mean that we’re already seven to eight years into a decline in the population,” Wahle said. For over 10 years now, lobster-egg production has been rising but the number of baby lobsters has been falling, Wahle said. Scientists and fishermen are working to better

understand the changes in the lobster population and their potential ramifications for the environment and the economy. Wahle said one factor could be a declining amount of a type of copepod that baby lobsters like to feed on. Another possibility is an increase in predators of young lobsters, he said. Wahle said scientists need to better un-

derstand those issues to help prepare for the future of the lobster fishery. Maine accounts for the largest percentage of the US lobster catch yearly, and the industry has been booming in recent years. The catch climbed to more than 130 million pounds last year, which was a record total according to state statistics that go back to the 19th century. The total US lobster catch was worth a record of more than $620 million in 2015, which is the most recent year for which statistics are available. It’s a lifeblood industry in Maine, and Wahle cautioned that “a downward trend in lobster production could significantly impact the state’s coastal economy in the future”. David Cousens, the president of the Maine Lobstermen’s Association, agreed. He said he’s concerned about the Maine lobster fishery going the way of the southern New England fishery, which scientists have said has faded in the face of warming ocean waters. AP

TheBroa Business continues to bet o A6

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Thursday, June 8, 2017

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VG Cabuag

N the late ’70s the Marcos administration decided to pursue a project that aims to reclaim a portion of the Manila Bay, part of what is now known as the Cultural Center of the Philippines (CCP).

Maksym Yemelyanov | Dreamstime.com

Ambitious as it was at that time, the CCP was just part of the grand plan developed in 1905 by the American architect David Burnham for the development of coastal road properties along the southern segment of the Manila Bay coastline stretching from Luneta to Cavite City. That project was called Boulevard 2000, and was later changed to so many other names, including “Bay City”. The grand plan was that CCP will eventually be subsidized by the commercial properties that dot along that thousands of hectares of land that, until today—more than a hundred years later—still needs reclaiming. Part of that reclaimed commercial land was assigned to the Philippine Amusement and Gaming Corp. (Pagcor), a state-owned casino operator and regulator of a huge chunk of the country’s gambling industry.

Nayong Pilipino

AS Pagcor’s charter was nearing its expiry in 2008, it needed to convince legislators that the agency is still relevant and not just simply an operator of casinos and a gambling industry regulator, profits of which were partly being used to fund some of the Philippine President’s pet projects. As ambitious as the centuryold Manila Bay reclamation project, Pagcor thought of spicing up its role in the industry by opening the country’s gambling market to the world and compete head on with the billion dollars worth of gambling sites in Macau, China, in Las Vegas in the United States, in Australia and in Malaysia. Pagcor operates its own gambling facilities under the Casino Filipino brand. These facilities were and still are mostly located in Luzon, but there were a few branches in the Visayas and Mindanao. But casinos, through the years, even with the entry of relatively small players, have become stale as these have had to compete with small-time competitors like horse racing, cockfighting and jueteng, among others. Nine years ago, Pagcor unveiled its plan called the Bagong Nayon Pilipino-Entertainment City, an integrated resort and casino expected to have four major players. Again, it was called by many other names like Boulevard 2000. It is now called Entertainment City, or sometimes Pagcor City. Nayong Pilipino was the cultural park previously located near the international airport in Pasay

City. In 2002 President Gloria Macapagal-Arroyo ordered the park closed but ordered its transfer in a reclaimed area, the 15-hectare property owned by the Philippine Reclamation Authority in Parañaque City. The Nayong Pilipino park now sits right smack in the middle of the Entertainment City, the gambling site using the integrated resort complex.

Junket players

UNDER the concept that’s relatively new to the Philippines but has been in practice in gambling meccas all over the world, the casino is integrated with a resort property development and the huge entertainment infrastructure surrounding the locale. The integrated resort also called for so-called junket players. These are foreign passport-holding players especially brought into the Philippines by the licensee or its third-party chip-washing or junket operator. These VIPs are flown in to play in junket rooms and areas reserved for them inside the casino. To accomplish this, Pagcor required huge casino operators to follow a certain ratio of gaming table per hotel room. The gaming capacity ratio for gaming tables is one gaming table for every four standard rooms or its equivalent. Meanwhile, there should be three electronic table game terminals for every two standard rooms or its equivalent. Casino operators cannot start doing business without at least having an 800-room hotel. However, Pagcor wanted more than just that. The regulator also required operators to spend at least $1 billion for their facilities for each of the four slots in the Entertainment City. Such was an eye-popping amount for the country’s fledgling gambling market, as it needed to put in place luxury hotels and highend entertainment facilities. In Macau or Singapore, for instance, a single operator would need to spend at least $4 billion to put up just one integrated resort.

Major players

NONETHELESS, the gambling regulator was able to attract four major players with deep pockets to operate in the Entertainment City. These were billionaire Enrique Razon Jr. along with Las Vegasbased Global Gaming Asset Management Llc. (GGAM); businessman Andrew Tan in partnership with Genting Hong Kong Ltd.; Belle Corp., which later on was majorityacquired by the SM Group; and

Japanese gambling magnate Kazuo Okada. Razon’s group was given 16 hectares of land fronting Manila Bay, while Tan’s group received some 30.5 hectares located inland. The SM Group was given 6.2 hectares, also inland, and Okada had the biggest at 44 hectares, a swath of property facing the Manila Bay. There were many tweaks along the way. Razon, who created his own resort brand under Solaire Resorts and Casino, fired the GGAM months after Solaire opened in 2013. An arbitration case has been filed in a court in Singapore. The SM Group, meanwhile, had to change the name of its casino from Belle Grande to City of Dreams Manila (CDM) after it partnered with Macau gambling tycoon Lawrence Ho with its Melco Crown Entertainment Ltd. The CDM opened in 2014. Today, Melco’s Philippines unit operates CDM and pays rent to both Belle and Premium Leisure Corp., the entity that now holds the casino license and the other gambling assets of the SM Group.

Partners’ talks

MEANWHILE, the opening of Okada’s project, the biggest among the other locators, has been delayed for several times. It was also accused of its partner Wynn Resorts, a Macau casino operator, of bribing Philippine officials for the coveted license. Okada’s previous local partner for the development, the Gokongweis’ Robinsons Land Inc., also backed out from the residential and commercial segment of the project. Okada, meanwhile, also spurned the group of Ambassador Jose Antonio of the Century Properties Group Inc. as replacement for Robinsons Land as local partner. Okada tapped instead businessman Antonio Cojuangco Jr. Tan, meanwhile, had to rebrand its Bayshore Resorts World to Westside City Resorts World, which is still under construction. As discussion on the Entertainment City casino projects was going on, Tan had an ace up his sleeve. He was also already talking to Genting for the development of Resorts World Manila, a 12-hectare property that sits right in front of the Terminal 3 of the Ninoy Aquino International Airport. In 2009 Tan opened Resorts World Manila, undercutting the other players in Entertainment City. While his investment was relatively smaller compared to other players in the Entertainment City,

Okada Hotel

Erik Zunec | Dreamstime.com

aderLook

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www.businessmirror.com.ph | Thursday, June 8, 2017

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on PHL’s gambling industry

CITY of Dreams

Yooran Park | Dreamstime.com

Solaire Resorts and Casino

Tan still had to follow the basic gaming table-to-hotel room ratio.

Raising funds

WITH such huge investments needed to bankroll Entertainment City projects, money did flow in the system. Aside from private placements, these major players tapped various sources of raising funds from the capital markets. Razon’s Bloomberry raised funds through the Philippine Stock Exchange, via a backdoor entry using Active Alliance Alliance Inc. Melco Crown (Philippines) Resorts Corp. also made its backdoor entry using Interphil Laboratories Inc. Okada, on the other hand, has been busy raising funds in Japan to bankroll its $2.4-billion project. The three other operators said they spent about $1.2 billion each for the establishment of their respective sites in Entertainment City. Tan’s Travellers International Hotel Group Inc. has said it spent P5.9 billion in 2014 for its ongoing second phase and third phase to expand Resorts World Manila. Tan will still spend more for his integrated resort project.

Getting bigger

ACCORDING to Pagcor data, gross gaming revenues from the current Entertainment City is now bigger than the other gambling sites in the Philippines combined, including its own Casino Filipino. In 2015, there are about P70.15 billion in gross gaming revenues from Entertainment City, which at that time only had two players— Solaire and City of Dreams Manila.

Revenues from other gambling sites totaled at P42.8 billion, Pagcor data revealed. As of the third quarter of 2016, revenues from Entertainment City reached P63.3 billion compared to the P36.45-billion revenues from other sites. As of September last year, Pagcor’s Casino Filipino, which is not required to put up its own hotel, still had 565 game tables. Solaire followed at 392 game tables, Resorts World Manila at 314 game tables and City of Dreams Manila at 247 game tables. This year, Okada Manila started operating, which will add to the number of game tables and hotel rooms. Westside City, slated to open by 2021, would be the last casino operator in Entertainment City to open, according to Kingson Sian, president and chief executive officer of Travellers International, Tan’s entity that holds most of his gambling and hotel assets. “By that time, we expect that the integrated casino market is more mature. Hopefully, we can expand the market by attracting tourists here,” Sian said. “The infrastructure projects of the government can help ease infrastructure bottlenecks.”

Market growth

SINCE the concept of an integrated resort is new, many are mum on how big the industry is. Still, most of these players agree that the market is growing and the nationalities of junket players are getting more diverse.

“The market is growing. Pagcor has not given an official figure yet so I can’t give you exact figures,” said Manuel Gana, Belle Corp.’s president and chief executive officer. “But we can tell you as of first quarter this year, total GGR [gross gaming revenues] in the Philippines has growth versus last year. So we expect it to further expand this year.” Willy Ocier, Belle’s vice chairman, said the gambling industry’s GGR last year reached close to $3 billion. With that positive result to pockets, Belle began to also lobby for visa on arrival to be issued especially for Chinese mainland tourists. “It hasn’t happened yet but we are constantly lobbying. Hopefully we will get approval soon, a bilateral approval, for Filipinos going to China and as well as Chinese coming here,” Ocier said. “That will obviously improve the traffic coming from China.” He added that “Taiwan has already approved the easing of travel of Filipinos going to Taiwan.” “[Taiwan is] already ‘visa-onarrival. So that’s something that the Philippines can offer,” Ocier explained. “So we’re hoping that barriers can be broken down especially in the Asean [Association of Southeast Asian Nations]”.

Birth pains

THERE are birth pains, however, especially when Entertainment City’s main junket players come from China. However, most are claiming there are also other players in some parts of wealthy Asian

nations, such as South Korea and Japan. The crackdown in China has also not been beneficial to many of the listed Entertainment City operators. Bloomberry’s share price has been erratic since its opening in 2013, mainly as investors were nervous with China’s crackdown on its citizens’ gambling addiction. The Razon firm’s share price shot up as high as P15.52 per share in late November 2014, but went down to just P3.08 in early 2016. The share price recovered and now is trading on average at P8.37 per share. Meanwhile, Travellers International’s shares reached as high as P9.90 in September 2014, but went down to P3.19 in September 2015. It has remained struggling to recover until today. Melco’s shares also took a heavy beating. From as high as P15.12 in late 2014, its shares were sold down heavily to reach P1.33 in early 2016. Gradually, Melco’s shares went up to P6 per share through this year. The same trajectory was seen with the share price of Belle that traded as high as P5.98 in 2014 but was sold down to reach P2.11 in early 2016. Shares of Premium Leisure also mimicked the same trajectory of its peers. Operators believe that when another player in the complex starts doing its business, the industry gets bigger and bigger. “Okada [Manila], which is so big, hopefully will help grow the market,” Razon said. “This place [Entertainment City], which was just zero how many years ago, has created 25,000 jobs out of thin air and has created an industry of $3 billion in revenue out of thin air,” Razon said, while lifting his palm face down two inches from the top of a table. “So it has been beneficial from zero to this amount of revenue. This is what you call economic value added.” He added that “every time there’s a property that opens, jobs are increasing [and] the market is also increasing. “Each of the 25,000 workers supports what, three or four people. And the change continues,” Razon told the BusinessMirror. “This is the kind of investment that the country needs.” Editor’s Note: This article was written weeks before violence broke out at Resorts World Manila.

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The World BusinessMirror

Thursday, June 8, 2017

Retired US Navy commander in Hawaii pleads guilty to fraud

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ONOLULU—A retired US Navy commander in Hawaii charged in a growing corruption scandal pleaded guilty on Tuesday to lying about his relationship with a Malaysian defense contractor, known by the nickname “Fat Leonard”. As part of a deal with federal prosecutors, David Kapaun entered the plea to a count of fraud and false statements in federal court in Honolulu involving his relationship with Leonard Francis, who prosecutors describe as “the center of a colossal bribery and fraud scandal ”.

Kapaun said in court that he omitted Francis from a securityclearance update form, because he knew “I did have a past association with him that was unfavorable”. He also didn’t disclose receiving dinners, hotel stays and prostitutes from Francis, said his defense attorney, Victor Bakke.

Fra nc is h a s ac k nowledged bribing Navy officials with cash, prostitutes and other gifts in exchange for classified information to help his company, Singaporebased Glenn Defense Mar ine A sia. T he company prov ided services, such as trash and sewage removal, food, water, security and fuel, to US Navy ships, according to prosecutors. He’s awaiting sentencing. “He played a minor role in the overall scheme that was conducted by Fat Leonard,” Bakke said of K apaun. “He’s remorseful. He realizes he should have used better judgment. But just like the number of other Naval officers that are involved in this case, he was seduced by this guy.” Twenty-one current and former

Navy officials have been charged so far in the scandal. Kapaun is the 11th to plead guilty. The allegations prompted Kapaun to resign earlier this year from his civilian position as deputy chief of staff for US Special Operations Command Pacific. Kapaun could face up to five years in federal prison when he’s sentenced on September 11. The terms of his plea agreement will require Kapaun to pay $50,000 restitution and a $25,000 fine, Bakke added. K apaun retired and was honorably discharged in 2008 af ter a 25 -year Nav y career, Ba k ke said. “Even though he’s retired, they could pull him back to active duty and court-martial him if they wanted to,” Bakke added. AP

A demonstrator holds a sign that reads in Portuguese “Get out Temer. Together!” referring to Brazil’s President Michel Temer, outside a presidential office building in São Paulo, Brazil, on June 6. AP

Brazil’s court begins hearing on removing President Temer

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ãO PAULO —Brazil ’s top electoral court began hearing arguments on Tuesday evening on whether embattled President Michel Temer should be pushed out of office over allegations of illegal campaign financing in the 2014 presidential election. Judge Herman Benjamin, who was named by the court to examine the case, began with his analysis of the charges against Temer, but left his vote for the next session. The hearing was expected to take at least three days, and there is no deadline for a final ruling by the seven judges in the case, which is the first time in Brazil’s history that a sitting president risks could have the job taken away by the electoral court. The suit was brought after the election by the right-leaning Brazilian Social Democracy Party, whose presidential candidate, Aecio Neves, lost to the ticket of then-President Dilma Rousseff and Temer as her vice presidential running mate. Ironically, the party has been a key ally of Temer since he took over the presidency after Rousseff was suspended and then impeached last year. If the court decides the Rousseff-Temer ticket did receive illegal campaign financing, as several plea bargains have suggested, Temer mandate would be annulled, and Congress would have to pick

some to serve out his term through December 2018. However, the career politician whose popularity is hovering around 8 percent has said he would appeal. Rousseff claims innocence, as does Temer, who argues that his team was not responsible for the fundraising of the ticket. Amid growing pressure for the president to resign amid a number of different corruption allegations, Hermann said this trial will be “based on facts, not on political convenience”. Supreme Court Justice Gilmar Mendes, who presides over the electoral court, described the trial that could remove his old friend as “a great learning experience”. If Temer is eventually pushed out of the presidency by the court, or decides to resign, Chamber of Deputies Speaker Rodrigo Maia would take over for 30 days while Congress voted in a new leader. The electoral court scheduled more sessions for Wednesday and Thursday, but those could be postponed if any of the seven judges asked to review the case. After Tuesday, the court will have to analyze a preliminary issue that could change the proceedings: Both Rousseff ’s and Temer’s legal teams want the judges to reject information coming from plea bargain testimony from executives of the giant construction company

Odebrecht, which is caught up in the sprawling investigation into bribes and kickbacks involving Brazil’s state-run oil company Petrobras. They argue that accusations made by Odebrecht employees involving the 2014 campaign exceed the original scope of the Petrobras investigation. Mauricio Santoro, a political analyst at Rio de Janeiro State University, said he expects the court to postpone a final decision in the case or find a way to separate Temer from Rousseff ’s ticket. “Temer has built a coalition of supporters in the Supreme Electoral Court under the argument that people may not like him, but there’s no consensus about who his successor should be,” Santoro said. Hours before the trial began, Temer’s political situation deteriorated further with the arrest of a former tourism minister and close ally. Henrique Eduardo Alves was taken into custody on allegations of corruption related to the construction of a 2014 World Cup stadium in Natal. Globo News captured images of Alves being arrested by federal police. Officials held a news conference later at which they laid out allegations that Alves and Fred Queiroz, Natal’s secretary of public works, received bribes from major construction companies. Alves, a former speaker of the

Chamber of Deputies, was tourism minister under both Rousseff and Temer, who assumed the presidency last year when Rousseff was removed for illegally managing the federal budget. Alves gave up the Cabinet post soon after Temer took power in May 2016. His arrest came just a day after federal police sent Temer a list of questions in a separate criminal probe that involves the president. He had 24 hours to answer the questions, but his lawyers got an extension until Friday afternoon. Last month, Brazil’s top prosecutor opened investigations on Temer for alleged passive corruption and obstruction of justice. Temer is being investigated for allegedly endorsing the payment of hush money to former Chamber of Deputies Speaker Eduardo Cunha, another former ally. Cunha is serving a 15-year prison sentence for corruption and money laundering. The president is also being investigated for allegedly receiving bribes via former aide Rodrigo Rocha Loures. On Tuesday Brazil’s top court rejected a petition by Loures to be released from jail. Loures was arrested over the weekend. The police released a video that apparently showed Loures carrying a suitcase filled with $154,000. Should he reach a plea bargain, his testimony could further implicate Temer. AP

www.businessmirror.com.ph

Letter points to power struggle within surging IS in Afghanistan

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SLAMABAD—A letter drafted by a senior Islamic State (IS) militant and obtained by The Associated Press (AP) points to a growing power struggle within the group’s Afghan affiliate, pitting notoriously fierce Uzbek fighters against Pakistanis seen as too close to that country’s powerful intelligence service. The rumblings of discontent come as the IS affiliate, which refers to itself as the Khorasan Province, is at war with both the US-backed government and the more well-established Taliban, with which it differs on tactics, leadership and ideology. The IS affiliate emerged in 2014 and refers to itself as the Khorasan Province, an ancient term for an area that includes parts of Afghanistan, Iran and Central Asian states. It has pledged allegiance to the IS group in Iraq and Syria, but consists mainly of disgruntled former Taliban and other insurgents from South and Central Asia. The letter, obtained by a jihadi fighter with ties to the IS affiliate and then provided to AP, was signed by Moawiya Uzbekistani, the apparent nom de guerre of an Uzbek militant, who claims to have become the leader of the IS affiliate after the death of Abdul Hasib, who was killed in a joint USAfghan operation in April. Uzbekistani rejects reports that another fighter, who he identifies as Sheikh Aslam Farouqi, has been chosen to lead the group and suggests Pakistan’s Inter-Services Intelligence (ISI) is behind the rumors. “Even if this information is true, then it’s the ISI of Pakistan behind this function and we don’t accept it, because we all fight for Allah and his religion,” the letter says, warning against “ infidels, intelligence services and the deceitful” acting from “ behind the scenes”. Militants belonging to allied groups said Central Asian fighters, as well as Afghans, want the leadership of the group taken out of Pakistani hands, even though the founder of IS in Afghanistan, Hafiz Saeed Khan, was a Pakistani tribesman. Khan was killed in a US drone strike in July 2016. The rift seemed to widen with a recent IS meeting in Pakistan’s Orakzai tribal belt, from where Khan originates, according to two people familiar with the meeting, which was said to have been attended by 40 senior IS commanders. The council appointed Saif-ul Islam, a close Pakistani ally of Saeed, as the new leader. With the many names used by insurgents, it wasn’t immediately clear if Aslam

Farouqi and Saif-ul Islam were the same person. Sheikh Abdul Qadir Khorasani, an Afghan from the eastern Kunar province, was appointed deputy, they said. The militants all spoke on condition of anonymity, as they were not authorized to brief reporters. There has been no official IS confirmation of a new leader and in Washington intelligence officials refused to comment. More than 16 years after the US invaded Afghanistan to end Taliban rule and flush out al-Qaeda, the mountainous regions along the Afghan-Pakistani border are still home to an array of extremist groups. Pakistan’s spy service is said to have connections to some, including the Afghan Taliban, even as it battles other groups that threaten its own citizens. The growing assertiveness of the Uzbek militants within the IS affiliate is particularly worrying. Uzbek fighters were so vicious in Pakistan’s South Waziristan province that they drove the area’s fractious tribesmen to unite to push them out in 2015. They then based themselves in North Waziristan before being driven across the border by a Pakistani military offensive. They have since clashed with the Taliban in different parts of Afghanistan and claimed responsibility for brazen and deadly attacks in Kabul, including a daytime assault and siege of an Afghan military hospital that killed 50 people earlier this year. Arkady Dubnov, a Moscowbased expert on Central Asian militants, said the Uzbeks’ reputation for brutality is likely rooted in the fact that they are “aliens” in much of Afghanistan and Pakistan, which are dominated by other ethnic groups. That may also explain their tensions with the Afghan Taliban. While both the IS and the Taliban are determined to overthrow the Afghan government and impose a harsh version of Islamic law, the former views itself as part of a global movement, while the latter confines its operations to Afghanistan. Dubnov also noted that the son of Tahir Yuldashev, the powerful Uzbek leader of the outlawed Islamic Movement of Uzbekistan who was killed in a US missile strike in Pakistan in 2009, is leading efforts to help expand IS influence in Afghanistan. Central Asian fighters are now a key pillar of support for the IS affiliate, according to Anatol Lieven, a regional expert at Georgetown University’s Qatar campus. AP

UN resolution would authorize Sahel force against extremists

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NITED NATIONS—France circulated a UN Security Council resolution on Tuesday that would authorize military action by five countries in Africa’s vast Sahel region against extremist groups. Presidents of the five countries—Niger, Mali, Chad, Burkina Faso and Mauritania— agreed in February to set up a joint force. Initially, it is expected to comprise up to 5,000 military, civilian and police personnel, with headquarters in Mali. France’s UN ambassador, François Delattre, told reporters that the African Union and the presidents of the five nations asked the Security Council to authorize the force. Council experts are expected to start discussing the draft on Wednesday and it could be put to a vote next week. “We cannot afford to let the Sahel region become a new safe haven for terrorists from across the world,” Delattre said. “The terrorist threat in the Sahel region threatens not only the region itself but... internationalpeace and security”. The draft resolution strongly condemns

the activities of “terrorist organizations” in Mali and the wider Sahel. It also notes serious challenges posed by transnational organized crime in the region, “including arms and drug trafficking, the smuggling of migrants, trafficking in persons, and its increasing links, in some cases, with terrorism”. It would authorize deployment of the force for a year, with a mandate to “combat terrorism, drug trafficking and trafficking in persons”, contribute to restoring state authority and helping the return of displaced people and refugees and facilitate the delivery of humanitarian aid. The draft would authorize the force “to use all necessary means to implement its mandate”, while underlining “the primary responsibility of the G5 Sahel states to protect civilians”. The proposed resolution welcomes the European Union’s decision to provide 50 million euros to support the force and urges other countries and organizations “to provide adequate logistical, operational and financial support”. AP

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

The World

Uber moves to repair tainted image with 20 firings, 1 hiring

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ETROIT—Uber, the world’s leading ride-hailing company, has taken two big steps toward repairing its corporate image: It fired 20 employees for a host of harassment problems and hired an Apple marketing executive to rescue its tainted brand. Those fired for sexual harassment, as well as bullying, discrimination and other behavior that violated company policies included both managers and lower-level workers. Some had retaliated against other employees after they complained about bad conduct, said Bobbie Wilson, a partner at the Perkins Coie law firm, which did the investigation. Separately, Uber announced on Tuesday that it had hired Apple marketing executive Bozoma Saint John, who will be Uber’s chief brand officer. She ran global consumer marketing of Apple Music and iTunes. Her task at Uber will be to improve its brand image so people like it as well as they like the company’s ride services, an Uber spokesman said. “Boz has a long track record of successfully creating emotional connections between people and the products they love,” Uber CEO Travis Kalanick said in a statement. More action could come next week when a report on Uber’s culture by former Attorney General Eric Holder is likely to be made public. He is supposed to make broader recommendations on how to change Uber’s culture. During Uber’s ascent to becoming the world’s most valuable start-up, the San Francisco-based company took Silicon Valley’s penchant for sexism, for cutthroat, unapologetic competition and distaste for government regulation and kicked it up several notches. For a while, this worked well, pushing Uber’s valuation to nearly $70 billion. But this year Uber’s aggressive corporate culture and 40-year-old Kalanick’s

self-admitted need to “fundamentally change and grow up” has caught up with it.

Target of lawsuits

IN addition to the sexual-harassment a l l e g at i o n s, U b e r i s t h e t a rg e t o f lawsuits, boycott threats and a federal investigation into claims that it has used a fake version of its app to thwart authorities. It’s also been accused of corporate espionage by Waymo, formerly Google’s autonomous vehicle arm. Uber’s former chief autonomous car researcher took confidential documents from Waymo before his start-up firm was purchased by Uber, according to a Waymo lawsuit. Uber also is searching for a COO and CFO as it prepares for a possible public stock offering. Uber Technologies Inc. retained Perkins Coie after former engineer Susan Fowler posted a blog in February about sexual harassment at the company. Fowler wrote that on her first day at work her boss propositioned her in a series of messages, and superiors ignored her complaints. After the posting, Uber set up a 24-hour hotline to take complaints from employees, and hired Perkins Coie to investigate them. The firm checked into 215 complaints, and 57 remain under investigation. The hotline will remain in operation. The probe into Fowler’s complaints is still underway, and Wilson wouldn’t say if any of those fired, or 31 other employees placed in counseling, were involved in that. Wilson said Uber gave her law firm “u n f e t te re d a cce s s” to p e o p l e a n d documents that were needed for the Fowler investigation. Problems at Uber are not unusual in the technology industry, given the company’s size of more than 14,000 employees, added Wilson, whose firm has done similar work for the biggest tech companies in the nation. AP

BusinessMirror

Thursday, June 8, 2017

A9

Existing climate efforts seen to keep US targets on track

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AN FRANCISCO—The momentum of climate-change efforts and the affordability of cleaner fuels will keep the US moving toward its goals of cutting emissions, despite the Trump administration’s withdrawal from the Paris global accord, business and government leaders in a growing alliance said. New York, California and 11 other states representing nearly 40 percent of the US economy, mayors of about 200 cities and leaders of business giants, including Amazon, Apple and Target have signed pledges to keep reducing their fossil-fuel emissions after President Donald J. Trump announced he would withdraw the US from the 2015 Paris climate accord. “Our coalition wants to let the world know that absent leadership from our federal government”, the countr y will keep cutting its emissions from fossil fuels, Oregon Gov. Kate Brown told reporters on Tuesday. California, New York, Virginia,

Connecticut, North Carolina, Minnesota, Rhode Island, Washington state, Vermont, Massachusetts, Delaware, Oregon and Washington, DC, have signed pledges. The states, most led by Democrats, represent $7 trillion of the US GDP, or 38 percent. Texas, the largest producer of climate-changing carbon dioxide in the US and the biggest state economy after California, is a key figure absent from the list. More than two dozen other states, mostly in the country’s middle, already had been fighting stepped-up federa l emissions-cutting programs before Trump’s announcement.

Top Texas leaders have had little public comment on the withdrawal from the global accord, although the state’s attorney general praised the move. New York and California are the only states in the country’s top 10 list of carbon emitters to sign pledges. Salt Lake City Mayor Jackie Biskupsi, who joined former New York Mayor Michael Bloomberg’s “We Are Still In” campaign, along with mayors of Houston, Atlanta and hundreds of other local leaders, cited the economics for her state: Utah has a $1-billion skiing industry threatened by climate change and marked 65-percent growth last year alone in solar power, as one of the country’s sunniest states. “Utah is warming at twice the global average, and our drinking water is at risk,” said Biskupsi, saying she was acting “for the wellbeing of the planet I’m leaving to my sons and your children.” Undoing most existing US programs that curb car pollution and other climate-changing emissions would probably take years and court battles if Trump tries, climate experts say. A few efforts, such as a reduction on methane emissions introduced by the Obama administration, could be overturned more easily. The momentum of existing climate-change efforts and the

availability of natural gas, wind and solar power mean those loyal to the Paris accord in the US will have an easier time, with emissions expected to fall overall for years, said Robert Perciasepe with the Center for Climate and Energy Solutions, who worked with Bloomberg’s group on the climate pledge. Some studies suggest the US will cut emissions as much as 19 percent by 2025 if it simply moves forward as is, he said. That’s not far from former President Barack Obama’s goals for a reduction of 25 to 28 percent as part of the Paris accord, Perciasepe added. Since Thursday, commitments from cities, universities and businesses were happening so fast that organizers had to set up a web site where they could sign up automatically, Perciasepe said. The support from local governments, public institutions and businesses show that climate change efforts are getting something they have long lacked in the US—vocal and enthusiastic support, said William K. Reilly, a former chief of the US Environmental Protection Agency, who is not involved in the alliances. “It does perhaps reflect an increasing activism on the part of the public at large” on climate change, Reilly added. “ Trump can take some perverse credit for that.” AP

Siding vs ally Qatar, Trump injects US into Arab crisis W

ASHINGTON—President Donald J. Trump injected the US into a volatile crisis among America’s Mideast allies, siding Tuesday with Saudi Arabia and other countries against Qatar in a dispute that threatens to disrupt efforts to defeat the Islamic State (IS) group and counter Iran. In a series of early morning tweets, Trump appeared to endorse the accusation that the small, gas-rich kingdom funds terrorist groups, a serious allegation against a strategic US partner that hosts a base with some 10,000 American troops. He also sought to cast the anti-Qatar action led by the Saudis and the United Arab Emirates (UAE) as the result of his trip last month to Riyadh, where he pressed leaders from dozens of Arab and Muslim governments, including Qatar’s emir, to combat extremism. Trump said he’d told the kings, presidents and prime ministers that funding “radical ideology” can’t be tolerated, and “Leaders pointed to Qatar—look!” “ They said they would take a hard line on funding...extremism, and all reference was pointing to Qatar. Perhaps this will be the beginning of the end to the horror of terrorism!” Trump said on Twitter, claiming his visit to Saudi Arabia was “already paying off ”. He appeared to take a more measured tone during a call with Saud i A rabia’s K ing Sa l ma n. Trump told Salman that a united Gulf Cooperation Council is “critical to defeating terrorism and promoting regional stability”, according to a White House readout of the conversation. The council includes Qatar, Saudi Arabia, the UAE, Bahrain, Oman and Kuwait.

Sharp critique

THE president’s sharp critique of Qatar pulled the US directly into a conflict that American diplomats had wanted the bickering parties

something governments won’t be able to do if they’re consumed with internal spats. “It’s a mixed bag with Qatar,” said Republican Sen. Lindsey Graham, summing up America’s st rateg ic conu nd r u m. “ T he y have been def initely play ing footsie with a lot of terrorist organizations, but we have a big air base there.”

No plans

In this May 21 file photo, President Donald J. Trump (right) holds a bilateral meeting with Qatar’s Emir Sheikh Tamim Bin Hamad Al-Thani, in Riyadh, Saudi Arabia. Trump sided with Saudi Arabia and other Arab countries on Tuesday in a deepening diplomatic crisis with Qatar, appearing to endorse the accusation that the oil-rich Persian Gulf nation is funding terrorist groups. AP

to resolve among themselves. The US wasn’t planning a major mediation role, a State Department official said, pointing to offers from Turkey and Kuwait to intervene in what is emerging as the worst diplomatic crisis in the Persian Gulf in decades. The fracas pits Qatar—a country smaller than Connecticut and the world’s biggest producer of liquefied natural gas—against Saudi Arabia, the UAE, Egypt and Bahrain. Those countries on Monday severed diplomatic ties with Qatar, leading to suspended flights and regional ports closed to Qatari ships as anxious residents started stockpiling food. Qatar’s neighbors have long

accused the country, of tolerating, or even encouraging support for extremist groups, including al-Qaida’s Syria branch—all of which Qatar denies. But its independent foreign policy has led to various tensions with its neighbors. The region’s Sunni states bristle at Qatar’s less hostile position toward Shiite Iran and object to its backing groups, such as the Muslim Brotherhood, whose ideology challenges the system of hereditary rule in Saudi Arabia, the UAE and elsewhere.

Key test

FOR Trump, the rift has emerged as a key test of his goal to unite the region around destroying the

IS and other extremist groups, and containing Iranian influence. While he has even held out hopes that a communal effort could pave the way for Israeli-Arab rapprochement, the Qatar crisis serves as a reminder of the region’s many fault lines that challenge US diplomacy. While Trump, too, shares the Saudi and UAE goals of weakening hardline Islamic movements and stemming Iran’s influence, American officials hadn’t publicly singled out Qatar as a problem. Like earlier administrations, Trump’s had kept its concerns private while publicly praising Qatari efforts to stamp out terror financing. “They have made progress,” State Department Spokesman

Heather Nauert said on Tuesday, while adding “They and we recognize more work remains to be done.” On Monday Trump’s secretary of state, Rex Tillerson, encouraged the sides to “sit down together” to resolve irritants he said had “bubbled up” for some time. He didn’t take sides. It was unclear how Trump’s broadside against Qatar might a f f e c t t h e U S - l e d c o a l it i o n fighting IS. The US relies heavily on A l-Udeid A ir Base in Qatar to orchestrate air attacks in Iraq, Syria and Afghanistan. And, it is trying to galvanize the Arab world to assume greater responsibility in fighting the IS,

THE Pentagon cited no immediate effects from the instability on its operations. Navy Capt. Jeff Davis, a Pentagon spokesman, expressed gratitude to Qatar for supporting the US presence, outlining no plans to adjust American military posture. Yet, a prolonged crisis will put significant pressure on Qatar. Millions of migrant workers and expatriates live there, and much of Qatar’s food comes from Saudi Arabia across the peninsular nation’s only land border, which the Saudis have now closed. And a coup attempt or any cross-border action by the Saudis or Emiratis would put Trump in an uncomfortable position, given his now vocal support for the antiQatar action. If Qatar is economica l ly wea kened or decides to reta liate against Tr ump’s 140 -character a l legations, it has leverage. Beyond hosting US troops, Qatar has invested bil lions in the US and increased its clout in Washington a long the way. It’s a strategy shared by other Persian Gulf countries seeking to win US support—including Saudi Arabia. During his Saudi tr ip, Tr ump announced $110 billion in deals to sell weapons to the kingdom. And in its bid to lobby the US administration, the Saudis spent about $270,000 at Trump’s hotel in Washington between October and the end of March, new foreign agent filings show. The Trump Organization says the money will be handed over to the US Treasury. AP

A10 Thursday, June 8, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

How to solve our brain-drain problem

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he BusinessMirror recently published an article, titled “Brain drain: Southeast Asia’s obstacle to growth”, which described how the region is losing some of its best professionals to rich nations in the Organization for Economic Co-operation and Development (OECD). The article cited a study by the Asian Development Bank showing that the number of Asean immigrants with university degrees who left to work in OECD-member nations surged 66 percent in 2011 to 2.8 million. Unfortunately, more than half of them came from the Philippines. The article said this loss of human capital in the fields of medicine, science, engineering, management and education can be a major obstacle to economic and social development. That’s because the professionals we lose are usually in their productive ages. Among Asean members, the Philippines has been ranked No. 1 for exporting nurses and No. 2 for sending doctors overseas. Of course, the Philippine economy benefits from their remittances, which reached $30 billion last year. Still, the productivity gains accrue to the developed economies where Filipino professionals are employed. Coined in the 1960s, when British scientists and intellectuals immigrated to the US, brain drain refers to the loss of human capital. As more and more Filipino professionals continue to seek greener pastures abroad, it may seem as if the country’s brain-drain problem shows no signs of stopping. Given the current trend, the Philippines continues to face a brain-drain problem, which is depriving the labor pool of much of its greatest talent. We have lost an estimated 10 percent of our population, including many highly qualified professionals who continue to seek greener pastures abroad. Like most of their counterparts in Asean, the report said, “Filipino professionals respond to other countries’ higher wages and better working conditions, prospects for professional development and continuous education, and opportunities to work with other skilled persons in talent clusters.” Many Filipinos, however, are often overqualified for the overseas jobs they hold. Is there hope for the Philippines to solve its brain-drain problem? Yes, according to the Institute of Chartered Accountants in England and Wales (ICAEW), which noted that Asean economies are benefiting from growing populations. In its latest Economic Insight report, ICAEW said brain drains have been reversed before, particularly in India and China, where many professionals are returning. “As we have seen, in China and India, for example, emigrants are willing to return to their home countries despite even wage cuts, so long as they are confident their sector of expertise exists. One key strategy will be to make sure that the Philippines’s high-tech industrial centers are integrated into relevant international networks; this means that people can return to their home nation without fearing that their career progression will suffer,” said Mark Billington, regional director of ICAEW Southeast Asia. The solution that ICAEW proposed includes providing incentives, such as grants for knowledge businesses. “Creating clusters of businesses in areas with good-quality infrastructure can catalyze the development of a viable new sector in an economy, particularly if those with the requisite education exist. There is little point in investing in upgrading higher education systems to cope with the new economy, if those workers will simply leave to start a career elsewhere,” the ICAEW report said. The government’s “Build, Build, Build” program may create jobs for the unemployed. But if we are to solve our brain drain-problem, we need to work on improving conditions that will provide great incentives for Filipino professionals with super skills to stay. Since 2005

Geopolitics is Facebook John Mangun

OUTSIDE THE BOX

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F you are an active Facebook user, then you are well on your way to fully understanding the way geopolitics work. The Facebook user model was obviously taken from the Cold War between the US and the Soviet Union.

The current loose definition of geopolitics is the relationships and interactions between nations and regions. That is also Facebook. Gaining lots of Facebook friends is exactly what the US and the USSR did during the Cold War. It does not matter if you even know or care about a Facebook friend. The objective is to add them to your list. You start searching for people in your second grade class just because. The African nation of Guinea—of no strategic military or political importance— was “friends” with the Soviets. The

Cecilio T. Arillo

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way too friendly with the mortal enemy of the others. The ultimate nuclear option on Facebook is to “block” someone. Then they cannot read your posts, comment or contact you. This is way beyond a simple “unfriend”. Further, you put this undesirable person in the position of not being able to do anything about the block. The GCC just did that to Qatar for “friending” Iran. The Qatar government responded by saying “this violates our sovereignty”, which is like someone saying that your blocking them violates their right to free speech. Good luck with that argument. Facebook would like to claim in essence that it has changed the way we react to each other. Actually it is a cheap, cost-effective way to do what has always been done—form alliances to beat the other guy down.

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.

Fires, storms, insects increase risks for forests worldwide

BusinessMirror A broader look at today’s business Publisher

US befriended Somalia. It is all going well until you run across that third grade bully who always stole your pencils and he has more friends than you do. Worse yet, some of your friends are also his. As time goes on, even people you actually considered real friends are not loyal at all. In 1963 France pulled out of North Atlantic Treaty Organization. Other friends—like India— make “nice-nice” to you and your mortal enemy at the same time and keep asking for a loan until payday with the threat to “unfriend” you.

Many people on Facebook are also members of “groups”, an idea also from the Cold War. The Southeast Asia Treaty Organization (Seato) was formed in September 1954 and was used to help validate the US participation in the proxy war against the Soviets in Vietnam. The US government officially marks November 1, 1955, as the start of that war. Facebook groups allow you to join with like-minded people to bash your “enemy”. You can invite anyone to join your group as the US did in having Pakistan become part of “Southeast Asia” through Seato. However, geopolitics and Facebook have evolved and have become more economic than militaristic. Besides, Facebook might ban you for saying you are looking forward to attending—sooner rather than later—your enemy’s wake. One important geopolitical group is the Gulf Cooperation Council (GCC) of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. But just like what happens on Facebook, one member became

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ROUGHTS, fires and wind, as well as insects and fungal, attacks result in stress for the forests of the Earth—and they are all influenced by climate change, said the Potsdam Institute for Climate Impact Research, or PIK, in its recent study shared to Database. A third of worldwide land surface is covered by forests, but knowledge about how disruptive factors that affect them interact with one another in the context of global climate change is still lacking, as these are often analyzed separately and on a local scale. Now, for the first time, an international team of scientists has comprehensively examined possible climate impacts on disturbances in forests. The team did this on a basis of more than 600 research papers of the last 30 years. Published in the scientific journal Nature Climate Change, their results show that increasing risks for forests have to be expected in the future. “When climate is changing, there are initially direct effects on the growth of the trees. But the chain of climate impacts is considerably longer: If, for instance, more rain saturates the soils or if soils are less frequently frozen, the trees will have less stability to withstand storms

and damage will increase,” explains lead author Rupert Seidl from the University of Natural Resources and Life Sciences in Vienna. Seidl said the many dead and dying trees will then provide ideal breeding material for insects, such as bark beetles, to reproduce quickly. “At the same time, the trees that are still alive will be weakened and will thus be more vulnerable to insect attacks,” he said, adding that, “Our study shows that climate change significantly influences disruptive factors all around the world—and that a further increase of disturbances in forests has to be expected in the future.”

Stress is normal for the forests —while the increase of disturbances is not

“Whether in the giant boreal forests of Scandinavia and Russia or in the wide woodlands of North America—fundamentally, natural disturbances, like fires, insect

attacks or storms, are normal aspects of these ecosystems,” said project leader Christopher Reyer of PIK. To get shaken up a little through natural disturbances can even be good for forests, as the natural renewal, for instance, promotes a greater biological diversity. Through climate change, these usual disturbances have already changed in the last years, Reyer said, explaining further that: “This has impacts on the ability of the forests to provide services for us humans—for example in terms of their wood, in terms of protection against avalanches, or simply as recreational spaces. If climate change keeps on increasing disturbances, this clearly is a risk for the coping capacities of the forests—in the long run, ecosystems as we know them today might change profoundly.”

Climate change as a challenge for forest management

For the review study, forest experts from Austria, Germany, Switzerland, Finland, Italy, Spain, the Czech Republic, Scotland, Slovakia and Slovenia analyzed more than 1,600 different findings from academic publications that established links between disruptions and climate factors. The scientists examined how indirect climate impacts, such as the alteration of tree species in the forests, influence the occurrence of disturbances. In particular, the indirect effects and the interactions between different disruptive factors

were collated in an unprecedentedly comprehensive manner in the research on forest disturbances. Today it is clear that risks caused by fires, pests and fungi will increase in the context of climate change—the devastating forest fires in Canada and Russia in the last years are an example of possible impacts. Fires are currently the most significant disruptive factor in many forests around the world, and will become an even more serious threat in the coming decades, according to the scientists. The forests of Northern and Central Europe, however, have until now primarily been impaired by twisters, such as Cyclone Kyrill in 2007, and the insect damage that follows them—a type of damage that will also increase under climate change. Damage caused by ice and snow were the only disruptive factors examined by the study that will likely decrease under continuing climate change. However, this positive effect cannot compensate the negative effects from other factors. “Our analysis clearly shows that climate change brings enormous challenges for forests—the forest sector has to adapt and to increase its resilience, as it seems impossible to prevent damage completely,” Seidl said. “In the long term, reductions of greenhouse-gas emissions and effective climate protection measures will help the most,” Reyer added. To reach the writer, e-mail cecilio.arillo@ gmail.com.

Opinion BusinessMirror

opinion@businessmirror.com.ph

True CSR begins at home

The Father and the Son and us Msgr. Sabino A. Vengco Jr.

Alálaong Bagá

Dr. Rene E. Ofreneo

LABOREM EXERCENS Continued from A1

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rade union and consumer movements from the North, such as the Clean Clothes Campaign of Europe and the No-Sweat Movement in America, angrily denounced the slave-like production situation in a number of factories established by the multinational corporations in the South.

These factories are usually found in union-free export-processing zones (EPZs) organized by governments of developing countries to seduce foreign investments. The criticisms ranged from labor abuses, such as the nonpayment of legally mandated minimum wages, to the employment of children and the existence of life-threatening conditions in congested and fire-prone production facilities. The huge fire that engulfed the lives of over a thousand women-garments workers in the Rana Plaza of Bangladesh in 2013, and the series of suicides committed by young workers assembling Apple-cellular materials in Foxconn’s garrison-like China factories, have elicited global calls for binding Codes of Conduct to govern the behavior of multinational companies (MNCs) and their global production network (GPN) subcontractors, especially in their treatment of EPZ workers in Asia, Africa and Latin America. So far, the United Nations has not adopted any binding Codes of Conduct for the MNCs. Instead, the UN’s labor agency, the International Labor Organization (ILO), has been promoting a “Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy”, which was adopted by the ILO Governing Body in 2000. The said declaration seeks to “promote good social practices” in accordance with another ILO Declaration, the 1998 “declaration on the Fundamental Principles and Rights at Work”, a seminal declaration which reiterates the obligations of UN memberstates to respect the internationally recognized core labor rights, namely: freedom of association, collective bargaining, nondiscrimination at work, prohibition of forced labor and elimination of extreme forms of child labor. The 2000 Tripartite Declaration is relatively weak. It respects the “sovereign rights of States” to maintain their respective national laws and regulations, while giving “due consideration to local practices and respect” for “relevant international standards”. In short, the 2000 ILO Declaration on MNCs is based on moral suasion, not on enforceable global rules on how corporations shall conduct their business across borders in a responsible and ethical manner. In the meantime, MNCs that are worried about their global image have been adopting their own respective or individual Codes of Conduct and have been reporting about the rigorous manner these Codes have been observed by their GPN subcontractors as attested by third-party “independent monitoring groups”. The problem is that most of these Codes of Conduct are focused on the “concretes”, such as the availability of clean rest rooms and readable fire exits. Codes of Conduct auditors routinely look for these concretes and tick them in the “tickbox” audit books. The point is the disclosure and assessment of policies related to labor relations, such as freedom of the workers to organize, employee access to a fair grievance procedure and nondiscrimination based on sexual orientation and gender identity are given scant attention. More so, on the social and environmental impact of the MNC operations on the host and neighboring

communities. Thus, companies with sparkling buildings, and yet, engaged in excessive or avoidable casualization of work easily get seals of good housekeeping, the seals which the MNCs readily advertise in their global PR campaigns. This is why there are continuing efforts by trade unions and civilsociety organizations worldwide to press governments to develop universal and legally binding Codes of Conduct for corporations operating across borders. One outcome of this is the Global Compact Initiative (GCI) launched in 2000 by former UN Secretary-General Kofi Annan. The GCI was followed by the decision in 2011 by the UN Human Rights Council (UNHRC) to adopt the 31 policy guideposts supporting the triad principles or PRR Framework advanced in the report outlined by the UN Rapporteur on Business and Human Rights, namely—the duty of states to protect human and labor rights, the duty of corporations to respect these rights and the duty of all stakeholders to find remedy for any violation of these rights. The GCI and the accompanying UNHRC’s decision on business and human rights have elicited positive responses from advocates of human and labor rights everywhere. The problem is they still have to be institutionalized in each UN member-state. Like the ILO Tripartite Declaration on Principles Concerning Multinational Enterprises and Social Policy (2000), the GCI and the 2011 UNHRC’s PRR Framework are largely recommendatory in nature and compliance is based on moral suasion. Hence, this column is recommending that the best option for the Philippines is for the government itself, under the decisive leadership of President Duterte, to forge a social compact with the country’s top 100 corporations on how the business community, as represented and led by the top 100, can be fully respectful of the rights of their own workers and the communities hosting their business presence, including the environmental rights of the whole nation. Like charity, corporate social responsibility (CSR) should and must begin at home. Why the top 100? The answer is simple: The top 100 control the commanding heights of the economy and they set the product and market standards for all business players. In this context, they also set the national standards and accepted practices in employee hiring, treatment of workers, skills development and development of various employee care and compensation programs. Thus, if the top 100 shall decide to stop the endo and other exploitative forms of employee hiring, the rest of the business community are likely to follow. Look at how the ISO 9000 quality product certification process, popular mainly among the top 100 corporations in the 1990s, has now been embraced by other firms nationwide. If the top 100 shall so decide, they can arrest the race to the bottom phenomenon, which is fueled by competition based on the desire of firms to have the cheapest and most malleable workers. By scaling up their CSR programs, the top 100 can trigger a race to the top based on productivity-focused social partnership with the workers and host communities.

Thursday, June 8, 2017 A11

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he period of the Ordinary Time in our liturgical calendar following the Easter Season is launched within the context of the mystery of the Triune God. Our salvation rests on the love of the Father expressed in and through the Son. The gospel narration (John 3:16-18) allows us to listen in at the personal reflections of the evangelist after the conversation between Jesus and Nicodemus.

The greatest love story Martin Luther called this verse: “God so loved the world that He gave His only Son” as gospel in miniature. This was the greatest love story ever. In so few words the incredible dimensions of God’s love are revealed, the very heart of the good news of our salvation. The Transcendent became close to us because the Transcendent loves; God’s omnipotence is at the service of His love. In this inconceivable divine initiative, God desired the salvation of the world. It is love immeasurable and unmerited, the hallmark of God’s dealings with humankind. Love can be the only reason for any of

God’s choice, as when God elected Israel: “If God set His heart on you, and chose you, it was not because you outnumbered other peoples; you were the least of all peoples! It was for love of you!” (Deuteronomy 7:7-8). The Johannine community behind the Fourth Gospel refers to this love of God some 37 times and would conclude that God is love (1 John 4:16).

The only Son given up

TO realize His loving design for us, God “gave His only Son”. His Son is the measure of His love, the revelation of His love. Not just offered as a gift as at the incarnation, but deliv-

ISIS in our midst Val A. Villanueva

Businesswise

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he government should not have just shrugged off reports during a recent security summit in Singapore that there are around 1,200 Islamic State of Iraq and Syria (ISIS) operatives in the Philippines.

Indonesian Defense Minister General Ryamizard Ryacudu said ISIS members, fighting alongside local Moro rebels who have pledged allegiance to the radical group, include 40 from his country. The prospect of a full ISIS invasion of southern Philippines, and possibly of other parts of the country, is far bigger than President Duterte’s war on drugs, which he had successfully used as campaign tact in last year’s elections. To me, it is this myopic view which has blurred his vision on other equally urgent problems facing the country today. We are losing territories in the West Philippine Sea by the day, despite prodding from Supreme

Court Associate Justice Antonio T. Carpio and former President Fidel V. Ramos to use the United Nations Convention on the Law of the Sea arbitral ruling that effectively nullified China’s nine-dash line claim over the vast swath of the West Philippine Sea as a deterrent. On the economic front, his “Build, Build, Build” mantra to kick off an infrastructure renaissance seems to have encountered a major bump. Socioeconomic Planning Secretary Ernesto M. Pernia admitted that expensive loans from China will not give us the Duterte-advertised “golden age of infrastructure”. He said: “It will be the bronze age, maybe of infrastructure or maybe dark

ered as a sacrifice on the cross. Thus, the New Testament often speaks of the fact that Jesus, “given up” for our salvation, is the supreme manifestation of divine love for us (John 13:1; 15:13; Romans 5:8-9; 8:32). As often as we celebrate the remembrance of Him, the words of the institution of the Eucharist ring out: “This is my body which will be given up for you” (Luke 22:19; 1 Corinthians 11:24). Truly, “no one has greater love than this, to lay down one’s life for one’s friends” (John 15:13). This inestimable love of God and of His only Son was foreshadowed, as seen by the Christian tradition very early on, in the narrative of Abraham and his only son whom he loved, Isaac (Genesis 22:1-18). Abraham was willing to give up his only son to death, and his obedient faith was to the benefit of all the nations of the earth, just as God’s giving up of His only Son is for the whole world. In this prefiguration of the drama of salvation, it is essential to see that what God wanted was not the suffering of Isaac or of Abraham but their love, a proof of love by both of them in obedience. When John unveils on the cross the divine love of Jesus, he focuses on the open side of Jesus to invite us to go beyond the visible sufferings and reach to the “heart”

Indonesian Defense Minister General Ryamizard Ryacudu said ISIS members, fighting alongside local Moro rebels who have pledged allegiance to the radical group, include 40 from his country. The prospect of a full ISIS invasion of southern Philippines, and possibly of other parts of the country, is far bigger than President Duterte’s war on drugs. age—dark age of infrastructure.” It now appears that such an ambitious project will be funded by income that will be gained from the comprehensive tax reform coupled with local borrowings to sidestep a likely “debt trap”. The way I see it, the government will make do with the liquidity surplus in the domestic market. Finance Secretary Carlos G. Dominguez III himself said that around 80 percent from banks and other financial establishments will be loaned, and only 20 percent will come from lenders overseas for the next six years. This will be the sustenance of a wider yearly budget deficit of 3 percent so that we can allot more on infrastructure buildup.

of our redemption, God’s love incarnate (John 19:33-37). Alálaong bagá, God “gave His only Son” and the Son gave up His life for us, so “that the world might be saved through Him.” The loving obedience of Jesus to the Father reversed the meaning of death as the consequence of sin; in His divine love, death becomes the Passover to eternal life. God did not send His Son to condemn the world, but so that “everyone who believes in Him might not perish but might have eternal life”—everyone who is willing to take up His own cross and follow Jesus in love. The love of God incarnate in Jesus presents an invitation and a challenge, and our response to it can result eternally in life or in death. Love can, thus, provoke self-judgment as we go for it or against it; God does not condemn us—we do that to ourselves when we refuse divine love. Welcoming or rejecting love means entering or withdrawing from life. And to imitate Jesus in His way of love demands faith, trust in the love of God in and through Jesus. Join me in meditating on the Word of God every Sunday, from 5 a.m. to 6 a.m. on dwIZ 882, or by audio-streaming on www.dwiz882.com.

But some pundits are wary of the way the tax reform will burden the citizenry, which is already hard put to pay for previous bad debts incurred by the late dictator, Ferdinand E. Marcos Sr. The traffic situation in Metro Manila and other major cities in the country has worsened, with no quick fix in sight, as traffic planners conduct one failed experiment after another. Then comes the ISIS threat. I really hope that our military is well-equipped in nipping this problem in the bud. The problem should end in Marawi City, and ISIS should not be allowed to gain a foothold in any part of the archipelago. The ISIS image is virtually culled from horror movies, such that people freeze in terror or run in fear just by the mere mention of its name. Need I narrate how the recent tragic incident at Resorts World Manila which—in the absence of credible information —even House Speaker Pantaleon D. Alvarez immediately dubbed as an ISIS attack? To be continued For comments and suggestions, e-mail me at mvala.v@gmail.com.

Evolution of taxpayer’s rights and remedies Atty. Irwin C. Nidea Jr.

Tax law for business

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t is true that the power to tax is so powerful that if abused, it can destroy enterprises and even lives. That is why law and jurisprudence have tried to set up safeguards to prevent possible abuses. In recent years, these safeguards have continuously evolved. Some for the better, and some for the worse.

First, the initial letter given by the Bureau of Internal Revenue (BIR) is either a Letter Notice (LN) or a Letter of Authority (LOA). The LN notifies a taxpayer that there is a discrepancy in the BIR data on its sale and purchases as compared to its third-party suppliers or clients. The LOA, on other hand, notifies a taxpayer that an examination will be conducted for a particular taxable year. Both letters will notify the taxpayer that there will be an examination for possible tax deficiency, and the name of the examiners assigned to conduct the same. It has been a practice by some examiners to treat an LN and an LOA as one and the same. In a recent de-

cision, the Supreme Court (SC) was categorical in saying the only valid letter that authorizes an examiner to conduct an investigation is an LOA. LN does not. It cannot be used as a substitute of an LOA. Second, the BIR, in order to expedite reassignments of dockets, only issue a memorandum of assignment (MOA) instead of issuing a new LOA. If an examiner is only armed with a MOA, his authority to examine the books of account of a taxpayer is defective. His tax assessments will be considered void. The court, in many decisions, made it clear that a MOA cannot take the place of an LOA. Third, Preliminary Assessment

Notice (PAN) is mandatory. Absence of a PAN makes an assessment void. Not only that, a taxpayer must be given an inviolable period of 15 days to reply to the PAN. Failure to observe this period will make an assessment void. For example, if a taxpayer received a PAN on June 1, then he or she has until June 16 to file a reply. If the BIR issues a Final Assessment Notice (FAN) on June 14 and the taxpayer received it on June 17, due process is not observed. In other words, the BIR must not prepare the FAN within the 15-day period that is given to a taxpayer to reply to the PAN. Fourth, the FAN must indicate a definite due date. There is a Court of Tax Appeals (CTA) ruling (CTA Case 8227), which says that a definite date for payment in a FAN is not necessary as the due date can be derived, i.e, until when the interest is computed. The SC recently made it clear that this is not enough. A definite due date must be indicated in the FAN for it to be considered valid. Last, the CTA recently ruled that service of PAN, through registered mail, must be received by the taxpayer or its agent. If the taxpayer denies receipt, the burden of proof

of receipt shifts to the BIR. In a recent CTA Case (CTA Case 9039), the assessment against Mrs. Dionesia Pacquiao was declared void since the BIR failed to prove that Analyn Abrera, who received the registered mail, is an agent of Mrs. Pacquiao. The BIR also failed to prove that Abrera lives in Mrs. Pacquiao’s registered address. In other words, the BIR must prove not only that the PAN was mailed at the registered address of the taxpayer, but also that his or her authorized agent received the mail. Taxpayer’s rights and remedies continuously evolve with jurisprudence. Unfortunately, it also means that some of these rights and remedies are not cast in stone. They change over time. The author is a partner of Du-Baladad and Associates Law Offices, a member-firm of WTS Global. The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported, therefore, by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at irwin.nidea@ bdblaw.com.ph or call 403-2001 local 330.

2nd Front Page BusinessMirror

A12 Thursday, June 8, 2017

Solons to clip Pagcor’s powers for failure to act on RWM casino license L By Jovee Marie N. dela Cruz

@joveemarie

eaders of the House of Representatives are eyeing to remove the licensing powers of the Philippine Amusement and Gaming Corp. (Pagcor) over casinos following the Resorts World Manila (RWM) carnage, where 38 people were killed.

During the lower chamber’s probe on the June 2 RWM incident, Speaker Pantaleon D. Alvarez and Majority Leader and PDP-Laban Rep. Rodolfo Fariñas of Ilocos Norte scored Pagcor for not immediately suspending the license of RWM after the shooting and arson attack of lone gunman Jessie Javier Carlos. “Resorts World Manila’s franchise should be automatically suspended, like what LTFRB [Land

Transportation Franchising and Regulatory Board] does when a bus line is involved in an accident,” Alvarez said. For her part, Pagcor Chairman Andrea Domingo told lawmakers that her office was not able to suspend the operation of RWM because “Resorts World Manila voluntarily suspended all [its] operations pending the investigation.” “It voluntarily suspended [its operations following the attack],

domingo: “Under its [Resorts World] provisional license, it should be given due process—60 to 90 days to comply. That is the reason we did not immediately suspend their operations.”

there’s nothing more to suspend,” Domingo said. “A l s o u n d e r i t s [R e s o r t s World] provisional license, it should be given due process—60 to 90 days to comply. That is the reason we did not immediately suspend its operations,” she added. Fariñas said the leadership of the lower chamber will file a bill removing Pagcor’s power to grant licenses to gambling operators. “The instruction of the Speaker to me, we will review Republic Act [RA] 9487 [An Act Further

Amending Presidential Decree (PD) 1869, or the Pagcor Charter] with a view of amending it and repealing altogether PD 1869,” he added. RA 9487 was enacted during the Arroyo administration. The law extends Pagcor’s franchise for another 25 years. It also grants Pagcor the authority to operate and license casinos and similar gaming and entertainment clubs in the country. “You know gambling is prohibited in the country, but by a presidential decree, the power was delegated to Pagcor to have the sole authority to authorize, license [and] regulate gambling. That should not be allowed. That should only be a congressional grant of franchise,” Fariñas said. “Worse, Pagcor is also operating casinos [and], at the same time, it is a regulator and it is also a licensor. By directive of the Speaker, we will file a bill removing [the licensing power of Pagcor],” he See “Solons,” A2

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BUSINESSMEN PLEDGE TO HASTEN ECONOMIC RECOVERY OF MARAWI By Elijah Felice E. Rosales @alyasjah

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government executive on Wednesday said the private sector is just waiting for the dust to settle in Marawi City, Lanao del Sur, before it steps in to resuscitate the economy of the besieged municipality. At the sidelines of a news briefing, Presidential Adviser on Agripreneurship Ana Margarita N. Hontiveros told the BusinessMirror that a number of businessmen have already committed to help the government in the recovery and rehabilitation of Marawi City. Hontiveros said once the military clears the municipality of Islamist militants, firms under the charity network Kapatid for Marawi will consult with residents and local officials to discuss what specific programs they need to bounce back from the atrocities of war. “We will have to do a lot of stakeholders’ meetings to find out what it is that they need, what it is that they want to do [and] what is their vision for Marawi City. Once done, we will determine in what areas can the private sector come in and support for the long haul,” she added. “What we can really do is to open up supply chains there to restart, perhaps jump-start, their economy again,” Hontiveros said. Kapatid for Marawi, a charity network comprised of various firms, such as LBC Express Inc., Philippine Airlines, RFM Foods Corp. and CDO-Foodsphere Inc., among others, had initially delivered 16 tons of relief items to evacuation sites in Mindanao catering to displaced residents of Marawi City. Hontiveros added Kapatid for Marawi will continue to supply evacuees with relief items as long as the war is ongoing. However, she assured it does not stop there, as the charity network is keen on working with the government in rebuilding Marawi City. “Most likely, we will be providing livelihood and employment opportunities for the locals and capacity-building programs for farmers so that their production will increase, so as their capability to supply big market chains,”

What we can really do is to open up supply chains there to restart, perhaps jump-start, their economy again.” —Hontiveros Hontiveros said. “Then, of course, because we have companies who have a lot of financial power, Kapatid for Marawi will be there to contribute in infrastructure building, which is really basic in promoting an investment environment within a certain province,” she added. Hontiveros said she is confident Marawi City can still attract investors in spite of the damages it suffered during the war. “We should remember that Lanao del Sur, where Marawi City belongs to, is in mainland Mindanao, a geographical location situated close to developed cities, Iligan City, Cagayan de Oro City and Davao City, which is only eight hours away,” Hontiveros added. “In terms of taking advantage of an organic path toward economic prosperity, Marawi City is really right smack into the area. We are looking forward and I’m sure the local community and their leaders are also looking forward to rebuilding what has been destroyed in this war,” she added. Last week the Autonomous Region in Muslim Mindanao announced it will be crafting a recovery and rehabilitation plan for Marawi City, titled “Unified Plan for Marawi City”, which will run in three phases: early recovery and reconstruction, medium-term construction, and long-term rehabilitation and development. The plan, according to Gov. Mujiv S. Hataman, is built up on previous efforts on disaster preparedness, prevention and mitigation and response. Development experts from the World Bank said it will assist in the formulation of the plan.

PHL’s dream: To become Southeast Asia’s LNG hub By Lenie Lectura

Stephen James Reilly (left), COO of Traveller’s International Hotel Group-Resorts World Manila (RWM), and Kingson Sian, president of Traveller’s International Hotel Group-RWM, field questions from members of three committees of the House of Representatives on Wednesday during the hearing held at the Ninoy Aquino International Airport Terminal 3, just across the casino, on the RWM attack that was carried out by a lone gunman, which left 38 people dead. NONIE REYES

Qatar Airways suspends flights to UAE, Egypt By Recto Mercene @rectomercene

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atar Airways has suspended all flights to Saudi Arabia, the United Arab Emirates (UAE), Bahrain and Egypt “until further notice”, the carrier said in a public advisory, posted on the main door of their office at the Ninoy Aquino International Airport Terminal 1 (Naia 1). The suspension came in the wake of a move led by Saudi Arabia to sever ties with the tiny emirate in the Persian Gulf, accusing Doha

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The number of flights Qatar Airways operates out of the Naia Terminal 1 of funding terrorist groups, such as the Muslim Brotherhood. Saudi Arabia, Bahrain, the UAE, Yemen, Egypt and the Maldives broke off diplomatic and trade relations with Qatar on Monday,

for purportedly supporting terrorism. Qatar Airways said affected customers will be provided with alternative options, including a full refund on any unused tickets and free booking to the nearest alternative Qatar Airways network destination. For passengers w ith existing bookings, they can inquire through their web site or e-mail them, and their team will get back to them as soon as possible. Qatar operates 14 flights out of the Naia 1 and seven flights out of Clark. There are about 1.5 million to 1.8 million overseas Filipino

workers in Saudi Arabia; 800,000 in the UAE; and 130,000 in Qatar. On Monday the five countries in the region announced that they have severed all ties with Qatar, accusing the Qatari monarchy of supporting Sunni Islamist terrorism in the region. Legacy carrier Philippine Airlines (PAL) said flights out of Manila to Doha and back to Manila will continue. “Philippine Airlines wishes to stress that all its flights to the Middle East continue to operate despite the ongoing row between See “Qatar Airways,” A2

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@llectura

he Duterte administration is keen on making the Philippines the liquefied natural gas (LNG) hub of Southeast Asia, according of the chief of the Department of Energy. According to Energy Secretary Alfonso G. Cusi, the government is aiming to turn the Philippines into a hub for LNG, amid a depletion of natural gas from the Malampaya gas field in Palawan in less than a decade. Around 3,200 megawatts (MW) of the country’s power is dependent on the natural gas source. “We are determining if the Philippines can be the hub for LNG. We missed being the hub for aviation, the hub for maritime, maybe we can become the hub for LNG in Southeast Asia,” Cusi said during a discussion after a forum hosted by GE Philippines in Makati City. LNG is natural gas that has been converted into a liquid state for easier storage and transporta-

CUSI: “We missed being the hub for aviation, the hub for maritime, maybe we can become the hub for LNG in Southeast Asia.”

tion. Upon reaching its destination, LNG is regasified so it can be distributed through pipelines as natural gas. “The Philippines already failed in aviation becoming a hub despite our geographical advantage and location, and in maritime. So this would probably [be] an opportunity. It’s a dream,” Cusi added. The Philippines has yet to construct an LNG facility. Previously, private firms were reluctant to build one because of the huge investment cost and uncertainty in policy direction. L ately, t he Phi l ippine National Oil Co. (PNOC) has been vocal in saying that it will build See “PHL’s dream,” A2