Businessmirror june 16, 2016

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“He doesn’t get it, or he gets it better than anybody understands. It’s one or the other. And either one is unacceptable.”—Donald Trump, in an interview on the Fox News Channel on President Barack Obama’s handling of terrorism. AP

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Thursday, June 16, 2016 Vol. 11 No. 250

LAWMAKERS COLD TO PROPOSALS TO INCREASE CONSUMPTION TAX

VAT hike faces rough sailing in 17th Congress

By Butch Fernandez & Jovee Marie N. dela Cruz

From the moment of creation

WORD & LIFE, FR. SAL PUTZU, SDB AND LOUIE M. LACSON, HFL Word&Life Publications • teacherlouie1965@yahoo.com

Editor: Gerard S. Ramos • lifestylebusinessmirror@gmail.com

Life

REELING: ‘THE CONJURING 2’: HAVING FUN WITH FEAR D3

BusinessMirror

Thursday, June 16, 2016

@joveemarie

awmakers on Wednesday vowed to oppose the plan of the next administration to increase the value-added tax (VAT) to 15 percent, saying this would further erode the purchasing power of Filipinos.

Asilah, morocco, offers authentic seaside getaway D

@butchfBM

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INSIDE

EAR God, You manifested Your love for all human beings in so many ways from the moment of creation. But it was especially in Your Incarnate Son, Jesus Christ, that You revealed all the depth, height, and unfathomable richness of Your love for each human being and humankind as a whole. It was the loving kindness of Christ that attracted the crowds by the thousands, and which transformed the 12 rough, ambitious and quarrelsome disciples into apostles of the Gospel of salvation, transformed by the light of the teaching and example of Jesus. Amen.

Now is the time to do a thorough review before taking the big step that would raise the VAT rate.”

—Angara Rep. Romero S. Quimbo of the Second District of Marikina, chairman of the House Committee on Ways and Means in the 16th Congress, said raising the 12-percent VAT Continued on A2

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ENJOY A DIFFERENT WAY OF TRAVELING

EXPLORING the Philippines’s many gorgeous islands has never been easier.

Whoever you’re traveling with over the course of our seemingly endless—family, friends, even on solo— adventure, FastCat is on point for convenience, speed and comfort when visiting the hottest destinations in the country.

With new catamaran vessels that are faster and safer than ever, FastCat (www.fastcat.com.ph) is bridging distances with routes to exciting places, such as Mindoro, Caticlan, Batangas, Sorsogon, Iloilo, Bacolod, Samar, Leyte and Surigao. Best of all is that travelers can load their car on the ship for hassle-free transportation once reaching your chosen vacation spot. All types of vehicles are, in fact, FastCat customers. By partnering with JAM and Philtranco buses, commuters traveling to the provinces are provided with a more seamless experience via its roll-on, roll-off operation owned and managed by FastCat. Summer or not, make sure to explore the amazing destinations in our own country and discover the true meaning of Pinoy pride.

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A BLUE window on the side streets of Asilah presents a fun photo op for passersby.

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A HORSEDRAWN cargo cart in Asilah, Morocco, stands ready for product transportation outside a local shop.

❸ A LOCAL

woman operates her produce stall with a smile and plenty of fresh vegetables.

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A DONKEY takes a break by the side of the road in rural northwest Morocco.

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A SEASIDE view of Asilah’s historic medina shows architecture from multiple periods.

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Asilah, Morocco, offers authentic seaside getaway STORY & PHOTOS BY MYSCHA THERIAULT Tribune News Service

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ESS than a one-hour train ride from Tangier along Morocco’s northern Atlantic coast lies the breezy seaside town of Asilah. Part of the landscape for more than 3,000 years, it offers an authentic Moroccan experience with a Mediterranean vibe.

There are several things to appreciate about the destination, including affordability, the freshness of the food and an extremely comfortable climate.

Regarding those things that make Asilah unique from a tourism perspective, the following are a few of my personal favorites.

■ Art: In addition to the typical shopping stalls filled with locally produced souvenir items and garments, travelers who look closely will see the trimmings of a true art scene. Small galleries have popped up, the results of international mural-painting festivals adorn the interior medina walls and street artists selling pieces created with recycled materials add to the town’s unique flavor.

■ Architecture: With ancient elements dating back to Phoenician times, a history that includes being a former Spanish territory and traditional Moroccan elements everywhere you look, the historic section of the town offers a fair bit of photographic eye candy for avid excursionists. Exploring the narrow streets inside the fortified walls of Asilah proper will lead you past the countless colorful, creatively decorated traditional doorways that are a matter of local pride.

■ Access: Not only does Asilah allow you to experience the seaside away from the hustle and bustle of Tangier, it’s location also allows you to easily explore the local farm country and other area antiquities. One such antiquity is the giant stone circle of Msoura. Located outside of town amid local farms and set in a countryside that could have you easily believing you were in southern Spain, the site is believed to be a funerary monument of some sort. In addition to being able to experience the site itself, the

view from the top of the center mound is spectacular.

Visiting here in late spring prior to the summer onslaught will ensure a peaceful and reflective visit, and a pleasant drive. In fact, we had the entire place to ourselves. While there appears to be no official ticket office, modest gratuities are appreciated by whichever local person is available to open the access gate for you when you arrive. Since Msoura is a relatively quick stop, you can easily extend your morning road trip to the Roman ruins at Lixus. With new archaeological excavations scheduled to take place, and further work having been done in the recent past, they offer an easy one to two hours of exploration time with more to come once future digs have been completed.

Spectacular views accompany this antiquity site, as well. If you want to experience true local culture, however, consider heading to the weekly Sunday market just outside of town. It’s the largest one in the area, and offers the majority of what any local would need. From livestock and rows of farm-fresh produce tables to flea market offerings of everything from cooking pots to random bits of hardware, this is true local commerce in all its earthy splendor. Be prepared to dodge groups of sheep trying to make their escape, cranky donkeys, family farm trucks and more to make your way to your desired wares. Food stalls offer fresh-grilled meats, hot bread and mint tea.

■ Authenticity: For as much as the population explodes during the summer with foreign tourists, spending a few weeks in Asilah during the off-season has shown me just how much of a community exists here. From the local dad walking his daughter and son home from martial-arts class in matching karate outfits, to the schoolchildren playing soccer in the streets and local grocery vendors checking with each other for inventory backup when they have a customer, this place is at heart a small town where people live their lives and raise their families.

One of the facets of this community I find most authentic is how much farm animals are still involved in the local transportation system. For all of the cars, taxis and daily train stops, donkeys with saddle bags

MAYETTE CASSANOVA (from left), Philippine Airlines (PAL) assistant vice president for loyalty programs; Kevin Hartigan-Go, PAL vice president for ancillary business; Reynaldo Maclang, Philippine National Bank (PNB) president; Bernie Tocmo, PNB executive vice president; Annie Umali, PNB Credit Cards head; Judith Dayrit, MasterCard Philippines vice president; Daday Joson, PNB vice president for retail banking group; and Ailea Zialcita, MasterCard Philippines vice president

GET THE TRIP OF YOUR DREAMS

full of cabbage and flat, horse-drawn carts carrying passengers and bags of rice still make up a large portion of local traffic. It’s an absolutely precious part of the local scene here I selfishly hope never changes.

■ Appetites: Savory meat tagines, couscous concoctions and mixed fresh seafood platters are the name of the game here. So are the fresh-squeezed juices and small breakfast menus that many cafés offer all day long. Fresh Moroccan bread comes with everything, and is nearly as much a source of pride as the ever-present mint tea.

In fact, when we tried to buy some from the local baker one night on our walk home, he wouldn’t sell us his two remaining loaves when he realized they had been sitting in the display counter longer than he’d thought. We would need to come back in the morning.

They are equally serious about their produce, as you’ll see if you book a place with a kitchen and need to access the daily market. Giant bundles of fresh mint for a buck, bags of mixed gourmet olives for 50 cents and fresh lemons by the crate are just some of the goodies you can expect to find.

When it comes to grabbing a basic traveler’s lunch at a local restaurant, you can do that anywhere and get a decent meal. However, if you are willing to walk a few streets away from the walled portion of the town, the average per plate price drops from around 6 bucks to an even more affordable $4. If you are a couple traveling with a teen, that means strolling a short distance will save you the cost of your third plate.

Also more common a few streets away are the family-run restaurants where sitting to eat your meal will let you witness grandchildren and nieces popping by to visit older relatives and Moroccan culture in general. If you have your heart set on being near the water with a view of the historic district, however, consider heading to Cafe Pepe. While their price point is a bit higher end, they offer good seafood, a decent cheese plate and access to paella without a prior reservation. They are also one of the only establishments in the area licensed to offer alcoholic beverages. You’re welcome. ■

CELEBRATING its centennial anniversary, Philippine National Bank (PNB, www.pnb.com.ph) and its credit-card division is about to make 100 of its clients enjoy the trip of their dreams.

Partnering with MasterCard, PNB Credit Cards marks its 100th-year milestone with the raffle promo “100 Winners in 100 Days,” where 100 lucky PNB MasterCard cardholders experience their dream destinations by winning 100,000 Mabuhay Miles each, all in 100 days.

“We thought it is timely for us to commemorate the 100th anniversary of our bank with a large-scale promotion that signifies our appreciation for our clients’ continued patronage,” PNB Credit Cards Head Annie Umali says.

“We want this to be very meaningful, not just for PNB but also for our cardholders, and we decided on indulging their passion for travel.”

From now until September 8, retail purchases made using your PNB MasterCard credit card automatically earns you entries to the raffle. There’s no minimum amount of spending required for the eligible transactions, which you can check on the PNB web site. With 100,000 Mabuhay Miles at stake per winner, cardholders should make sure they have a Philippine Airlines (PAL) Mabuhay Miles membership because their miles will be credited to this PAL account.

PNB’s airline cobrand partner and the country’s national carrier, PAL, will be flying the 100 winners to their selected destinations. According to PAL Vice President for Ancillary Business Kevin Hartigan-Go, “It’s our aim to enrich the travel experience for Filipinos, and the PNB-PAL Mabuhay Miles World and Platinum MasterCard remain to be among the country’s most prestigious and highly rewarding cards.

These offer low point-to-mile conversion, a welcome gift of 2,000 PAL Mabuhay Miles for new cardholders, and an additional 10,000 PAL Mabuhay Miles when new cardholders reach at least P100,000 spending at PAL within one year from the date issued.”

MasterCard, meanwhile, pampers winning cardholders with premium perks and privileges once they get to their choice destination. “Using your PNB MasterCard during your travels bring even more rewards,” MasterCard Philippines Vice President Judith Dayrit points out.

“We are pleased to partner with PNB to provide MasterCard cardholders with an exciting campaign promoting travel while celebrating PNB’s 100 years. It also provides an opportunity for the lucky 100 winners to travel to one of MasterCard’s Priceless Cities.”

LIfe

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NO PANIC FOR NOW Sports BusinessMirror

sports@businessmirror.com.ph

Thursday, June 16, 2016

The Associated Press

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AKLAND, California—Stephen Curry sat on the bench and buried his head in his hand. Fellow Splash Brother Klay Thompson wrapped a towel around his face.

This was misery for the Warriors and their fired-up fans, who made for the exits early during Monday’s 112-97 National Basketball Association (NBA) Finals loss to the Cavaliers that sent the series back to Cleveland for a Game Six on Thursday night.

They wanted so badly to do it for Draymond Green, do it for each other, and for their home crowd this time.

Instead, Golden State is going to Ohio again. One flight the Warriors surely would have preferred not to take at this road-weary stage of another extra-long season, but it will be well worth it if they hoist a second straight trophy when these NBA Finals finally end.

Their “Strength in Numbers” mantra was tested once more in a game that mattered so much. The Warriors lost at home for only the second time this postseason and fourth overall.

Yet, there’s no panic now for the defending champions after LeBron James and the Cavs forced at least one more game in what has become quite the testy rematch. The Warriors lead the series 3-2 and still have the upper hand.

“We’re all disappointed. We want to win,” guard Shaun Livingston said. “With the stakes being what they are right now, obviously it’s a gut punch. But it’s the finals. It’s not going to be easy. They’re not going to lay down. It doesn’t matter who’s on the court. We’ve got to play.”

Golden State will get a boost having emotional leader and All-Star forward Green back, after he sat out Game Five serving a suspension for a Game Four swipe at James’s groin.

Fans chanted “Free Dray-mond! Free Dray-mond!” and large cutouts of his face waved from all corners of Oracle Arena as he watched from a baseball suite next door in the Oakland Coliseum.

“You want to win here more than anything for your fans. They deserve

Golden State is going to Ohio again. One flight the Warriors surely would have preferred not to take at this road-weary stage of another extra-long season, but it will be well worth it if they hoist a second straight trophy when these National Basketball Association Finals finally end.

to see us win, but you just suck it up and move on,” Thompson said.

“We’re still in a great position.”

While Green returns for Game Six, the Warriors might be down big man Andrew Bogut. The 7-foot center sprained his left knee early in the third quarter on Monday and traveled with the team to Cleveland after undergoing further tests. An update on his status was planned for Wednesday, team spokesman Raymond Ridder said.

Bogut has been an imposing presence with his shot-blocking ability, but the Warriors have some depth at the position and often use a center-by-committee approach with Festus Ezeli and Marreese Speights, among others, such as Anderson Varejao, getting regular opportunities to contribute.

“If there’s a chance he’s out Thursday, our bigs are just going to have to step up. Been doing it all year,” Thompson said.

Defensively, the Warriors must find a way to keep James and Kyrie Irving from going off the way they did on Monday, with each scoring 41 points.

Not that the always-confident Warriors are overly concerned. They are a group that bounced back from every rare loss during a recordsetting, 73-win regular season.

Golden State is 14-1 following a defeat.

“We’re in the same place we were last year, up 3-2 heading back to Cleveland. If you told me this before the series, I would have taken it,” Coach Steve Kerr said. “So we’re in a good spot. We’re disappointed we didn’t win tonight, but, like I said, they outplayed us. They deserved the win. And we’ll go back to Cleveland and we’ll

play a better game for sure.” Golden State doesn’t have much further to fall after shooting a postseasonlow 36.4 percent—its first game below a 40-percent clip—despite getting 37 points from Thompson with six three-pointers and Curry’s

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A gasoline attendant assists passenger jeepneys at a gasoline station along Kamias Road in Quezon City. Raising the 12-percent value-added tax could increase the price of petroleum products and the cost of transportation. NONOY LACZA STEPHEN CURRY: You tip your hat to them. They had a great night. AP

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LEBRON JAMES almost singlehandedly makes it happen by dominating Game Five in too many ways to capture in a sentence, let alone a paragraph. AP

AKLAND, California—LeBron James had a simple mantra before Game Five, and he shared it publicly.

Win or lose, the Cleveland Cavaliers had to return home after playing Monday at Golden State. So why not win and force a Game Six on the Cavaliers’ court?

James almost singlehandedly made it happen by dominating Game Five in too many ways to capture in a sentence, let alone a paragraph.

He scored 41 points, took 16 rebounds and added seven assists in a game-high 43 minutes of a 112-97 victory that prevented the Golden State Warriors from winning a second consecutive championship.

Cleveland still trails in the NBA Finals, 3-2, and faces the steep challenge known as history: No National Basketball Association (NBA) team has ever successfully rallied from a 3-1 Finals deficit in 32 previous tries.

But James clung to his dream of bringing the Cavaliers the first NBA title of their 46year existence. He made 16-of-30 shots, flying past Golden State defenders on plenty of them, and hit four-of-eight attempts from three-point range.

His defense bordered on maniacal. He ferociously blocked two shots from behind

on Warriors fast breaks and disrupted Shaun Livingston’s fast-break dunk attempt, as well.

“We had a mind-set that we wanted to come here and just try to extend our [playoff] period,” James said. “I understood the magnitude of this game. I knew how great of a team we were playing.”

Cavaliers teammate Kyrie Irving was plenty sharp too, scoring 41 points to complement James in many ways, typically from the outside.

Irving made 17-of-24 shots (70.8 percent), accuracy usually reserved for a big night from a big man, not a point guard. He added six assists.

“Just Kyrie being special,” Cleveland Coach Tyronn Lue said.

Klay Thompson had 37 points for the Warriors, who clearly missed their most versatile player. Draymond Green sat out because of a one-game suspension after striking James in the groin in Game Four.

As such, Warriors fans chanted “Free Draymond” during time-outs on Monday and booed James whenever he touched the ball.

Warriors Coach Steve Kerr didn’t want to address much about Green, ending reporters’ what-if questions about the fine defender and well-rounded offensive threat.

“We’re not talking about that,” Kerr said.

“Draymond wasn’t here so we played without him. We didn’t play well enough to win. I’m not going into all that stuff.”

SPORTS

Outside The Box

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John Mangun

s the calendar is ready to roll over with every New Year, we see that same cartoon of a decrepit, usually sad-faced, man representing the old year and the smiling optimistic baby, which is the coming year. It is almost the same feeling as the Philippine president takes office with a new administration.

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health&fitness

Asean issues, retracts tough statement on South China Sea

B Electronics exports seen hitting $31B

LEBRON CLINGS ON TO HIS DREAM Los Angeles Times

President Rodrigo Duterte’s biggest economic problem

Continued on A10

25 with five trees. “You tip your hat to them. They had a great night,” Curry said. The Warriors are trying to close out the fifth championship in franchise history and third since moving out West from Philadelphia in 1962-1963.

Each of the last two since coming to the Bay Area have been clinched on the road—the first title in 40 years last June and also in 1975, when the Warriors won at Washington with a four-game sweep of the Bullets.

By Mike Bresnahan

P25.00 nationwide | 4 sections 28 pages | 7 days a week

We talk about the need for “continuity” from one administration to another, but the genuine continuity is that the challenges the nation faces are the same on July 1st as they were on June 29th. So the average Filipino tries to put on a brave smile, hoping that, this time, things will actually be different and better.

NO PANIC FOR NOW

By Janie Mccauley

“Inflammatory anti-Muslim rhetoric and threatening to ban the families and friends of Muslim Americans, as well as millions of Muslim business people and tourists from entering our country, hurts the vast majority of Muslims who love freedom and hate terror.”—Hillary Clinton on Donald Trump’s vow to impose a broad ban on immigration from areas of the world with a history of terrorism. AP

The Warriors are the ones facing some question marks now.

NBA Most Valuable Player Stephen Curry fell back from his stirring Game Four effort and missed 13-of-21 shots. He scored 25 points.

The Warriors will probably go forward without center Andrew Bogut, who suffered an undisclosed left-knee injury in the third quarter and had to be helped off the court. Bogut’s contributions aren’t as splashy as his Warriors’ teammates but his defensive presence can cause trouble for opponents.

Golden State, normally a topnotch threat from three-point range, missed 18 of 21 from behind the arc in the second half on Monday.

The Warriors get Green back for Game Six but if they lose on Thursday, the series is tied at three games each. Golden State would host Game Seven. Beyond James and Irving, there wasn’t much for Cleveland. Kevin Love, for example, returned to the starting lineup and had two points in 33 minutes in his second game back from a concussion.

It didn’t really matter.

James’s power and Irving’s grace were enough to silence a keyed-up Oracle Arena crowd that wanted to witness a clincher.

James returned to the Cavaliers two years ago in hopes of earning that elusive championship for them.

He still has a chance to do it, much more than was expected before Game Five.

By Catherine N. Pillas

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@c_pillas29

ew growth areas would allow receipts from electronics exports to reach as much as $31 billion this year, according to the Semiconductor and Electronics Industries in the Philippines Inc. (Seipi).

Seipi President Dan C. Lachica said the last time electronics tallied $31 billion in export receipts was in 2010. Lachica said the industry is on track to match its 2010 record this year.

“We had $31 billion in 2010, we had $28.9 billion in 2015. We had our peak in 2010 and it went as low as $22 billion in 2014, then we

PESO exchange rates n US 46.1890

recovered last year,” Lachica told reporters in a news briefing at the 13th Semiconductor and Electronics Convention and Exhibition, which opened in Pasay City.

Lachica said the increase in shipments will be driven by the industry’s shift to new growth areas, led by electronic-data processing, information and telecommunication electronics, consumer products and automotive electronics.

“We’re looking at how we can enable resurgence in the electronics industry, which still accounts for 58 percent of the country’s total exports, and a major contributor to the economy,” Lachica added.

He noted that semiconductor and electronics exports still exceed the

$2.25B The value of the country’s electronics exports in April

earnings of the business-process outsourcing sector and overseas Filipino workers.

Sunil Banwari, ON Semiconductor vice president for operations and Philippines country manager, said automotive electronics and industrial/ Internet of Things (Iot)-smart devices are “untapped areas of growth.”

Given these prospects, Lachica said direct employment is seen to See “Electronics,” A2

EIJING—The Association of Southeast Asian Nations (Asean) issued, then swiftly retracted a tough statement on tensions in the South China Sea that may have offended meeting host China, underscoring sensitivity over the increasingly heated territorial disputes in the region.

T he st atement f rom t he 10-nation regional bloc was issued on Tuesday night following a China-Asean meeting in the southern Chinese city of Yuxi, called in part to discuss tensions in the crucial waterway.

The group “cannot ignore what is happening in the South China Sea, as it is an important issue in the relations and cooperation between Asean and China,” the statement said.

“We express our serious concerns over recent and ongoing developments, which have eroded trust and confidence, increased

tensions and which may have the potential to undermine peace, security and stability in the South China Sea,” The Asean statement was issued

by Malaysia’s Foreign Ministry on Tuesday night to an online chat group, which also sent out the retraction. It was not clear whether an amended statement would be issued, although individual members, such as Singapore, had issued their own, mentioning concerns about the South China Sea. While the original statement made no direct accusations against China, it referred to sensitivity over land reclamation, in a nod to China’s creation of man-made islands and the building of airstrips and other infrastructure. The moves are widely seen as an effort to strengthen China’s claims to virtually the entire South China Sea by Continued on A2

n japan 0.4353 n UK 65.2142 n HK 5.9522 n CHINA 7.0019 n singapore 34.0979 n australia 33.9766 n EU 51.7779 n SAUDI arabia 12.3204

Source: BSP (15 June 2016 )

A2 Thursday, June 16, 2016

BMReports BusinessMirror

Asean issues, retracts tough statement on South China Sea Continued from A1

changing its actual geography and boosting forward troop deployments.

“We emphasized the importance of nonmilitarization and self-restraint in the conduct of all activities, including land reclamation, which may raise tensions in the South China Sea,” the statement said.

It is unusual for Asean to employ such strong language over any regional issue, given divisions within the 10-member grouping that includes four

countries—Malaysia, Vietnam, Brunei Darussalam and the Philippines— that directly claim South China Sea islands and waters that China considers its sovereign territory. China’s claim also overlaps with the exclusive economic zone of a fifth member, Indonesia.

The bloc also includes Cambodia and Lao PDR, smaller states over which China exercises considerable influence. They are seen as speaking for China over its insistence that territorial disputes be dealt with through bilateral talks between the nations

involved rather than between China and Asean as a whole.

China has rejected outside mediation in the issue, denouncing and refusing to take part in a case brought before an international arbitration panel by the Philippines, challenging the applicability of Beijing’s territorial claim under the United Nations Convention on the Law of the Sea. Chinese Foreign Minister Wang Yi had been at pains on Tuesday to emphasize consensus on the issue, although he ended up appearing alone

at a delayed news conference instead of alongside his Singaporean counterpart as expected.

While the incident involving the Asean statement wasn’t widely reported in China’s entirely state-controlled media, the official newspaper Global Times issued an editorial accusing foreign media coverage of manufacturing the controversy.

“Did Asean slap China’s face over the South China Sea? Western media crazy thinking,” the editorial’s headline read. AP

news@businessmirror.com.ph

Electronics. . .

Continued from A1

expand to 355,000 by year-end from the current 351,000.

Data from the Philippine Statistics Authority (PSA) showed that the country’s exports in April declined by 4.1 percent to $4.24 billion, from $4.43 billion recorded a year ago. The PSA attributed the decline in revenues to lower outward shipments of the three major commodities out of the country’s top 10 export commodities. These are articles of apparel and clothing accessories, chemicals, and machinery and transport equipment.

Electronic products remained as the country’s top export with total receipts of $2.25 billion, accounting for 53.1 percent of revenues in April. It increased by a mere 1.9 percent from $2.21 billion recorded a year ago.

Components/devices (semiconductors), which accounted for 38.2 percent of electronics shipments, declined by 2.6 percent to $1.62 billion during the period, from $1.66 billion in April 2015.

Data from the PSA showed that total merchandise exports for January to April registered a 7.3-percent decline to $17.36 billion, from $18.73 billion in the same period last year.

VAT hike faces rough sailing in 17th Congress Continued from A1

will hurt the poor. “We must make sure that any increase in VAT will not be regressive, that it’s not the poor that will get hit the most.

As it is, the poor gets hit the most

by VAT. We cannot allow this to happen,” Quimbo said.

Sen. Juan Edgardo M. Angara, who chaired the Senate Ways and Means Committee in the 16th Congress, said the country’s current VAT rate is already the highest in the region.

“Now is the time to do a thorough review before taking the big

step that would raise the VAT rate,” Angara said. “We can also review the list of exemptions from VAT coverage and identify the transactions that should no longer be exempted from VAT,” he added.

For his part, Sen. Panfilo Lacson said the administration of President-elect Rodrigo R. Duterte should give priority to reversing underspending before thinking of imposing higher taxes.

“VAT hits mostly the ‘hoi polloi’ being a consumers’ tax. Big business won’t mind since they will simply pass on the burden to the buyer,” Lacson said.

However, lawmakers said the 17th Congress could take up proposals for a VAT increase if it will be accompanied by a remedial legislation reducing income tax rates.

Sen. Vicente C. Sotto III said most senators, anticipating widespread negative public reaction to government tax hikes, would be more supportive of a give-and-take formula in the form of a companion tax-relief measure.

“The country’s income tax is at 32 percent. It would be more acceptable to the people if it would be reduced even if you raise the VAT,” Sotto told reporters at a Senate me-

dia forum on Wednesday.

Sotto said a panel of senators and representatives will meet with Duterte administration officials shortly after the 17th Congress convenes on July 25 to take up his proposal to lower income-tax rates.

“We’ll discuss that in the Ledac,” Sotto said, referring to the Legislative-Executive Development Advisory Council.

He added the congressional panel will also discuss the lower incometax proposal with the Department of Budget and Management.

“How much are we going to save if we lower income tax? There should

be a study on that. How much will the government collect if the VAT is raised? If the plan is only to increase VAT, then I’m against it,” Sotto said. For his part, Quimbo said lowering individual incometax rates is “long overdue.”

In the current setup, Quimbo noted that those earning P10,000 or less per month pay a 5-percent income tax, while those with yearly earnings of P500,000 and above pay a 32-percent income tax.

Among the 10-member countries of Asean, the Philippines has the highest tax rate at 32 percent, after Thailand and Vietnam.

The House of Representatives failed to pass a bill lowering individual and corporate-tax rates following the strong opposition of Malacañang to the tax-reform proposal.

President Aquino, citing the Department of Finance (DOF) and the Bureau of Internal Revenue, said the government “cannot put our fiscal sustainability and credit rating at risk by doing piecemeal revenue-reducing legislation.”

The DOF has said the proposal may cause the government to lose revenues totaling as much as 1.5 percent of the country’s GDP or P30 billion.

BMReports BusinessMirror

news@businessmirror.com.ph

Thursday, June 16, 2016 A3

Who has Duterte’s ear? ‘War’ over $13-B bid to build new Manila airport rekindled

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By Recto Mercene

@rectomercene

robably, banking on incoming President Rodrigo R. Duterte’s vaunted decisiveness to address and rid the country’s multifaced ills, the president of diversified conglomerate San Miguel Corp. (SMC), Ramon S. Ang, has bared plans to resubmit a proposal to the new Palace administration his bid for the construction of a new Manila airport in Manila Bay. Ang said in May that the feasibility study of the proposed airport conducted by the Japan International Cooperation Agency (Jica) is being finalized. And by his own estimate, the extension to the congested and aging Ninoy Aquino International Airport (Naia) would cost about $13 billion.

But even before Ang’s plans to build the futuristic airport on 800 hectares of reclaimed land in Manila Bay, Sen. Cynthia Villar shot down the proposal, again.

On March 16, 2012, Villar filed a petition for writ of kalikasan before the Supreme Court with support the majority of Las Piñas residents. She succeeded to stop the project with the backing of the Philippine Ports Authority (PPA) on the extent of disruptions that the project would cause to the seaborne traffic on the bay.

Two weeks ago, Villar issued a n appea l , t h rough t he me dia, addressed to the incoming Duterte administration to junk the revived proposal to reclaim a portion of Manila Bay near Parañaque City as site for a new international airport.

Villar reiterated her appeal following reports that reelected Parañaque Mayor Edw in Olivarez urged Duterte to push t h rou g h w it h t he pro p os e d $13-billion project.

A known advocate of environmental protection, Villar said the reclamation of Manila Bay will destroy the Las Piñas-Parañaque Critical Habitat and Ecotourism Area (LPPCHEA).

Villar lamented that the airport project was being resurrected after SMC’s proposal to build a new airport in Manila Bay did not push through during the Aquino administration.

Earlier, the Aquino administration commissioned Jica to undertake a study on where to build the airport that would complement the Naia. Jica came out with a proposal that this airport could either be in Sangley Point, Cavite, where there is an existing airport, or a reclaimed portion of Manila Bay. Jica said the Naia is expected to host 37.78 million passengers this year, already in excess of its capacity of 30 million yearly capacity. By 2040, passenger traffic is expected reach 101.49 million.

The Naia’s maximum handling capacity stands at 35 million passengers a year.

However, Jica cancelled the $13-billion Manila Bay airport study after PPA opposed the plan.

Transportation Secretary Joseph Emilio A. Abaya was quoted as saying that the PPA has argued that an international air port could obstruct the active shipping lanes on the bay. The former representative from Cavite said Jica was now looking at Sangley Point in Cavite and Laguna de Bay as

potential locations for the new international airport.

“The whole feasibility [study] for the new international airport would be completed in 18 months,” Abaya said.

Clark ’s Diosdado Macapagal International Airport, a favorite choice by proponents, had been scrapped because it is deemed too far away from Manila at nearly 100 kilometers. The proposed high-speed railway link that would connect Clark to Manila was abandoned, as well.

The high-speed rail’s cancellation was supported by the chief of Peregrine Development International Inc. (PDI), who says the claim about the need for highspeed rail to service Clark International Airport is nothing but a “folklore.”

Dennis Wright, president and CEO of PDI, told Rappler on February 18 that he wrote for the American Chamber of Commerce Philippines’s monthly Journal, wherein he tagged as “folklore” the claim about the need for high-speed rail to service Clark airport.

PDI is the initial developer of the $3-billion Sabah Al-Ahmad Global Gateway Logistics City at the 177-hectare area near the main gate of Clark Freeport.

Wright said the rail system— which was mentioned by three presidential candidates as a prerequisite to the full operation of the Clark airport—will not be beneficial to people using the airport.

“It actually benefits very few. It does not benefit one single person [among] the 23 million people in the Clark Catchment Basin, nor anyone in Region 4 or South of Manila nor anyone in the Visayas in Mindanao,” Rappler quotes Wright as saying.

The Clark Catchment Basin he was referring to includes Central Luzon, Ilocos Region, Cordillera Administrative Region, Cagayan Valley and Camanava (Caloocan, Malabon, Navotas, Valenzuela), which have better access to Clark airport than to the usually traffic congested areas surrounding the Naia in Parañaque City.

Wright claims that the Philippines “ruling class,” who insists on having a high-speed rail as a prerequisite to the full development and operation of the Clark airport, will not benefit from the project as most of them ride on chauffer-driven cars.

The chief of PDI said overseas Filipino workers (OFWs) and their families are also unlikely to use the high-speed rail, dragging their oversized balikbayan boxes and luggage to board the train.

“It is hardly likely that a large family wanting to greet a returning OFW or send one off to work [abroad] will gather at the train station for a trip to and from the

Migratory birds in Las Piñas-Parañaque Critical Habitat and Ecotourism Area. Nonie Reyes

The [proposed] Manila Bay airport project will cause massive flooding, and [is] detrimental to the environment and livelihood of 300,000 poor fishermen.”—Villar airport,” Wright said.

“Also, have you ever tried doing a bag drag and/or balikbayan boxes from an airport terminal to a rail terminal and on and off the train car to a taxi? While it can be done, it is not easy,” he added.

The American businessman said rail transportation is not necessary between the Clark airport and the Naia because airlines generally connect to routes between sister airports in the same area.

“For example, no one flies to Narita [Japan] and connects out of Haneda, or flies O’Hare [Chicago] and out of Midway. So passengers, in general, rarely need or would use a rail connection between the airports,” Wright said.

He said Clark International Airport should be developed as a major airport alongside the Naia.

Just like in most cities around the world, two or three major airports are needed to service locals and tourists, as the number of flights continue to increase, Wright added.

He cited the cases of Thailand that built a new airport some 30 kilometers away from the old airport; Japan, that built and operated Narita airport, some 60 km away from the older Haneda airport; and Malaysia, that built a new airport some 45 km from downtown Kuala Lumpur.

Sangley and Laguna de Bay has been chosen because these are about 25 to 30 minutes away from the Naia.

Parañaque Mayor Edwin L. Olivarez told the BusinessMirror that he welcomes the Jica study wherever they would decide to

locate the new airport.

Olivarez said any development that would accompany the new airport would benefit not only Parañaque and Las Piñas, but the surrounding cities, as well.

“Look, the Entertainment City is near the proposed airport development, and I am sure that [these] would complement each other to the benefit of nearby cities,” he said.

Wright added that the new air-

Philippine Amusement and Gaming Corp. in an 8 square kilometer land along Macapagal Boulevard, which is also adjacent to the Mall of Asia and other high-rise developments in the area.

SMC, which used to operate Philippine A irlines (PAL), returned the control of the airline to tycoon Lucio Tan in 2014.

According to the transportation department, the proposed airport would have an international and domestic passengerhandling capacity of 75 million passengers a year that could be ramped up to accommodate more than 100 million passengers.

It would be only 11 minutes away from the Makati Central Business District via a new airport expressway.

In her renewed appeal to block the airport project last week,

Let us welcome the new development, but my only appeal is for the authorities to take care, as well, the flora and fauna that might be affected and let us preserve what nature has given us.”—Olivarez port and the Las Vegas-like gaming and entertainment complex would create more jobs as both areas grew and become entwined through the years.

He added that Jica is an international firm of known reputation and would surely come up with a plan that would take care of all the supposed problems associated with it, such as flooding.

“Let us welcome the new development, but my only appeal is for the authorities to take care, as well, the flora and fauna that might be affected, and let us preserve what nature has given us,” Olivarez said.

The Entertainment City Olivarez was referring is operated by the

Vi l l a r sa id: “ T he [proposed] Manila Bay airport project will cause massive f lood ing , a nd [is] detrimental to the environment and livelihood of 300,000 poor fishermen.”

Under the plan, the proposed airport will make use of 157 hectares of Freedom Island, home and known breeding area of the Philippine Ducks, Chinese Egret and Black-Winged Stilts, all listed as vulnerable species, and 82 other wild-bird species from as far as China, Japan and Siberia.

About 1,000 of the BlackWinged Stilts of only 100,000 existing in the whole world can be found in the area.

Villar pointed out that, con-

trary to the claim of Olivarez, the Jica proposed the Sangley Point in Cavite and beyond as a viable site of the airport, and not Manila Bay in Parañaque.

She lamented that the airport project was being resurrected after SMC’s proposal to build a new airport in Manila Bay did not push through during the Aquino administration.

The lady senator also cited the 2002 ruling of the Supreme Court, which struck down the Public Estates Authority-Amari deal as “unconstitutional.”

T he r u l i n g s t ate d t h at pr i v ate compa n ies c a n not ow n reclaimed lands.

“Attracting tourists and investors should not be proposed at the expense of the constitutionally guaranteed rights of citizens for a safe and secure environment to live in,” Villar said.

LPPCHEA is a declared critical habitat and a protected area by virtue of Presidential Proclamation 1412 and 1412-A in 2007. It is the first critical habitat to be declared in the country. Covering around 175 hectares of wetland ecosystem, LPPCHEA consists of two islands — Freedom Island and Long Island.

In March 2013 it was also listed as a Wetland of International Importance by the Ramsar Convention because of the critical role it plays in the survival of threatened and restricted-range bird species. It is the only wetland in Metro Manila and in an urban setting.

The five other Philippine sites in the list are the Puerto Princesa Subterranean River National Park in Palawan; the Tubbataha Reefs National Marine Park in Sulu; the Agusan Marsh Wildlife Sanctuary; the Naujan Lake National Park in Oriental Mindoro; and the Olango Island Wildlife Sanctuary in Cebu.

The Philippines, being one of the signatories to the Ramsar Convention, is mandated to protect the habitat.

BMReports BusinessMirror

A4 Thursday, June 16, 2016

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Expert bats for multipurpose dams

T

By Mary Grace Padin

@_enren

he country’s irrigation systems should be “retrofitted” to serve multiple purposes, making it more climate-resilient and investor friendly, according to an agricultural think tank.

Pablito M. Villegas, president and CEO of agricultural think tank Meganomics Specialists International Inc., told the BusinessMirror that dams should be “bundled” for multiple purposes, including irrigation, hydropower generation, domestic water use and flood control.

“Right now, what the government is doing is just the ‘rehabilitation’ [of dams], which is only in the context of saying the dams will work for agriculture. But when I say ‘retrofitting,’ it means dams should be bundled for multi-use of water resources,” Villegas said.

The expert, who is also a consultant of the National Economic and Development Authority on irrigation for food security, said doing so would promote water conservation and attract more private-sector investment in agriculture.

Water conservation

Villegas said some of the irrigation systems in the country still have not delivered their full benefits to farmers due to constraints brought about by the weather.

He cited some parts of Mindoro, where some irrigation systems could not provide water to all of its service areas.

“One [dam] in Mindoro has a service area of 6,000 hectares. But during the rainy season, only about 20 percent of the total service area can be irrigated, while during the dry season, it can only irrigate 2.5 percent,” Villegas said.

“It’s because during the rainy season, the area becomes flood prone, so most of the farmlands cannot be used for agriculture. During the dry season, there is simply no water supply,” he explained.

This is where the flood-control feature of irrigation systems should come in, he said.

“During the rainy season, the system should collect the rainwater. When the dry season comes in, that’s when we can release this water,” Villegas said.

Coupled with watershed and river basin rehabilitation, Villegas said this could be a viable waterconservation and climate-resiliency strategy of the government.

PPPs and irrigation subsidies

According to Villegas, bundling water dams for multiple purposes can attract more public-private partnerships (PPP) for irrigation projects.

“There is no PPP for irrigation projects because there is no profit in irrigation,” the expert said.

He explained that the private sector will only be interested in investing in irrigation systems when they can also be used for hydropower and domestic uses.

Attracting private investors in the construction of irrigation systems and water dams, in turn, would allow the government to minimize the funds needed and fast-track the expansion of the country’s irrigated areas. The country still has a backlog of 1.5 million hectares in terms of irrigation.

It will also allow the government to partially subsidize the irrigation fees of farmers, he said.

“Subsidizing irrigation would be hard to do without draining the budget of the government. That would cost millions,” he said.

“With the earnings gained from the hydropower and domestic water supply facet of the multipurpose dams, the government will then

Children play at the unfinished spillway connecting Bohol Irrigation Project Stage 1 to Stage 2. Project proponents have complained of the P1.246-billion increase in the project cost.

There is no PPP for irrigation projects because there is no profit in irrigation.”—Villegas have funds to subsidize irrigation,” he added.

NIA

National Irrigation Administration Spokesman Pilipina Bermudez told the BusinessMirror the agency currently has multipurpose irrigation projects, such as the Pantabangan Dam and Magat Dam. “We have irrigation systems that can be used for hydropower. The Pantabangan and Magat dams are both a combination of hydropower

and irrigation,” Bermudez said.

While the NIA does have multipurpose irrigation projects, Villegas said it should be done in a programmatic approach, rather than a per-project approach.

However, Philippine Institute for Development Studies senior research fellow Roehlano Briones said feasibility studies should be done first to identify areas that provide opportunities to construct more multipurpose dams.

“Whether other areas would be

suitable for such, given the condition of our watersheds, I’m not sure, but if proper feasibility study is done and there are selected areas where this can be done, then why not have such,” Briones told the BusinessMirror.

Bermudez, for her part, said the NIA currently has 364 areas that can become potential hydropower plant sites. However, she said the agency is constrained by the Electric Power Industry Reform Act law, which disallows the agency to operate hydropower plants.

“What we do is we tie up with the private sector, so what we have are PPPs. We have one plant that is ongoing construction, it’s in partnership with Aboitiz Power Corp.,” she said.

Bermudez said the agency is

NONIE REYES

eyeing more PPPs, specifically for megadams that the government is incapable of funding.

Meanwhile, incoming Agriculture Secretary Emmanuel F. Piñol earlier said the Department of Agriculture, under his term, will focus more on the expansion of smallscale irrigation systems.

Dr. Rolando Dy, executive director of the University of Asia and the Pacific’s Center for Food and Agribusiness, said he agrees with this direction, as large irrigation projects are often too costly and have poor economic returns.

Briones, likewise, said the next administration should not discount large irrigation systems, especially if private entities are interested in investing in multipurpose dams.

Conrad Hotels looking to expand its brand in PHL

By Stella Arnaldo

@Pulitika2010 Special to the BusinessMirror

W

ITH just a simple snip to a blue ribbon and a champagne toast, the newest luxury hotel in the Philippines, Conrad Manila, quietly opened its doors to the public on Wednesday.

A fully owned property by the SM Hotels and Conventions Corp. (SMHCC) and managed by the worldwide Conrad Hotels and Resorts brand, the 347-room Conrad Manila is setting out to be “the most iconic hotel in the country,” said SMHCC President Elizabeth T. Sy in a press briefing following the ribbon-cutting ceremony, led by her mother Felicia and brother Hans, president of SM Prime Holdings Corp.

The hotel is uniquely shaped like a ship and, with the stunning Manila Bay and its mesmerizing daily sunsets as backdrop, it serves as anchor to the SM Group’s lifestyle city-themed Mall of Asia complex in Pasay City.

In an interview with the BusinessMirror, Martin R inck, president for Asia Pacific of Hilton Worldwide, the parent firm of Conrad Hotels and Resorts, said the brand is constantly looking out for opportunities for expansion, especially now with the

Philippines hosting more of its managed properties.

“It all comes down to finding the right partners in the right location, in the right development opportunity, and those, I will say, the stars need to align. If you take the example of this property [Conrad Manila] where we have a fantastic partner in SM, we have a great up-and-coming location in Manila and the bay area, the stars do align, and huge business fundamentals of additional tourists coming into the Philippines,” he said. “If it is the same in another destination, [whether] it be another property with SM or another partner, if we feel the Conrad brand is the right brand to deploy at that point and time, we definitely will look into it.”

Two Hilton-managed hotels will be opened by the end of 2018, one at the Resorts World in Parañaque and the other at Clark in Pampanga. In an earlier interview with SMHCC officials, there were no indications, however, that the company was going to invest in putting up another Conrad hotel after the MOA property, choosing instead to focus on midsized hotels. (See “SM hotel unit to focus on mid-range market,” in the January 27, 2016, issue of the BusinessMirror.)

Yet, Rinck confirmed that there were feelers and ongoing

Ma. Luisa Pelagia Angeles (from left), SVP Operations of SM Hotels and Conventions Corp.; Elizabeth Sy, president of SM Hotels and Conventions Corp.; Martin Link, area president-Asia Pacific Hilton Worldwide; and Harald Feurstein, general manager-Conrad Manila, answer questions from the media during the launch of the 347-room Conrad Manila on Wednesday. NONIE REYES

discussions with other groups in the Philippines for another Conrad-managed hotel, but he stressed there was nothing definite to announce yet. “We are always in dialogue to look at opportunities [here in the Philippines].”

In a separate interview, Conrad Manila General Manager Harald Fuerstein expressed optimism that the hotel will be able to quickly build up its clientele,

as it rides on the rising visitor arrivals and the Philippines’s growing economy.

“I don’t want to sound overly optimistic and overconfident, but I have a very good solid feeling that we will not have a very major challenge [to building our clientele]. But we have many good ingredients in place; we’ve got a great buoyant economy, we’ve got a lot of interest in the Philippine

market from the outside, and the people in the Philippines are looking for something new all the time.

Over the recent months we have been preparing for the opening, we’ve experienced so much interest already from people asking us ‘what’s the Conrad going to be about, when will you open, what can we expect, what’s the experience going to be like’—there’s been a lot of interest. I fully expect

that it will be reasonably quick for us to build the business.”

Rinck added that the hotel also has access to the 55 million members of Hilton Worldwide.

The main target clientele of Conrad Manila will be the MICE (meetings, incentives, conferences and exhibitions) market, events, locals looking for “staycations,” as well as travelers from “inter-Asia —Hong Kong, Singapore, Japan, Korea and China,” Fuerstein said.

Sources intimated that until the very last minute, the hotel was still moving in furniture, finishing touches were still being made in several rooms, the check-in system was being installed, and the like, although none of the frenzied activity was evident on Wednesday.

“That’s what we do whenever we open a hotel, everything comes together,” Fuerstein explained. “As with any project big or small, there will be a few last-minute touch-ups.

Also in a hotel opening, as it builds up toward the actual day [of the opening], activity gets a little bit more frantic. But you know we’ve got it all done. We’re pretty relaxed today, so we’re all ready to go. We got it done, that’s the most important.”

Conrad Manila was built at a cost of P6.5 billion, with 250 employees currently employed.

SMHCC has a 10-year partnership agreement with Conrad Hotels, which is renewable.

Asean

BusinessMirror

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Indonesia central bank gains credibility decades after crisis

W

HEN inflation pressures began surging just as he took the helm of Indonesia’s central bank, Agus Martowardojo didn’t hesitate to plant his flag on the side of price stability.

The newly installed Bank Indonesia (BI) governor proceeded to raise interest rates five times in the second half of 2013—each time surprising economists accustomed to less-hawkish leadership. A former loan officer who rose to head the nation’s largest bank, Martowardojo demonstrated he was ready to sacrifice growth to shore up the rupiah and quell inflation.

Three years on, it’s becoming clear that Martowardojo has championed a deeper set of changes designed to strengthen the effectiveness and credibility of Bank Indonesia, an institution that had presided over a currency collapse in the 1990s. That bodes well as Southeast Asia’s biggest economy grapples with the risk of a reeruption of emerging-market turbulence amid Brexit, China’s slowdown and US interest-rate hike dangers.

Bank Indonesia, under Martowardojo, 60, is adopting a new main monetary-policy tool tied more closely to actual borrowing costs, with a rollout in August. BI has new mechanisms to monitor risks surrounding foreign debt, and is setting up a department charged with growing a stunted currency market, where traders used to get browbeating phone calls from the central bank when they set the rupiah at unfavorable levels.

Confidence rising

“INVESTORS are now much more confident that Indonesia can manage episodes of instability in global financial markets that spill over into emerging markets,” Benedict Bingham, the International Monetary Fund’s (IMF) resident representative in Jakarta, said by phone. “They moved to a more flexible exchange-rate regime and underpinned it with a firmer, more credible monetary policy” in recent years, he said.

In 2013 Indonesia was one of the markets walloped by the prospect of the US Federal Reserve tapering off its liquidity injections. By contrast, its stocks and currency this year have been relatively stable. Indonesia, with the world’s fourth-largest population, punches below its weight on a number of fronts, with the foreign-exchange market no exception. The most recent triennial survey of the foreign-exchange market by the Bank for International Settlements showed that daily currency trading in the country was less than half of Thailand and Malaysia.

Market development

A more liquid market offers greater confidence to investors that they’re receiving a competitive rate, and can enter into a purchase of Indonesian rupiah assets with fewer concerns about being able to exit.

Another priority under Martowardojo, who was appointed by the predecessor to current President Joko Widodo, is monitoring companies that have sold debt in foreign currencies. Indonesia ran up private-sector debt in dollars and other foreign currencies amid the developed world’s liquidity surge after the global credit crisis, leaving the economy vulnerable should the rupiah sink.

When it comes to monetary policy, Martowardojo, who served as finance minister under former President Susilo Bambang Yudhoyono, has shown a more hawkish predisposition than predecessors. One of his former teachers, who previously lectured in economics at the University of Indonesia, even says he raised rates too much in 2013.

After the central bank shifted to easing mode—it cut the current benchmark reference rate three times in the first quarter to address slower growth— it encountered weakness in the policy framework, said Iwan Azis, now a professor of economics at Cornell University in New York state.

L

Singapore home sales climb in 10 months on new projects

S

INGAPORE developers sold the most homes in 10 months in May, helped by the successful marketing of new projects, as prices have been declining since September 2013.

Developers sold 1,056 units last month, compared with a revised 748 in April, according to data released on Wednesday by the Urban Redevelopment Authority (URA). That’s the highest number of homes since July last year.

Sales were boosted by the launch of Stars of Kovan, a project by a unit

of Hong Kong-based Cheung Kong Property Holdings Ltd. in the Kovan area in the northeast of Singapore.

The developer sold 76 of the 180 units marketed. The Gem Residences project by Evia Real Estate also added to the numbers, with 312 of the 578 units on offer sold.

Singapore home prices dropped

1,056

The total number of units developers sold in May in Singapore, according to data released on Wednesday by the Urban Redevelopment Authority for 10 quarters in the period ended on March 31, posting the longest losing streak in almost two decades, as property curbs damped demand.

Purchasing power

THE inflation outlook is now for consumer-price gains to taper to just 4 percent over the coming half decade, a lower sustained pace than seen in IMF data back through 1980. Bank Indonesia has stepped up its communication under the Amsterdam-born Martowardojo, who has been known to ban officials from checking their smartphones during meetings that can sometimes stretch well into the night. Officials hold regular calls with analysts and investors to keep them informed of new initiatives, such as the adoption of the new benchmark rate. Bloomberg News

warned on Tuesday that more deals are under threat of collapsing because of widening investigations into alleged slush funds and embezzlement at the business empire.

An IPO of Hotel Lotte Co. would have given momentum to other Lotte Group affiliates, including Lotte Data Communication Co., Korea Seven Co. and Lotteria Co., to list their shares, the Korean stock exchange said in January. The group had planned to announce further details on the Malaysian chemical IPO this week, one of the people said.

A representative for Lotte Group declined to comment.

Plastics produced by Lotte Chemical Titan include polyethylene, used in shopping bags and toys, as well as polypropylene, which can be found in battery casings and car parts. The company also makes olefins that are part of the manufacturing process for rubbers and detergents.

Bloomberg News

Bloomberg News

K

WELCOMING NEIGHBORS Cambodian students react as they wait to welcome Vietnam’s President Tran Dai Quang along a main street in

Rate outlook

An index tracking private residential prices fell 0.7 percent in the three months ended on March 31 from the previous quarter, according to data from the URA. The city-state’s government has signaled it is reluctant to lift curbs it began rolling out in 2009, as low interest rates and demand from foreign buyers raised concerns that the market was overheating. Those curbs have included a cap on debt repayment costs at 60 percent of a borrower’s monthly income, and higher stamp duties on home purchases. In his budget speech in February, Finance Minister Heng Swee Keat said it was “premature” to relax the curbs.

Research firm cites distributed generation of power in SEA

“THE ineffectiveness of Bank Indonesia policy is vindicated by the fact that the BI rate failed to translate into lower lending rates needed to boost growth,” he said.

Martowardojo was unavailable to be interviewed for this story, according to a spokesman for the bank.

Where the central bank has been successful is in holding down inflation, which is currently running at the slowest in more than six years. That helps preserve purchasing power in a country where about 40 percent of the population remains clustered around the poverty line of 330,776 rupiah a month, according to the World Bank, equivalent to $24.80 at the current exchange rate.

“If they hadn’t tightened, the economy would be too hot and they would lose control of inflation,”said Steve Hanke, who served as an adviser to former President Suharto during the Asian financial crisis and who is now a professor at Johns Hopkins University in Baltimore. He said the central bank had restored the credibility ruined amid the turmoil almost two decades ago; in 1998, prices climbed more than 77 percent and the economy shrank in excess of 13 percent.

Lotte Group said to shelve Malaysian chemical IPO OTTE Group, South Korea’s fifth-largest family-run conglomerate, has shelved plans to list its Malaysian petrochemicals business amid widening investigations at the parent, people familiar with the matter said.

The group will postpone the planned share sale of Lotte Chemical Titan Holding Sdn. until after the probes are resolved, according to the people, who asked not to be identified as the information is private. Lotte Chemical Titan, an arm of Seoul-traded Lotte Chemical Corp., was exploring a Kuala Lumpur initial public offering (IPO) as soon as the second half of this year that could have raised more than $500 million, people familiar with the matter said in January.

Lotte Group earlier this week scrapped a potential $4.5-billion share sale for its lodging and dutyfree business, which was set to be the world’s biggest IPO this year. It

Editor: Max V. de Leon • Thursday, June 16, 2016 A5

Phnom Penh, Cambodia, on Wednesday. Vietnam’s president on Wednesday arrived for a two-day official visit to Cambodia. AP

Weather may fix Singapore haze as Indonesia makes scant progress

I

NDONESIAN officials don’t expect a repeat of the forest fires that cloaked Southeast Asia in a thick haze last year, though that may be due more to favorable weather than progress in addressing the underlying causes of the blazes.

Satellite imagery showed 730 hot spots in the year to May, down from more than 2,900 in the first six months of last year, government data show. Last year’s fires raged out of control for months and unleashed smoke that closed airports and schools, for a time making Indonesia the world’s worst greenhousegas polluter.

“We have integrated fire-patrol teams deployed in the villages where forest fires are an annual occurrence,” said Raffles Brotestes Panjaitan, the Environment and Forestry Ministry official tasked with overseeing fire prevention. “Normally, forest fires are quite rampant in February and March, but there are no fires in villages where patrols are deployed.”

The smog has become an annual nuisance as the local practice of slashand-burn farming is exacerbated by agribusiness companies that drain former swamp land to make way for palm oil, pulpwood and other plantations. Last year’s fires peaked in September and October, sending haze across Singapore, Malaysia and parts of Thailand, as governments argued over who was to blame.

Root causes

THE pending haze “season” is a reminder of the lack of progress Indonesia has made in tackling root causes of the haze, including a murky system of land ownership and permits and graft at a local level. That’s even as President Joko Widodo, known as Jokowi, has vowed to punish those responsible for setting the fires that the World Bank estimates caused at least $16 billion in economic losses for Indonesia alone.

The government has set up village patrols, increased fire-prevention requirements for plantation companies and is reviewing permits issued to those who operate in areas prone to fires, Panjaitan said. Still, it hasn’t done enough to address the issue, said Eduardo Mariz, an analyst with Concord Consulting in Jakarta.

Politics has played a “significant” part in that, he said. The country’s palm-oil industry accounted for $18.6 billion in exports in 2015, or about 2.1 percent of GDP. “It is clearly in the interest of most people in Southeast Asia, including Indonesians, that plantation companies are discouraged from illegally starting fires,” Mariz said. “But there appears to be a limit to what Jakarta is willing to do.”

Jokowi’s options are limited by a decentralized system of government put in place in 2001 that has focused power around local officials

and made it harder to tackle corruption. There’s also been little effort made to address a complex system of overlapping land permits where forest is illegally burned to claim ownership.

Last year Jokowi extended a moratorium on new palm plantations in fire-prone areas and in April called for a ban on the expansion of existing plantations, saying the focus should be on increasing yields on current plots. There has yet to be progress on the ban. A spokesman for the president did not respond to a text message seeking comment.

La Niña

INDONESIA may get some help from the weather. Just as dry conditions from El Niño helped fuel last year’s blazes, the transition to a La Niña weather pattern and its heavy rains should help keep fires under control, said Andi Eka Sakya, head of Indonesia’s Agency for Meteorology, Climatology and Geophysics. A “wet dry season” is expected from July to September, he said.

Singapore, which aside from Indonesia has borne the brunt of annual haze, has been vocal in pushing Indonesia to take action against companies found burning forests. Its minister for the environment and water resources, Masagos Zulkifli, said he’s “cautiously hopeful” that Indonesia’s efforts may curtail the haze this year. Bloomberg News

UALA Lumpur, Malaysia— The inadequacy of transmission and distribution infrastructure and the topographical challenges in isolated islands, such as Indonesia and the Philippines, have created strong demand for distributed power generation (DPG) in Southeast Asia, Frost & Sullivan said on June 14.

“The overall installed capacity of the DPG market was estimated to be 20,450 megawatts (MW) in 2015 and is forecast to reach 34,747 MW by 2020,” Frost & Sullivan said. “The key types of power plants analyzed are biomass and waste to power, solar photovoltaic [PV], internal combustion engine [diesel/heavy fuel oil/gas engines/gensets]-based power plants and temporary rental power plants.”

“Indonesia, Myanmar and the Philippines have been facing severe rolling blackouts due to the gap in supply, their geography and weak power-sector infrastructure,” Frost & Sullivan Energy and Environment Research Analyst Adwaith Visveswaran said. “Additionally, prolonged delays in completing base load centralized power-generation plants in these countries create vast opportunities for diverse DPG solutions that can be quickly deployed to meet soaring electricity demand.”

Southeast Asia has an annual global horizontal irradiance (GHI) ranging from 1,200 kilowatt-hour per square meter (kWh/sq m) to 1,800 kWh/sq m, making it ideal for developing solar-power plants.

Besides, more than 60 percent of the land in Thailand, Myanmar and Vietnam is suitable for large-scale solar farms, with substantial irradiance levels between 1,200 kWh/sq m per year and 2,000 kWh/sq m per year.

This natural advantage has given a major fillip to the DPG market in Southeast Asia.

Though the opportunities are many, the prohibitive cost of batteries for solar PV panels and the inherent risks in fuel-supply contracts affect the returns on investment for project developers.

In any DPG project, except those based on solar PV, 40 percent to 60 percent of the cost is earmarked for obtaining fuel. In some cases, project developers have to import fuel, and the returns from tariffs do not justify this expenditure. The lack of favorable policies and regulations is another hurdle to the rapid adoption of DPG.

TheBroa

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A6 Thursday, June 16, 2016

16th Congress: Hits and misses i

By Butch Fernandez , Jovee Marie N. dela Cruz, Lenie Lectura, VG Cabuag, Jonathan L. Mayuga & Mary Grace C. Padin

S

OME were awaiting fists to fly on June 6 at the Lower House. It was the last day of the 16th Congress when Party-list Rep. Neri J. Colmenares of Bayan Muna appealed to fellow lawmakers to reconsider and approve a motion overriding a presidential veto of a proposed increase in private pension.

1,103

However, Majority Leader Neptali M. Gonzales II refused, saying the Senate has already adjourned.

“There is no rule that prohibits the House from tackling business just because the Senate has adjourned,” Colmenares said. “The Senate can always reconvene any time, as it has done so in the past, before our term ends on June 30.

The House leadership just does not want to put it [Gonzales’s motion] to a vote for fear that our motion will get the necessary votes to override the veto of the President.”

Sobriety prevailed and the lawmakers agreed to adjourn after weathering the times that Senate President Franklin M. Drilon called “the biggest political storm” of the chamber in its 100-year history.

The 16th Senate convened right after what Drilon was referring to senators who were jailed on charges of corruption and the inquiry on the massacre of soldiers in Mamasapano, Maguindanao.

But the crises apparently motivated the Upper House to overcompensate and produce legislation mandating some of the most farreaching—and long-awaited— reforms promoting growth and income equality.

Interviewed by the BusinessMirror just after the 16th Congress adjourned on June 8, several senators gave the Senate high marks not just for the quantity of laws produced (238), but for the fact that, as Senate President Drilon put it, the harvest included “landmark measures that previously languished in the legislative mill for decades, such as the Philippine Competition Act, which we were able to pass after being stuck in Congress for more than 20 years.”

“We also initiated difficult institutional reforms, such as the abolition of the pork barrel funds.”

Senate leaders gave the chamber high marks in terms of promoting growth, especially, with Drilon remarking that the focus “on laying the foundation of a healthier Philippine economy” was quite obvious in the slew of legislation produced the past three years. Besides the Philippine Competition Act, there were amendments to the Cabotage Act, and Tax Incentives Management and Transparency Act (Timta), which, Drilon said, “are all geared to promote a better business climate for more jobs and financial opportunities for Filipinos.”

again gave the 16th Senate a grade of 8.5, citing as basis: “There were bills passed into law that promote the interest of both large and small entrepreneurs, and not singling out a particular segment in the business sector.”

Sotto also provided specific scores for certain pieces of legislation in terms of how well they promoted growth and development: n A n 8 for the Philippine Competition Act; n A “9” for the amended 50-yearold Cabotage law; n An 8 for the Timta; n A 7 for the Customs and Tariff Modernization (CMTA); and n A “9” for the creation of the Department of Information and Communications Technology (DICT).

S i m i l a r l y, S e n . J u a n E d ga rdo A nga ra , t he c h a i r m a n of t he Way s a nd Mea n s Com m it tee, g ave t he c h a mber a h ig h score ( “ 8 ” ) i n ter m s of promot i ng econom ic g row t h a nd de ve lopment overa l l .

Sen. Sergio R. Osmeña, chairm a n of t wo ke y com m it tee: Banks, Financial Institutions and Currency, and on Energy; and vice chairman of the Blue-Ribbon Committee, singled out the New Insurance code among the most significant outcomes of the 16th Senate, mainly because it “replaced the 44-year-old Code,” thus, allowing for comprehensive reforms to be carried out.

Osmeña, likewise, touted as key legislation the amendments to the charter of the Philippine Deposit Insurance Commission (PDIC), seen as boosting the banking and financial system and protecting the public.

In his assessment shared with the BusinessMirror, Drilon also listed the amended PDIC charter as a major achievement, but noted as well how the chamber worked hard to pave the way for “structural reforms to government agencies that directly affect the nation’s economy,” such as the CMTA and the law creating the DICT.

The minority view

Promoting income equality

TO be sure, the minority shares the majority’s assessment of the Senate’s performance overall, and in terms of promoting growth. Deputy Minority Leader Vicente C. Sotto III, asked by the BusinessMirror to rate the chamber on a scale of 1 to 10 (with 10 as the highest), gave the 16th Senate a grade of “8.5,” and made this justification: “the Senate in the 16th Congress was able to pass major legislations that greatly benefit the Filipinos in general.”

In terms of promoting economic growth and development, Sotto

The total bills and resolutions passed by the Lower House during the 16th Congress

THE minority, meanwhile, does not share the similarly rosy assessment by the Senate leadership of the 16th Senate’s achievement in terms of promoting income equality and redressing inequity, alongside economic growth.

“Although there were efforts made by every member of the Senate to introduce bills that shall advance income equality [i.e, amendment of National Internal Revenue Code], there were very few that were passed,” Sotto told the BusinessMirror. The number of bills

passed that would have advanced income equality, Sotto added, “is not substantial enough to create a good impact to the nation. Hence, I give a rating of 4.”

Here, Drilon’s assessment sharply diverges. He insisted the “Senate of the 16th Congress did not neglect the need to help the country’s poor and underprivileged. It passed laws that seek a bigger take home pay for workers, such as the act raising the 13th-month pay and other benefits from P30,000 to P82,000. It has worked to secure ample funding for the Pantawid Pamilyang Pilipino Program [4Ps], the country’s poverty alleviation program. It also passed the comprehensive Philhealth [Philippine Health Insurance Corp.] coverage for all senior citizens,” the Senate chief said.

Drilon listed as well several initiatives “to help the Filipino youth overcome the inequities that prevent them from accessing public education, such as poverty, age or distance,” and cited the passage of the Iskolar ng Bayan Act, the Unified Student Financial Assistance System Act, Ladderized Education Act, the Open Learning and Distance Education Act and the Open High School System Act. For his part, Ways and Means Committee Chairman Angara, who rated the Senate at 8 for promoting growth, gave it a score of 7 for income equality.”

Sen. Grace Poe, the chairman of the Committee on Public Services and on Public Information and Mass Media, took pride in the 16th Senate’s having passed the Freedom of Information (FOI) Act, although it was not enacted into law because it got stalled in the House of Representatives.

She said the FOI crowns all efforts to promote transparency and good governance, as well as public participation in making all state actors accountable, and thus, should be the fountainhead of all effort to promote growth and development, as well as income equality.

With apparent dismay at the House’s failure to match the Senate’s zeal on this legislative item, Poe told the BusinessMirror the FOI “should have been the cornerstone of reforms and t ra nspa renc y in gover nment which are key motivators for more investors to come in and invest in the Philippines.”

If Poe takes pride in having shepherded the FOI bill in the 16th Senate, Drilon, for his part, listed as well the Sandiganbayan Reform Act, the Pagasa Modernization Act and the Marina Law among key outcomes of the chamber that will go a long way to strengthen key state agencies.

Likewise, the Senate president cited the Graphic Health Warning Act [mandating the use on tobacco packaging of images mirroring the horrible effects of smoking] as a significant means for preserving the gains from the earlier passage of the sin-tax-reform law. The latter had allowed the government to draw in more revenues from tobacco and alcohol manufacturers, while plowing back a substantial part of such revenue into the health sector.

Lower House

THE 16th Congress has ended its session last with the passage of a total of 1,103 bills and resolutions in the Lower House.

Speaker Feliciano R. Belmonte Jr. said the passage of these measures have significant contribution to the country’s economy. “ I a m con f ident t h at h i s tor y w il l show that we have conduc t e d ou r s e lve s c re d it ably,” Belmonte said. “ The 16th Congress w il l leave behind a

Nonoy Lacza

remark able legac y. Inspired by the sig nificant grow th of our economy, we passed laws which enhanced our competitiveness as an investment destination.”

Citing the World Economic Forum’s competitiveness report from 2010 to 2016, the Speaker said the competitiveness ranking of the Philippines rose by 38 notches from 85th to 47th.

“This was, no doubt, underpinned by our strong and stable macroeconomic environment and the structural reforms we initiated through legislation,” Belmonte said.

However, despite calls to from public and business groups, the lower chamber has failed to pass several important measures.

Among these are the measure lowering individual and corporate-tax rates and the bill relaxing the economic provisions of the 1987 Constitution.

Likewise, and the contention on the last day of the 16th Congress, is the bill increasing the pension under the Social Security System (SSS), which was vetoed

by President Aquino.

Under Article VI, Section 27 of the 1987 Constitution, the Congress could pass a bill into law despite the President’s veto if twothirds of the members of each chamber vote for its approval.

In January Mr. Aquino vetoed the bill providing P2,000 acrossthe-board increase in the monthly pension of SSS pensioners and adjust ment of t he m inimu m monthly pension from P1,200 to P3,200, for members who have contributed the equivalent of 10 credited years of service (CYS), and from P2,400 to P4,000, for those with at least 20 CYS.

Mr. Aquino was worried that the stabilit y of the SSS wou ld be compromised if he wou ld a l low the pension hike of 2.1 mil lion pensioners.

Other failed attempts

THE lower chamber also failed to pass tax-reform measure following the strong position of the Palace against proposals coming outside the executive branch.

Taking cue from the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR), Mr. Aquino repeatedly rejected the passage in Congress of a longpending bill mandating adjustments in individual and corporate income-tax rates, saying, the government “cannot put our fiscal sustainability and credit rating at risk by doing piecemeal revenuereducing legislation.”

The DOF has said the proposal may cause the government to lose revenues totaling to P30 billion, or as much as 1.5 percent, of the country’s GDP. Liberal Party Rep. Romeros Quimbo of Marikina City, meanwhile, vowed to refile in the 17th Congress the bill lowering individual and corporate income-tax rates.

Quimbo said the income tax should be adjusted considering that the P500,000 amounts to P1.1 million today. In the current setup, those earning P10,000 or less per month pay 5-percent income tax, while those with yearly earnings of P500,000 and above pay 32-percent income tax, he added.

Belmonte also vowed to refile the bill seeking to amend the “6040 rule” that limits foreign ownership of certain activities in the Philippines. Several local and foreign business groups backed the

passage of the measure in the 16th Congress. But lawmakers did not push through with the expected voting on the third and final reading of the bill, apparently due to lack of affirmative votes. The lower chamber needed the vote of at least two-thirds of its membership, or 217 affirmative votes, to pass the “Charter-change” measure.

The voting has also been affected by Mr. Aquino’s stance against tweaking the Constitution that was ratified under the presidency of his mother Corazon S. Aquino.

Presumptive Speaker and PDPLaban Rep. Pantaleon D. Alvarez of Davao del Norte said he is open to the suggestion lifting the economic provisions of the 1987 Constitution in the 17th Congress.

Kind market

DESPITE Drilon’s description of the events that clutched the 16th Congress, the market was generally unmoved.

More than the actions of legislators, the local market tracked the movement and signals of its overseas counterpart. What the market reacted to was when the US Federal Reserve started flooding the market with billions of dollars to prop up the US economy but later announcing it is pulling the plug on the cash flow.

Not even the hearings on the Priority Development Assistance Fund scam, which began in 2013, was able to dampen the growth of the market. The benchmark 30-company Philippine Stock Exchange index (PSEi) was consistently ranked among the top 5 bourses in the world since 2013.

At the end of 2013, it closed at 5,899.83, slightly higher than the 5,812.7 points close in 2012. In

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www.businessmirror.com.ph | Thursday, June 16, 2016

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in propelling economic growth project: donation, negotiated sale, expropriation or any other modes allowed legally. “We are happy that the ROW law amendment was signed but are disappointed that the so-important amendment to the build-operatetransfer law did not make it,” European Chamber of Commerce of the Philippines (ECCP) External Vice President Henry J. Schumacher told the BusinessMirror.

Delegating tasks

2014 it closed higher at 7,230.57. but fell to 6,952.08 at the end of last year.

Last year the PSEi reached its highest closing price at 8,127.48.

But when news broke out that the US Fed is finally winding down its pump priming measures, the main index started to fall. This was at the same time when hearings on alleged corruption involving Vice President Jejomar C. Binay also started. “ T he t h ings t hat once made us st a nd over t he shou lders of ou r peers in t he reg iona l, as wel l as t he globa l, ma rketpl ace were ha l f -bu r ied when we t hought it wou ld be able to hold above g rou nd,” Trader Just ino Ca l aycay Jr. sa id. “For about t h ree yea rs, t he PSEi consistently ranked among the top 5 bourses in the world, and fel l to no f ur t her t han t hird in t he A si a n cont inent.”

“Indeed, we were the ‘next rising star,’” said Calaycay, who is now head of marketing and research at A and A Securities Inc. “It was a year of two main emotions—guarded optimism during the first quarter, which turned into a doubtful ‘ bear’ the rest of the way.”

Powerful hopes

IN the power sector, private firms had hoped for a more pronounced policy on power mix.

First Gen Corp., whose main business is anchored on the production of natural gas, noted the “lack of alignment” between what the government aspires versus what is actually happening in the power sector.

“There’s misalignment between what the private sector is doing,

which is signing up for new coal, versus the commitment of the government to effectively reduce carbon emissions,” First Gen Corp.

President Francis Giles Puno said.

Coal as a source of power to fuel power plants in the country still dominates the current power mix.

“Meeting the economy’s power demand with more coal-fired plants today means ‘locking-in’ those high-carbon emissions for decades. Business-as-usual is a sure road to disaster. These are extraordinary times that call for extraordinary change and everyone must shift to thinking about the fastest route to a decarbonized economy,” said First Gen Chairman Federico Lopez.

Energy Secretary Zenaida Y. Monsada had proposed for the legislation of a power-mix policy during the Aquino administration. She remains hopeful that the incoming administration would push for the legislation.

As a start, the Department of Energy is pushing for the industry to source 30 percent of its energy requirements from coal, 30 percent from renewable energy and another 30 percent from natural gas. The remaining 10 percent will come from oil-based power plants.

Good power mix

AC Energy Holdings Inc. President John Eric Francia said it is easy to put in a number to come up with a power mix. The challenge, however, is in the implementation.

“The issue of the government is the challenge of substantiating this energy-mix policy. As it is now, the latest scoreboard is roughly half of the generating capacity about 50 to 60 comes

from coal- and diesel-fired power plants and 30 percent comes from natural-gas, then the remaining 10 per cent comes from renewables, which include geothermal, wind, hydro, solar, etc.

T he gover nment has to sub st a nt i ate a nd t hat represents a n oppor t u nit y to t he e x tent that the government can really make it ver y tangible on how to grow the renewable energ y and nat u ra l gas cont r ibut ion for a n overa l l energ y m i x to obv iously represent oppor t u nit ies for investors,” Fra nc i a sa id.

For the chairman of the House Committee on Energy, Oriental Mindoro Rep. Reynaldo Umali said legislating the said policy will not work, saying “market should dictate it.”

“It is not for us to legislate,” he said. “It is difficult to get out of it once it is legislated.”

Among other infrastructurerelated laws, the 16th Congress was able to to ink the easing of the process of the acquisition of rightof-way (ROW).

Just compensation

SIGNED by Mr. Aquino on March 7, Republic Act (RA) 10752 provides for the just compensation of private owners of properties up for expropriation.

It stated that the government “shall ensure that owners or real property acquired for national government infrastructure projects are promptly paid just compensation for the expeditious acquisition of the required ROW for the projects.”

The following, according to the law, are the modes of acquiring real property for any national government infrastructure

THE Public-Private Partnership (PPP) Act would have institutionalized the project development and monitoring facility, the PPP Governing Board and the contingent liability fund.

The proposed amendments to the decades-old BOT law include the separation of regulatory and commercial functions of government-owned and -controlled corporations and create a list of projects called “projects of national significance.”

By virtue of being included on the list of projects of national significance, projects will be “insulated” from local laws, among others, by local government units.

The proposed amendments also include allowing time-bound temporary restraining order and the extension of the period for Swiss Challenge to six months from the current two-month period.

A l so, t he s a id piece of legi sl at ion wou ld h ave g iven t he e xec ut ive d i rec tor of t he PPP C e nt e r a f i x e d t e nu r e , a n d wou ld h ave, l i k e w i s e, m ade t he sa id body a vot ing member of t he I nvest ment Coord i n at ion Com m it tee a nd t he C abinet Committee of t he Nat iona l E conom ic a nd D e v e lo p me nt Aut hor it y ( Ned a).

“I’d rather mention what is needed to be done to avoid delays in the implementaiton of the much-needed infrastructure.

I hope government permits to be obtained can be reduced to a minimum,” MTD Philippines Inc. President Isaac S. David said.

He added: “It would be better if the interagency office can be created and delegated to issue permits needed to start construction.”

‘Green’ groups

ENVIRONMENTAL groups in the Philippines said the 16th Congress have scored big in coming up with policy instruments that favor the environment.

In general, however, they claim the legislative branch failed to meet the high expectations and demand for the passage of laws that will ensure strong environmental protection and effective natural resources management.

Chuck Baclagon of 350.org said the passage of law enhancing the Philippine environmental impact assessment system, to strengthen public participation, is laudable. “ T here is also the Peoples Survival Fund which a special fund in the National Treasury that will finance climate change adaptation programs and projects. For me, these two come top of the mind. In terms of le g i s l at ive i nter ve nt ion s on env i ron ment a l ly- dest r uc t ive projects, there was the congressional inquiry into a coal-fired power plant belonging to D.M. Consunji Holdings, Inc. (DMCI) in Narra, Palawan that was initiated by partylist Bayan Muna.

However, Baclagon said passing laws is only one side of the story.

“The issue of implementing it on the executive branch is the more challenging task because it entails the creation of implementing rules and regulations and finding the financial

resources to materialize mechanisms and infrastructures that can enable the law to function.”

Despite efforts

GERRY Arances of the Center for Energy, Ecology and Development (CEED) has a different perspective.

Overall, I would rate them close to nil, Arances said. “Des pite ef for t s b y prog ressive legislators in advancing legislations on the issues of land use, biod iversit y, forest m a n age ment, renewable energy, minera ls management, transparency, most of these efforts never reached Congress approval.”

He cited as example the National Land Use Management Act, the Forest Resources Bill, Expanded National Integrated Protected Areas System, Alternative Minerals Management Bill, renewable-energy bills and the P1-million ceiling bill.

“There are also the advances, like the ‘Green Jobs’ law, but if we look at the overall picture, many of the supposed environmental protection bills never reached being enacted,” Arances said.

H e a d d e d e n v i r o n m e nt a l groups were also able to defeat bills they perceive to be detrimental to the environment, like the amendments to the Clean Air Act, that would allow operating incinerators again. Arances also cited the measure giving emergency powers to the President, which would allow the suspension of application environmental laws on power projects.

“This was seen as a hastening of the construction coal projects and incinerators, among many others.”

Dismayed

CLEMENTE Bautista of the Kalikasan-Peoples Network for the Environment said expressed dismay on the 16th Congress.

“First they failed to repeal or at least amend the mining act and investigate and prosecute US Navy officers and personnel involved in the grounding of the USS Guardian,” Bautista said. “[The 16th Congress also] failed to pass resolution demanding the return of toxic waste to Canada, to legislate a law to ensure the reduction of carbon emission and to impose a moratorium on coal-power plants.”

“For me, the 16th Congress is an epic fail in ter ms of env ironmenta l protection and natura l-resources management,” Bautista added.

‘Trusted allies’

INDUSTRY groups from the agriculture sector said they have found “trusted allies” in the 16th Congress who they claim to have “truly listened” to the woes of farmers and fishermen.

Sinag Executive Director Jayson Cainglet told the BusinessMirror both chambers have been on top of the issues that concern the agriculture sector.

“The committee chairs on agriculture [in particular] were crucial,” Cainglet said in a phone interview. “Those appointed should really work for the interest of the industry, and they have proven to be just that with us.”

Cainglet and United Broilers Raisers Association President Jose Elias Inciong lauded the ratification of bills that were seen to benefit the agriculture industry. “ I t h i n k t he Fo o d S a fe t y Act a nd t he recent bi l l of Se.Cy nthia Villar, which raises t he pena lt y for acts of ag r icu lt u ra l smug gl ing , wou ld rea l ly be good for t he a g r ic u lt u re sector,” Inc iong sa id.

For Philippine Maize Federation Inc. President Roger Navarro, the biggest support the

Some of economic measures enacted in the 16th Congress: n Republic Act (RA) 10667, providing for

a national competition policy prohibiting Anticompetitive agreements, abuse of dominant position and anticompetitive mergers and acquisitions n RA 1668, allowing foreign vessels to transport and coload foreign cargoes for domestic transshipment n RA 10846, amendments to the Philippine Deposit Insurance Charter n RA 10863, the Customs Modernization and Tariff Act n RA 10708, instituting the Tax Incentives Management and Transparency Act n RA 10665, establishing the open high school system in the Philippines n RA 10644, the Go Negosyo Act n RA 10844, the Department of Information and Communications n RA 10953, adjusting the 13th-Month pay and other benefits ceiling for purposes of income taxation. n RA 10692, providing for the modernization of the Philippine Atmospheric, Geophysical and Astronomical Services Administration n RA 10693, strengthening Nongovernmental organizations engaged in microfinance operations for the poor n RA 10699, expanding the coverage of incentives granted to national athletes and coaches. n RA 10654, to prevent, deter and eliminate illegal, unreported and unregulated fishing, amending RA 8550, otherwise known as the Philippine Fisheries Code of 1998 n RA 10660, strengthening further the functional and structural organization of the Sandiganbayan n RA 10533, the K to 12 Program n RA 10645, the mandatory PhilHealth coverage for senior citizens n RA 10754, granting VAT exemption to persons with disabilities

Some of the bills approved by the Lower House of representatives during the 16th Congress

n Strengthening the Balanced Housing

Development Program

n Amending foreign-ownership

restrictions in specific laws governing adjustment companies, lending companies, financing companies and investment houses cited in -he Foreign Investment Negative List (FINL), except those in the Constitution n An act modernizing the National Bureau of Investigation (NBI) n An act regulating the Philippine Credit Card Industry n Bill seeking to provide increased financial support to agrarian-reform beneficiaries 16th Congress has given is the increased budget allotted for the agriculture sector.

The budget of the Department of Agriculture (DA) from 2011 to 2016 reached P339.7 billion, or P45 billion higher than the agriculture budget from 1975 to 2010.

However, he said there should be adjustments in the budgeting system for agriculture.

“Our budgeting system, based on the Neda or the Department of Budget and Management, is on a per-capita basis,” Navarro said. “So a huge part of the budget goes to Luzon, as most of the population is in there. He added 65 percent of the budget for agriculture goes to Luzon, while 35 percent goes to the Visayas and Mindanao.

“We should change that. Instead of per-capita basis, it should be based on the production area,” he said.

Inciong, meanwhile, said that while, the Legislative body has given satisfactory support to the sector, it was the Executive bodies or the agencies who failed to properly implement the policies.

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The World BusinessMirror

Thursday, June 16, 2016

China bans exports to North Korea with possible military use

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EIJING—China on Wednesday banned exports to North Korea of technology and materials, which might be used in weapons production in a new response to the North’s development of nuclear weapons and missiles.

The list of banned “dual use” items with possible civilian and military use includes metal al-

loys, cutting and laser-welding equipment and materials that could be used in production of

chemical weapons, the Commerce Ministry said.

Beijing has long supported the North Korean government but in a sign of growing frustration signed on in March to United Nations sanctions enacted in response to the North’s fourth nuclear test.

Those penalties include a ban on sales of dual use items.

North Korean leader Kim Jong Un’s government has intensified nuclear activities in defiance of UN sanctions.

China is the impoverished North ’s main trading partner and aid donor, making its co-

operation essential for the success of trade penalties. In April China banned imports of North Korean coal and iron ore, an important revenue source for the impoverished country. Beijing also banned sales of jet fuel to the North, though it said civilian aircraft would be allowed to refuel on flights to China.

Beijing balked at previous demands by Washington and other governments to use trade as leverage against North Korea. Chinese diplomats said the potential humanitarian impact of sanctions had to be considered. AP

Argentina ex-official arrested over cash bags at monastery

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$7M The amount of money found by authorities at a monastery 55 kilometers west of Buenos Aires, Argentina

“He later told the nuns that the police had tried to steal the money that he was trying to donate,” Ritondo said. “There are dollars, yen, euros and a currency from Qatar. It’s a lot of money.” He did not give an exact amount because the money was still being counted.

Dario Kubar, the area’s mayor, told reporters earlier Tuesday that authorities had found more than $7 million at the monastery that is home to nuns devoted to Our Lady of the Rosary of Fatima, which is about 55 kilometers west of the capital, Buenos Aires. The news became a trending

Beat the press: Donald Trump’s contempt for media is calculated

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EW YOR K—Don a ld Trump’s favorite nickname for the news media is the “dishonest press.” He swaps in “disgusting press” from time to time. And sometimes, he puts it all together: “disgusting, dishonest human beings.”

The presumptive Republican presidential nominee has a whole menu of takedowns for individual reporters and news organizations. In recent weeks, he’s used his microphone and his tweets to label them “third-rate,” ‘‘not nice,” ‘‘disgraceful,” ‘‘phony,” ‘‘low-life,” ‘‘very unprofessional” and “bad people.” Or, for extra emphasis in a tweet, “BAD.” He’s also been quick to yank or withhold credentials from news organizations whose coverage he doesn’t like—most recently, The Washington Post.

Trump seems to be perpetually mad at the press, but there’s a method to his mad-ness.

He sees little dow nside to bashing the media—and plenty of potential benefits.

“It’s a truism of American politics that you don’t lose an election by criticizing the media,” said Robert Lichter, president of the private Center for Media and Public Affairs.

“It plays well with the public, particularly with Republicans.”

W hile Trump’s language is more incendiary and he lashes out more personally at reporters than typical for past candidates, he’s following a long tradition of modern politicians who shoot barbs at the messenger.

Former President Dwight Eisenhower energized the 1964 Republican convention with his complaint about “sensation-seeking columnists and commentators.”

Richard Nixon Vice President Spiro Agnew famously threw shade at “nattering nabobs of negativism” in the press.

President George H.W. Bush, who played horseshoes with press photographers and invited reporters to White House picnics and other events, still exhorted voters during his reelection campaign to act on the bumper-sticker slogan: “Annoy the Media: Reelect Bush.”

His wife, Barbara, had some biting advice for Hillary Clinton when the incoming first lady visited the White House in November 1992: “Avoid this crowd like the plague,” Bush told Clinton, sweeping her hand toward the reporters and photographers on the South Lawn.

Trump is taking the beat-thepress strategy to a whole new level.

In a recent one-month period, he delivered 39 tweets skewering reporters and media organizations, mixed in with a much smaller number of positive and neutral references in his Twitter feed. Just one example: “The media is really on a witch-hunt against me. False reporting, and plenty of it—but we will prevail!”

This week, Trump revoked the Post’s credentials, citing what he called the paper’s “incredibly inaccurate coverage and reporting.”

Other news organizations he’s banned, either short-term or permanently, include Politico, the Des Moines Register, BuzzFeed, The Daily Beast and the Huffington Post.

Post editor Martin Baron called Trump’s latest move “nothing less than a repudiation of the role of a free and independent press.”

Kathleen Carroll, executive editor of The Associated Press, said his credentialing bans do a disservice to the public.

In the race for the most powerful position on the planet, she said, “the public is interested in what the candidates do and say, and having independent coverage is part of what keeps the public informed.”

Why is Trump so quick to pick a fight with the press?

For one thing, his over-the-top language can be a successful strategy for changing the subject when he wants to divert attention.

Last month, when reporters pressed Trump to document what he’d done with millions of dollars raised for veterans, he turned on them, calling one reporter “a sleaze” and sarcastically referring to another as “a real beauty.” That language itself became a big part of the story, shifting some of the attention away from questions about his handling of the money for veterans. AP

Australia releases prisoner convicted in China of fraud

A youth watches the police block a street that leads to a monastery on the outskirts of Buenos Aires, Argentina, on June 14. An official in the former government of President Cristina Fernandez was arrested on Tuesday, as he allegedly tried to hide millions in dollars and other currencies at the monastery, along with luxury watches, in a case that the cabinet chief compared to a movie. AP

UENOS AIRES, Argentina— A n officia l in the for mer gover nment of President Cristina Fernandez was arrested on Tuesday, as he a l leged ly tr ied to hide mil lions in dollars and other cur rencies at an A rgentine monaster y.

A neighbor of the monaster y called authorities after seeing a man throwing bags onto the prop er t y ne a r Bue nos A i res early Tuesday. Officers arrived and arrested a man who turned out to be former Public Works Secretar y Jose Lopez. The police initially detained him for possession of a .22-caliber rif le.

They then discovered wads of cash, as well as the watches, in more than 160 packages inside the bags. Other money had been taken to the monastery kitchen and some was found in the trunk of a car.

Secur it y Minister Cr istian Ritondo of Buenos Aires Province told a news conference that Lopez was “in a state of shock” when he was arrested and alleged that he tried to bribe police.

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topic on Twitter in Argentina.

Local TV stations showed images of the piles of cash, and later of Lopez being escorted by the police to another precinct wearing a helmet and a bulletproof vest.

“It’s almost out of a movie,” said Marcos Pena, President Mauricio Macri’s Cabinet chief. “We’re shocked because it’s not a minor official. He led public works, which were so questioned, where we saw so much daily corruption.”

It’s “shameful,” Macri said during a public event on Tuesday. “We are all surprised. We are clearly changing and it’s good that we shed light on the types of practices that we want to eradicate in Argentina.”

Since Fernandez ended her ter m l ast December, Macr i ’s administration has promised to root out corruption that has plagued Argentina. Analysts say that has emboldened judges who are now freer to pursue sensitive cases against the former leader and her friends w ithout fear of retribution. Fernandez has been included in investigations involving allegations of money

laundering and possible illegal enrichment. Lazaro Baez, a once seemingly untouchable friend of Fernandez and her husband and predecessor, Nestor K irchner, was arrested earlier this year.

The millionaire businessman, who got public works contracts under both presidents, is accused of embezzling and laundering about $5 million. Prosecutors began looking into Baez after a 2013 journalistic investigation named him as Kirchner’s figurehead in an elaborate scheme.

Prosecutors have also said they are looking into the financial transactions at several hotels owned by the Kirchner family in the southern province of Santa Cruz, where Fernandez has lived since leaving office.

“Our most energetic condemnation against the shameful actions of Jose Lopez,” opposition lawmaker Juan Manuel Abal Medina, who served as Cabinet chief under Fernandez, said on Twitter.

“Corruption is stealing from all, especially those who have the least.” AP

C

A NBER R A , Australia— Australia has granted early release to an Australian businessman who was convicted in China of financial crimes and transferred home under a prisoner exchange agreement, an official said on Wednesday.

Matthew Ng was the first of only two Australian citizens who have been able to come home to Australia under a 5-year-old prisoner swap deal with China.

Ng had applied for early release “based on his exceptional family circumstances,” Justice Minister Michael Keenan said.

“I am satisfied exceptional circumstances exist to justify Mr. Ng’s early release from prison,” Keenan said in a statement, without giving details.

Ng was arrested in Guangzhou in 2010 and sentenced the next year to 11-and-a-half years in prison for fraud and bribery convictions related to a corporate takeover of a state-owned enterprise. He was transferred to an Australian prison in November 2014 to serve out his sentence.

His lawyer Tom Lennox said he has filed applications for early release since early 2015 on various grounds, including a diagnosis of post-traumatic stress disorder and the disproportionate nature

of the sentence for behav ior that would not be criminal in Australia. Lennox said he thinks the decline in the health of Ng’s Sydney-based wife Niki Chow in the last two months prompted the decision.

“His wife has been very unwell and he has a family in need of care,” Lennox said. “Matthew’s emotional, I’m emotional. We’re delighted with the minister’s decision.”

Ng was released from Sydney’s Silver water Correctional Complex within hours of the minister’s announcement.

A Chinese Embassy spokesman did not immediately respond to a request for comment on Wednesday. Lennox described Ng as a political prisoner who had done nothing that would be considered illegal in Australia.

“It was a state enterprise in China that used the criminal justice system in China to both expropriate all of Matthew’s property and put him in jail,” Lennox said. “I think that meets the test of political prisoner.”

L ennox sa id t he c a se wa s brought by a Guangzhou Communist Party official who objected to Ng’s travel company, GZL, taking over a state-owned enterprise.

With Ng in prison, the enterprise was returned to state control. AP

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Thursday, June 16, 2016

A9

Deal-making excitement rises over beer in Myanmar

A

scorching May day in Myanmar calls for beers and loosened neck ties. At newly opened Harry’s Bar in Yangon, investors talk opportunities over draft lagers, jalapeño steak sliders and fries.

Several private equity types and company executives are gathered around Jasmine Thazin Aung, an energetic and bubbly Yangonbased executive director at PricewaterhouseCoopers Llp. who returned to her country from Singapore in 2012 to set up the firm’s business advising on mergers and acquisitions. They’re talking about what sectors are hot: infrastructure and consumer businesses.

“The projects keep coming, we’re doing more work,” said Thazin Aung, 40. “It’s definitely going to be taking off, and it’s starting already.”

With the easing of more US sanctions in May following the smooth transition of power to the democratic party formerly in opposition, Myanmar is poised for a foreign investment takeoff. The Asian Development Bank is pred icting economic growth faster than 8 percent for this year and next—the highest rate in Asia. Incomes among the nation’s 54 million consumers are rising. A planned change in the investment law this year to be more welcoming to foreign buyers may increase the appeal.

“As the country opens up, we expect there will be more opportunities,” said Thura Ko, managing director at YGA Capital Ltd. and adviser to US private equity firm TPG Capital, which last year bought a 50 -percent stake in Myanmar Distillery Co. valued at more than $100 million. “There is sizable money waiting. Entrepreneurs who have put in decades of effort and personal capital would also like to take their businesses to the next stage.”

A l ready, approved foreig n investment increased 18.4 percent to $9.48 billion in the year ending March 31, compared to 2015, according to the country’s Directorate of Investment and Company Administration.

Myanmar may attract as much as $100 billion in foreign direct investment by 2030 if it spends enough to achieve its economicgrowth potential, the McKinsey Global Institute reported.

What’s being purchased shows the potential of the country’s eager consumers. Colgate-Palmolive Co., the New York-based maker of toiletries, bought a Myanmar toothpaste company for about $60 million in 2014. Kirin Holdings Co. of Japan bought 55 percent of the country’s largest beer producer, Myanmar Brewery Ltd., for $560 million in August last year.

Malaysia’s Axiata Group Bhd. invested $125 million in a telecommunications firm last December.

W hile no major acquisitions have been announced this year, dealmakers have still been active. A $2-million investment from the Omidyar Network was one of two venture-capital deals announced this year, according to research firm Preqin Ltd. The investment firm, backed by eBay Inc. cofounder Pierre Omidyar, agreed to buy a stake in a Yangon community tech center and accelerator lab called Phandeeyar.

Last year four venture capital injections into Myanmar compa n ies tot a led $7. 2 m i l l ion, Preqin said.

Getting warmer

YET, it’s only now that the invest ment c l i m ate i s get t i ng warmer. The US lifted sanctions on 10 state-owned enterprises and banks in May, though other restrictions remain in place. The US, which imposed sanctions in 1997 after the military government’s clampdown on its democratic opposition, started lifting

$9.48B The approved foreign investment by Myanmar in the year ending March 31

restr ictions fol low ing political reforms in 2012. After last November’s election results, in which Aung San Suu Kyi and her National League for Democracy (NLD) swept to victory, the Treasury Department allowed American businesses to use ports, toll roads and airports in the country.

The further easing in May followed the NLD’s smooth taking of power on April 1.

Lawmakers may vote this year to allow foreigners to invest directly in local firms without having to set up joint ventures, the current requirement. Under proposed new rules, overseas entities would be able to buy as much as a 35-percent stake directly, although that may change when the law is submitted to parliament for approval in the next few months, Aung Naing Oo, secretary of the Myanmar Investment Commission, said in an e-mailed response to questions.

More freely

“IF foreigners can buy shares more freely in local companies, we expect mergers and acquisitions involving local companies to i nc rea se,” he sa id. “ More M& A can help Myanmar companies grow, improve their products and ser vices, and operate more efficiently in line w ith international markets.”

A new law would also let foreign investors participate in a wider range of sectors than joint ventures are currently allowed, such as mineral production and some agricultural activities.

Peaceful moment

“AT this moment, many investors are still waiting for the policies of the new government to come,” said Takeshi Mukawa, a partner at law firm Mori Hamada & Matsumoto, which opened its office in Yangon in 2014. “Every firm in Myanmar is waiting for the investment rush to come. This is a peaceful moment.”

TPG is on the lookout for more deals in the banking, telecommunications, infrastructure and consumer sectors, Thura Ko said.

Besides last year’s whiskey deal, it invested in a telecom venture in 2014 that planned to build mobile phone towers across the country. TPG cofounder David Bonderman traveled to Myanmar in 2012 and met with government officials, business executives and Aung San Suu Kyi to size up the investment and political climate.

A t My a n m a r B re w e r y, a n expansion is under way as its m a n a g i n g d i r e c t o r Ta k e s h i Minakata, 54, seeks to raise annual capacity 50 percent in three years, from the current production of 200 million liters.

Minakata, who relocated to Yangon in April from his base at Kirin in Japan to handle day-today operations, said Myanmar people “are changing their behavior to try new things and are seeking a global lifestyle.” The company introduced two new high-end beers, Myanmar Premium and another based on Kirin’s Ichiban brew sold in Japan and elsewhere, at the end of March.

More beer

BEER consumption per person in Myanmar, currently at about 5 liters a year, has plenty of room to grow, he said. It’s 40 liters a year in Vietnam and 30 in Thailand, Minakata he said. Bloomberg News

British politician and leader of the UK Independence Party Nigel Farage talks to members of the media as he launches his party’s campaign for Britain to leave the European Union (EU), outside the EU representative office in London on May 20. To determine how the vote would go, money is seen looking to the bookies. AP

To guess UK vote, smart money looks to bookies

L

ONDON—To gauge whether Britain will vote to leave the European Union (EU), the smart money is looking to the bookies.

After polls missed badly in measuring sentiment before some of Britain’s most recent votes, bookies’ odds have become the point of reference for anyone trying to guess the outcome of the June 23 referendum on the country’s EU membership.

And it’s not just your average Joe plunking down a bill at the local betting shop. Big investors, including Morgan Stanley, BlackRock and UBS, have all turned to the gamblers for guidance on this seismic vote. Pollsters failed to see the defeat of Scotland’s independence referendum coming in 2014 and said last year’s general election was too close to call— when in fact, the Conservative Party won a clear victory. Even so, predictions were never going to be simple: Much of the vote hinges on the undecided and on whether the wavering will feel strongly enough about the outcome to go to the polls.

“There is no version of ‘don’t know’ with the bookies,” said Bill O’Neill, head of wealth management in Britain for the Swiss banking giant UBS. “It’s a clear either or choice.”

In today’s world, bookmakers, like Ladbrokes, Paddy Power and William Hill, take wagers on everything from local elections in the London borough of Tooting to the US presidential vote, as well as the latest sporting events.

Similarly, investment firms, such as IG Group, offer spread betting on political issues in addition to movements in financial markets.

T he book ies and investors agree: based on the flow of money into these bets there is about a 60-percent chance that UK voters will cast their ballots in favor of staying in the EU. By contrast, the latest aggregate of public opinion polls by the respected pollster John Curtice’s WhatUKthinks.org site, shows the electorate split 5149 for leave—too close to call.

“Our political binaries have shown a high success rate in predicting the correct outcome in previous elections and referendums,” said Matt Brief, head of dealing at IG Group, referring to trades that let investors bet on either side in a political contest. “ The pattern we are seeing is similar to the Scottish Referendum when markets remained solidly for a no victor y throughout the campaign.”

Investors argue that betting markets are a more accurate predictor of results, because the odds are based on where people put their money, not simply on how they answer questions from a pollster.

Experts say the main problem with polls is that they ask samples of people how they would vote—a question that can shift quickly depending on which campaign lands a good punch in any given week.

Gamblers, on the other hand, analyze all the information available, incorporating polling data, and place bets on the eventual outcome. Betting is particularly popular in Britain, meaning the odds are the result of a high number of individuals’ views.

“In an information age where the cost of trading is very low and so much information is available, the betting markets are going to be very efficient predictors,” said Leighton Vaughan Williams, director of the political forecasting and betting research units at Nottingham Business School.

If the polls say one thing and the betting markets another, you should trust the betting markets, Vaughan Williams said. In a study published in the Journal of Forecasting, Vaughan Williams studied data related to US elections going back to 2004, and found that the bookies outperformed the polls in every case. “Nobody can step directly into the future,” Vaughan Williams said. “But your best guess as to what that future will be is given by the betting markets.”

Even w it hout t heir recent stumbles, pollsters would have had a tough time dealing with the EU referendum.

Britain has held very few plebiscites, and that makes it difficult for pollsters, who generally look at past elections, to provide clues about how people will vote in the future. In the EU referendum, for example, there are no “safe districts” that can be used as bellwethers of opinion as there are in parliamentary elections.

Pollsters have to keep tweaking their survey groups and making adjustments. Their main problem is whether people who don’t really

care will take part. Those who feel strongly are more likely to want to vote leave, said Ben Page, chief executive of the respected polling firm Ipsos MORI. So getting the balance right in the sample is a challenge when things are close.

“Polling is a mix of science and art,” Page said. “There isn’t much of a track record to determine how these things are going to go.”

Fogging the picture further is the number of undecided, which Page estimated at between 5 percent and 10 percent of those questioned. The wavering tend to go with the status quo—in this case, remain in the EU. I can’t tell you what they’re going to do in the voting booth because I’m not there with them,” he said.

“They’re making up their minds while they’re there.”

But even with the markets, the discussion is about probability rather than certainty. The markets will change as the vote draws near and can be influenced by events— such as the decision by the influential Sun newspaper on Tuesday to endorse an exit, known as Brexit.

The odds have narrowed in recent days as the vote approaches.

Betfair said on Tuesday that while remain had been a solid one-third favorite (78 percent) last week, the odds have weakened to four-sixth (60 percent). Millions of pounds were traded overnight.

And while remain is a solid favorite at the moment, Vaughan Williams stressed that information could come out in the coming days that might change the market.

“Betting markets tell us our most likely future, and they are better than any other way of doing that,” Vaughan Williams said.

“But they are not a crystal ball.” AP

Toyota gets bullish on plug-in hybrids with new Prius Prime

T

OKYO—A top engineer at Toyota says the Japanese automaker plans to get as bullish as its rivals in pushing plugin hybrids with the introduction of its new Prius Prime.

Toyota Motor Corp. leads the industry in hybrids, which switch between a gas engine and an electric motor. It has sold 9 million hybrid vehicles around the world since the first Prius went on sale in 1997, but only about 75,000 plug-in hybrids, which charge from a regular household plug and switch to operating as hybrids only when their batteries run low. The first Toyota plugin was launched in 2012, after limited leasing from 2009. It will start selling its remodeled

plug-in, called the Prius Prime in the US and Prius PHV in Japan, later this year.

The company is promising a whopping mileage equivalent to 120 miles per gallon, calculated including how far the vehicle goes as an electric car, without a drop of gas. “We were just studying it thoroughly,” chief Engineer Kouji Toyoshima told The Associated Press, when asked whether Toyota had fallen behind on plug-ins. “But what we have developed is at the top level among plug-in hybrids.”

T he Pr ius Pr ime look s sim ilar to a reg u lar Pr ius. Toyota is a im ing for a model it ca n sel l at high volumes, w it h f r iend ly st yl ing a nd a f ford able pr ices, so as to have t he most impact

i n re duc i ng fossi l f ue l con sumpt ion, Toyoshima sa id. He said batter y costs are the main obst ac le for reduc ing pr ices.

Toyota has not yet announced pricing for the Prius Prime.

The vehicle’s solar panel provides about 10 percent of the average driving range of a Tokyo resident, partly addressing the criticism that, while electricity is emissions-free at the car level, power generation relies mostly on fossil fuels. When the Prius Prime is operating as an electric car, the generator for its hybrid feature also works with the motor to increase efficiency, Toyoshima said.

The EV’s cruise range is 35 kilometers, or long enough for about half of American commuters. That

rises to about 80 percent for people who can plug in during work, according to Toyota.

Toyota was the first with the Prius, but today the market for plug-ins is crowded with offerings from General Motors Co., Volvo and Mitsubishi Motors Corp., and electric cars from Tesla and Nissan Motor Co. “The new Toyota Prius Prime is facing a much tougher competitive environment,” said Christian Stadler, professor of strategic management at the University of Warwick’s business school. He said it makes sense for Toyota to move up-market and cater to customers who are less pricesensitive and more concerned with the environment. AP

A10 Thursday, June 16, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

How to keep mass violence out of PHL

I

N a free society like the US, people can’t be denied a gun if they want one. And in Florida, where a lone gunman last Sunday slaughtered 50 people in the deadliest mass shooting in US history, buying military-style weapons built for the purpose of killing scores of people is as easy as buying a cough medicine. Following Murphy’s law, what can happen when people have easy access to killing machines unfortunately happened.

The senseless massacre of merrymakers at a gay nightclub in Orlando, Florida, by someone who can get an assault weapon anytime he wants one highlights the wisdom of incoming President Rodrigo R. Duterte’s avowed policy to stop the issuance of licenses to people with high-powered firearms or assault rifles, whoever they are. We hope he won’t change his mind.

In the same vein, the incoming administration must identify and punish the senior police officials at Camp Crame who were reportedly involved in arms trafficking. Reports say that more than 1,000 high-powered firearms have been sold to communist insurgents since 2011, with the unwitting assistance of these senior police officials. The Criminal Investigation and Detection Group reportedly discovered this when they investigated President Aquino’s disclosure last year that several AK-47 assault rifles disappeared after the Philippine National Police processed their papers.

Days after the Florida carnage, people continue to gather at vigils across the US to honor the victims of the 134th mass shooting in America this year. Meanwhile, people around the world are wondering why mass violence keeps happening in America. Recent reports could provide an answer: “A vast majority of guns used in 16 recent mass shootings, including two guns believed to be used in the Orlando attack, were bought legally and with a federal background check. At least eight gunmen had criminal histories or documented mental-health problems that did not prevent them from obtaining their weapons.”

Many factors appear to have contributed to the massacre, including a vicious homophobia, where the hatred of a single person cost 50 people their lives. The gunman, identified as Omar Mateen of Fort Pierce, Florida, reportedly told his father he had been disturbed by seeing two men kissing in Miami. Another factor points to the influence of a radicalized strain of Islam that works to convert angry people into mass killers. It seems the gunman was inspired by radical material he found online because he reportedly made a 911 call from the gay club in which he professed allegiance to the leader of the Islamic State, Abu Bakr al-Baghdadi.

President Barack Obama said the attack is “an example of the kind of homegrown extremism that all of us have been concerned about. One of the biggest challenges we are going to have is this kind of propaganda and perversions of Islam that you see generated on the Internet.”

In the US people who support terrorism have easy access to assault weapons. Duterte will make sure this will not happen in the Philippines.

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John Mangun

OUTSIDE THE BOX Continued from A1

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N spite of all the harsh and sometimes nasty rhetoric, most people want a new administration to succeed and probably newly elected and appointed government officials want to do a good job. Certainly, there are some that are in over their heads and others that are just simply unqualified. But no one assumes the offices planning to make their motto “Success is not an option.”

The interesting thing is that the government is a relatively small piece in the economic puzzle as far as the Philippines is concerned. Certainly, here in the Philippines, we think that the sun rises and sets on what the government does. Also certain is that government economic policies have an impact. However, if you look at the broad picture of the Philippine

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economy after the initial two-year fallout from the start of the global debt/financial crisis, conditions have been improving. Even going back to 2000 and removing 2008 and 2009, most everything has been in a steady upward trajectory.

The international press and media can go all crazy about President-elect Duterte and maybe they should. But is

The incoming administration’s greatest economic problem is telling the true story of the Philippines to foreign investors.

All the “it’s now easier to do business here” must come after “you can make a lot of money in the Philippines.”

this all really on the same scale from an economic standpoint as the British vote on leaving the European Union, continuing terrorist attacks in France along with massive labor problems, Japan’s zero economic growth, or Australia and Canada suffering from low oil and commodity prices?

If investors loan their money to the German government, they have to pay the government for the privilege. In Japan loaning money to government means you can double your capital in 138 years. Investing in Canada cost a loss of 11 percent in currency exchange and a 20-percent high to low fluctuation in the past 12 months.

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President Rodrigo Duterte’s biggest economic problem

Siegfred Bueno Mison, Esq.

THE PATRIOT

I

N his book The Tipping Point: How Little Things Can Make a Big Difference, Malcolm Gladwell describes the “tipping point” as the moment when sociological events occur and lead up to a threshold where systems are “tipped,” causing changes to take place like an epidemic.

In his Law of the Few, Gladwell explains that certain individuals and behavior, no matter how few, can actually contribute to radical changes needed in organizations.

Basically, Gladwell postulates that most trends, styles and phenomena are actually started by only a few people, referred to as Connectors, Mavens and Salesmen. For instance, only a few people (Salesmen) with the AIDS virus were responsible for hundreds of AIDS transmissions in Africa. In our country, the transformation of Subic/Olongapo (centers of immorality) and Marikina (salvage capital) previously known as places of ill repute in the 1970s to two of the most disciplined urban centers in the Philippines today, can be attributed to a few key personalities (Connectors like Richard Gordon and Bayani Fernando) in those cities.

Connector: He is a person in the community who knows a lot of people and has a special gift of bringing them together. Due to his network, the Connector is a person who can be likened to a “virus,” as he has the

extraordinary ability to jump-start an epidemic. When P-Noy declared a “No wang-wang” policy in his first State of the Nation Address, the wanton use of sirens on our roads was drastically reduced. Whenever people see President-elect Rodrigo R. Duterte eat in a small carinderia, fall in line, wear simple and ordinary clothes, obey traffic rules, and refuse any “special” treatment because of his position, he is actually starting an epidemic. With these gestures, our Connectors, both outgoing President Aquino and incoming President Duterte, have tried to infect all those in government with the “virus mindset” that public service is not a matter of power for everyone to see (or hear in the case of wang-wang) but rather public service is more of responsibility, humility and modesty.

Maven: After graduation, a certain Mr. Rodolfo Gino was not inclined to join government and opted to work for different private companies for the main reason that the salaries and benefits in the private sector were much better than those

in public service. However, after more than 10 years, he decided to switch to government service (perhaps out of curiosity, due to professional boredom, or maybe for love of country) by joining the Bureau of Immigration.

He wanted to become an Immigration Officer (IO) but he knew that getting the much-coveted IO position requires “backers” or persons with influence. Nonetheless, in 1982 he joined the Bureau as a confidential agent. Still pursuing his dream to become an immigration officer, he attended a training program supposedly only for immigration officers, where he garnered the highest score in the final exams. Through diligence and determination, Gino thereafter continued to equip himself with the theoretical knowledge and the tools of the trade, which paved the way to his being assigned to several sensitive and crucial posts that, in turn, eventually led to promotions. In the context of Gladwell’s Law of the Few, Gino is a Maven in the bureau who can start “word-of-mouth” epidemics due to his knowledge, social skills and ability to communicate. He is akin to a walking encyclopedia in the field of immigration. Anyone can ask him about immigration rules and procedures, and he knows the answer. In the rare occasions he doesn’t, he knows where to find the answer.

Among the many instructors in the Philippine Immigration Academy, students always voted Gino as the best and the most effective instructor. Through different training programs where he participated either as instructor, consultant, director, or resource person, he has helped spread

So where could investors find a country where the currency is stable (8-percent fluctuation) and has devalued only 3.3 percent? Where on earth is there a country where the government pays its loans on time at 4.4-percent interest? Is there any place where the economy has been growing nonstop since 2000? Is there any economy that has all of these and, in addition, a stock market that is 9 percent higher since June 2015?

The incoming administration’s greatest economic problem is telling the true story of the Philippines to foreign investors. All the “it’s now easier to do business here” must come after “you can make a lot of money in the Philippines.” The new administration is telling criminals to “beware” of the “new” Philippines.

Who is in charge of telling investors to “Be Aware” of the Philippines?

E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com.

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the culture of competence and courtesy among all officers in all ports of entry/exit. He even came out of retirement to continue training the new breed of immigration officers and, indirectly, mold a few of these officers to become Salesmen.

Salesmen: Once started, an epidemic can be better spread by those persons with the gift of influencing the actions of others. An effective Salesman goes beyond what he says (seller’s talk) and does what he says to make others want to follow, not because the buyer believes the seller, but because the buyer believes in the product. With the right recruitment, selection and training, any organization can come up with a good sales team. In its technical term, a Salesman works together with other Salesmen to promote the products they sell to achieve a certain revenue target, market share, or a sales quota.

Our Salesmen in the government bureaucracy are the few good men and women we elected in May, and those few good men and women who were appointed or will be appointed to the Cabinet and other agencies by President Duterte. They will soon work as a sales team together with Connectors, like President Duterte, and Mavens, like Gino, to sell the product (better government for a better Philippines) to internal audiences (fellow public servants, private sector, civil society, etc.) and to external players (investors, tourists, business, other countries, etc.). Change is coming, they say, and I agree. We just hope and pray that we will have the right Connectors, Mavens and Salesmen in our midst.

Opinion BusinessMirror

opinion@businessmirror.com.ph

BIR may investigate the capacity of parties to acquire properties Atty. Julie Ann L. Aranda

Tax Law for Business

L

ess than a month before she steps down from her office, the Commissioner of the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Order (RMO) 24-2016, prescribing the guidelines and procedures in the conduct of investigation on the capacity of parties to acquire properties.

The RMO provides new rules to be observed by revenue officers and the parties in transactions involving sale, transfer or assignment of properties.

This covers the transactions subject to final capital-gains tax on sale of real properties considered as capital assets and sale, transfer or assignment of stocks not traded in the stock exchange; expanded withholding tax on the sale of real properties, which are ordinary assets; donor’s tax; estate tax; other taxes, including documentarystamp tax related to the sale or transfer of properties and those covered by tax-free transfers.

Parties to the transactions may be investigated in order to determine their financial capacity to acquire and hold properties. If the buyer or seller fails to prove his financial capacity, he may be issued a letter of authority for the revenue officers to conduct further investigation.

In the application for the issuance of Certificate of Authorizing Registration (CAR) and Tax Clearance (TCL) in relation to sale or transfer of properties, the application and the documents and information required to be submitted shall be evaluated for possible audit or investigation. If the seller/transferor has no capacity to acquire the property which is the subject of the CAR, a Letter of Authority may be recommended for further audit or investigation.

In all cases, the One-Time Transaction (ONETT) taxpayer shall verify with the integrated tax system of the BIR to determine whether the seller/transferor and buyer/transferee regularly file their tax returns and report income sufficient to establish financial capacity. For individuals exempt from the filing of income-tax return, they must submit an affidavit stating therein the reason they are not required to file an income-tax return, their total annual income and sources of income. To establish financial capacity, a party may present the income-tax return, certificate of creditable withholding tax, certificate of final tax withheld at source or loan documents as the source of the consideration for the acquisition of the subject property.

As provided in the RMO, if the buyer/transferee fails to prove financial capacity to acquire the property, the transaction shall be considered a donation, not a sale and donor’s tax shall be imposed, instead, of capital-gains tax.

The parties should then execute a Deed of Donation. If it is the seller, assignor, or transferor who is established to lack financial capacity, he may be further investigated. However, this shall not hinder the issuance of CAR and TCL for the transfer of the property.

In cases of application for BIR certification ruling on the consequences of a tax-free exchange transaction, the usual supporting documents required under existing rules and regulations shall be submitted. But an evaluation will still be conducted to determine the financial capacity of the parties. If it is determined that the transferor or assignor does not have capacity to acquire the property subject of the tax-free exchange, the Law Division shall forward it to the National Investigation Division for investigation.

With the issuance of the RMO, a simple transaction involving sale, assignment or transfer of property may trigger the examination of the parties involved in the transaction. If the parties or a party cannot establish documents to support his capacity to hold, own or acquire the property, he may be subjected to examination for possible undeclared income, and consequently undeclared taxes. To avoid this scenario, a party entering into transactions involving sale or assignment of properties should be ready to provide substantiation for his financial capacity.

The author is a senior associate of Du-Baladad and Associates Law Offices (BDB Law), a member firm of World Tax Services (WTS).

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 filamer.miguel@bdblaw.com. ph or call 403-2001 local 360.

Regulate payday lending, but not like this

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or the first time, the federal government is creating rules focused on the short-term, small-sum credit, known as payday lending. That’s a good idea, but the plan announced by the Consumer Financial Protection Bureau (CFPB) isn’t the way to do it.

Payday lenders cater to people with poor credit who need cash fast. Lenders typically offer two-week loans of a few hundred dollars for a 15-percent fee—nearly 400-percent annualized.

Outrageous as those terms may seem, they can make sense for someone who, say, needs to fix a car to get to work and can’t borrow any other way.

But that’s only if the loans are quickly paid back. Often they aren’t—and that’s how many lenders like it. Paying the loan down gradually is discouraged: Typically, borrowers are required either to repay in full on the due date or extend the whole amount at added cost. Many do just that, paying much more in interest and fees than they initially borrowed, and ending up in deep financial distress.

This kind of business accounts for a large share of payday lenders’ revenues.

The challenge for regulators is to curb this predatory lending without killing off a useful service.

There’s a workable model: In 2010 Colorado adopted a rule giving borrowers at least six months to pay down

a loan’s principal and capping total charges. Since then, interest rates have fallen by more than half, payments have become far more affordable, and the service has remained widely available.

The CFPB lacks the power to cap finance charges like Colorado did, but it could do something similar. Set a ceiling of gross income—say, 5 percent— below which it will presume loan payments to be affordable. This would be straightforward, because payday lenders typically already require a pay stub or other proof of income. A clear and simple rule of that kind could attract traditional banks into the small-sum lending business—helping to lower annualized interest rates even more.

Unfortunately, the CFPB has proposed a much more complicated—and much less effective—approach. This would require lenders to run various checks on borrowers’ ability to pay (and to satisfy other conditions), yet would provide no clear guidance on the permissible level of payments. Complex verification will slow the process and increase the cost, lack of clarity will repel traditional banks, and lenders will be able to keep collecting fees that can add up to more than three times principal over the life of a short-term loan.

The simpler alternative is tested, and it works. Why not do that? Bloomberg View

Thursday, June 16, 2016 A11

Your loving kindness is worth more than life Msgr. Sabino A. Vengco Jr.

Alálaong Bagá

I

N a prayer of intimate trust in God, the psalmist glorifies God, whose loving kindness is a greater good than life itself, and to Him he clings fast in joy (Psalm 63:2, 3-4, 5-6, 8-9). Jesus reveals Himself as the Son of Man who would greatly suffer, but whom God would raise up again; to follow Him is to deny oneself (Luke 9:18-24).

Your right hand upholds Me Addressing God throughout the Psalm in the second person, the psalmist expresses fervent longing for God like a parched earth thirsting for water, like Earth lifeless without water. In his body and in his soul, hence in the totality of his being as a person, the psalmist intensely pines and yearns for God, seeking for Him like an arid land fainting for water, without which there can be no life. The Lord’s loving kindness (hesed) is, indeed, worth more than life itself. And indicative of his desire to be with God, the psalmist recalls the times he spent in the divine presence in the temple, seeking to look upon some manifestation of God’s power and glory.

The Lord’s steadfast love and fidelity to His covenant is the basis for the psalmist’s confidence in His con-

tinuing support and blessing. The fulfilling life with God, abundant with blessings “as with the riches of a banquet,” contrasts sharply with the parched earth situation without God. And so the psalmist promises, so long as he lives, to glorify and bless the Lord God; he intends to call upon His name and to praise Him all his life. He trusts the Lord absolutely. For God is kind and God is his help (ezer). God’s right hand upholds him. Like an eagle, God’s wings provide protection to the psalmist, and so in the shadow of His wings he shouts for joy and clings to God with all his longing.

He must deny Himself

The focus of the gospel passage is Christological: Jesus asks first who the crowds think He is and then who the disciples think He is; only after the misconceptions have been aired

The Lord’s steadfast love and fidelity to His covenant is the basis for the psalmist’s confidence in His continuing support and blessing. The fulfilling life with God, abundant with blessings “as with the riches of a banquet,” contrasts sharply with the parched earth situation without God. And so the psalmist promises, so long as he lives, to glorify and bless the Lord God; he intends to call upon His name and to praise Him all his life.

does He reveal something of His true identity. The crowds see Him merely as a prophetic figure. Peter’s confession as spokesman of the disciples declares Jesus to be the long-awaited Messiah, the Christ, the Anointed One of God, the Promised One and now sent by God. In response, Jesus charges His followers not to reveal His identity to anyone, to prevent any misconception about Him as the Messiah being some sort of a political leader to an occupied people.

Jesus goes further in His selfrevelation to His disciples by predicting His own suffering, death and resurrection. The rejection and crucifixion He would endure are all part of God’s plan. (The mention of the elders, priests and scribes, who made up the Sanhedrin as the

Jewish religious leadership sanctioned by the Romans, shows that Jesus was rejected for religious as well as political reasons. His bold claims troubled the religious leaders, and the unrest He caused was a political threat.) Those who follow Jesus must, like Him, deny themselves of self-interest and self-fulfillment: those who selfishly save themselves actually lose themselves, while those who unselfishly lose themselves actually save themselves.

Alálaong bagá, to be a follower of Jesus is to follow a suffering Messiah. His path is that of total self-offering, the way of love, steadfast and generous, like God’s kindness and compassion. The disciples need to look at Jesus first, not at themselves, to discover who they are. Knowing who it is we serve and to whom we belong determines our own identity and what kind of followers we are to be. We take up our cross of self-dedication daily on the footsteps of Jesus. And, together with the psalmist, as we experience the Lord’s loving kindness and witness His power and glory, we know that His steadfast love is greater than life itself, and that in the shadow of His wings we can cling fast to Him and be filled with joy and praise.

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

Ahmopi makes health care accessible and affordable MAIL

Please e-mail your letters to the editor to oped@businessmirror. com.ph. Letters chosen for publication in this section are edited for brevity and clarity.

This refers to an article published in the BusinessMirror on June 9 titled “Insurance sector: Changes are coming.”

While we find most of the information in the article factual, especially the pronouncements of Insurance Commissioner Emmanuel F. Dooc, there are a few that need to be clarified, as they may send the wrong signals to your readership and especially to the Health Maintenance Organization (HMO) industry’s key stakeholders and partners, the more than 4 million HMO planholders in the country, our more than a thousand-and-one affiliated institutional health-care providers and nearly 30,000 accredited physicians nationwide. Allow us to comment on some of the key points of the article: The Association of Health Maintenance Organizations of the Philippines Inc. (Ahmopi) is the only recognized trade organization of HMOs in the Philippines.

We currently have nine industryleaders as members: Avega Managed Care Inc.; Caritas Health Shield Inc.; Cocolife Healthcare; Health Maintenance Inc.; Health Plan Philippines Inc.; Insular Health Care Inc.; Intellicare; Medicard Philippines Inc.; and Pacific Cross Health Care Inc. (formerly Blue Cross Health Care Inc.).

The Ahmopi strives to make health care more accessible and affordable to as many of our countrymen as possible, particularly the marginalized sector of our society.

To enable the Ahmopi to provide our planholders with comprehensive health-care plans and services at more affordable costs, we negotiate with affiliated hospitals and accredited doctors for discounts and preferred rates, respectively. We have Memorandums of Agreement (MOAs) with four major medical specialty societies—the Philippine College of Surgeons (PCS), the Philippine College of Physicians (PCP), the Philippine Society of Anesthe-

siologists (PSA), and the Philippine Obstetrical and Gynecological Society (POGS) and all their respective subspecialties. Likewise, for some select hospitals, like Davao Doctors Hospital and Saint Luke’s Medical Center-Global City for its Unified Doctors Accreditation Agreement with the hospital’s Affiliated Group of Medical Specialists. All participating doctors into MOA initiatives initially apply for inclusion into the MOA are credentialed accordingly and, if approved, are given a Unified Service Agreement issued by the association covering the MOA period.

Among the many key features of these MOAs are the compensation structure that follow Philippine Health Insurance Corp.’s Relative Unit Values when applicable.

We take exception to the statement published that “Ahmopi would like to give lower rates to the doctors.” As explained above, we negotiate with the PCS, PCP, PSA and the POGS; and with individual doctors outside of MOA initiatives for more affordable rates, in exchange for the large volume of patients we give them. With economies of scale, Ahmopi is able to achieve better operational efficiencies thus providing our clients with more affordable health-care programs and services.

Cash bonds being required by some hospitals from HMOs seeking affiliation range from P50,000 to a couple of millions of pesos. This problem has been addressed and significantly minimized in the past few years through the relentless efforts of the Ahmopi. However, please note that this is only for Ahmopi members. We understand that nonmembers of the association have to put cash bonds in hospitals all over the country.

One of the Ahmopi’s cardinal rules is its “no-bond” policy of any sort or label—to hospitals, either tertiary, secondary or primary, on account of what we believe is the “shared responsibility” of the business. Hospitals earn from every patient we send them and, therefore, should be willing to take the risks, just as HMOs do when they cover the planholder’s maximum benefit limit per illness, or aggregate benefit limit per year. And yet, membership fees are kept to the barest minimum in support of our advocacy to provide the Filipino people with the best health-care services possible.

To drive home a point, in 2014 Ahmopi members paid over a thousand affiliated hospitals, clinics and laboratories nationwide a total

of P17.935 billion. In terms of payments to accredited physicians (an average of 12,000 per HMO), figures show that Ahmopi members paid a total of P4.365 billion in 2014, or a combined total of P22.300 billion —for a membership base of about 3.672 million.

On some HMOs having ceased to be members of the association because of “differences in opinions” over (a) Professional fees of doctors HMOs pay and (b) cash-bond requirements of some hospitals is a lame excuse. To set the record straight, the cases involved a hospital in Metro Manila that required bond placements for some of our members. To cut to the chase, these HMOs have had to resign from the Association in accordance with the Ahmopi’s Code of Conduct, rules and regulations, board resolutions, and a certification of authority and support of the Association signed by all its members.

On the relatively low professional fees some HMOs pay their accredited doctors, this does not involve Ahmopi members given the standard fees we maintain, let alone the four MOAs we have with the PCS, PCP, PSA and POGS and all their subspecialty societies. Practically all Ahmopi members are affiliated with all tertiary hospitals nationwide, with only the best doctors in all fields of specialization.

The association has submitted its position paper on the Insurance Commission’s (IC) draft circular on financials for HMOs, including a lot of rejoinders and reports. Judging from early pronouncements by the IC on probable implementing rules and regulations, the Ahmopi is glad that most of its suggestions are being considered for implementation.

Of particular significance is the association’s recommendations for existing HMOs of a minimum paidup capital of P10 million followed by risk-based capitalization over an across-the-board P100 million for all players. We believe that the smaller players with only about 5,000 or more planholders should not be required to put up the same paid-up capital, as those with about a million planholders.

For the longest time, the association has espoused the passage of an HMO Bill that shall, once and for all, establish the industry on solid ground. We have drafted our own bill and have farmed out copies to some members of Congress and the Senate, hoping that sometime soon, and with the help and push of the IC, an HMO law shall be enacted in the

17th Congress.

For the longest time, too, the association has espoused regulation by an appropriate government regulatory body. This came in the form of a DOH regulation of sorts in the past years, though not really in the true context of an IC regulatory environment.

We resolutely participated in initiatives that resulted to the signing of Executive Order 192 by President Aquino—transferring regulation of the HMO industry from the DOH to the IC effective on November 17, 2015. Then and, especially, now, the Association fully supports the IC in its efforts to regulate the industry.

We are glad that Commissioner Dooc passionately believes in leveling the playing field, now that the HMOs are under the regulatory functions of the Commission. He supports our contention that insurance companies with HMO or HMOlike products in the marketplace are definitely not in a level-playing field, the former being VAT exempt, while HMOs are “VATable,” based on gross revenues. We laud Commissioner Dooc’s statement in relation to the HMOs when he said: “Now that I am the regulator, bakit naman hindi ko sila poprotektahan.”

A lot of life and nonlife insurance companies, and even preneed companies and insurance brokers go into the HMO business, and have genuine HMO plans and services or HMO-like products in the marketplace. It is not fair that HMOs pay VAT based on gross revenues, while life-insurance companies with huge genuine HMO businesses ride on their company’s VAT exemption. It’s high time the Commission puts a stop to this inequity in the industry and levels the playing field, once and for all.

For the record, we interpose no object to Commissioner Dooc’s views on having all SEC-registered HMOs join the Ahmopi as it will definitely make for better coordination of industry issues and concerns and policing of our ranks, let alone result in better economies of scale and operational efficiencies in the industry.

We hope to have clarified matters to your satisfaction and would like to request that our comments be published if only to be fair to the Ahmopi and to allow us to present our side of the current issues of the industry.

Carlos D. da Silva Executive Director Association of Health Maintenance Organizations of the Philippines Inc.

2nd Front Page BusinessMirror

A12 Thursday, June 16, 2016

www.businessmirror.com.ph

PHL, EU to resume FTA talks T

he second round of negotiations for a free-trade agreement (FTA) between the Philippines and the European Union (EU) will be held in Manila this October, according to the Department of Trade and Industry (DTI).

Trade Undersecretary Ceferino S. Rodolfo Jr. said he expects FTA talks between the Philippines and the EU to continue in the Duterte administration.

“We are confident in our FTA policy, as we’ve shown in our conclusion of the EFTA [European Free Trade Association]. With the recovery of our global markets, we want to diversify our export markets not just for goods, but also for services,” Rodolfo said.

EFTA is an intergovernmental trade organization composed of Iceland, Norway, Switzerland and Liechtenstein. The Philippines secured an FTA with this economic bloc in late April.

Since December 2014, the Philippines has been benefiting from the enhanced trade preferences granted by the EU-General System of Preference Plus (GSP+). Under the EU-GSP+, tariff rates on some 6,200 Philippine products were slashed to zero.

As of end-June 2015, exports of Philippine products covered by the EU-GSP+ expanded by 27 percent, or to €742,788.28, from €584,292.58 in 2014, according to Walter Van Hattum, economic and trade section chief of the EU delegation in Manila.

Secur ing an FTA w ith the

With the recovery of our global markets, we want to diversify our export markets not just for goods, but also for services.”

—Rodolfo EU, Rodolfo said, would result in higher shipments of Philippine products to European countries.He said the Philippines is particularly keen on expanding shipments of farm products to European countries.

Negotiations for a region-toregion FTA between the EU and the Association of Southeast Asian Nations (Asean) were launched in 2007 and were put on hold in 2009 to give way to a bilateral format of negotiation.

These bilateral FTAs were conceived as building blocks toward

DRIED FISH Fishermen carry the drying racks for their catch at a fishing village in Legaspi City. NONOY LACZA a future region-to-region agreement. So far, the EU has completed bilateral agreements with Singapore in 2014 and with Vietnam last year.

The Philippines is the EU’s sixth-

largest trade partner in Asean and ranks 44th worldwide.

In 2014 the EU exported goods worth €6.8 billion to the Philippines, while EU imports from the Philippines amounted to €5.7 billion. EU

exports to the Philippines consisted mostly of transport equipment, machinery, food products, chemicals and electronic components.

The country’s main exports to European countries include office and

telecommunication equipment, machinery, food products and optical and photographic instruments.

The trade in services between the EU and the Philippines was worth €3 billion in 2013.

AT Kearney sees positive prospects for PHL retail ‘Set up of research centers will

M

ANAGEMENT consulting firm AT Kearney Inc. has noted a healthy increase in sales of the Philippines’s retail sector.

“As the outsourcing industry helps boost the Philippines’s economic growth, long-term prospects for retail remain positive,” AT Kearney said in its 2016 Global Retail Development Index (GRDI) report. Retail is expected to account for one-fifth of the Philippines’sGDP by 2025, the 90-year-old company named after Andrew T. Kearney said.

The Philippines was ranked 16th among 30 countries included in the GRDI scrutiny.

The GRDI ranks the top 30 developing countries for retail investment worldwide, AT Kearney explained. The index analyzes 25 macroeconomic and retail-specific variables to help retailers devise

successful global strategies to identify emerging market investment opportunities, the managementconsulting firm added.

“The study is unique in that it not only identifies the markets that are most attractive today, but also those that offer future potential.”

However, while the Philippines posted total retail sales of $134 billion, the country trails Vietnam despite its national retail sales of $87 billion. The Philippines also trails the other four top-retail markets in the Asia Pacific: China, India, Malaysia and Indonesia, which has a GRDI ranking of 1, 2, 3 and 5, respectively. Vietnam has a GRDI ranking of 11, with a score of 50.8 ,compared to the Philippines’s score of 47.7. Vietnam is also considered a low-risk but high-potential market for the retail sector.

Vietnam’s retail sales compound-

ed annual growth rate (C AGR) from 2013 to 2015 at 7.1 percent is also higher than the Philippines’s 3.5 percent. Nonetheless, AT Kearney added it sees a potential in the Philippines as its modern retail spreads.

“The country’s retail experience is modernizing as retail giants invest billions in malls to ramp up their nationwide presence,” AT Kearney said.

Modern retail sales area grew 13 percent last year, AT Kearney added.

Competition is also heating up in the country’s retail sector, “with expansion plans coming from both domestic and regional players.”

AT Kearney said it sees Davao City as “poised to be the next retail hot spot outside of Manila, with its high income and large population.

The city, the management-consulting firm said, is being targeted by major retail players.

Dennis D. Estopace

help boost PHL farm production’

By Manuel T. Cayon

Mindanao Bureau Chief @awimailbox

D

AVA O C I T Y —T h e absence of dedicated resea rc h u n its a nd farmers’ lack of access to affordable loans have delayed the development of the country’s farm sector, according to the chief of the Pilipino Banana Growers and Exporters Association (PBGEA).

Except for the Inter national Rice Research Institute (IRRI) and the Southeast Asian Fisheries Development Center (SEAFDEC), other crops subsectors have no dedicated research centers, PBGEA President Stephen A. Antig told the BusinessMirror.

Even then, the IRRI caters to the interest of all Asian countries involved in riceproduc t ion development although it is based in Los Baños, Laguna. SEAFDEC is also an Asian-based center based in Bangkok, Thailand.

Antig said the lack of a dedicated research unit is deeply felt in the banana industry, for instance, where the dreaded Panama disease, or the Fusarium wilt, continues to wreak havoc on the industry for more than half a century.

It was only in recent months when a government research center in Taiwan came out with two disease-resistant varieties of Cavendish bananas that are acceptable for commercial production.

“It looks like research has been neglected as a crucial policy move for agriculture,” he said.

Fusarium wilt

The disease that continues to wreak havoc on the local banana industry production, tissue culture and Proposals The PBGEA said it had asked former President Gloria MacapagalArroyo to consider the proposal of former Agriculture Secretary Domingo F. Panganiban for the setup of a national banana research institute. This is expected to allow the industry to address banana diseases.

The institute is also envisioned to help the Philippines surpass other global competitors, mostly from South America.

Private growers in Davao had also pushed for the creation of an institute for banana back in 2010. The Cavendish banana, one of the top farm exports of Mindanao, is grown extensively in Davao del Norte and 16 other provinces in the region.

Lizabel Holganza, chairman of the 2010 Davao Trade Exposition, experts in the academe and in business are keen on putting up the institute to further boost the country’s bid to become the top global supplier of bananas.

The proposed institute would mostly focus on conducting research and providing documentation about banana. It is also envisioned to train workers in the multimillion industry.

The regional agriculture office here said the institute would use the Philippine Rubber Institute as its model, and would conduct studies on varieties of banana,

diseases. But like most other ventures, the institute would need government support.

“We need the initial funding to start everything, but we would show the government that it would be sustainable,” said Carlos Mendoza, a former Department of Agriculture director.

Quoting industry leaders, Mendoza said planters and plantation owners have pledged a certain portion of their proceeds from the production, “promising to give 50 cents per box.”

Financing

Apart from the lack of technical expertise, Antig said farmers also have to contend with their inability to secure bank loans.

“If you think that banks would have special considerations to farmers and other small borrowers, you are wrong,” he said. “It’s always about collateral, in whatever form.”

Citing his sources, Antig said banks “would rather pay the fines for not complying with the Agri-Agra law than to go into what they believe as a risky lending venture.”

“Let us wait how the Duterte administration would fulfill its campaign promise that it would compel the government financial institutions to allocate P1 billion for each region,” he said.