Businessmirror june 15, 2017

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A broader look at today’s business n

Thursday, June 15, 2017 Vol. 12 No. 245

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The Asean economic community-hood: Still a work in progress

FRANCIA: “In an ideal world, it’s a ‘6+6’— the first administration will lay out the new strategy and the next administration will build on it, execute it and not reinvent the wheel. That’s not what’s happening now.”

This, according to AC Energy Holdings Inc. President John Eric T. Francia, is because the shift in tack not only puts to waste the momentum built by the PPP Program and the preparations undertaken by the Continued on A2

Rene E. Ofreneo

LABOREM EXERCENS

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he Association of Southeast Asian Nations (Asean) is celebrating its 50th year, with the Philippines serving as chairman of the organization this year.

The Asean was formed by the original Asean 5—Indonesia, Malaysia, the Philippines, Singapore and Thailand—in 1967, or at the height of the Vietnam War. The organization was widely seen then as an anti-Communist coalition given the timing of its establishment and the well-known anti-Communist position of the Asean 5 countries.

Continued on A12

EU rebuts Philexport chief on impact of GSP+ scheme €1.662B

By Catherine N. Pillas

T

Smoke and flames rise from a building on fire in London on June 14. Metropolitan Police in London say they’re continuing to evacuate people from a massive apartment fire in west London. The fire has been burning for more than three hours and stretches from the second to the 24th floor of the building. AP/Matt Dunham

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Infra buildup being held back by policy flip-flops or investors who committed to support the country’s massive infrastructuredevelopment program through the internationally proven publicprivate partnership (PPP) scheme, the Duterte administration’s shift to the so-called hybrid mode is really something to frown about.

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@c_pillas29

he European Union (EU) delegation in Manila said it is wrong for the government and the private sector to belittle the benefits that the country is getting from the EU’s Generalized System of Preferences Plus (GSP+) scheme, which could be lost anytime soon due to the bloc’s concern over the Duterte administration’s bloody war against illegal drugs.

In response to the Philippine Exporters Confederation Inc.’s (Philexport) remarks on the country’s perceived minimal gains from the GSP+, the EU delegation in Manila said the value of Philippine goods entering the EU duty-free through the preferential trade scheme is gradually increasing.

T his proves the advantage

The value of Philippine goods that entered the European Union duty-free in 2016

gained by Philippine ex porters over their peers in accessing the European market. The EUGSP+ also made the EU market the top destination for certain Philippine products.

“In 2016 total exports of the Philippines to the EU under the GSP+ amounted to €1.662 billion [P91.4 billion], or 26.3 percent of the total Philippine exports to the EU. Both in absolute and in relative [utilization rates] terms, this was an increase compared to 2015,” said Walter Van Hattum, economic counselor at

European delegation in Manila.

In 2015 Philippine exports under the GSP totaled €1.56 billion, Van Hattum added.

Earlier this week, Philexport President Sergio Ortiz-Luis Jr. said Philippine exports for the rest of the year will continue to grow at a steady pace, even if the country loses its trade privileges from the EU. This, Ortiz-Luis said, is because the Philippines has not fully taken advantage of the GSP+ scheme, which has been in place since December 2014.

“We have not really taken advantage of the [GSP+ scheme], because from what I understand, only garments would really benefit from it.

But it seems it’s not being used, so there won’t be much of a difference [if it is scrapped],” Ortiz-Luis told the BusinessMirror.

London blaze kills 6, injures dozens DOT eyes revision of accreditation L rules to cover casino complexes

ONDON—A deadly nighttime fire raced through a 24-story apartment tower in London early on Wednesday, killing at least six people and injuring dozens more. Some desperate residents threw their children from high windows, hoping someone on the ground would catch them.

Police commander Stuart Cundy said there were six confirmed fatalities, adding that the figure was likely to rise “during what will be a complex recovery operation over a number of days” as of press

time in Manila.

People in the apartments cornered by the quickly advancing flames and thick smoke banged on windows and screamed for help to those watching down below, witnesses and survivors said.

Flames from the inferno lit up the night and smoke spewed from the windows of the Grenfell Tower in North Kensington, where more than 200 firefighters battled the blaze and went into the building with breathing apparatus.

A plume of black smoke stretched for kilometers across the pale

PESO exchange rates n US 49.5580

sky after dawn, revealing the blackened, flame-licked wreckage of the building.

“This is an unprecedented incident,” Fire Commissioner Dany Cotton told reporters on the scene.

“In my 29 years of being a firefighter I have never, ever seen anything of this scale.”

The London Fire Brigade received the first reports of the fire at 12:54 a.m. and the first engines arrived within six minutes, she said. Flames could still be seen more than 10 hours later.

Continued on A2

By Ma. Stella F. Arnaldo

I

@akosistellaBM Special to the BusinessMirror

NTEGRATED casino resorts are not required to accredit their establishments with the Department of Tourism (DOT).

In an interview with the BusinessMirror, DOT Director for

Tourism Standards and Regulations Ma. Rica C. Bueno said the agency “does not accredit the complex itself; only their hotels need the mandatory accreditation”.

DOT’s latest list of accredited tourism establishments showed City of Dreams (COD) was the only accredited casino complex in Metro Manila, and categorized as a tour-

See “EU,” A2

ism entertainment complex.

This developed as the DOT said it would look into revising accreditation guidelines to include casino complexes.

At a news conference on Tuesday, DOT Spokesman and Assistant Secretary Frederick M. Alegre said: “Tourism Secretary

n japan 0.4503 n UK 63.2162 n HK 6.3560 n CHINA 7.2891 n singapore 35.8934 n australia 37.3420 n EU 55.5892 n SAUDI arabia 13.2169

See “DOT,” A2

Source: BSP (14 June 2017 )

A2 Thursday, June 15, 2017

BMReports BusinessMirror

www.businessmirror.com.ph

Infra buildup being held back by policy flip-flops Continued from A1

state and private-sector partners, but also the infra projects earlier pipelined are now being shelved.

“I remember much promise during the previous administration when the Aquino [administration] announced big plans on the private-public partnership [PPP] projects. It took a long time before the program could get off the ground but we thought that was the right direction,” Francia said during Wednesday’s Oxford Business Group’s Report on the Philippines.

The previous government managed to gain traction in laying out the process, even after two years of slow movement due to initial jitters—all for naught today.

“I thought we had a good momentum going on; so our hope was that this momentum could continue and this administration could reap the benefits that were

sowed. But what’s happening is a lot of these PPP projects are being shoved aside,” Francia lamented.

Clearly, the Ayala Corp. executive stressed, continuity in infrastructure development policy is sorely lacking in the country.

Just this March, the National Economic and Development Authority’s Investment Coordination Committee proposed to shift three major infrastructure projects to official development assistance (ODA) financing using the hybrid mode.

One of these is the P53.6-million Chico River Pumping Irrigation project that has been identified as a project to be financed by the Chinese government.

The same agency proposed changing the financing mode of the New Centennial Water Source Kaliwa-Dam Project from PPP to ODA—another project offered to China as a priority.

This was the same fate for the North-South Railway ProjectSouth Line, with the Chinese expressing interest in financing the long-haul line and Japan International Cooperation Agency (Jica) interested in the commuter line.

“We haven’t seen a single PPP project bid out or carried out,” Francia said.

Ayala is a major player in the PPP arena. Under its belt are a number of PPP projects: Muntinlupa-Cavite Expressway, Automated Fare Collection System, Light Rail Transit Line 1 Cavite Extension and Integrated Terminal System South.

Francia observed that the infrastructure development in the Philippines is now characterized by an increasing reliance on ODA as a financing option, and the encouragement of unsolicited proposals. While the country’s low debt-to-GDP ratio allows flexibility in increased government borrow-

ings, the trend of spurring unsolicited bids is “a waste of time and resources”. “It takes a lot of government effort to review all of these unsolicited bids, and let’s get real: will the government really accept unsolicited bids on critical infrastructure and award the original proponent status to one bidder just because it submitted first?” asked Francia, underscoring that the ambiguity in this mode may stir controversy.

He maintained that unsolicited proposals could be suitable for noncritical projects, or those not of national significance.

On the whole, however, Francia reiterated that the government must view infrastructure as a “multiyear” endeavor that transcends administrations.

“Six years is just too short for a government to lay out a new policy and roll it out. In an ideal world, it’s a “6+6”—the first administration

London blaze kills 6, injures dozens Continued from A1

There was no immediate word on the cause, but angry residents said they had repeatedly warned about a potential fire threat. One resident said the fire alarm did not go off.

Samira Lamrani, a witness, said a woman dropped a baby from a window on the ninth or 10th floor to people on the sidewalk.

“People were starting to appear at the windows, frantically banging and screaming,” Lamrani said, and the woman gestured that she wanted to drop a baby. “Somebody did, a gentleman ran forward and managed to grab the baby,” Lamrani told Britain’s Press Association news agency.

Ruks Mamudu, 69, escaped from her first floor apartment wearing only her purple pajamas and bathrobe. She and her grandson sat outside the building and watched people trapped on higher floors cry desperately for help.

“I sat there watching my house burn down and watching people

cry for help who couldn’t come down,” she said.

People at the scene spoke of being unable to reach friends and family inside. Others said they could see people inside using flashlights and mobile phones to try to signal for help from higher floors.

Nassima Boutrig, who lives opposite the building, said she was awa kened by sirens and smoke so thick that it filled her home, as well.

“We saw the people screaming,” she said. “A lot of people said ‘help, help, help.’ The fire brigade could only help downstairs. It was fire up, up, up. They couldn’t stop the fire.”

The disaster occurred 10 days after a terror attack at London’s Borough Market, and some locals said they initially feared the fire was also terror-related, though authorities discounted that possibility.

“The flames, I have never seen anything like it, it just reminded me of 9/11,” said Muna Ali, 45.

“The fire started on the upper

floors...oh my goodness, it spread so quickly, it had completely spread within half an hour.”

Other witnesses described a white, polystyrene-type material falling like snow from the building as it burned. Some locals feared the charred tower block might collapse but a structural engineer said the building was not in danger, London Fire Brigade said.

Edward Daffarn, a 55-year-old who lived on the building’s 16th floor, said the fire alarm didn’t ring.

“I’m lucky to be alive. A neighbor’s smoke alarm went off and another neighbor phoned and told me to get out,” he said.

Daffarn said residents had complained for years to London City Council about building safety, to no avail.

“I consider this mass murder,” he said of the blaze.

Grenfell Tower was recently upgraded at a cost of £8.6 million ($11 million), with work finishing in May 2016. The Grenfell Action Group, a community organi-

zation formed to oppose a nearby redevelopment project, has been warning about the risk of fire at Grenfell Tower since 2013.

The group has raised concerns about testing and maintenance of firefighting equipment and blocked emergency access to the site.

“All our warnings fell on deaf ears and we predicted that a catastrophe like this was inevitable and just a matter of time,” the group said in a blog post written after the fire broke out.

A July 2014 newsletter for residents said the building was designed “according to rigorous fire safety standards”. It recommended that in case of a fire in the building residents should stay inside their apartments. London Mayor Sadiq Khan said many questions now need to be answered about tower blocks around the city.

“There will be a great many questions over the coming days as to the cause of this tragedy and I want to reassure Londoners that we will get all the answers,” Khan said in a statement. AP

will lay out the new strategy and the next administration will build on it, execute it and not reinvent the wheel. That’s not what’s happening now,” Francia noted.

Economic managers have admitted that the government has shifted its bias on infrastructure development, with a leaning on pursuing hybrid deals.

A project is considered a hybrid if the government assumes the responsibility of building the infrastructure, whether through public funds or ODA, while granting the operations and maintenance component to the private sector upon completion.

Oxford Business Group Managing Editor for Asia Paulius Kuncinas said there is really a need to address the gaping infrastructure divide in the Philippines. Today, experts tag the Philippines as experiencing an infrastructure crisis.

Catherine N. Pillas, Lorenz S. Marasigan

EU. . .

Continued from A1

While export receipts in the second quarter are usually “tempered”, Ortiz-Luis said he remains confident that shipments would post double-digit growth by the end of the year.

The EU-GSP+ allows the Philippines to export 6,274 products to the EU duty-free. Manila is the only one in the region that was accorded this privilege, giving Philippine exporters a good advantage. Van Hattum said exporters of garments/textiles/footwear benefit have shipped around €113 million worth of products to the EU using this scheme.

Also benefiting are: Vegetable fats and oils (€459 million); preparations of meat, fish, etc. (€123 million); preparation of vegetables, fruits, nuts, plants (€80 million); organic chemicals (€41 million); chemical products (€82 million); rubber and articles (€60 million); machinery and mechanical appliances (€227 million); and optical instruments (€87 million).

“Looking forward to 2017, we don’t have detailed figures yet on GSP utilization. But in terms of sectors where the Philippines scores relatively well compared to 2016, these include preparations of meat, of fish or of crustaceans, as well as preparations of vegetables, fruit, nuts or other parts of plants. These have relative strong increases compared to 2016 as proportion of total exports to the EU,” Van Hattum added. Other “GSP+ sectors” remain stable in terms of proportion of overall exports to the EU, meaning benefits would grow with the overall growth in exports to the EU, which was 42.8 percent compared to 2016.

Earlier, Senate sources told the BusinessMirror President Duterte’s decision to reject grants from the EU also put at risk the future of Philippine companies that depend on the tariff-free privilege they are enjoying in exporting to Europe.

PHL. . .

Continued from A12

While Indonesia paid premium over its US dollar curve, it was the price that the sovereign was willing to pay in return for diversification, the Ministry of Finance said in an e-mailed response. “We like to diversify our funding sources to serve our natural hedging strategy for our yen exposure. Given the low yield environment, we understand that premium is needed to satisfy these investors and we were happy with the pricing we have achieved this time,” the e-mail said.

Traditional samurai bond issuers in the month of May were absent this year, including “double A”-rated European banks, such as R abobank NA. “SingleA”-rated Credit Agricole SA executed a ¥203.9-billion deal this month, which was the market’s biggest in a decade. More than half of those bonds were graded less than the issuer’s rating because they could be written off in the event of any liquidation.

Samurai bond sales in the fiscal year that began on April 1 total ¥383.9 billion fell 14 percent from the same period a year earlier, according to data compiled

by Bloomberg. Issuance in the 12 months to March 31 was ¥1.8 trillion, the lowest in four years.

Bloomberg News

DOT. . .

Continued from A1

Wanda Corazon T. Teo wants to work with the Peza [Philippine Economic Zone Authority] and Tieza [Tourism Enterprise Zone Authority] to implement strict security protocols of all facilities [that cater to tourists].”

He also said one of the areas the DOT is also looking at is possibly “revising DOT’s accreditation” procedures to include integrated resorts and casino complexes.

But RWM Assistant Vice President and Director for Corporate Communications Owen Cammayo, in a text message, said: “Per our compliance team, all our hotels— Maxim’s, Remington, Marriott are DOT-accredited.”

The DOT list showed only Marriott Hotel Manila and its Grand Ballroom, as well as the Newport Commercial Center Administration Inc., are accredited among all the establishments at the Newport City in Pasay.

Narlene A . Soriano, public relations manager for ICTSI, an affiliate of Bloomberry Resorts Corp., owner of Solaire Resort and Casino, said: “We’re looking into this now, why we aren’t on the list.” She did say the DOT, in 2014, “inspected Solaire and gave [it] a five-star accreditation.” The DOT, however, requires tourism establishments to apply for accreditation every year.

As for Okada Manila, Director of Sales Kimmy Labayandon said: “We have been processing our accreditation for sometime now.” She did not say, however, if this application for accreditation was for the hotel only or the entire integrated casino-resort.

DOT officials last week said the agency will be reviewing the accreditation papers of RWM and will be checking up on the security protocols of other integrated casino complexes, following the lone gunman attack on RWM on June 2. (See, “DOT to review RWM accreditation as casinos beef up security measures,” in the BusinessMirror, June 12, 2017.)

But Bueno, for her part, said “Resorts World did not apply for [DOT] accreditation; the process is voluntary.” She noted that COD was accredited as a tourism entertainment complex, “which falls under the category of secondary leisure enterprises”.

She added that casinos are already registered by the Philippine Amusement and Gaming Corp. (Pagcor), as well as with the local government units (LGUs) where they are located. “Pagcor is really their government regulator,” she said.

At present, the DOT “only requires tourism establishments to submit their business permit from the Mayor’s Office for accreditation purposes,” she explained. “We didn’t want the accreditation process to be tedious, that they need to get so many permits and accreditations from many government agencies.”

Despite the lack of DOT accreditation for RWM and other casino complexes, Bueno said: “This does not stop us from working with the LGU concerned when we do inspections. If there is a problem, let’s say in health and sanitation, we write both the enterprise and the LGU [so they can take action on it].”

In a news conference last week, DOT’s Alegre said RWM was accredited by the government agency. “A facility like that needs our accreditation. Alam ko dumaan sa amin. The security aspect is part of the requirements you have to present to show preparenedness to operate the facility.”

He also enjoined the public to first check the list of accredited tourism establishments of the DOT, before making any booking reservations. “We have a web site [http://bit.ly/1LBCHST] you can visit to check if it’s accredited.

Please check the [establishment] if it’s accredited, because we cannot answer for your safety and stay [if it is not accredited].”

Economy BusinessMirror

A4 Thursday, June 15, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

DOTr eyes online driver’s license renewal, vehicle registration

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ETTING licenses and permits from the Land Transportation Office (LTO) may get a little bit faster and more convenient as the agency migrates to the digital age, through the modernization of its information-technology (IT) system.

Edgar Galvante, the agency’s chief, said modernization of its tech system will “make online transactions possible and more efficient”. It will also promote transparency and prevent corruption.

“We are gearing toward online registration of driver’s license application and car registration. We need a credible IT to be able to enforce that,” he said.

Transportation Secretary Arthur P. Tugade also expressed support for the online driver’s application.

“Pinag-aaralan namin na sa hinaharap, kung wala kang violation, online na lang ang application ng lisensya [We are studying the possibility of making the application for driver’s license online if the driver does not have any violation],” according to the Department of Transportation chief.

Both houses of Congress last month ratified the bill extending the validity of driver’s licenses to five years from the original three years.

The proposed law still awaits President Duterte’s signature.

Charlotte D. Furigay

news@businessmirror.com.ph

PTAA opposes plan to charge Customs OT fees from airlines

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By Recto Mercene

@rectomercene

he Philippine Travel Agencies Association (PTAA) has expressed its opposition to the implementation of a Customs administrative order (CAO) that will squarely place the funding for overtime fees of Bureau of Customs (BOC) airport officers to airline companies.

The PTAA, saying it has obtained a copy of the CAO, which will become part of the implementing rules and regulations for Republic Act 10863, or the Customs Modernization and Tariff Act, said the yet-to-bereleased CAO contradicts the basic principles of labor laws.

PTAA President Marlene Jante said overtime pay for Customs officials and personnel must be shouldered by the government and not the airline companies.

“If the Bureau of Customs wants

to implement an overtime system instead of the 24/7 shifting schedule that was specified under CAO 7-2011, then airlines under any circumstances should not be ordered to provide service fees, dues and other charges,” Jante said.

Former PTAA President Aileen Clemente gave her support to the current stand of the association.

“It is completely unacceptable for the government, especially in a globalized economy, to only provide Customs service’s during working

hours. It is not right for tourists, investors and Filipinos coming back into the country to not be cleared by the BOC for entry unless the airlines pay for it,” Clemente said.

Both Jante and Clemente said that enforcement of Customs laws is an obligation of the government that should be provided all the time, and that it should ensure that it has internal funding for it.

Under Section 3 of the draft CAO, Customs services shall not be less than eight hours work per day for five days a week exclusive of lunch time or from 8 a.m. to 5 p.m., except Saturday, Sunday and holidays.

Under the General Provisions in Section 4, it stated that the BOC can charge an aircraft supervision fee of P30,000 from airlines or their agents for every aircraft engaged in foreign commerce that landed and departed from an international airport of entry and where Customs services are rendered.

Under the provision, services included tagging of estimated time of arrival and actual time of arrival, issuance of entrance and clearance permits, conduct of boarding formalities, supervision of the loading

and unloading of cargoes, underguarding of cargoes and aircraft, clearance of passengers and baggage, storage and release of held baggage and other related services.

Under Section 4.2, it is stated that all fees collected shall be placed in a trust fund and will be used for overtime fees and those for meal, transportation and accommodation allowances for employees that needs to travel outside their work site to render customs services.

Jante stressed that there is no government in the world that or-

ders international airlines to pay for overtime work of Customs officials at airports. She argues that airline responsibility starts when passengers and cargoes are boarded and ends when they disembark.

In 2012 the then-Department of Transportation and Communication eliminated the overtime fees and went with a 24/7 three-shift system at all international airports wherein the government fully financed the services of Customs officials. The system had a night differential pay for those working from 6 p.m. to 6 a.m.

It is completely unacceptable for the government, especially in a globalized economy, to only provide Customs service’s during working hours. It is not right for tourists, investors and Filipinos coming back into the country to not be cleared by the BOC for entry unless the airlines pay for it.”—Clemente

Western Visayas farmers told to use biocontrol agents to fight armyworms

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he Department of Agriculture (DA) on Wednesday urged Western Visayas farmers to use biocontrol agents to eliminate pests and diseases after the region suffered from outbreaks of armyworms early this year.

DA Region 6 Crop Protection Center (RCPC) Officer in Charge Ryan Rasgo said they have prepared proactive preventive measures against pests and diseases incidence as the wet cropping season has already started.

“While the use of chemical pesticides is recommended during pest outbreak, the DA-RCPC is also urging farmers to use bio-control agents, such as trichogramma and metarhizium, if regular pest incidence occurred,” the DA said in a news statement on Wednesday.

The DA urged farmers to immediately report pests incidence or outbreaks to their respective local farmer technicians, barangay committee chairman on agriculture or farmers’ association president for prompt action.

“A report shall be submitted within two days to the agricultural extension worker who will validate the report,” the DA said. “The municipal agriculturist will approve and endorse the incident report to the provincial agriculturist and to the DA-RCPC for immediate action,” the DA added.

Vicente Nim, chief of the DA-Region 6 Integrated Laboratories, said local agriculture offices in the region should also closely monitor the incidence of pest outbreaks, especially this wet season.

“We encourage our local agriculture offices to update their municipal pest profiles annually so that the RCPC could give a pest advisory to our farmers. The RCPC is devising strategies on how to provide early warning and quick responses to protect our crop producers,” Nim said.

During a recent workshop, Rasgo and other officials of DA-Region 6 taught local farmer technicians on how to fill up and analyze data on rapid crop health during pest outbreak situation.

In January this year there was an outbreak of armyworms in two barangays in San Jose, Antique, which affected a total of 237.6 hectares of rice fields, according to the DA. However, the outbreak was immediately contained through the intervention of the local government unit in coordination with the DA-RCPC, the DA added.

Jasper Emmanuel Y. Arcalas and Rikka Alyssa D. Daquipil

Fruitful harvest

A mother-and-daughter team sorts newly harvested mangoes in a farm just in time before rains brought about by the wet season come. Philippine mangoes are known the world over for superior quality, especially mango varieties harvested in the Guimaras island in Western Visayas. Nonie Reyes

Albay’s ‘pinangat’ ranks 22nd in Top 50 World Street Food list

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EGAZPI CITY—Pinangat, one of Albay’s outstanding ethnic dishes that have been making waves in world food expos, has bagged the 22nd spot in the Top 50 World Street Food Masters list at the recently concluded World Street Food Congress (WSFC) 2017 in Manila.

The top 50 eats include Singapore’s Hill Street Hwa Pork Noodle; Franklin’s BBQ of Austin, Texas, US; and Bangkok’s Che Paek Pu Ob Voon Sen. Aside from its intrinsic savory taste, the pinangat’s success is partly credited to Albay Second District Rep. Joey S. Salceda’s 2D Culinaria initiative, which focuses on food and travel, and supports ethnic cuisines and local food producers.

The 2D Culinaria Albay program was derived from the original Culinaria Albay, which

significantly enhanced the local food industry and opened new avenues for small and medium food producers and entrepreneurs in the province. On account of its successful participation in past international food expos, the Department of Tourism has tasked 2D Culinaria Albay to represent the Bicol region in the May 31 to June 4 WSFC held at the Mall of Asia in Pasay City.

The WSFC has been acclaimed as a resounding success, and local entrepreneur Zeny’s Pinangat of Camalig town in Albay made it to the 22nd spot in the Top 50 World Street Food Masters list. The pinangat is a concoction of pork or fish wrapped in taro leaves, and gently simmered in coconut milk.

Two native Albay dishes were presented

during the WSFC—the Bicol express risotto and the pinangat burger. Both merited good reviews and were included in the “10 things to try at WSFC” by Spot.ph; the “8 must-try dishes” by Interaksyon.com; and the “7 local food picks” by ABS-CBN. 2D Culinaria Albay’s success at the WSFC followed its equally outstanding presentation last month at the Ifex Philippines, one of the country’s biggest international trade exhibitions.

The WSFC featured 28 of the world’s best Street Food Masters from 12 countries who dished out authentic mouthwatering heritage street food for five days. Present during the congress were world-class chef and TV host Anthony Bourdain, and WSF organizer Makansutra, a photojournalist-entrepreneur and founder of

KF Seetoh of Singapore. Albay’s 2D Culinaria team included Oriental Legazpi Executive Chef Andhei Nacion and two sous-chefs.

Salceda has sustained his support for his province’s food industry through the Culinaria Albay brand and has urged Albayanos to patronize local products to support the native industry, and promote their chefs and homegrown restauranteurs in the global food arena.

The 2D Culinaria Albay has also joined the Madrid Fusión Manila food exposition from April 6 to 8 at the SMX Mall of Asia, after which three international chefs and food writers from Russia, London and the Middle East visited Albay and Sorsogon as their post-expo destination, a validation Culinaria Albay is on the right track, Salceda said. PNA

news@businessmirror.com.ph

AseanThursday BusinessMirror

Editor: Max V. de Leon • Thursday, June 15, 2017 A5

Indonesia tackles inflation as subsidies cut

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hat’s good for Indonesia’s fiscal chiefs is proving a headache for the central bank.

President Joko Widodo’s push to phase out electricity subsidies that have drained the budget of billions of dollars is boosting prices in the economy and threatening the bank’s 3-percent to 5-percent inflation target.

For reform-minded Widodo, getting rid of the subsidies and building fiscal space has been a focus of his two-year-old presidency. It has won him support from international investors and credit-rating companies, but now presents a test for Bank Indonesia: how to manage the short-term pain for consumers without halting the nascent recovery in the economy.

“Inflationary pressures have largely arisen from administered price hikes, such as electricity tariff

follow several hours after the Fed is expected to raise borrowing costs.

The rupiah has gained 1.4 percent against the dollar this year and was trading at 13,287 as of 10 a.m. in Jakarta on Wednesday.

45T rupiah Indonesia’s programmed electricity subsidy this year hikes,” said Weiwen Ng, an economist at Australia & New Zealand (ANZ) Banking Group Ltd. in Singapore.

Higher power costs “are a necessary evil” and structural reform that the economy needs, he added.

The government raised electricity tariffs twice this year, and delayed a third hike initially planned for June, because it would have coincided

‘Wasteful’ subsidies

with Ramadan, the Muslim fasting month when food prices generally spike. Inflation, which reached a 14-month high of 4.3 percent last month, could have broken through 5 percent if power costs were raised a third time, Ng said.

After reducing interest rates six times last year, Bank Indonesia has since kept its benchmark interest rate unchanged at 4.75 percent and will probably maintain that stance

on Thursday, according to all 28 economists surveyed by Bloomberg.

A separate survey shows most economists expect the rate will be higher in a year’s time.

The rate outlook is also being shaped by the Federal Reserve’s (The Fed) moves to tighten the US monetary policy, which may affect foreign inflows to emerging markets and currencies. Bank Indonesia’s rate decision on Thursday will

Subsidizing electricity costs have long been criticized for drawing resources away from other muchneeded priorities, such as infrastructure projects. The Canada-based International Institute for Sustainable Development, which has produced regular reports on energy policy in Indonesia, estimated subsidies reached a peak of 101.8 trillion rupiah ($7.7 billion) in 2014. The budget allocation for this year is 45 trillion rupiah, it said.

“Fiscally, the subsidies are wasteful,” said Lucky Lontoh, a researcher on energy policy at the institute’s Global Subsidies Initiative in Jakarta. “They aren’t the best way to use Indonesia’s resources for the good of the people.”

Singapore Premier’s brother to leave city amid family feud

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ingapore Prime Minister Lee Hsien Loong’s younger brother Lee Hsien Yang said on Wednesday he feels “compelled” to leave the city-state amid a family dispute since their father’s death two years ago.

“It is with a very heavy heart that I will leave Singapore for the foreseeable future,” Lee Hsien Yang wrote in a six-page joint statement with his sister Lee Wei Ling that was posted on his Facebook account. “I have no desire to leave. Hsien Loong is the only reason for my departure,” they said.

“We do not trust Hsien Loong and have lost confidence in him,” the siblings said in their statement. It did not mention where Lee Hsien Yang planned to relocate.

The prime minister issued a statement denying allegations made by his siblings and said he regretted their public comments, which escalate a feud that has simmered since the March 2015 death of their father Lee

Kuan Yew, Singapore’s first elected prime minister.

The tensions have largely stayed removed from domestic politics, and the ruling People’s Action Party led

by Lee Hsien Loong has a strong grip on power. It boosted its share of the popular vote in the last election in September 2015 to nearly 70 percent—the highest since 2001—and secured 83 of 89 seats up for grabs.

“I am very disappointed that my siblings have chosen to issue a statement publicizing private family matters,” Prime Minister Lee said in an e-mailed response on Wednesday. “While siblings may have differences, I believe that any such differences should stay in the family.”

Lee Hsien Yang and Lee Wei Ling’s statement has hurt their father’s legacy, the prime minister said. He denied an “absurd claim” alleging he harbored political ambitions for his son. Lee, who became Singapore’s third prime minister in 2004, said he would con-

sider the issue further after he returns from an overseas trip with his family later this month.

Confidence in the government and leadership is unlikely to be immediately affected by the public spat, according to Eugene Tan, a political analyst and former nominated member of parliament.

“Singaporeans may feel conflicted given the siblings’ statement wasn’t made on a whim,” Tan said. “But they generally have trust in the system and a prime minister who is personally popular. They see it as an unfortunate family feud.”

Lee Hsien Yang, who is chairman of the Civil Aviation Authority of Singapore and special adviser to private-equity firm General Atlantic Llc., and Lee Wei Ling said in the statement they were “disturbed by the character” and “personal agenda” of Lee Hsien Loong. They said their statement was “by no means a criticism of the government”.

Lee’s estate

Six months after the elder Lee died, his two younger children filed a legal challenge against the government relating to an agreement over the custody and use of certain interviews by their father.

The late Lee’s house, located on the fringe of the Orchard Road shopping belt, has also been the subject of dispute. The late premier had said he wanted his home demolished after his death. There have been calls to convert the home into a museum and as a memorial to him. In December 2015 Lee Hsien Loong said he recused himself from all government decisions involving the house.

Lee Kuan Yew was prime minister from 1959 to 1990, turning Singapore into Southeast Asia’s richest nation by opening the island to foreign investors. He ran a tightly controlled state that emphasized incorruptibility and stability. Lee stepped down from the cabinet in 2011. Bloomberg News

Graft scandal at Malaysia palm-oil giant brings risks for Najib

P

rime Minister Najib Razak wrote a message on his web site this month to the more than 100,000 ethnic Malay families working on government-sponsored farms: “As long as I am prime minister, your welfare is guaranteed.”

Just days later angry chatter spread across a closed Facebook group with 50,000 members for families—known as settlers—given land decades ago during Malaysia’s independence.

Many were concerned by a graft probe at one of the world’s largest palmoil producers, Felda Global Ventures (FGV) Holdings Bhd., because the bulk of settlers hold shares in the listed unit of a government agency.

One of them was Zulkefli Nordin, 57, a retired civil servant from Selangor state in eastern Malaysia whose parents are settlers. “Already, there are rumors circulating about why this happened, and I’m afraid it is the Barisan Nasional government that would feel pain from this” scandal, he said.

Farmers are already upset by a long decline in Felda shares and late assistance payments from the state-backed company, which traces its roots to a 1956 grant from the World Bank and is virtually synonymous with government aid to rural Malaysia. That’s bad news for Najib, whose coalition needs farming votes to extend its 60-year grip on power in an election that may come within months.

Felda settlers make up the majority of voters in 54 out of 222 federal seats, and Najib’s Barisan Nasional coalition won all but six of those seats in the 2013 election, according to Shahaniza Shamsuddin, a lawmaker with Najib’s United Malays National Organisation (UMNO).

Together with districts in the east

As long as I am prime minister, your welfare is guaranteed.”—Najib dominated by ethnic Malays, Felda settlers will determine the outcome of the election, said Oh Ei Sun, principal adviser to the Pacific Research Centre in Malaysia. Agriculture was 8.9 percent of Malaysia’s gross domestic product in 2015, with palm oil making up 47 percent of that.

While the vote is not due until mid2018, politicians and analysts have indicated it could come by the end of this year, as Najib seeks to capitalize on an opposition in disarray and expectations economic growth may slow next year.

The Malaysian Anti-Corruption Commission is investigating several cases involving FGV, whose parent agency, the Federal Land Development Authority, was formed to help steer the rural poor out of poverty. The company’s board ordered President and CEO Zakaria Arshad on leave pending an internal probe into transactions by unit Delima Oil Products Sdn. Zakaria has denied any wrongdoing. Najib, who is not involved in the probe, said last Saturday he wanted FGV’s problems to be resolved during the Muslim fasting month of Ramadan, which ends on June 24, the New Straits Times reported.

‘Three principles’

“The three principles in resolving the

FGV tussle are to abide by the company’s laws, to be in line with good governance principles and to ensure the outcome must have undergone a fair process,” Najib said in a fasting month address. His office declined to comment further to Bloomberg.

Najib’s government has showered settlers with gifts, such as affordable homes and funds for education. Last Saturday, he announced a 500-ringgit ($117) payment to Felda families to help them celebrate the festival for the end of Ramadan, according to the official Bernama news agency. FGV will also pay a 280-ringgit dividend to the nearly 95,000 settlers who hold shares.

In May Najib said the government would allocate 510 million ringgit to smallholders for replanting or new planting. Still, some farmers have complained of late assistance payments from Felda and about FGV’s declining value, with the stock 62 percent below its listing price in 2012.

Felda often issues loans as a monthly allowance until land bears fruit, which could take years, raising the risk settlers fall into debts they can’t manage.

Unhappy, distrustful

Eighty percent of voters in Shahaniza’s assembly seat in Pahang state in central Malaysia are Felda settlers.

They were already “unhappy and distrustful of the government”, because Felda was as much as a month late in paying them for their produce, they said. “So that matter hasn’t fully died down yet, and this investigation happens. It isn’t good.”

Najib told a gathering of settlers last September he had heard complaints about late payments, and the government was working on ways to improve the system, The Star reported at the

time. FGV Chairman Isa Samad was not immediately available to comment on the payments issue when contacted

by Bloomberg.

Zakaria urged the antigraft agency to probe alleged improprieties at FGV, he told The Star last week. The plantation settler’s son said he often disagreed with Isa on how the company was managed and was overruled by the board at least twice related to investments. Isa told reporters last week that Zakaria’s enforced leave was normal procedure and only getting attention for political reasons.

“There’s a lot of voters in Felda.” He declined to comment further on that matter when contacted by Bloomberg.

Opposition efforts

Zainuddin Mat Naan, 59, an UMNO member and Felda settler from Selangor, said he was finding it difficult to defend the government to his community. “My neighbors often ask me, how can we depend on the government when the government can’t even help us Felda settlers? And now this happens,” he said.

Some children of settlers said they might urge their parents to vote against Barisan Nasional. “We can influence how our parents vote,” said Zainuddin Zainal, 51, from Selangor.

“We are educated professionals, we know what’s happening.”

Still, while the opposition has increased visits to settler communities, the chances of winning them over are limited, said Ibrahim Suffian, executive director at the Merdeka Center for Opinion Research. “The opposition currently lacks convincing leadership or clarity of message, thus giving BN a clear advantage.”

Bloomberg News

The government is mandated to keep its budget deficit under 3 percent of GDP, a line that is getting closer as tax revenue comes under pressure. Widodo has ordered government departments to review their spending plans this year to help keep the budget under control.

The deficit may widen to as much as 2.7 percent of GDP this year compared to an estimated 2.4 percent for 2016, Finance Minister Sri Mulyani Indrawati said last week. She said on Tuesday the government remained “optimistic” about reaching its revenue target this year and was taking a cautious approach in case it misses that goal.

Gundy Cahyadi, an economist at DBS Group Holdings Ltd. in Singapore, said a gradual increase in electricity prices would help limit the impact on inflation.

“You do not want to give a onetime hike, which would only put a lot of stress on prices in the short term,” he added. “That could also be disruptive.” Bloomberg News

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TheBroa

Business

Thursday, June 15, 2017

PHL still teaching self

A

By Claudeth C. Mocon

letter-number combo defines one of the Philippine government’s boldest moves: K to 12. As the Department of Education (DepEd) rolled out Grade 12 this school year, Secretary Leonor Magtolis-Briones asserts that the program, the boldest move made by the government in the history of the Philippine educational system, is primarily geared to benefit Filipino learners and the country.

“I always insist that K to 12 is not only for our regional friends or for our international neighbor or for the global community, we are doing this for ourselves,” Briones said.

As schools opened their doors on June 5 to 27.7 million learners, which include the first batch of Grade 12 learners, Briones maintained the implementation of K to 12 is not propelled only on the advice of the international community, or as a requirement by the Association of Southeast Asian Nations (Asean).

“We rolled out the K to 12 because Filipinos should realize the rich advantage of the new curriculum in making the youth more productive and competitive, not only overseas but more so in their country,” Briones said.

“We are doing K to 12 for ourselves and for the Philippine education,” she added. “We are doing this to be able to compete in our own country so that we can equip our learners with appropriate skills, creativity and intelligence to cope with the changing world.”

Germinal

THE K to 12 is the innovative curriculum of DepEd that covers kindergarten and 12 years of basic education. The program aims to provide sufficient time for students to master concepts and skills, develop lifelong learners and prepare graduates for tertiary education, middle-level skills development, employment and entrepreneurship.

Briones said that when she assumed the stewardship of DepEd, it was her vision that beyond quality, the constitutional provision is making education accessible, relevant and liberating.

“We want quality education to be liberating from intellectual, social and even material poverty,” she emphasized.

Briones recalled when President Duterte solicited her opinion in the implementation of the new curriculum, especially the Senior High School (SHS) program, her answer was to follow the mandate of the law.

The K to 12 program is mandated by Republic Act 10533, otherwise known as “Basic Education Act of 2013”. The DepEd began the new learning program in its efforts “to make a change toward a better Philippines” as early as 2011.

K to 12 education reform, Briones claims, “requires courage, determination and political will of revolutionizing the Philippine educational system” amid challenges in more than 70 years.

Records from the DepEd showed there are 2.06 million students in kindergarten, 14.40 million in elementary and 7.65 million in Junior High School (JHS). In SHS, there are 2.84 million publicschool students.

For private schools, about 220,802 are enrolled in kindergarten, 1.25 million in elementary,

1.33 million in JHS and 1.27 million in SHS.

Briones emphasized that the SHS curriculum would help prepare graduates for higher education, entrepreneurship, further middle-level skills development, or work. The curriculum contains four tracks that learners and schools may choose from: technical-vocational-livelihood, academic, sports and arts and design.

“All tracks contain a core curriculum that would enable graduates to pursue higher education should they wish,” she concluded.

Hurdles

FOR SY 2017 to 2018, the DepEd created 40,104 teacher items for the K to 10 levels and the SHS.

Briones, however, emphasized the country still needs more teachers, especially in public schools, to address the program’s demands.

“Additional items will be created throughout the year, depending on the actual enrollment for SY 2017-2018,” Briones said. “The Department continues to prioritize hiring of Higher Education Institutions (HEIs) faculty affected by the reform program until SY 2021-2022.”

Meanwhile, a total of 55,680 classrooms will be available for K10 and SHS.

“The DepEd is nearly done with the 2014 and the 2015 classroom backlogs and has registered 51.59-percent completion rate from 2014 to 2016,” she told the BusinessMirror.

DepEd-National Capital Region Director Ponciano Menguito clarified they have not issued any directive to merge Technology and Livelihood Education (TLE) classes to be taught by only one teacher.

Menguito said this may be the contingency measure of the school principal if there are no teachers available to teach the subject.

However, this is only for emergency situations, he explained.

Menguito added that JHS teachers in Metro Manila are not forced to teach in SHS. Teacher hiring for Grades 11 and 12 has been opened since February and is also open for JHS teachers, if they have the expertise.

Investments

A study conducted by the Philippine Normal University (PNU) said the Philippines needs to raise investments in teacher education, especially since it is the lowest in Asia at 2.8 percent of gross domestic product (GDP).

According to the PNU, doing so can increase the number of board passers in the licensure examination for teachers (LET) and therefore raise teaching quality in K-12.

Edna Luz R. Abulon, PNU Educational Policy Research and Development Center director, said the 64.8-percent passing rate is questionable since the government poured P4.386 billion for teacher preparation over the study period

2008 to 2012.

The study titled “Exploring wastage in teacher preparation investments in the Philippines” said the government invested P59,366 per graduate over four years.

“Yet this was grossly inadequate,” said the study that covered an extensive number of 73,882 teacher education graduates (TEG) in 56 state universities and colleges (SUCs).

The Philippine government’s spending on education is already the second lowest in Asia, just next to Cambodia with 1.4 percent. In the rest of Asia, investment as percentage of GDP was 3.3 percent for Brunei, 4.3 percent for Thailand and 5.6 percent for Malaysia.

Apparently due to the new K-12 program, there is a need to raise the number of teachers due to the added two more years in basic education.

Raising investments in teacher training should result in higher hiring and retention of quality teachers, particularly in basic education (K-12), consequently upgrading learning quality among the youth.

TEGs

TO determine the effectiveness of the government’s investment in teacher education, a cost analysis was conducted by the PNU research team. They compared General Appropriations Act (GAA) figures with enrollment and graduation data in 56 out of 106 SUCs.

Using the National Statistics Office’s (NSO) quarterly Labor Force Survey from 2007 to 2011, the study analyzed wastage in government investment by comparing the number of TEGs who did not pursue a teaching job.

The study showed that six regions of the Top 8 best LET performers (with lowest failure rate) from 2009 to 20012 were also those that received highest government support funding: NCR and Regions 6, 1, 5, 3 and 2.

“The study indicated that the lower the education cost or government support, the greater the tendency to have higher percentage of failure in the LET,” said Abulon.

Region 5 got the highest government support in teacher preparation investment from 2008 to 2010 at P136.5 million. It was followed by NCR at P129.6 million then the Autonomous Region in Muslim Mindanao at P126.9 million.

Among the reasons TEGs ranked highly and why they did not take teachings jobs include: better appraisal in other jobs (better salary, better working conditions), need to support family (financially), mismatched personality with teaching, medical considerations and uncertainty in career choice about teaching.

From 2007 to 2011, just 59.54 percent of TEGs took teaching jobs and the rest, 40.46 percent, went to perform other jobs elsewhere,

Students gather at the Parañaque Municipal School school grounds at the start of classes on June 5. NONIE REYES

Other policy improvements recommended by a study of the Philippine Normal University n Further studies may be conducted on salary incentives that would attract quality teachers n Other further research may be on reasons for poor LET performance, a benchmarking study on admissions policy on teacher education in both government and private SUCs and the development and standardization of teaching aptitude examination for Teacher Education Institutions (TEIs) nationwide n Give incentives to teachers, primarily in the form of a more attractive compensation, n Adopt policies in some OECD (Organization of Economic Cooperation Development) countries like the US that offer loan condonation and signing bonuses to teachers n Adopt practices in other developed countries to retain teachers such as offering scholarships, special allowances, free computer and free housing and accommodation n Adopt incentives like those for new teachers in South Korea that include preemployment training on classroom management, student counseling and

teacher tasks, instructional guidance, student aptitude guidance and supervision of clerical work n Adopt a recommendation from the 2011 International Summit on Teaching Profession that stressed the importance of boosting image of teachers and creating a professional working environment for them in order to attract more qualified teachers n Exclude qualified candidates for teacher education students from paying entrance examination fees and from filing some costly requirements (such as original NSO birth certificate) and application fee payments n Adopt policies institutionalizing best practices such as an MMSU (Mariano Marcos State University ) program offering scholarships for teacher education to honor high-school graduates—valedictorian, salutatorian, first to third honorable mention from a class of 50 or more students n Review current DepEd prohibition for teachers to teach in another school which perhaps must be applied only on permanent teachers but not on

temporary teachers in order to help them enhance income n Cut further hiring period of DepEd since division heads are given this responsibility—”taking several layers of authority,” which is why some teaching applicants just grab other jobs that are available. DepEd may have claimed that it reduced hiring period from 8 to 3 months in 2013. But the study skipped the fact that some TEGs are first employed as volunteer teacher or as local government-funded teacher (prior to DepEd hiring) n Adopt a compensation policy based on workload since some teachers shifted to jobs that are more “timebound” (compared to teaching, a never-ending job where lesson preparation and grading reports have to be brought home) Source: “Exploring wastage in teacher preparation investments in the Philippines,” Edna Luz R. Abulon, Antriman V. Orleans, Zyralie L. Bedural, Adonis P. David, Jaime V. Florentino, Teresita T. Rungduin | Philippine Normal University

aderLook

sMirror

www.businessmirror.com.ph | Thursday, June 15, 2017

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f in journey to K to 12

the PNU authors said.

Based on the 2012 Bureau of Labor and Employment Statistics survey, teaching jobs in private schools connote lower salary.

Salary levels of teaching jobs are comparative to those only received by bookkeeping clerks, callcenter agents and air-travel clerks.

And since these competitor jobs are held in air-conditioned rooms versus non-airconditioned rooms in schools, TEGs preferred to take competitor jobs.

Recommendations

ACCORDING to the PNU study, there should be a review of directions in public spending in order to improve teacher education.

Likewise, the government should also conduct a review of teachers’ salaries to adjust these and attract more TEGs to seriously pursue teaching jobs.

The national government should also suspend or terminate teacher education programs in SUCs that have low LET passing rates.

Very important, the govern-

ment should review the DepEd’s recruitment policies with a view to speeding up the hiring process for new teachers. The government is also advised to enhance in-service teacher incentives and professional development for DepEd teachers in both public and private schools.

It should review admission and retention policy for pre-service teachers so that these teachers will commit to a lifelong teaching job and appreciate its nobility, the PNU study recommends.

Likewise, the government should also adopt strategies and programs so that SUCs and private TEIs (teacher education institutions) with good LET records could help poor SUCs improve on LET performance.

The PNU study also zeroed in on teacher workload “as the common denominator when teachers were asked why they leave their professions.”

“This particular result mirrored what have caused the ‘teacher loss phenomenon’ in some countries like in the United States, Australia and the United Kingdom.”

French connection

SCIENCES Po, one of the world’s leading international research universities in the field of social science based in Paris, France, is opening its doors to Filipino college faculty and staff by offering scholarships for graduate studies.

According to the 2017 QS World University Subjects Rankings, Sciences Po is top five in politics and international studies and 62nd in social science and management. It is also known for producing many notable public figures, including five of the last seven French presidents, the latest being the recently elected President Emmanuel Macron.

In partnership with the Commission on Higher Education (CHEd), with the support of the Embassy of France in the Philippines, the joint scholarship program will open up 10 slots for teaching and nonteaching staff from Philippine HEIs.

The scholarship will offer premier master’s- and PhD-level programs in politics, social policy

and administration and urban studies. Awarded scholars will be receiving privileges that include coverage of tuition, nonacademic fees and monthly living allowance, among others.

CHEd Chairman Patricia B. Licuanan and Sciences Po President Frédéric Mion formalized the partnership through a memorandum of agreement.

“Through this scholarship, we aim to support outstanding grantees with the potential to become leaders in the field of social science in the Philippines. We eagerly look forward to our first cohort of scholars as we launch the call for applications this year until the first quarter of 2018,” Licuanan said.

Licuanan led a delegation to France composed of representatives from six universities, including Visayas State University and the University of Southern Mindanao.

The partnership with Sciences Po is also part of CHED’s ongoing efforts through the K to 12 Transition Program to invest and support HEI faculty and staff in upgrad-

ing their qualifications during the transition period.

Transitioning

THE K to 12 Transition Program is a five-year effort aimed at the strategic development of HEIs and personnel during the transition period from 2016 to 2021. The program includes a range of programs to support faculty and staff through scholarships for master’s and doctoral programs, nondegree programs, as well as institutional grants for HEIs.

Opposition

THE Alliance of Concerned Teachers (ACT) has been very vocal in opposing the implementation of the K-12 program.

The ACT cited the DepEd first needs to address issues like lack of classrooms and learning materials and the low salary of public school teachers.

ACT National Chairman Benjamin Valbuena said there are still public schools that don’t have enough teachers and even lack facilities.

“And yet the DepEd is just

playing blind and deaf to the existing problems.”

He said there are also 3.4 million dropouts because of lack of school vouchers. “Not to mention that they don’t have the money to go to school,” he added.

The SHS is “not for free but for sale,” Valbuena said.

“The DepEd already allocated P34.5 billion for SHS vouchers even without doing the auditing of P22 billion last year,” Valbuena said in an interview.

He alleges that only profit-oriented private schools are the ones benefitting from the K to 12 program.

“If DepEd will just spend the P34.5-billion budget for the SHS vouchers and even the P70-billion Conditional Cash Transfer (of the Department of Social Welfare and Development), [we] could already build classrooms that could accommodate 1.8 million learners,” he lamented.

Another group, the Teachers Dignity Coalition, has maintained strong opposition to the addition of two more years to the 10-year basic education cycle.

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Thursday, June 15, 2017

The World BusinessMirror

American held in a coma evacuated from N. Korea

W

ASHINGTON—Otto F. Warmbier was a University of Virginia honors student with a passion for travel when he signed up for a five-day tour of North Korea with a Chinese company that advertised “budget travel to destinations your mother would rather you stayed away from”.

He was detained at the Pyongyang airport as he tried to leave in January 2016, charged with an unspecified “hostile act” against the reclusive government.

Within two months, he was convicted after a one-hour trial of trying to steal a propaganda poster. Warmbier was sentenced to 15 years of hard labor. A video captured him being led away to prison, dazed, stumbling and flanked by two North Korean guards.

Fifteen months later, Warmbier—gravely ill and in a coma—was medically evacuated from North Korea on Tuesday and on his way to his parents’ home in Cincinnati.

His release followed secret negotiations between US officials and the government in Pyongyang that unfolded as tensions escalated over North Korea’s nuclear program.

Little is known about Warmbier’s ordeal in North Korea, where the government refused for more than a year to allow access to him

by Swedish consular officials, who act as interlocutors between Washington and Pyongyang.

But last month North Korean officials asked for an emergency meeting with their US counterparts in New York and opened the door for his return.

President Donald J. Trump ordered a State Department envoy and a medical team to Pyongyang to take Warmbier home to Ohio, ending his parents’ nightmare and showing how intractable relations remain between the countries.

“We want the world to know how we and our son have been brutalized and terrorized by the pariah regime” in North Korea, Warmbier’s parents, Fred and Cindy Warmbier, said in a statement to The Associated Press on Tuesday, as he traveled to Ohio, with stops in Japan and Anchorage.

They said they were grateful that their son would “finally be

with people who love him”.

His plane landed at Lunken Airport in Cincinnati late on Tuesday, and taxied to a row of hangars where an ambulance and a small crowd waited. Wearing dark pants and a blue shirt, Warmbier was carried off the plane and taken to University of Cincinnati Medical Center.

Warmbier, 23, has been in a coma for “over a year now and urgently needs proper medical care”, said Bill Richardson, the former governor of New Mexico, who has been in touch with the Warmbier family and has served periodically as a negotiator with the North Korean government.

A senior US official said the United States obtained intelligence reports in recent weeks indicating that Warmbier had been repeatedly beaten while in North Korean custody. The official, who was not authorized to publicly discuss intelligence and spoke on the condition of anonymity, said there had been earlier concerns that Warmbier had died.

A second person who was involved in early discussions with North Koreans about US prisoners said Warmbier’s family at one point told friends they believed the North had killed their son.

Last month Warmbier’s imprisonment came up as part of continuing negotiations in Oslo, during so-called Track 2 talks— unofficial discussions primarily involving former senior officials from both sides—about how the US and North Korea could start resolving their differences, particularly over the North’s nuclear and missile programs.

The subject of allowing Swedish officials to visit US prisoners was discussed at length. A short time later a Swedish representative was allowed to see one of three other Americans held in North Korea.

It was after that visit that the

In this March 16, 2016, photo, American student Otto Warmbier (center) is escorted at the Supreme Court in Pyongyang, North Korea. AP/Jon Chol Jin

North Koreans urgently requested the meeting with US officials in New York, on June 6, when Joseph Y. Yun, the State Department’s special representative for North Korea, first learned of Warmbier’s grave medical condition.

Yun was told the North wanted concessions in return for Warmbier’s release, according to a person familiar with the conversation.

But Yun said that, given Warmbier’s condition, Pyongyang must free him immediately.

By Monday, a US delegation, including Yun and a medical team, arrived in Pyongyang to take Warmbier home. After two doctors visited Warmbier, Yun demanded his return on humanitarian grounds, the State Department said. Secretary of State Rex W. Tillerson issued a statement on Tuesday announcing the release of Warmbier, without providing any details about the negotiations.

Much about the hastily arranged release remains a mystery.

Warmbier’s evacuation was announced while Dennis Rodman— a former professional basketball player who has relationships with North Korea’s leader, Kim Jong Un, and with Trump—was visiting North Korea. Rodman appeared on Trump’s Celebrity Apprentice in 2009 and traveled to North Korea in 2013. A State Department spokesman, Heather Nauert, said on Tuesday, “Dennis Rodman did not have anything to do with the release of Otto Warmbier.”

The specifics of Warmbier’s condition were not known. His family was told that he had contracted botulism and had been given a sleeping pill, causing him to slip into a coma, according to the people briefed on the situation, who insisted on anonymity to discuss the highly sensitive matter.

But US officials suspect his condition is the result of his treatment at North Korean hands, given the record of the brutal treatment of past prisoners there.

“Out of respect for the privacy of Mr. Warmbier and his family, we have no further comment,” Tillerson said in his statement.

Asked later at a Senate committee hearing about Warmbier’s health, he declined to comment.

Sen. Rob Portman, RepublicanOhio, said, “Otto’s detainment and sentence was unnecessary and appalling, and North Korea should be universally condemned for its abhorrent behavior.”

A senior aide to Portman said the senator had been working for months to secure Warmbier’s release, consulting Trump, Tillerson, Richardson and John Kerry, the former secretary of state.

“The North Koreans have a lot of explaining to do if he’s really been in a coma for months,” said Richardson, who has been in regular contact with the Warmbier family. “That’s outrageous that they didn’t notify the US and that the Swedes have not been given access to him.”

Richardson, who helped negotiate the release of US detainee Evan Hunziker in 1996, is one of a few US dignitaries who have traveled to North Korea to escort prisoners home to the US. Richardson added that it was very likely a coincidence that Warmbier had been released while Rodman was visiting North Korea and could be meeting with its leader, Kim. “I have mixed reactions about Rodman’s visit,” Richardson said. “My hope is he gets a full explanation given Otto’s condition. My hope is that he is used to start dialogue.”

In a tearful news conference in Pyong yang after his arrest, Warmbier said he had stolen the poster because an acquaintance had offered to give him a used car worth $10,000 in exchange for it. “I made the worst mistake of my life,” he said. It is unclear whether his statement was genuine or coerced.

New York Times News Service

www.businessmirror.com.ph

Chief of Chinese firm is detained

T

he chairman of a Chinese f inancia l conglomerate who tried to forge a business relationship with President Donald J. Trump’s son-in-law has been detained by police.

Wu Xiaohui, the chairman of Anbang Insurance Group, was taken away by the police last Friday in Beijing, according to Caijing, a respected newsmagazine. In a statement early on Wednesday morning in China, the company said that Wu was “for personal reasons no longer able to perform his duties.”

Two people briefed on the matter—a company executive and a business partner of Anbang—confirmed that Wu had been detained.

Wu, who piloted Anbang’s rapid rise to global prominence with splashy purchases, like the Waldorf Astoria hotel in Manhattan, is the latest Chinese tycoon to be ensnared in an anticorruption drive that has swept the country in recent years.

Another of China’s wealthiest and most politically connected financiers, Xiao Jianhua, was reportedly seized from his luxury hotel in Hong Kong by Chinese police officers and taken over the border in January. He has not been seen publicly since.

The detention of Wu is likely to reverberate through business circles in China and the United States. Anbang, which claims to have almost $300 billion in assets, had recently been on a worldwide buying spree, and Wu counted Wall Street executives like Stephen A. Schwarzman as among his business partners in the US. The article in Caijing said Wu was detained as part of a Chinese government investigation into Anbang. The two people confirming that Wu had been detained asked for anonymity because they were not authorized to speak to the news media.

Anbang is also one of the biggest issuers of speculative wealth management products, which have attracted a tidal wave of money from Chinese investors.

Wu’s detention follows a move last month by China’s insurance regulator to bar the company from offering new insurance products for three months as part of a wider clampdown.

The regulator said at the time that it was taking disciplinary measures against the company over the improper sale of insurance products.

It was not clear on Tuesday what would happen to Wu. Some executives caught up in the government’s crackdown on corruption in the financial sector, which began last year, have vanished for a few days only to reappear, back in charge of their companies.

Others, like Xiao, have been held for months in undisclosed locations without any charges being publicized.

Xu Ming, a billionaire caught

up in a 2012 political scandal, vanished and died in prison in late 2015 at 44, according to a report in one Chinese government-owned newspaper in Hong Kong.

Sterling political connections on both sides of the Pacific Ocean might have worked to Wu’s advantage in his business dealings.

He married a granddaughter of Deng Xiaoping, China’s paramount leader in the 1980s, and in November met with Jared Kushner, Trump’s son-in-law and a top adviser, in a bid to buy a stake in a Manhattan office building partly owned by Kushner’s family company.

The deal was eventually abandoned after media coverage highlighted a perceived conflict of interest. Kushner’s purview at the White House includes relations with China.

Anbang has taken the money it raised from Chinese savers and invested much of it abroad. Last year, Anbang spent more than $6 billion for a collection of luxury hotels across the US. The seller of those hotels was the Blackstone Group, whose chairman and chief executive, Schwarzman, is one of Trump’s closest business advisers.

In a separate effort, Anbang offered more than $13 billion for Starwood Hotels and Resorts before abandoning its bid early last year following media scrutiny of its opaque ownership structure.

China’s insurance sector has been in turmoil in recent months.

In April anticorruption investigators announced that they were focusing on the insurance sector and specifically, the country’s top insurance regulator.

Xiang Junbo, the chairman of China Insurance Regulatory Commission, was later removed from office after the government placed him under investigation for “severe violations of discipline”.

Wu’s detention comes at a politically sensitive time in China.

The ruling Communist Party is set to convene a leadership meeting this year that will pick a new generation of top officials, and the party puts the preservation of stability—both financial and political—at a premium in the months ahead of the conclave, held once every five years.

“The framing question here is, has he been behaving badly by Chinese standards?” asked Derek Scissors, a resident scholar and China economist at the American Enterprise Institute. “If it’s just him doing something the party doesn’t like, it doesn’t matter. The question is whether the whole firm has been used to do things the party doesn’t like.”

In its statement, Anbang said that the company would continue to operate as usual without Wu. But it is unclear if Anbang can still pursue its global ambitions if Wu does not return to the helm.

New York Times News Service

Trump promotes US teeners’ access to apprenticeships

P

resident Donald J. Trump said America’s teenagers should have broad access to apprenticeships to prepare them for jobs.

“We want a future where every high school in America offers apprenticeship” options, Trump told participants in a vocational program at a community college in Wisconsin on Tuesday.

Trump will issue a directive on Wednesday intended to boost apprenticeships by expanding industry-certified programs, according to people familiar with the matter.

The order is designed to streamline apprenticeship training to give more certification responsibility to businesses rather than relying on the Department of Labor.

The trip put Trump on friendly political ground to highlight pocketbook issues as the investigation of his campaign’s possible collusion with Russian meddling in the presidential election again dominated national news.

As Trump was speaking, cable news networks were broadcasting Attorney General Jeff Session’s testimony to the Senate Intelligence Committee.

The White House is trying to counter weeks of national attention on the investigation and the ouster of Federal Bureau of Investigation Director James Comey with a campaign to show him at work on the economy.

This week’s theme is work-force development, an area where Ivanka Trump, the president’s daughter and adviser, has taken on a role as an administration spokesman.

Trump’s visit to Waukesha County Technical College celebrated collaborations between educational institutions and the private sector in a county that backed him for president by 2-to-1 over Democrat Hillary Clinton.

Nationally, disapproval of Trump’s handling of the presidency hit a new high of 60 percent in the most recent Gallup daily tracking poll, completed on Monday.

While in the state, Trump also headlined a fund-raiser for Wisconsin’s governor, Republican Scott Walker, who’s expected to announce in the coming months that he’s running for a third term. Bloomberg News

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Trump, in zigzag, calls House Republicans health bill ‘mean’

W

ASHINGTON—President Donald J. Trump on Tuesday bluntly derided a House attempt to repeal the Affordable Care Act (ACA) as “mean” and, in doing so, injected himself in a brewing Senate battle that his fellow Republicans had prayed he would avoid.

At a White House lunch with more than a dozen Republican senators, Trump alerted his guests that a bill passed by the House this spring—one he lauded last month in the Rose Garden as a “great plan” that was “very, very incredibly well-crafted”—was now “mean”.

He also informed the lawmakers, who represented politically diverse views from across the Republican spectrum, that he expected the Senate to come up with something more generous, according to four congressional aides who were briefed on the discussion and spoke on the condition of anonymity.

“I really appreciate what you’re doing to come out with a bill that’s going to be a phenomenal bill for the people of our country: generous, kind, with heart,” Trump told his guests in the Cabinet Room. “That’s what I’m saying. And that may be adding additional money into it.”

It was unclear to lawmakers what Trump meant by “generous”, although it seemed a likely reference to tax credits that would make health insurance more affordable.

The White House declined to comment. The divisions facing a health-care overhaul in the Senate are many. Senators from states that expanded the Medicaid program are not eager to roll it back.

At the same time, however, other senators are angling to use the process of repealing President Barack Obama’s signature healthcare law as an inroad to greatly curtail the nation’s Medicaid program writ large.

On Tuesday it seemed that Trump was putting his finger on the scale with the more moderate members by criticizing a bill he celebrated with more conservative House Republicans.

Senators, who are growing increasingly indifferent to Trump’s policy interests, did not seem moved by his entreaties, the congressional aides said.

But it did give fodder to Democrats, who are likely to revel in Trump’s derision of his party’s bill.

The House Democratic leader, Rep. Nancy Pelosi of California, did not pass up such a gift from the president. She wrote on Twitter that Trumpcare, as she called it, was “not only ‘mean’, but a moral monstrosity”.

“The Senate bill is just as cruel,” she added. Republican senators were already planning to make their bill more generous, at least

relative to the House bill, known as the American Health Care Act. At the Capitol, Senate Majority Leader Mitch McConnell of Kentucky said Republicans were hard at work on their legislation, although he did not divulge any specifics about it.

“Our goal here is to move forward quickly,” he added. “The status quo is unsustainable.”

The Congressional Budget Office found that the bill passed by the House would leave 14 million more people uninsured next year than under the ACA, and 23 million more in 2026.

It also said the House bill would cut more than $800 billion from projected federal spending on Medicaid over the next 10 years, and that less healthy people could face “extremely high premiums”, as would some older Americans.

For example, the budget office said, for a typical 64-year-old with an annual income of $26,500, the net premium in 2026—after tax credits—would average about $16,000 a year under the House bill, compared with $1,700 under the Affordable Care Act. Doctors and hospitals opposed the House bill, as did groups like the American Cancer Society and American Association of Retired Persons. Senate Republicans immediately dismissed the House overhaul and pledged to write their own replacement for the health law.

Senate Republicans have been working for weeks on proposals that they say could soften the effects of the House bill by providing more financial assistance to low-income people and older Americans to help them pay for insurance. But some Republican senators are eager to keep a provision of the House bill that would let states opt out of a federal requirement for insurers to provide certain minimum health benefits.

In such states, the budget office said, “out-of-pocke t spending on maternity care and mental-health and substance-abuse ser v ices could increase by thousands of dollars” for some consumers.

Eager to show progress on a central legislative goal, Trump had leaned on House Republicans to push their bill through the chamber, despite reservations from many members and intense pressure from constituents who wanted the health law to remain in place. But with his description on Tuesday, Trump suddenly seemed in step with Democrats who were unable to stop the House bill.

Asked about Trump’s comment, AshLee Strong, a spokesman for Speaker Paul D. Ryan, focused on the shortcomings of the law the House bill is meant to replace.

New York Times News Service

S

A9

Sessions: Idea of collusion with Russia ‘detestable lie’

A

ttorney General Jeff Sessions said he never spoke with Russian officials concerning “any type of interference” with the 2016 presidential campaign and called any suggestion he colluded with Russia during the election an “appalling and detestable lie”.

Under questioning by Senate Intelligence Committee members on Tuesday, Sessions added he was within his responsibilities as attorney general to sign off on the firing of Federal Bureau of Investigation (FBI) Director James Comey, even though he had recused himself from involvement in a federal probe of Russia’s role in the election that was led at the time by Comey.

With pressure g row ing on the W hite House over Comey’s dismissal and the Russia probe, Sessions also defended himself against Democratic allegations that he gave misleading testimony about his contacts with Ru ssi a n of f ic i a l s du r i ng h i s confirmation hearing.

“That is false,” Sessions said.

While the hearing lacked the detailed revelations that Comey provided in his testimony last week, it featured sharp exchanges between Sessions and committee Democrats over accusations the attor ney general recused himself from the Russia probe, in part, for reasons that haven’t been publicly disclosed.

‘Secret innuendo’

“Why don’t you tell me,” what those accusations are, Sessions said to Oregon Sen. Ron Wyden. “ There are none—I can tell you that for absolute certainty,” he continued, adding he doesn’t appreciate “secret innuendo” being leaked about him.

Sessions sought to preempt questions from the panel about conversations w ith President Donald J. Trump regarding the Russia investigation and the May 9 firing of Comey, saying he “cannot and will not violate my duty to protect the confidential communications I had with the president”.

Democrats said he had little basis for doing so without the White House claiming executive privilege. Sen. Martin Heinrich of New Mexico repeatedly said

Qatar to boost deposit rates to attract dollars ome Qatari banks are boosting interest rates on dollar deposits to shore up liquidity as a Saudi-led campaign to isolate the gas-rich Arab state intensifies, people familiar with the matter said.

The lenders are offering a premium of as much as 100 basis points over the London interbank offered rate (Libor) to attract dollars from regional banks, two of the people said, asking not to be named because the matter is sensitive. That compares with rates of 20 basis points over the Libor before the feud started on June 5.

Some of the banks are dealing with regional lenders directly instead of using brokers, which allows them to determine interest rates depending on the amount being deposited, two of the people said.

Qatar, one of the world’s richest countries and biggest producer of liquefied natural gas, is seeking to boost dollar supplies after Saudi Arabia, the United Arab Emirates and Bahrain cut economic and diplomatic ties with the country last week, in an unprecedented move designed to punish it for ties with Iran and Islamist groups in the region.

Some banks in neighboring countries are cutting their exposure to Qatar amid concerns of a widening of the blockade, people familiar with the matter said on June 7.

Thursday, June 15, 2017

While banks are unlikely “to be thrust into a crisis”, borrowing costs “look set to rise, and banks are likely to become more cautious with their lending”, Jason Tuvey, London-based Middle East economist at Capital Economics, wrote in a report on Tuesday. “If local banks struggle to rollover their external debts, they could be forced to shrink their balance sheets and tighten credit conditions.”

Central bank officials in Qatar didn’t immediately respond to requests for comment.

The regulator said on Monday the banking system was functioning without disruption.

Qatar has enough financial firepower to defend its currency and economy, Finance Minister Ali Shareef Al Emadi told CNBC in an interview broadcast last Monday. Al Emadi played down the impact of the crisis on the country, saying the plunge in Qatari assets last week was a “normal” reaction to the standoff.

Qatar National Bank, the biggest lender in the Middle East, said it didn’t see any “significant” rate increases since the standoff began, according to an e-mailed statement from the bank on Tuesday.

Investors have been selling Qatari assets and speculating against the riyal as they ponder how long Qatar can weather the crisis without having to devalue its currency or sell any of its global holdings. Bloomberg News

Sessions’s answers amounted to “obstructing” the congressional probe and his refusal to answer was without justification.

In a response to Maine independent Sen. Angus King, the attorney general suggested he wanted to keep the president’s options open.

“It would be premature to me to deny the president a full and intelligent choice on executive privilege,” Sessions said.

In his first public testimony on Capitol Hill since his January confirmation hearing, Sessions suggested he’s only aware of the intelligence community’s conclusion that Russia attempted to undermine the election because of media reports.

He said he never read classified reports about the meddling or got a briefing, even before he joined the administration.

“It appears so,” Sessions said when asked whether Russians interfered in the 2016 election. “I know nothing but what I’ve read in the paper.”

Responding to questions about the firing of Comey, Sessions says he never informed the FBI chief of concerns about his job performance, which the administration cited in his dismissal.

And he added that he discussed the need for a “fresh start” at the FBI with Deputy Attorney General Rod Rosenstein before either of the men were confirmed to their posts.

Sessions largely confirmed a key portion of Comey’s description of a February meeting at the W hite House, at which the at tor ney genera l a nd Tr u mp

Attorney General Jeff Sessions Bloomberg News

son-in-law Jared Kushner left the Oval Office so the president and Comey could speak alone.

He said Comey expressed concerns afterward about being left alone with the president, a point highlighted in the former FBI director’s testimony last week.

Russian envoy

The attorney general said he learned after the fact that Russian A mbassador Sergey K islyak was at a reception held in conjunction with a foreign policy speech then-candidate Tr ump gave at Washing ton’s Mayf lower Hotel in April 2016 that Sessions attended. But Sessions said he doesn’t remember K islyak being there and has no recollection of interacting with him at the event.

Sessions has acknowledged two other exchanges with the ambassador, yet his failure to initially disclose those encounters during his confirmation hearing helped prompt his recusal from the Russia probe.

Warner pressed Sessions on whether he has confidence in special counsel Robert Mueller, who was appointed to lead the Russia probe and is still building

I appointed him [special counsel Robert Mueller]. I stand by that decision. I’m going to defend the integrity of that investigation.”

—Rosenstein

his investigative team. He said he did, though he added that he has “no idea” if Trump does since he isn’t kept abreast of the probe.

Questions about Trump’s support for Mueller were raised after Chris Ruddy, the CEO of Newsmax Media and a close friend to the president, said on Monday he believed Trump was considering dismissing the special counsel.

Rosenstein’s assertion

In testimony earlier on Tuesday to a different Senate subcommittee, Rosenstein clarified that only he, not the president, can fire the special counsel.

He said there would need to be “good cause” to dismiss Mueller.

“I appointed him. I stand by that decision,” said Rosenstein.

“I’m going to defend the integrity of that investigation.”

White House Spokesman Sarah Huckabee Sanders told reporters on Air Force One that Trump doesn’t plan to remove Mueller.

“While the president has the right to, he has no intention to do so,” she said.

She added that Trump wasn’t able to watch much of Sessions’ testimony but, from what he did see and hear, thought the attorney general “did a very good job”.

Sessions’ testimony comes one day after National Security Agenc y chief Mike Rogers met behind closed doors w ith the Intel ligence Committee, after last week say ing he couldn’t respond to some questions about the Russia probe and Tr ump’s alleged involvement in a public hear ing. Bloomberg News

A10 Thursday, June 15, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Trumpeting the good news

T

he Department of Tourism (DOT) rolled out its new campaign, dubbed “Sights”, on June 12, Independence Day, with the tagline “Experience the Philippines”. The new advertisement features M. Uchimura, a Japanese retiree, as he visits the Hundred Islands in Pangasinan, Banaue Rice Terraces in Ifugao, Paoay Sand Dunes in Ilocos Norte and Calle Crisologo in Vigan City, Ilocos Sur. At the end of the commercial, viewers find out that Uchimura is blind when he brought out a folding walking cane and says, “You don’t have to see to feel you are home.”

Tourism Secretary Wanda Corazon T. Teo said the campaign seeks to portray the unique experiences that each Philippine destination could offer, capped by our own brand of Filipino hospitality. Teo believes that Filipinos personify the basic element of fun because it is the people themselves who make the total tourism experience fulfilling and memorable. In other words, the Filipino people are the heart and essence of the tourism campaign.

Unfortunately, netizens used the social media to virtually bash the DOT campaign. Detractors said the new tourism video is a copycat of South Africa’s 2016 campaign, which also featured a tourist who turned out to be blind.

McCann Ericksonn, the advertising agency behind the ad, said it takes full responsibility for the controversial video. It added that “there has never been any intention to copy others’ creative work”, and that the ad portrays the real experiences of a retired Japanese who felt he was at home in the Philippines.

Although the concept may be similar to South Africa’s tourism campaign, everything else in Experience the Philippines is original and different. As a cool head explained, with the advent of Google there’s hardly any original idea these days because there’s a thin line between finding inspiration and outright appropriating somebody else’s idea.

Unfortunately for the Tourism department, this is not the first time it got itself embroiled in a controversy. In 2010 the DOT’s “Pilipinas Kay Ganda” slogan and web site were criticized. Detractors said the design of the campaign’s logo was copied from the “Polska” tourism logo of Poland. Former Tourism Undersecretary Vicente Romano III, who was the former head of the DOT’s Planning and Promotions section, resigned from his post after he took responsibility for the controversial Pilipinas Kay Ganda campaign. However, Romano believed that the public was mistakenly concerned with the campaign’s originality and not on its effectiveness in attracting tourists. “I think part of the problem is our hang-up with being original. In other industries, we literally copy business models and concepts and apply it to our own business without paying any royalty or even giving due recognition to the original author. It’s called best practices,” Romano said.

We understand that every citizen has a right to express his thoughts or feelings about the new tourism ad. But we must also understand what it takes to launch a tourism campaign, which is a difficult endeavor. Tourism Assistant Secretary Frederick M. Alegre said the DOT stood by McCann Ericksonn, saying that despite the similarities, the agency was able to present the campaign in a different manner.

Alegre wanted to focus on the campaign’s effectiveness, rather than on its originality. He said the DOT succeeded in attracting nearly 1.8 million foreign travelers to the country in the first quarter of this year. “We should use social media to trumpet our massive investments in infrastructure, the DOT’s aggressive marketing efforts in selling the Philippines abroad, our efforts to expand airline routes and our success in lowering crime rate, which is good for tourism,” he said.

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Foreign pigs can’t sing John Mangun

OUTSIDE THE BOX

T

wo thousand-year-old Lazarus Long—a character in several Robert A. Heinlein science-fiction novels—gave this advice in Time Enough for Love: “Never attempt to teach a pig to sing; it wastes your time and annoys the pig.”

I feel the same way when talking to foreigners about the Philippines. In fact, were I the secretary of tourism, I would suggest as the slogan “You Don’t Know Jack About the Philippines.”

Most foreigners that have never been here get their knowledge about the country and our economy from the multilingual Filipino concierge at an exclusive boutique resort in Switzerland. They might have noticed that a Filipina is the nursing director at the US hospital they were treated at. But you can’t really blame them since all the global press wants to focus on is Duterte, drugs and deranged Islamic insurgents.

However, a social-media post by an American expat about the

Is a constitutional crisis in the offing?

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first-quarter economic growth was annoying—“Fake numbers from a failing country. Philippine companies cannot compete at all in the world market.”

Our knowledgeable friend moved to Australia and last year—according to his social-media posts—shipped his classic American car to his new home in Melbourne. What this “expert” on Philippine business apparently does not know is that the Victoria International Container Terminal in Melbourne is owned and operated by Filipino listed company International Container Terminals Inc. (ICT).

ICT operates 19 container ports outside of the Philippines, from Ecuador to Pakistan and China, and

in 2016 generated $1 billion of revenue. Not bad for a company from a country that cannot compete in the global markets. Strange how facts never get in the way of a negative narrative about the Philippines.

Note also that the combined profits of the 30 Philippine Stock Exchange index companies rose 12 percent in 2016. The profit growth of the 30 Dow Jones Industrial index companies for 2016 was 0.00 percent over the previous year. And this country is the one failing?

The Chinese snack-food business is worth $12 billion a year and private Philippine company Liwayway Marketing Corp.—through its “Oishi” brand—is No. 5 in sales. Oishi has 14 manufacturing plants in China. Here’s something interesting too. Oishi products are shipped from China to be sold in England— and maybe to our American friend in Australia.

The country’s agriculture sector grew 5.28 percent in the first quarter, but taking advantage of exporting Filipino fruits has not been easy, especially for companies other than the multinationals like Dole and Del Monte.

Public company Agrinurture Inc. has quietly expanded into China, as I have mentioned before. The key has

I

asked this question because Speaker Pantaleon D. Alvarez on June 8 warned that the Supreme Court can’t dictate Congress to hold a joint session to tackle the martial-law issue.

He issued the warning of a possible constitutional crisis as a result of several petitions asking the High Court to compel Congress to call a joint session to determine the factual basis of President Duterte’s declaration of martial law in Mindanao.

Chiding the petitioners, Alvarez said in the vernacular: “Balikan muna nila [petitioners] ang law books. How can the Supreme Court dictate Congress what to do?

“Coequal body ’yan. O, mag-issue ng direktiba ang Supreme Court telling Congress, dictating Congress na magconvene kayo ng joint session, punitin ko ’yan,” Alvarez said.

Alvarez said the petitioners have created a situation that could result to a clash between Congress and the SC. “Eh, talagang magkakaroon ng constitutional crisis. At hindi namin kasalanan ’yun,” said Alvarez, who is among the respondents named in the petitions before the SC. “Ipinasa ko na sa Office of the

Solicitor General [OSG]. At ang position natin doon walang jurisdiction ang Supreme Court d’yan,” Alvarez added.

The Speaker said he could not understand why the petitioners are insisting on a joint session over martial law in Mindanao.

He noted that both the Senate and the House of Representatives have already adopted their respective resolutions supporting the declaration of martial law in Mindanao.

“Ngayon mag-convene ka ng joint session, anong pag-uusapan natin? Alam na natin kung anong decision,” Alvarez explained.

“Siguro baka naman gusto nilang mag-grandstanding lang diyan sa joint session,” he said.

“Basta kami hindi susunod kung anong sabihin ng Supreme Court diyan dahil wala silang karapatan para diktahan ang Kongreso kung anong dapat naming gawin,” Alvarez added.

Last Monday Solicitor General Jose Calida, in a 45-page comment, asked

the SC to dismiss the three consolidated petitions questioning the legality of Proclamation 216 (martial law) for lack of merit.

Calida argued that declaring martial law was within the powers of Duterte, thus rejecting the petitioners’ argument of lack of recommendation from ranking defense and military authorities from the beginning.

The petitioners cited a reported admission by Defense Secretary Delfin N. Lorenzana before members of the Senate and the House of Representatives in a closed-door executive meeting that he had no prior knowledge about the declaration of martial law following the attack by terrorists on Marawi City on May 23.

It could be that Lorenzana was not told about the declaration of martial law by the President simply because he is not a member of the Chain of Command. The chain begins with the President as Commander in Chief of the Armed Forces, the chief of staff, the deputy chief of staff and all the commands down the line.

In fact, Calida articulated this when he said: “The recommendation of the secretary of national defense, or any member of the Executive department for that matter, is not a condition precedent to the President’s exercise of his power to proclaim martial law or suspend the privilege of the writ of habeas corpus.”

The OSG chief said the three consolidated petitions by opposition lawmakers, led by Albay Rep. Edcel

been to invest in a local Chinese distribution company with the existing infrastructure that is always costly and time consuming to set up for any foreign operation. To boost its sales, Agrinurture is looking to invest even more in that Chinese company to gain greater economy of scale and majority control.

Vladivostok, Russia, has about the same population as Parañaque City but is the home to the Russian Pacific Fleet with 23 submarines and six Air Wings. Three prominent Philippine cities—Davao, Cebu and Makati— call Vladivostok their “sister”. If a Russian submariner—while keeping a watch on the US Seventh Fleet off Japan—reaches for a banana, it probably has a “Produce of the Philippines” label. There is a good chance that banana is part of an Agrinurture export shipment.

The Philippine global economic reach is more than a construction worker in Dubai or a Jollibee in Winnipeg, Canada. But, unfortunately, pigs are never going to learn how to sing.

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Lagman; local Mindanao leaders, led by lumad (indigenous people) leader Eufemia Campos Cullamat; and a group of women from Marawi, led by Norkaya Mohamad, failed to prove grave abuse of discretion on the part of the President in issuing Proclamation 216.

“Quite the contrary, the proclamation is amply supported by facts that a rebellion does exist, and the public safety requires it,” Calida said, adding, “There is nothing arbitrary in this reliance, as the President—given his vast responsibilities as head of state, chief representative in foreign affairs and Commander in Chief of the Philippine Armed Forces—could not be reasonably expected to personally determine the veracity of all these reports.”

“The facts relied on by President Duterte for the issuance of Proclamation 216 sufficiently established the existence of a rebellion in Mindanao.

IS-inspired local rebel groups have taken up arms against the Philippine government for the purpose of removing Mindanao from its allegiance, and of depriving the Chief Executive of his prerogatives therein,” Calida said.

The SC en banc started on Tuesday its three-day oral arguments on the validity of the declaration of martial law, and is expected to finish it on Thursday. Crisis or no crisis, we will soon get the answer.

To reach the writer, e-mail cecilio.arillo@ gmail.com.

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Opinion

The world at cyber war

The food from heaven

BusinessMirror

Ariel Nepomuceno

Msgr. Sabino A. Vengco Jr.

DECISION TIME

Alálaong Bagá

A

mid the nuclear threat posed by North Korea, the rising tension between the United States of America and China over the issue on freedom of navigation at the South China Sea and the raging war on terror against the Islamic State of Iraq and Syria in Syria and Iran, there is another kind of war now raging globally where control and dominance at the front are not measured in terms of military power, but on computer wizardry.

Called cyber war, it is an Internetbased conflict involving politically and/ or economically motivated attacks on information and information systems.

Cyber-warfare attacks can disable official web sites and networks, disrupt or disable essential services, steal or alter classified data and cripple financial systems, among others.

On May 12 cyber warfare flared again, hitting most parts of Europe, Asia and the Americas with the tremendously damaging ransomware, WannaCrypt, which targets out-ofdate Windows devices as it stops you from using your PC by holding all files unless ransom is paid. Specifically, ransomware, which can target any personal-computer (PC) user, whether its a home computer, endpoints in an enterprise network or servers used by a government or health-care provider, can prevent you from accessing windows, encrypt files so you can’t use them and stop certain apps from running, like your web browser, among others. Ransomware will demand that you pay money as “ransom” to get access to your PC or files again.

Ransomware is classified into two types, the lockscreen and the encryption. The lockscreen ransomware will show on your computer monitor a message that you need to pay money as “ransom” before you can access your PC again., while the encryption ransomeware will change your files so you can’t open them, unless you also pay a “ransom”.

PC users beware

Ransomware can inflict computers from almost any source that any other malware or viruses can come from, like visiting unsafe, suspicious or fake web sites, opening unknown emails and e-mail attachments, clicking on malicious or bad links in e-mails, Facebook, Twitter and other socialmedia posts and instant messenger chats, like Skype.

Once infected with ransomware, it would be very difficult to restore your computer to its old shape.That is why it would be best for PC users to be very extra careful with the use of the Internet. Be on the lookout for fake e-mails and web pages. Oftentimes, these emails and web pages have poor spelling and punctuation marks, like instead of “PayPal”, it is misspelled as “PayePal”.

Don’t click on a web-page link, an e-mail or a chat message, unless you trust the page or sender. And most important, if you’re unsure of the message or the web page, don’t click at all.

The global cyber attack

Considered as the world’s biggest cyber hit, ransomware’s recent attack affected at least 150 countries.

It affected over 300,000 computers in just a matter of days from its breakout. The victims included hospitals, manufacturers,universities and government agencies in countries, like Britain, China, Russia, Germany and Spain. And the list is growing. Even global companies have been targeted by ransomware.

In China, according to its staterun media, some gas stations experienced digital-payment shutdown, forcing customers to pay cash for their transactions. In Germany, the German railway company’s passenger information displays in some stations were left inoperative, together with its ticket machines.

In Japan, a globally known manufacturing and shipbuilding company, reported having problems receiving e-mails and opening its attachments.

In the UK, at least, 16 National Health Service providers were affected, prompting the UK government to call for a meeting of its Crisis Reponse Committee. While India reported that in the state of Andhra Pradesh, 25 percent of its system was hit by the attack.

And in the Philippines, while we have not been gravely affected by the ransomware attack, the Bangko Sentral ng Pilipinas, nevertheless, issued an order to Philippine banks to boost the defenses of their system, amid the ransomware crisis that has already affected a large part of the global community.

A PC-dependent world

The global community is mostly linked with each other, 24/7 and at real time, by the Internet. And at any given time, billions or even trillions in information kilobytes crissross the cyber space closing billions of dollars worth of business transactions, keeping separated families together and even clarifying issues of global security concerns.

There is no doubt the Internet will continue to influence our lives and the lives of the coming generations, as well.

So it would be best for PC and Internet users to be very careful with their gadgets and the Internet, especially now that the world is under attack.

For comments and suggestions arielnepo.businessmirror@gmail.com

O

ur spiritual growth and development, the focus of the Ordinary Time in our Liturgical Year, gets an initial boost in the Solemnity of Corpus Christi, Christ’s Body and Blood as our extraordinary sustenance. The gospel text (John 6:5158) gives us a portion of the “Bread of Life Discourse” in the Fourth Gospel about the primacy and significance of Jesus Christ in the life of the faithful.

I am the living bread from heaven Five thousand men in the desert have eaten their fill. The original helplessness of the situation was staggering: a vast hungry crowd, in the wilderness where so much food was not conceivable, and with only the paltry five loaves to start with.

But Jesus fed them all and still had 12 wicker baskets of left-over. The enthusiastic crowd then moved to follow Jesus, who withdrew Himself from them across the Sea of Galilee. He escaped from them, for He knew they

wanted Him as king because of their perennial need for food for the body.

“You are looking for me...because you ate and were filled,” Jesus said confronting them.

He pointed out they should strive and work, not for “food that perishes” but “for the food that endures for eternal life” (John 6:26-27). Their exertion to locate Him for perishable food is really not worth it; they must, instead, search for the one on whom the seal of God has been set, the Son of Man, who, alone, gives eternal life. Attention is now con-

ISIS in our midst Val A. Villanueva

Businesswise Conclusion

W

ith sporadic gunfire and bomb explosions in the background, the city of Marawi struggled to return to a state of normalcy on Monday, June 12, amid chaos and devastation, as it simultaneously held emotional flag ceremonies at the provincial capitol and city hall.

It was the first time that the Philippine flag was hoisted since fighting between the Maute-Abu Sayyaf Group and the Philippine military erupted on May 23, and even as the United States P-3 Orion surveillance plane circled the town to pinpoint the enemy’s exact location.

The US has since provided help, which it says the Philippine government sought, but which a clueless President Duterte denies asking for.

His communications group wriggled to put a spin on the confusion, saying that any help from foreign neighbors is very much welcome since terrorism is a global problem.

For the past three weeks, the military has been fiercely fighting to reclaim Marawi City from the Islamic State of Iraq and Syria (ISIS)-inspired terrorist group. Deadlines have been unmet, with the Philippine soldiers forcing their way to extricate the enemy, house-to-house and man-to-man.

On June 9, Friday, 13 Marines perished in a ferocious battle with Islamist militants who had infested fragments

of southern Marawi City, bringing to 58 the number of dead government troops, with 138 militants and 20 civilians also among the deceased.

The ISIS-inspired insurgents have, thus, far endured more than two weeks of air and ground bombardment by security forces, even if they only control 10 percent of the city, according to the military’s own estimate.

Among the topics in the recent Singapore security conference is the fear that cities or places, like Marawi, could become a new base for the Islamic State groups, which have been losing ground in the Middle East.

Says Singapore Defense Minister Ng Eng Hen, “…If not addressed adequately [the Marawi siege] could be a pulling ground for would-be jihadist.”

ISIS fighters fight blindly. They are highly motivated by transforming the world into a caliphate where only pure Muslim practices are allowed, and Christians and other faiths have to convert or die. They have fighters who are so pumped up that dying means orgasmic

Taxable status of ADB Filipino employees Atty. Pierre Martin Reyes

Tax Law for Business

R

elying on the tax-exemption provisions of the Asian Development Bank (ADB) Charter Agreement and the ADB Headquarters Agreement and in the absence of an express and unequivocal Bureau of Internal Revenue (BIR) issuance on the matter, ADB Filipino employees did not pay income tax since its establishment. This changed when, on April 12, 2013, then-Commissioner of Internal Revenue (CIR) Kim Jacinto-Henares issued Revenue Memorandum Circular (RMC) 31-2013, which provides, among others, that only non-Filipino ADB employees are exempt from Philippine income tax.

Certain Filipino ADB Employees then assailed RMC 31-2013 before the regional trial court (RTC), which, at that time, still had jurisdiction over the validity of BIR issuances. The RTC declared the provision that only exempts non-Filipino ADB employees as void. Although

the ADB Filipino employees won at the RTC level, litigation would continue on to the Court of Appeals and finally to the Supreme Court (SC), which has the final say on the issue.

Considering, however, that certain Filipino ADB employees have already

paid their income taxes in compliance with RMC 31-2013, they had only within two years from the date of payment of the tax to file a claim for refund pursuant to Section 229 of the Tax Code. Hence, certain Filipino ADB employees filed their respective refund claims giving occasion to the Court of Tax Appeals (CTA), now vested with jurisdiction, to rule on the validity of RMC 31-2013.

In CTA Case 9075 promulgated on February 9 and CTA Case 9041 promulgated on February 24, both by the CTA First Division, the Court opined that the RTC decision declaring the provision that only exempts non-Filipino ADB employees as void is not binding precedent. This means that the CTA can arrive at ruling contrary to the RTC decision. So it did.

The CTA ruled that Filipino ADB employees are subject to income tax.

While the ADB Charter provides a tax-exemption provision, the same contains a proviso where a membercountry may retain its right to tax its citizens or nationals, provided a declaration was made. Similarly, the ADB Headquarters Agreement also

declares that the same is subject to the power of the member-country to tax its nationals. The Court found that the Philippine government made such a specific declaration when it ratified and confirmed the ADB Charter.

Elsewise stated, the provision of RMC 31-2013, which states that only nonFilipino ADB employees are exempt from Philippine income tax, is valid.

The same conclusion was reached recently in CTA Case 9081 promulgated on June 8 by the CTA Second Division, making it highly probable that the CTA en banc, will affirm the taxable status of ADB Filipino employees. The difference, however, of CTA Case 9081 with the previous cases, is that the Court (with one justice dissenting) granted a partial refund on the basis of Section 246 of the Tax Code that provides that no issuance of the CIR shall be given retroactive application if the revocation, modification or reversal will be prejudicial to the taxpayer. As RMC 31-2013 took effect only on May 2, 2013, incometax payments made prior to said date should be refunded. On that regard,

Thursday, June 15, 2017 A11

centrated on Jesus; insistently and solemnly He declares: “I am the living bread that came down from heaven; whoever eats this bread will live forever.”

The bread i give is my flesh The whole discourse leads to this surprising claim. Jesus is personally the bread, the living bread for the life of the hungry world. The reaction of the crowd indicates they understood Him in an immediate realistic sense, as Jesus meant to be understood. “How can this man give us his flesh to eat?” This man from Nazareth, the Son of God come down from heaven, “became flesh and made His dwelling among us” (John 1:14), and now He offers His flesh as bread, food for eternal life. The reality of His humanity and faith in the incarnation are the basis for the realism of and faith in the Eucharist: Jesus as the bread of eternal life. Jesus has offered His life for the life of the world.

With all His authority, Jesus insists: “Amen, amen, I say to you, unless you eat this flesh of the Son of Man and drink His blood, you do not have life within you. Whoever eats my flesh and drinks my blood has eternal life.... For my flesh is true food and my blood is true drink. Whoever eats my flesh and

release in the arms of 72 virgins.

But nowhere in the Islamic faith can we find reference to 72 open-mouthed sex deities welcoming the “martyrs” who killed “infidels” in the name of Allah, or the word “suicide” (intihar in Arabic), which has become synonymous with martyrdom. Such belief was planted over one oral tradition by Imam Tirmidhi, who cunningly fashioned the “72 virgins” that has now become the rallying cry of radicalized and misled Muslim men.

How can we fight ISIS soldiers who are not afraid to die? It should not make Defense Secretary Delfin N. Lorenzana wonder why ISIS will fight to the last man. The late Osama Bin Laden—whose Al-Qaeda group, he once headed before he died, could be a saint compared to ISIS—once said: “We love death like you love life.”

ISIS is a killing machine. It has torched cities it has overran, raped women and beheaded Christians and fellow Muslims who would not bend to their command. We all saw the terrifying destruction it has caused in Iraq and Syria, and the ruthlessness by which it carries out the carnage. This is partly what we are witnessing now in Marawi.

The defense establishment should carefully weigh what observation from Indonesia’s Gen. Ryamizard noted during the three-day Singapore Summit that was also attended by US Defense Secretary James Mattis: “The terrorism threat in this region has evolved into an unprecedented immediate level of emergency…The death group’s area of operation has gone global.”

We should never put our guard down.

A question of jurisdiction

drinks my blood remains in me and I in Him.” Any metaphorical or allegorical interpretation here is preempted by this repetition of the words: eat, drink, flesh, blood and food. The evangelist’s choice of these unusual words indicating to chew or munch the immediate physicality of Jesus (sarx in Greek) precludes any false spiritualization.

Alálaong bagá, in our celebration of the Lord’s Supper, that meal in which He feeds His own and gives them His body and blood for their life of communion with Him, is real eating and drinking of real food. Risen and glorious, Jesus now makes Himself available to the world in the sacraments of bread and wine, transformed in the power of the Holy Spirit into His own Body and Blood. And so, in the Eucharist, Jesus is our food and life nourishment, literally sharing with us the eternal life that the Son has in communion with the Father. This life of communion and intimacy with Jesus is what salvation is all about, proclaimed, celebrated and shared in the Eucharist.

Join me in meditating on the Word of God every Sunday, from 5 to 6 a.m. on dwIZ 882, or by audio-streaming on www.dwiz882.com.

This is the dilemma confronting Gov. Amor Deloso of Zambales who has hired a private mining firm to clean the province of nickel ores as mandated by the provisions of Republic Act (RA) 7160, or the Local Government Code of 1991. RA 7160 empowers the provincial governor to implement emergency measures to lessen the impact of natural and man-made calamities and disasters. This law devolves the regulation of small mining from the Department of Environment and Natural Resources to local government units (LGUs), virtually promoting a revolution in local governance.

According to the Mines and Geoscience Bureau (MGB), the Zambales provincial government should not get rid of these dangerous nickel ores, based on an EO—Section 10 of Department Administrative Order 2012-07, or the implementing rules of EO 79 dated July 6, 2012.

Deloso argues that RA 7942, or the Philippine Mining Act of 1995, has sustained the devolution of small mining operations to LGUs by mandating the creation of the Provincial Mining Regulatory Board, which would formulate policies on small mining operations in every province.

He says the Zambales provincial government wants to remove the nickel ores because they pose hazards to communities, farmlands and water systems, particularly during the rainy season.

In stopping the hauling of these pollutants, is the MGB leadership acting with grave abuse of discretion that is punishable under the Anti-Graft and Corrupt Practices Law?

Should an executive order (EO) prevail over two major laws with legislative fiat?

For comments and suggestions, e-mail me at mvala.v@gmail.com

CTA Case 9081 conflicts with CTA Case 9075 and CTA Case 9041.

In CTA Case 9075 and CTA Case 9041, the CTA held that the taxability of the income received by ADB Filipino employees is not dependent on the validity or invalidity of RMC 31-2013, as the same is based on existing provisions of the Tax Code in relation to the treaty and/or agreement between the Philippine government and ADB. Thus, beginning the taxable year of their employment with ADB, said Filipino ADB employees are obliged to pay income tax.

This was further elaborated in the dissenting opinion of Justice Castañeda in CTA Case 9081 where he stated that RMC 31-2013 was issued merely to construe existing provisions of the Tax Code in relation to existing treaty obligations, and not to impose additional burdens not found under the law.

In essence, while Section 246 of the Tax Code indeed provides that a reversal of a general interpretative rule issued by the CIR cannot adversely prejudice a taxpayer who, in good faith, relied on such general interpretative rule prior to its reversal, what general interpretive rule

is being relied upon by the ADB Filipino employees? As pointed out by the CTA, it is surely, not the letter-opinion of a regional director.

In light of the various CTA cases discussed above, all is not last for the ADB Filipino employees. Just as the RTC decision may not be considered as binding precedent, the same is likewise true of CTA decisions when appealed to the SC. While entitled to great weight, CTA decisions can be reversed by the SC. After all, in our system, the SC is the final arbiter of any justiciable controversy. It has the last word on what the law is.

The author is a senior associate 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 pierremartin. reyes@bdblaw.com.ph or call 403-2001 local 311.

2nd Front Page BusinessMirror

A12 Thursday, June 15, 2017

www.businessmirror.com.ph

US reaffirms support to PHL military T

By Rene Acosta

@reneacostaBM

he United States military has reaffirmed its commitment to help the Armed Forces of the Philippines (AFP) deal with security challenges, including terrorism, where US Special Forces are now helping Filipino troops in fighting the Maute Group and Islamic State terrorists in Marawi City by providing technical support.

The reassurance of support was made by US Pacific Fleet Commander Adm. Scott Swift during his three-day visit to the country, as security forces battle the terrorists in their efforts to clear the city, with US troops supporting

the Filipino soldiers by conducting intelligence, surveillance and reconnaissance operations.

“The Philippine Navy is a valued and enduring ally of the US Navy and a close partner of the Pacific Fleet,” said Swift in a statement

released by the US Embassy in Manila. “I’m very pleased to have had the opportunity to visit with senior government and military leaders here in Manila. We continue to build on the strong relationship we have and to reaffirm our commitment to working together to face shared challenges,” he added.

Recently, the US military turned over firepower, including a Gatling machine gun, and equipment to the Philippine Marines, which Marine Commandant Maj. Gen. Emmanuel B. Salamat said would be sent to troops in Marawi City.

While in the country, Swift met with Foreign Secretary Alan Peter S. Cayetano, Defense Secretary Delfin N. Lorenzana, AFP Chief of Staff Gen. Eduardo M. Año and Navy Chief Vice Adm. Ronald J.S. Mercado.

During his talks with the officials, the top US military commander in the Pacific region

SWIFT: “We continue to build on the strong relationship we have and to reaffirm our commitment to working together to face shared challenges.”

stressed his command’s support in addressing shared regional security concerns, including counterterrorism and piracy, while highlighting the strong defense ties between the US and the country.

Swift’s visit ended on Wednesday. The embassy said that, as part of the security partnership, the US supports the Philippines in its efforts to strengthen national defense and improve its ability to respond to natural disasters, terror threats, piracy and other transnational crimes.

Meanwhile, the investigation

into the recent friendly fire that killed 13 soldiers who were among those battling terrorists in Marawi City has been finished, but a top military official refused to divulge its details, although it recommended “some actions by the major services”.

According to the AFP inspector general, Maj. Gen. Rafael Valencia, the board of inquiry formed to look into the incident has already submitted its findings to the chief of staff.

“We already submitted it to the chief of staff,” Valencia said. “I know he has it already.”

Valencia refused to go into the details of the report, which was submitted last Friday, as it will have implications on the ongoing operation in Marawi City.

Meanwhile, Presidential Adviser on the Peace Process Jesus G. Dureza has urged stakeholders to work on relationship building in healing the wounds and divisions brought

about by the armed conflict.

“I always say this before, and even now, I can build easily the [physical] structures destroyed by the [armed] conflict. I can also build the school buildings that were burned down. But building of the relationships, bringing back social cohesion and mending the torn social fabric brought about the conflict takes time. The healing takes time,” Dureza said in his speech during the celebration of the country’s 119th Independence Day. Dureza emphasized the very important process of healing, amid the crisis in Marawi and the continuing recovery of Zamboanga City, which was also a site of a bloody siege in 2013.

He noted that indications show that Zamboanga “is now moving forward. The city is already building torn relationships.” With Recto Mercene, Claudeth Mocon-Ciriaco

PHL mulls over return to samurai bond market

T

Biz men, unicef work for kids’ rights The United Nations Children’s Fund (Unicef), in partnership with the Makati Business Club (MBC), launches the Children’s Rights and Business Principles among members of the Philippine business community. Present during the launching are (from left) H&M Asia Regional Sustainability Manager Wong Xin Yi, SM Supermalls President Annie Garcia, Unicef Philippines Representative Lotta Sylwander, MBC Chairman Edgar Chua and Philippine Chamber of Commerce and Industry President George Barcelon. The launch was held at a hotel in Makati City. ALYSA SALEN

he samurai bond market may be getting a little ninjalike appetite for risk.

After a dearth of higher-grade yen-denominated securities earlier this year, investors snapped up lower-rated bonds sold by Credit Agricole SA and Indonesia in recent weeks. The Philippines is also considering a return to the market for the first time since 2010.

A lot’s changed since the Philippines last came to this market.

For one thing, it’s now on the investment-grade ladder, two steps above junk. Back in 2010, it sold its samurais with a stateowned Japanese bank guarantee. And with rock-bottom yields from domestic issuers, Japanese investors are hungrier for marginal returns.

Another benefit for the Southeast Asian nation: interest rates for the strongest European banks are so low at home that selling in

samurais doesn’t make much sense —something that’s left a supply gap for buyers.

“Japanese investors used to be very conservative in terms of the credit ratings they buy,” said Akihiro Igarashi, an executive director at Nomura Securities Co.’s syndication department in Tokyo. “In this negative yield environment, they have to change their investment style by, for example, widening their credit horizon.”

Indonesia sold ¥100 billion ($908 million) of samurai bonds on May 31 after S&P Global Ratings upgraded the nation to investment grade from junk.

The Philippines is examining a return to the samurai market among “cost-efficient financing options” to diversify its investor base and meet funding needs, Treasurer Rosalia de Leon said last week.

See “PHL,” A2

The Asean economic community-hood: Still a work in progress Continued from A1

Ironically, two-and-a-half decades after, the “socialist” states in the region —Cambodia, Lao PDR, Myanmar and Vietnam—became members of the Asean.

By then, the Indochinese wars were over and all the four countries had embraced “market opening” reforms. Earlier, in 1984, the tiny but wealthy oil state of Brunei Darussalam joined the Asean.

Not surprisingly, the overwhelming focus of the Asean 10 since the 1990s has been the promotion of regional economic cooperation and integration.

A series of economic complementation projects in select industries were adopted in the decade. Then, in 2007, the Asean raised its economic integration ambition by adopting a blueprint or road map for the formation of the Asean Economic Community (AEC) by 2015. Under the AEC 2015 blueprint, the Southeast Asian region would become one single market and one production base characterized by the following: ■ free flow of goods ■ free flow of services ■ free flow of investment ■ free flow of capital ■ free flow of skilled labor On the free flow of goods, the primary integration instrument is the Asean Free Trade Agreement (Afta), which has been in place since the mid-1990s. The liberalization of intra-Asean trade under the Afta program was accelerated with the adoption in 2007 of the trade-facilitating Asean Trade in Goods Agreement, the completion of the Asean tariff harmonization program and the introduction of other trade-boosting measures, such as the Asean “single window system” (to smoothen the entry of Asean goods in

each country’s customs doors). Thus, as of 2010, the Asean proudly claims that import duties for 99.65 percent of the total tariff lines of the original Asean 6 (Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand) had been abolished or reduced to zero. The figure for the CLMV 4 (Cambodia, Laos, Myanmar and Vietnam) was 98.86 percent of all tariff lines, or zero percent to 5 percent as originally conceived for the whole of Asean.

On services, investment, capital and skilled labor, the Asean has instituted key liberalization programs, such as the Asean Framework Agreement on Services, the Asean Investment Agreement, Asean capital market development and the issuance of employment passes for professionals and skilled labor.

Had the Asean then become one seamless regional economy in 2015 in accordance with the original AEC blueprint?

The answer is a clear no. The year 2015 passed by without any formal Asean announcement that the region is now fully integrated. What happened instead is the replacement of AEC 2015 by a new AEC blueprint, the AEC 2025, which seeks to consolidate the various liberalization programs initiated under AEC 2015. Also, the Asean member-states balked at the speed by which the most important segment of the economy, financial services, would be opened up. Thus, the financial-integration target was postponed to 2020 and the Asean member-states were given elbow room to calibrate the adoption and implementation of banking liberalization measures based on their respective national development priorities. Obviously, the Asean member-states have learned a painful lesson on the danger of unregulated financial

deregulation from the devastating 19971998 Asian financial crisis and the 20082010 global financial crisis.

But a more important explanation for the nonrealization of fuller economic integration is the gap between regional policy agreement and its interpretation and implementation at the national level.

W­hat the Asean has instituted are measures to help open up or liberalize the Asean economy through the freer trading of goods and services and the freer flow of capital within the region. Such measures do not automatically transform the Asean into one integrated Asean economy.

This is easily seen in the stagnant growth of intra-Asean trade, which has remained at roughly 25 percent since the mid-1990s (See Table 1) compared to over 60 percent for the intra-European Union trade (now covering 25 European countries) or 50 percent for the intra-North American Free Trade Agreement (Nafta) involving the United States, Canada and Mexico.

The individual Asean member-countries do more trade with the non-Asean trade partners such as China, Japan, South Korea, the European Union and the United States.

Table 1.

Intra-Asean trade

Year

Percent

1985

20.3

1990

18.9

1995

24.1

2000

24.7

2005

24.9

2010

25.4

2012

24.3

Source: Asean Statistics (downloadable at http://www.aseansec.org)

Another reality: Asean is composed of 10 countries at 10 different levels of development, whose economies are not exactly complementary to one another. Singapore has a per-capita GDP income of over $52,743 compared to Cambodia’s $1,198 per capita and the Philippines’s $2,850 (statistics of asean.org). Spread in between Singapore and Cambodia are the eight other Asean countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Thailand and Vietnam. One solution to this uneven development is to help the laggards close the gap by giving them resources to catch up. The problem is that the Asean has no resources to close these development gaps. Worse, some of the Asean countries are competing with one another, for example, in the production of export garments or in the assembly of electronic, auto and other industrial products. What is worrisome is that sustained growth in the more developed Asean countries, like Singapore and Malaysia, may mean sustained and widening inequality within the Asean bloc.

What further complicates the situation is that the Asean, in contrast to the program of the EU to build “Fortress Europe” (an economic bloc open within but protected against outsiders), has pursued regional integration through a system of open economic regionalism and unrestricted economic liberalization, with each member-country allowed to conclude free-trade agreements (FTAs) with other non-Asean countries. Thus, while the Asean has been concluding regional FTAs with the different nonAsean countries, the individual Asean countries are also forging bilateral FTAs with these non-Asean countries.

As a result, the Asean has generated a confusing number’s game— Asean+3 (China, Japan and South Korea), Asean+3+2 (Australia, New Zealand), etc.

Because of the foregoing, the Asean, according to the UNDP, has generated a “noodle bowl” of over 100 bilateral and regional FTAs. Member-countries have also pursued “unilateral”trade liberalization way above their trade liberalization commitments to the World Trade Organization (WTO, set up in 1995). For example, Indonesia, the Philippines and Thailand have lowered their tariffs largely in compliance with their commitments to the “structural adjustment programs” concluded with the International Monetary Fund (IMF) and the World Bank. Hence, the most-favorednation (MFN) or actual tariffs imposed by a number of Asean countries on a whole range of industrial and agricultural products are just slightly higher than the Afta tariffs and way below their bound commitments to the WTO. This partly explains why intra-Asean trade associated with “Form D” (which importers/exporters availing of the lower Asean tariffs fill up) constitutes a miniscule 5 percent of the total. In short, there is no incentive to use fully the Afta and its facilitating program called the Common Effective Preferential Tariff (CEPT) scheme.

At the same time, the free flow of goods under the foregoing trade liberalization programs (Afta-CEPT, unilateral and bilateral/regional FTAs) is somehow impeded in some Asean countries because of the so-called nontariff barriers (NTBs). The most common NTBs come in the form of product standards (the more standards imposed, the more difficult for products to enter a market) and technical/government regulations (for example,

customs rules). It appears that the most open Asean economies in terms of tariffs and regulations are also the most vulnerable to trade dumping and smuggling. On the other hand, Malaysia and Singapore have also low tariffs and yet are able to weed out unwanted imports through numerous product standards and strict technical regulations.

Overall, it is abundantly clear that the Asean still has a long way to go as an integrated and seamless regional economy. Nonetheless, however, it cannot be denied that the various integration and liberalization programs and measures have indeed opened up the Asean economy, both at the regional and national levels. These liberalization programs and measures have contributed to the substantial increase in trade from the 1980s to the 1990s. A bewildering array and diversity of products coming from the different Asean countries, the major Asean “dialogue partners” like Australia, China, Japan and South Korea and the traditional western trade partners (North America and Western Europe) now line up the supermarket shelves and shopping malls across the Asean region. Asean consumers have virtually unlimited product choices.

There has also been increasing intraAsean travel among government officials, businessmen and tourists of the different Asean countries, not to mention the everincreasing flow of migrant workers circulating within the Asean. This is facilitated by the non-visa requirement for Asean travelers (usually good for 21 days) and the cheaper air travel due to increased competition in the aviation industry.

Overall, however, the Asean economic integration program is still very much a work in progress.