Businessmirror june 22, 2018

media partner of the year

United nations

2015 environmental Media Award leadership award 2008

BusinessMirror A broader look at today’s business

www.businessmirror.com.ph

n Friday, June 22, 2018 Vol. 13 No. 251

Biz groups wary of LGU tax power in fed system

L

By Elijah Felice E. Rosales

@alyasjah

OCAL governments having too much financial power under a federal system do not sit well with onshore and offshore investors, as this might allow states to increase taxes at will and spend their funds in risky ways, Philippine business groups said. See “Biz groups,” A2

DEEPER INTO BEAR TERRITORY

SHARE prices in the country’s stock exchange fell to their lowest level in about 17 months on Thursday following the increase of the country’s interest rate by the Bangko Sentral ng Pilipinas (BSP). The local course’s main index sank deeper into the so-called bear territory. The benchmark Philippine Stock Exchange index shed 163.47 points to close at 7,098.15 points, as all other subindices bled.Thursday’s close was the lowest since January 4, 2017, when the index closed at 7,030.95 points.

Full story on B1

3rd rate hike? Wages, not oil, may be trigger By Bianca Cuaresma @BcuaresmaBM

R

ISING oil prices will not push the Central Bank to pursue another rate hike in the next monetarypolicy meeting in August, but a significant increase in local wages will, an international banking giant said. In a commentary following the Bangko Sentral ng Pilipinas’s move to effectively hike its monetary-policy rates on Wednesday, HSBC said it does not expect the BSP to pull out another rate hike within the year, given easing inflationary pressures. On Wednesday the BSP Monetary Board decided to raise its main policy rate by 25 basis points to 4 percent. This came on the heels of the May monetarypolicy meeting, where the MB decided to hike the main policy rates also by 25 basis points for the first time since 2014. The back-to-back hike also did not stop the BSP from opening its doors to further hike this year, with BSP chief Nestor A. Espenilla Jr. expressing preparedness to take “further policy action as needed.” HSBC said the June hike is largely pegged on responding to external developments, particularly the more hawkish stance of the United States Federal Re-

serve with regards to its own monetarypolicy direction. As such, the bank said the BSP is “likely through” with rate hikes this year given easing inflationary momentum. BSP officials on Wednesday said inflation expectations were slightly lowered to cover for the slower-than-expected inflation in May—bringing forecasts to 4.5 percent from 4.6 percent for 2018 and 3.3 percent from 3.4 percent for 2019. “We still expect headline inflation to peak on a yearly basis in the second half of 2018, but mainly due to base effects and higher oil prices, which we believe aren’t reason enough for additional monetary tightening,” HSBC said. The bank, however, said that among the key things to watch out for are second-round impacts from the tax reform in the form of rising wages. HSBC noted that while recently passed minimum -wage hikes in the Visayas region have all been within the BSP’s forecast range of P20 or less, a broader and higher wage hike could change the game for local inflation and monetary-policy direction. “Any significant increases in minimum wages and/or broad-based wage hikes across the board would likely trigger even higher prices that would prompt the BSP to hike rates further,” HSBC said.

PESO exchange rates n US 53.3890

2016 ejap journalism awards

business news source of the year

P25.00 nationwide | 5 sections 28 pages | 7 days a week

GOVT HOPES TO BOOST WEAK EXPORT GROWTH WITH NEW DEVT PLAN By Cai U. Ordinario

T

“Our latest exports numbers [April 2018] have not been so good. All products showed negative growth rates, except mineral and forest products, as well as electronics. We expect the PEDP to ramp up our exports, thereby meeting our targets in the Philippine Development Plan 2017-2022.”— Pernia

@cuo_bm

HE Economic Development Cluster has endorsed the Philippine Export Development Plan (PEDP) 2018-2022 for approval of President Duterte, according to the National Economic and Development Authority (Neda). In a statement, the Neda said the PEDP 2018-2022 is a five-year road map aimed at improving exports performance and increasing the sector’s competitiveness. The plan is consistent with the country’s Philippine Development Plan (PDP) 2017-2022, which targets a yield of $122 billion to $130.8 billion in revenues from export goods and services by 2022. “Our latest exports numbers [April 2018] have not been so good. All products showed negative growth rates, except mineral and forest products, as well as electronics. We expect the PEDP to ramp up our exports, thereby meeting our targets in the Philippine Development Plan 2017-2022,” Socioeconomic Planning Secretary Ernesto M. Pernia said in a statement. The PEDP identifies as urgent the passing of the National Quality See “Govt,” A2

Villar pitches ‘perpetual’ rice fund once QR goes By Jasper Emmanuel Y. Arcalas @jearcalas

& Cai U. Ordinario

T MILESTONE AT 500 Jollibee founder Tony Tan Caktiong and Mang Inasal founder Edgar Injap Sia II, along with Ernesto Tanmantiong and Joseph Tanbuntiong, grace the inauguration on Tuesday of the 500th store of Mang Inasal on West Diversion Road, Iloilo City. The businessmen are also partners in the real-estate company DoubleDragon Properties Corp.

@cuo_bm

HE Sen ate Com m it tee on Food and Agriculture wants to perpetually earmark at least P10 billion to the rice sector annually once the quantitative restriction (QR) on the staple is scrapped. Sen. Cynthia A. Villar, committee chairman, said she will incorporate a provision mandating the allocation of P10 billion to the rice sector every year in the Senate’s version of the rice-tariffication bill. This provision, Villar said, would improve the productivity of rice farmers and help them become competitive with their Southeast Asian counterparts who can

produce rice at a lower cost. “I have conditions that they [economic managers] have to meet. For example, they have to set aside P10 billion for rice farmers to help them mechanize and buy [better] seeds to hike their income and make them competitive,” she told reporters at the sidelines of a coastal cleaning event in Kawit, Cavite, on June 20. “Even if the government imposes a 35-percent tariff on rice from Vietnam, if our farmers are not competitive, they will still be edged out by foreign producers,” Villar added. She said the P10-billion fund should be initially shouldered by the national government. Later on, the amount can be drawn from See “Villar,” A12

n japan 0.4838 n UK 70.3400 n HK 6.8044 n CHINA 8.2454 n singapore 39.3028 n australia 39.3317 n EU 61.7924 n SAUDI arabia 14.2355

Source: BSP (21 June 2018 )

News

BusinessMirror

A2 Friday, June 22, 2018

www.businessmirror.com.ph

Duterte to head transition body for federalism?

C

By Bernadette D. Nicolas

ernment and vowed that he will not extend his term. Although Puno is aware of the President’s apprehension to take part in the transition, he told the BusinessMirror the commission decided to propose making the President chairman of the Transition Commission as “he is the best person to do it.” Puno, however, was quick to note that the Transition Commission shall be composed of

members who are experts in the fields of economy, law, fiscal management, governance or development. They will not be appointed by the President but by a five-member search committee to be headed by the Civil Service Commission. The members of the search committee shall be formed by members of academe, business and the marginalized sector, and the women sector. The Transition Commission shall also craft the necessary rules and promulgations, decrees, proclamations and other issuances and all acts to implement the transition plan. It shall also organize, reorganize and fully establish the federal government and the governments of the federated regions in accordance with the Constitution, he added. When it comes to the organization of the new government, especially in the selection of the new appointees, Puno said the Transition Commission shall also ensure people’s participation by involving faith-based civil society, indigenous people, sectoral

Puno also reiterated there will be no term extension for all incumbent elected officials once the new charter is adopted, as feared by some quarters.

implementation of the Ease of Doing Business law, which was signed into law by the President on May 28. Other government programs the PEDP notes that will boost exports are the following: Regional Interactive Platform for Philippine Exporters (Ripples Plus) of the Department of Trade and Industry (DTI), Agribusiness Support for Promotion and Investment in Regional Expositions (Aspire) of the Department of Agriculture, and the National Single Window Program of

the Department of Finance (DOF), among others. In 2017 the Neda said the country’s merchandise exports grew by 10.15 percent to $63.2 billion visà-vis 2016’s performance of -2.42 percent to $57.4 billion, based on a report by the Philippine Statistics Authority. Top sector gainers, the Neda said, include coconut products, sugar products, forest products, mineral products and electronics, among others. Pernia added that the PEDP 2018-2022 is very much aligned

with the PDP, which calls for boosting services exports, increasing the competitiveness of Philippine exports and exploring new markets for Philippine products. The Economic Development Cluster is an executive body mandated through Executive Order (EO) 43, series of 2011, to promote inclusive, sustainabl, and rapid economic growth. It was reorganized through EO 24, series of 2017, and now has 15 member-agencies, including the Neda. It is chaired by the DOF.

players is a mere 140 MHz of frequencies in the 700 MHz, 850 MHz, 2100 MHz, 2500 MHz and 3500 MHz spectra. Spectrum is the real estate on which telecommunication operators develop their respective network to deliver services to customers. The amount of spectrum assigned to a telco has an impact on the cost to build capacity, overall network performance, ability to offer new multimedia services and general customer experience of wireless services.

tion remains a “priority.” “The impression about third telco’s not pushing through must be because of the delay and of the new parameters that have been introduced,” Rio noted. “The third telco remains a priority of the President. We’re being pressured not only by the President, but also by the people.” The third player is seen to help disrupt the market by lowering price points, while challenging the two incumbents to improve their services. Philippine 4G speeds continued to lag behind neighbors in Southeast Asia, averaging at only 9.5 megabytes per second (Mbps) dur-

ing a three-month period ending January, data from think tank Open Signal showed. The country’s 4G connection is well below the 16.9 Mbps global average, ranking second to the last in terms of speed, next only to Indonesia. Interested parties for the third player’s slot include Now Corp., Philippine Telegraph and Telephone Corp. and Converge ICT Solutions Inc. Based on an indicative timeline released in February, the final version of the terms for the third telco’s selection should have been released on April 9. Bids were supposed to be accepted on May 24.

@BNicolasBM

ONSULTATIVE committee Chairman Reynato S. Puno said on Thursday that the committee is proposing the creation of a 10-member Transition Commission headed by President Duterte in a bid to transition toward federal government by 2022. “The Transition Commission shall have the power to formulate and to draft a transition plan for the orderly shift to a new system of government as provided for in the new constitution,” Puno said in a speech on the First National Forum and Public Consultation. The proposal is different from what the President has repeatedly said in past speeches, that he does not want to take part in the transition to a federal gov-

Govt. . .

Continued from A1

Infrastructure bill, which seeks to harmonize the country’s strategies on standards, testing, certification and quality accreditation, and thus support national authorities for consumer protection, free trade and environmental protection.

Boost to exports

The Plan also calls for the strict

NTC. . .

Continued from A12

“The beauty contest in the past resulted in frequency hoarding and those companies failed to improve service. They just made money by flipping the assets the government owns. I don’t want that to happen again,” Rio added. Data from the regulator showed that PLDT Inc. holds 400 megahertz of the total holdings, while Globe Telecom Inc. has rights to 325 MHz. What remains for budding telecom

‘Still a priority’

RIO clarified that the third telco selec-

or nongovernment and other community-based organizations. All the living past presidents shall also be consulted by the Transition Commission, according to Puno. “The inputs of our living presidents are of utmost value, but more than that, all of them together will symbolize our unity and our harmony and this is a new beginning,” he said. Asked if this might hinder the shift to federalism, Puno told the BusinessMirror: “No...because [if] they don’t want to participate, that is their prerogative.” He also noted that they had previously thought of putting all the living past presidents in one special group. “But we see also that there might be clashes of opinion, so that became the compromise—that they may be consulted,” he said.

No term extension

He added that the committee specifically provided, under the transitory provisions of the proposed draft federal constitution, that the terms of the president and vice president shall end on June 30, 2022, the same date that the Transition Commission must complete its work. On the sidelines of the forum, Puno said this transitory provision of “no term extension” under the new charter will also cover those who will win the 2019 elections. Asked what will happen to those elected for a six-year term by 2019, he said: “[Candidates] have to take that chance.”

30-year transition

Meanwhile, former senator and 1971 Constitutional Convention delegate Heherson Alvarez wondered aloud, in a speech during the forum, if the transition to federalism will be finished in 30 years. “How is the transition going to be achieved? It would be a very challenging question,” Alvarez said. “They say we can achieve it in a short span of time. Can you

Biz groups. . . Continued from A1

In a position paper, business groups warned investments might be at risk if regional states are permitted to reform their fiscal regime on their own. They said draft proposals from the House of Representatives and the consultative committee (Con-com) reviewing the 1987 Constitution leave many provisions of the division of financial powers open to dispute by future leaders. “First, investors are unsure if the proposed states will have the power to increase taxes, and, if so, which states would use such power, affecting corporate bottom lines. Investors are unsure if states will have added responsibility for collection and, if so, which states will perform poorly, thereby, affecting the delivery of infrastructure and other services,” the groups said. “Second, investors are unsure as to how much new spending power the local governments will exercise, and then whether the local governments will use this power wisely or in risky ways,” they added. As for this, they recommend that federal states be mandated to practice strict spending and budget deficit constraints, similar to how new European Union member-states committed to implement. The position paper was signed by the Financial Executives Institute of the Philippines, Makati Business Club, Management Association of the Philippines and the Philippine Chamber of Commerce and Industry. It was also signed by the Semiconductor and Electronics Industries of the Philippines Foundation Inc. and Cebu Business Club.

Equalizing budgets

The business groups also cautioned against drastically equalizing the budget allocation for regions should the country shift to a federal system. “Third, investors are also concerned about a planned equalization fund, which is meant to transfer undefined amounts during a transition period from more economically strong states to weaker ones,” they said. They argued that only a handful of federal regions have the capacity to independently maintain strong production and trade that will support their population. Those that do not have the capacity to sustain a stable economic backbone, the business groups said, will most likely see firms closing operations. “One or both of these factors could force big and small businesses to shut down, thereby triggering higher unemployment and making our people’s economic burden heavier, sparking a downward spiral in the overall quality of

build that political culture in just a short span of time?” Sought for comment, Puno told the BusinessMirror in a text message that the transition to shift to federalism by 2022 “depends on the competence of the Transition Commission.” “If they are real experts and use the proper people, it can be done,” he said. He also noted that the committee has proposed the first national, regional and local election under the new constitution to be held without postponement on the second Monday of May 2022. T he comm ittee is a l ready 100-percent done with its proposed draft federal constitution and is now subjecting it to final review for each provision. The final en banc vote for the entire draft is scheduled on June 28. The consultative committee targets to submit the draft to the President on or before July 9, the committee’s self-imposed deadline. This is to give the President time to review the proposed constitution before his State of the Nation Address on July 23.

life of our people,” they explained. “This could also compel the national government to bail out several, if not many, of the proposed federal regions and states, resulting in a bleak scenario for the national government and the economy. We are concerned that the likelihood that these economically detrimental scenarios could, in fact, materialize, thereby, triggering a significant decline in investments and a reversal of the strong economic profile achieved painstakingly by the country in the past years,” the business groups added. It is, therefore, the advice of the business groups that the national government design and roll out a program with the objective of expanding the capabilities of local governments and their officials. They said some reforms can be done immediately by amending the Local Government Code and enacting new laws and administrative measures, instead of waiting for the new constitution to be completed. They also raised the need to look into political families with a strong grip on dozens of provinces—one of the toughest criticisms against the shift to a federal system. The business groups said the creation of regional states will “escalate and intensify” political dynasties’ competition for control and patronage. If this be the case, they concluded the expected benefits from a decentralized system will easily be thrown out the window. “We are concerned that wellentrenched political bosses and dynasties will strongly resist any plan to consolidate provinces into federal regions. Therefore, either the proposed new federal regions will duplicate many of the provincial agencies and operations, thereby, resulting in higher government costs and turf wars, or the new federal regions will be weak and unable to deliver on the promised benefits of a shift to a federal system,” the business groups argued. They also find alarming the lack of participation from the Departments of Finance and of Budget and Management and the National Economic and Development Authority. They pointed out the economic team has a crucial role in the transition to a federal system, as they need to study its implications on the size of the national budget and the additional costs of creating new bureaucracies. The statement was issued at a time the Con-com is inching closer to filing the draft constitution for the President’s review. The panel wants to give the President at least a couple of weeks to go about the proposed changes in the highest law of the land before his third State of the Nation Address. With Beatrice Laforga and Gillian Villanueva

The Nation BusinessMirror

www.businessmirror.com.ph

Editor: Vittorio V. Vitug • Friday, June 22, 2018 A3

LGUs urged to implement crackdown vs ‘tambay’

S

By Butch Fernandez @butchfBM & Jovee Marie N. dela Cruz @joveemarie

en. Panfilo M. Lacson on Tuesday said the Duterte administration’s ongoing crackdown against so-called tambay, or street-corner loiterers, should be carried out by local government units (LGUs) and not the Philippine National Police (PNP). At the House of Representatives, meanwhile, a party-list group is seeking an investigation into the

“anti-tambay” campaign of the Duterte administration in Metro Manila. Bayan Muna Rep. Carlos

Isagani T. Zarate and Bayan Muna Chairman and former Rep. Neri Colmenares are seeking congressional probe following the killing of arrested tambay Genesis Argoncillo, a.k.a. ‘Tisoy,” who was arrested by police of the Station 4 in Novaliches, Quezon City on Friday and was found dead on Monday in his detention cell. “This is really condemnable considering that Tisoy was just supposedly sitting near his house when he was arrested by the police. There is no reason to arrest him in the first place, even if they use the Civil Code for public nuisance,” Zarate said. Lacson, a former PNP chief before his election to the Senate, pointed out that the arrests of loiterers

DOJ chief to dig deeper into DAP, PDAF cases

J

USTICE Secretary Menardo I. Gueverra on Thursday said that he has instructed the National Bureau of Investigation (NBI) to continue its case build against other personalities who should be held criminally liable for alleged misuse of their Priority Development Assistance Fund (PDAF) and the Disbursement Acceleration Program (DAP) allotments. The Senate chief prober of government anomalies, meanwhile, reiterated that former President Benigno S. Aquino III and ex-Budget Secretary Florencio Abad should face “malversation and graft charges not just usurpation of powers” for diverting Congress-approved budget allocations to bankroll the Aquino administration’s controversial DAP. Sen. Richard J. Gordon, chairman of the Senate Committee on Accountability of Public Officers and Investigations, on Thursday voiced his deep disappointment, even as he admits agreeing with the Ombudsman’s initial decision to indict Aquino and Abad for the lesser offense of usurpation. “I agree with the Ombudsman

that there was usurpation…Though I don’t know all the facts yet, I would have chosen the more stringent offenses which are graft and corruption and malversation,” Gordon said, adding: “They [Aquino and Abad] were even guilty of malversation, technical malversation.” The senator said the malversation charges already absorbed the case against usurpation. “In order to commit malversation, they usurped the powers of Congress,” he added. In a television interview, Guevarra also expressed readiness to talk with detained pork-barrel scam alleged mastermind Janet Lim-Napoles if the latter would signify her intention to share more information against some persons without any condition, such as transferring him to a safehouse. The justice chief reiterated that Napoles can no longer be placed under the Witness Protection Program and transferred to a safehouse by the DOJ since it is the Sandiganbayan which now has jurisdiction over her because of her pending pork-barrel cases. “So, we cannot do that, we cannot

move her to a safehouse, even if she wanted to because the court already have control over the case and over her person,” Guevarra noted. Guevarra added Napoles may still provide information even without protection from the DOJ if she wants to. Guevarra issued the statement this following the recent decision of Ombudsman Conchita Carpio-Morales to indict Aquino and Abad for usurpation of legislative powers and dismiss the technical malversation charges against them. Anti-pork barrel groups led by former Manila councilor and now Presidential Anti-Corruption Commission commissioner Greco Belgica have earlier submitted records with the DOJ that allegedly showed a conspiracy between the Aquino administration and some lawmakers for alleged misuse of DAP. The groups are seeking the indictment of Aquino and other officials for the anomalous disbursements of public funds through DAP, an economic stimulus program of the previous administration. Butch Fernandez and Joel R. San Juan

DOH, PhilHealth told: Be ready to implement mental health law

F

ollowing the signing of the Philippine mental health law, or the Republic Act 11036, a lawmaker on Thursday asked the Department of Health (DOH) to assure the public that there are available generic medicines and better PhilHealth coverage for mental illnesses. Assistant Majority Leader Ron Salo of Kabayan party-list said hospitals must beef up their rosters of mental health-care specialists. President Duterte earlier signed the Philippine mental health law to give Filipinos a comprehensive, effective and efficient national mental health-care system. Presidential Spokesman Harry L. Roque Jr., in a news statement issued on Thursday, said that the signing of Republic Act (RA) 11036 is a “testament of the President’s commitment to provide accessible and affordable mental health care and services to all Filipinos.” “It forms part of the government’s mandate to design and implement a national mental health program and integrate this as part of the health information system, among others,” he said. Roque, who was also one of the coauthors of the bill, said that the law recognizes the mental disorders as illness, which can be diagnosed and treated, adding that they hope that this policy will help neutralize the stigma attached to mental illness. “Implementing a universal mental health-care system in the country would provide more awareness regarding mental health among Filipinos, especially given the rising number of suicide cases among the youth,” he said. Salo continued: “Generic medicines for mental health illnesses and

conditions must be available in all hospitals and pharmacies.” The DOH and other implementing agencies, the lawmaker said, have to approve implementing rules and regulations with the detailed processes, standards and systems necessary to faithfully implement RA 11036. “I ask the DOH and DBM [Department of Budget and Management] to include enough funds to kick-start the provision of mental health care. Expanded and better PhilHealth coverage for mental health and generic medicines must be in the set of RA 11036 programs,” Salo said. He added colleges and universities should also supply the needed college graduates and professionals who will provide the expert and personal touch of a psychiatrist and psychologist. “School and workplace clinics need psychologists and psychiatrists,” he said. With this new law, the lawmaker said, Filipinos will be more open and immediately seek professional help when they are in mental distress. “When a family member goes missing, the family must be frank about the mental health state of the missing person. Families and barangays nationwide should be made aware of all the warning signs of mental distress and be trained to give the appropriate response,” he said. Meanwhile, Deputy Speaker Romero S. Quimbo of Marikina, principal author of the new law, said the mental health law aims to address current shortcomings in the government response to mental health needs of Filipinos by providing a coherent, rational

and unified response to mental health problems through the reconstitution and strengthening of the Philippine Mental Health Council, as well as the formulation and implementation of the National Mental Health Care Delivery System. He said the law declares the right of every person to have the right to the best available mental health-care services for those who live with mental disorders to be free from any form of exploitation and discrimination on the ground of their condition. It also provides for the establishment and operation of community-based mental health-care facilities with the target of eventually having one in each cluster municipality in the country. “Truly fantastic news. It’s a bill that languished in Congress for almost 20 years. Finally, the long wait is over. Today’s signing of the mental health law will hopefully usher in the prevention of thousands of suicides that have been plaguing our country,” Quimbo said. “For so many years, problems related to mental health have become a silent killer. It has literally become an epidemic. With the enactment, people grappling with depression, anxiety and bipolar conditions can now come out of the darkness,” he added. The lawmaker, citing DOH data, said 1 in 5 adults and 1 in 10 children in the country have experienced mental-health problems. “With the stigma attached to mental health in our society, many [have] to endure in silence. The actual figure is likely much higher,” Quimbo said. Jovee Marie N. dela Cruz and Bernadette D. Nicolas

were based on local ordinances and would “best be addressed” by local authorities. In a news statement, the senator said the perceived problem poised by so-called loiterers “can best be addressed...at the local level, without having to elevate it to the national level.” “If they say, being tambay violates local ordinances, keep it local,” Lacson said, adding: “The chief [and the] PNP doing all the explaining and justifying instead of the concerned local chiefs of police only adds up to the suspicion and criticisms.”

The senator suggested it would be better to leave it to local chiefs of police who can implement local ordinances under the provisions of the PNP law. For instance, Lacson recalled the highly successful anti-criminality experience of Davao City under then-Mayor Rodrigo Duterte, which gained widespread public support from local residents, noting that the “highly successful Davao City anti-criminality experience under then-Mayor Rodrigo Duterte gained widespread,

almost unanimous public support from Davaoeños, and as recent history tells us, even catapulted him to where he is now.” Moreover, the senator cited what he described as a “similar success story [involving] Marikina City, where the administration of thenMayor Bayani Fernando managed to address the issue as part of its anticriminality campaign.” Lacson cited the experiences in Davao and Marikina cities that could serve a “good template” for the PNP to replicate.

Japanese falls victim to feminine wiles at Naia By Recto Mercene

F

@rectomercene

EMININE beauty and wiles proved too irresistible for a departing Japanese national who fell victim to three suspected Salisi gang lady members. Right after a very brief chat with them in the departure area of the Ninoy Aquino International Airport Terminal 1 (Naia 1), the foreigner found his luggage containing cash, passport and other personal belongings stolen. The incident also left Tetsuya Makita stranded at the airport four days after the incident, and just as the country’s economic managers are in Tokyo for an economic road show. Makita, in faltering English, could only describe the suspects as “very beautiful.” “I was waiting at the departure curbside for my flight to Narita, Japan, at about 2:30 p.m, last Saturday when three very beautiful women asked me what time it is in Japan,” Makita narrated to Lt. Jaime Estrella of the airport police.

As he glanced to check his time piece and accede to one of thewomen’s request, her two other cohorts snuck behind Makita and went off with his luggage. “Then they said ‘good-bye,’” he told Estrella, not aware that the women were probably members of a gang victimizing unsuspecting passengers at the airport, especially foreigners. Makita appealed to Estrella to arrest the girls or locate his case containing his passport, other important documents, cellular phone and around ¥50,000, or P25,000. The airport policeman invited Makita to stay in his office while contacting the Japanese embassy to request another copy of Makita’s passport so he can leave the country. On Wednesday, with a newly minted passport in his hand, Makita thanked Estrella and the other police officers of the Naia, eventually boarding a Japan Airlines flight, which took off at 2:35 p.m. for Narita, Japan.

A4 Friday, June 22, 2018 • Editor: Vittorio V. Vitug

Economy BusinessMirror

10 ‘big ticket’ projects to start construction this year–DOF

T

he Department of Finance (DOF) has reported that 10 infrastructure projects out of the 75 big-ticket flagship projects under the Duterte administration’s “Build, Build, Build” (BBB) program are now moving to construction phase within the year. Data obtained from the DOF showed that the 10 projects taunted to usher the construction phase of the so-called Golden Age of Infrastructure are worth P59.759 billion. Finance Secretary Carlos G. Dominguez III earlier said that of the 75 high-impact infrastructure projects under the BBB program, 35 have already gone through the approval process through the National Economic and Development Authority Board. The projects to be undertake by the Department of Public Works and Highways (DPWH) include the Binondo-Intramuros Bridge through the aid of Chinese grants with a project cost of P4.607 billion; the Estrella-Pantaleon Bridge, also

₧59.759B Total estimated worth of the 10 infrastructure projects expected to enter initial construction phase this year. The Duterte administration has listed a total of 75 “BBB” projects for its massive infrastructure buildup plan.

through the aid of Chinese grants with a project cost of P1.367 billion; the Panguil Bay Bridge Project, under a loan from South Korea with a project cost of P4.858 billion;

the improvement of the remaining sections along Pasig River from Delpan Bridge to Napindan Channel through official development assistance with a project cost of P1 billion. In funding its infrastructure projects, the Philippine government has adopted the hybrid model of the public-private partnership (PPP) that utilizes a combination of funds from the National Treasury, inflows from ODAs and funds raised from bond floats at investment-grade rates. The projects being implemented by the Bases Conversion and Development Authority, on the other hand, include: the Clark Green City Government Center through a PPP with a project cost of P1.780 billion; the Clark Green City Commercial Center also through a PPP with a project cost of P850 million; and the Clark Green City Mixed-Income Housing also through PPP with a project cost of P3.331 billion. Earlier, economic managers explained that they are not inclined to stick solely to the PPP model, and would rather prefer the hybrid model, which, they said, is more flexible in that it can speed up delivery and completion. For the Department of Transportation (DOTr), the projects already

in the construction phase include the New Bohol Airport in its operations and maintenance concession through a PPP model with total project cost of P2.335 billion; and the Mindanao Rail Project (Phase 1)—Tagum Davao Digos Segment through a Chinese loan and funding from the General Appropriations Act with a total project cost of P35.257 billion. The government plans to spend around P8 trillion to P9 trillion on infrastructure projects under the Duterte administration or until 2022, with the government eyeing to spend P1.1 trillion on big-ticket infrastructure projects this year. The 10th project that is being implemented by the National Irrigation Administration is the Chico River Pump Irrigation Project through a Chinese loan with the project cost amounting to P4.372 billion. In May this year, the Department of Budget and Management reported that government spending on infrastructure rose by 95.9 percent for the month of April to P65.6 billion, driven by road-construction projects undertaken by the DPWH in line with the government’s BBB infrastructure program. The April 2018 spending represented a near doubling of the P33.5 billion recorded in the same month for 2017. Rea Cu

www.businessmirror.com.ph

No basis to suspend us, ERC commissioners say T

he Energy Regulatory Commission (ERC) and power-industry stakeholders have expressed alarm and indignation following the issuance of a three-month suspension order by the Office of the Ombudsman against four of its commissioners. On Thursday suspended ERC commissioners—Alfredo S. Non, Gloria Victoria C. Yap-Taruc, Josefina Patricia M. Asirit and Geronimo D. Sta. Ana—maintained that there is “no” basis for the suspension, maintaining that there has never been any instance of neglect of duty on their part. They were found guilty by the Ombudsman for simple misconduct for tolerating Manila Electric Co.’s (Meralco) alleged misuse of bill deposits. This is the second time in the past seven months that the Ombudsman has found the same ERC commissioners administratively liable for failing to fulfill their basic duty to protect the interests of the consumers. “There are existing regulations put in place by the commission regarding the bill deposit being enforced to protect the public. One of the regulations issued by the commission is the Magna Marta on the Rights of Electricity Consumers [MREC], where consumers are granted the right to demand the return of the deposit and the distribution utilities cannot ignore the said demand,” the ERC said. Notwithstanding the existence of these policies, the commission has been evaluating them beforehand, and had actually been working on the review of the policies in question.
It cited the efforts being undertaken to address such concerns even before the second suspension order was issued on May 18. For instance, the ERC said, it posted in its official website the initial draft “Rules to Govern the Monitoring and Reporting Process of Bill Deposits,” docketed as ERC Case 2017-006 on May 30, 2017. It asked all interested parties to submit their comments on the said draft rules on or before June 15, 2017. After considering all the comments submitted, the commission, likewise, issued the second draft rules on bill deposits in October last year. Again, the commission solicited comments from all interested parties giving them until end-October last year. In the intervening period, several letters were exchanged between Energy Secretary Alfonso G. Cusi and Undersecretary Pete Ilagan to update them on the progress of the public consultations.
 Ilagan used to be the president of the National Association of Electricity Consumers

for Reforms Inc., which filed the syndicated estafa and grave misconduct complaint against officials of Meralco and the ERC commissioners. Subsequently, the ERC scheduled public consultations nationwide. 
”The commission continues to work on the concern as well as other equally important and pressing issues under the Commission’s mandate. The industry has grown and developed in scope so much so that the agency has had to keep up with the needed actions and engagements to address regulatory gaps in different aspects of stakeholders/regulated entities’ operations,” the ERC said. It added: “In this light, we continue to work toward resolving issues and concerns as well as anticipate needed reforms within our sphere of responsibility. Rest assured, 
we remain steadfast in our commitment to diligently execute our mandate with utmost professionalism and integrity.” Industry players, meanwhile, expressed apprehension over the suspension order, which is now the subject of a petition filed with the Court of Appeals. The suspension of four commissioners, they said, will leave a vacuum of leadership within the agency, which is responsible for approving vital power contracts, certificates and other pertinent permits needed before a power project is cleared for commercial operation. “An ERC, without four commissioners, will stop functioning. That’s not positive for the industry,” Aboitiz Power Corp. President and Chief Operating Officer Antonio Moraza said in a text message. The ERC is the electric-power industry regulator composed of four commissioners and one chairman. The collegial body requires the presence of three members in order to issue orders, decisions and resolutions. In this situation, the absence of four of its members leaves the body powerless in making decisions critical to the energy sector. “I hope it will be resolved soon. Otherwise, ERC cannot function with a lot of pending major issue for decision,” said Meralco PowerGen (MGen) President Rogelio Singson in a separate text message. MGen is the power-generation arm of Meralco, which has seven power-supply agreement applications pending with the ERC. The first suspension order issued in December last year implied that the commissioners gave Meralco an undue advantage when the agency extended the submission of its PSA applications. Lenie Lectura

The World BusinessMirror

www.businessmirror.com.ph

Canada to legalize marijuana on Oct. 17

T

ORONTO—Marijuana will be legal nationwide in Canada starting October 17, in a move that should take market share away from organized crime and protect the country’s youth, Prime Minister Justin Trudeau said on Wednesday. The Senate gave final passage to the bill to legalize cannabis on Tuesday, legislation that will make Canada only the second country in the world to make pot legal across the country. Trudeau said provincial and territorial governments need the time to prepare for retail sales. “It is our hope as of October 17 there will be a smooth operation of retail cannabis outlets operated by the provinces with an online mail delivery system operated by the provinces that will ensure that this happens in an orderly fashion,” Trudeau said. The prime minister said at a news conference that the goal is to take a significant part of the market share away from organized crime. “Over the following months and indeed years, we will completely replace or almost completely replace the organized crime market on that,” he said. Canada is following the lead of Uruguay in allowing a nationwide, legal marijuana market, although each Canadian province is working up its own rules for pot sales. The federal government and the provinces also still need to publish regulations that will govern the cannabis trade. “The legislation is transformative,” said Justice Minister Jody Wilson-Raybould, adding it “marks a wholesale shift in how our country approaches cannabis, leaving behind a failed model of prohibition.” She urged Canadians to follow the existing law until the Cannabis Act comes into force. “The law still remains the law,” Wilson-Raybould said. Many questions remain unanswered, including how police will test motorists suspected of driving under the influence, what to do about those with prior marijuana convic tions and just how the rules governing home cultivation will work. The Canadian provinces of Quebec and Manitoba have already decided to ban homegrown pot, even though the federal bill specifies that individuals can grow up to four plants per dwelling. “Provinces can set their own laws. If individuals are challenging that law, they can challenge it,” Wilson-Raybould said. Trudeau said the government won’t discuss pardons of past convictions until legalization is in effect. “There’s no point looking at pardons while the old law is in the books,” Trudeau said. Trudeau said they are going to treat it like wine and tobacco, noting that few people will cultivate it at home, but it’s necessary to fight organized crime. Trudeau promised to legalize it during the 2015 election and had set a goal of July 1 for it. The provinces pleaded for more time. Canadian marijuana stocks have rallied in anticipation of legalization and jumped again on Wednesday. In the neighboring US, nine states and the District of Columbia have legalized marijuana. California, home to one in eight Americans, launched the United States’s biggest legal marijuana marketplace on January 1. The news was greeted with enthusiasm by marijuana advocates in the US. Morgan Fox, a spokesman for the National Cannabis Industry Alliance in the US, said Canada’s legalization should also serve as a wake-up call south of the border. “The most important takeaway is that it’s time for advocates in the industry to double down, so as to not be surpassed by the Canadian cannabis industry,” he said. Don Hartleben, who manages Dank of America, a retail cannabis store just south of the border in Blaine, Washington, said Canada’s legalization was not only politically exciting, but a potential business boon for him. Many of his customers are Canadian tourists who are terrified of trying to bring pot across the border, he said. If more use marijuana when they’re in Canada, more will use when they’re on vacation in the states. AP

Friday, June 22, 2018

A5

Opec works toward deal as Saudis propose plan for higher production

T

he odds of the Organization of the Petroleum Exporting Countries (Opec) reaching an oil-production deal increased as Iran edged away from a threat to veto any agreement that would raise output and Saudi Arabia put forward a plan that would add about 600,000 barrels a day to the global market.

At t he end of a d ay of d iplom at ic bac k-a nd-for t h i n V ien n a on Wed nesd ay, delegates were increasingly positive that a deal would be reached at Friday’s meeting of the Opec. A fter sitting dow n w ith several counterparts, Iranian Minister Bijan Namdar Zanganeh said he was optimistic about the outcome of the Opec meeting, a marked contrast to comments on Tuesday when he said a deal was unlikely. He also spoke with Russian Energ y Minister A lexander Novak by phone. “I’m confident that at the end of the day reason w ill prevail,” Saudi Energ y Minister K h a l id A l-Fa l i h told

reporters in Vienna after a succession of meetings. He e c ho e d e a r l i e r c o m m e nt s f rom Opec Secretar y- General Mohammad Barkindo. With two days until ministers from the Opec formally meet in Vienna to decide on policy, delegates attempted to find a plan to boost production and ease consumer anxiety about high oil prices that wouldn’t provoke a veto. The talks, held as the cartel hosted an international energy conference attended b y hu nd re d s of of f ic i a l s , e xe c ut ives a nd i nvestor s, will shape oil prices, energy stocks and currencies of petroleum-exporting countries for months to come.

China accuses US of trade ‘abuses’ as India hikes tariffs on US products

T

he globa l trade war deepened on Thursday with China reiterating it will hit back if the latest tariff threats from Donald J. Trump materialize, while India followed the European Union in slapping retaliatory levies on US goods. China is “fully prepared” to respond to any new list of US tariffs, according to a commerce ministry spokesman, who said the nation will use a combination of quantitative and qualitative measures. Trump on Monday evening ordered up identification of $200 billion in Chinese imports for additional tariffs of 10 percent— with another $200 billion after that if Beijing retaliates. India raised tariffs on a slew of items in retaliation for the US imposing higher levies on some products shipped from the South Asian nation, echoing steps taken by China, the EU and other trading partners. The import duty on chickpeas and bengal gram, or chana, has been increased to 70 percent and will take effect from August 4. The world ’s most powerful central bankers this week warned that escalating international trade tensions have started damaging confidence among companies, threatening the global economic expansion. Case in point: Daimler AG late Wednesday slashed its earnings outlook for the year, saying fewer Chinese consumers will buy Mercedes-Benz sport-utility vehicles because of tariffs Beijing is slapping on autos imported from the US. “Changes in trade policy could cause us to have to question the outlook,” Federal Reserve Chairman Jerome Powell said during a panel discussion at a European Central Bank

conference in Sintra, Portugal. “For the first time, we’re hearing about decisions to postpone investment, postpone hiring.” The EU this week triggered the first phase of retaliation against the US over its metal-import tariffs imposed on national secur it y grounds, making good on more than three months of threats to hit American goods with titfor-tat levies. Japa n ha s reser ved t he right to respond too, although it hasn’t yet. Canada’s retaliatory measures begin on July 1, and Mexico and other nations have also announced they will respond. “The US abuses tariffs to trigger trade wars everywhere around the globe and that will severely damage the world trade order, hurt the interests of trading partners, and also hurt its domestic companies and people,” Ministry of Commerce Spokesman Gao Feng said at a regular briefing in Beijing on Thursday. The US “always use other nations as scapegoats for their own problems,” he said. The Trump administration this week ratcheted up its accusations that China’s trade and intellectual-property practices are threatening US economic interests. The two nations are locked in a worsening cycle of retaliation on trade, with no public sign that negotiations are still happening. Both sides have promised to impose tariffs early next month on billions of dollars in goods. China had negotiated on agriculture and energy in early June and planned to negotiate on manufacturing and services, Gao said, adding that previous negotiations were in a “positive, constructive” manner.

Complex calculation

The Saudi proposal involves a complex calculation based on how much the group has cut production beyond the initial target of 1.8 million barrels a day set in 2016, the delegates said, asking not to be named discussing private meetings. Saudi Arabia and its allies estimate that total cuts now amount to 2.8 million barrels. The paper agreement would see production increase by 1 million barrels a day to bring the group back to target. However, because most countries can’t increase production, that would probably translate to just 600,000 barrels coming back on to the market—an increase in global production of about 0.5 percent. T he convoluted pl a n shows the difficulty Saudi Arabia has in bridging the gap between Russia, which has pushed for a larger increase, and Iran. The proposal has yet to win the backing of all Opec members, and may meet resistance from more hawkish countries in the group including Venezuela and Algeria, as well as Iran. Saud i A rabi a , u nder pressu re f rom US P reside nt Don a ld J. Tr u mp, wa nt s to u nw i nd some of t he c ut s b y e ng i ne e r i ng a

“moderate” supply boost i n t he second h a l f of t he yea r. Ru ssi a i s pu sh i ng for a n e ven l a rger quot a i nc rea se of 1. 5 m i l l ion ba r re l s a d ay. Iran, with some support from Venezuela, has so far rejected any increase, including one compromise mooted in private by some Opec officials for a 300,000-to600,000 barrel-a-day hike in the second half of the year. There’s a good reason for the two countries’ opposition—neither have the ability to increase their own production. Iran faces constraints on its oil exports after Trump reimposed sanctions on May 8. Venezuela’s oil industry is collapsing due to years of mismanagement and an economic crisis. When Opec and its allies, which include Russia, Kazakhstan and Mexico, agreed to cut output in late-2016, they announced a 1.8 million-barrel-a-day reduction. But problems in Venezuela, Mexico and other nations mean the reduction in May was far higher. Oi l pr ices surged nearly 75 percent, touching $80 a bar rel, af ter Opec and a l lies ag reed to c ut p r o du c t i o n i n l at e -2 016 . T h at s u r ge prompt e d t he U S

president to complain on Twitter t hat t he car tel was ar tif icia l ly inf lating pr ices. Benchmark Brent crude prices traded at $74.35 a barrel on Thursday morning in London. Trump’s involvement makes it difficult for Tehran to accept a compromise. Zanganeh has said the president is to blame for high prices because of his unilateral withdrawal from the international nuclear agreement. “Opec is an independent organization, not an organization to receive instruction from President Trump,” Zanganeh said on Tuesday. “Opec is not part of the Department of Energy of the United States.” Opec takes its decisions by unanimity, so if Iran were to wield its veto Saudi Arabia would be left only with the option of assembling a coalition of willing countries to bypass Tehran’s opposition. Riyadh could also act unilaterally boosting output, as it did in 2011 after a meeting ended in acrimony without a deal. “Opec is listening to consumers,” Bob Dudley, the chief executive of BP Plc., said on the sidelines of the Opec conference in Vienna. “They pay attention to consumer nations.” Bloomberg News

BusinessMirror

A6 Friday June 22 2018 SICHUAN AIRLINES CO, LTD CONDITIONS OF INTERNATIONAL CARRIAGE FOR CARGO

Statement of the General Manager General Conditions of International Carriage for Passengers and Baggage of Sichuan Airlines is developed in accordance with Montreal Convention, Civil Aviation Regulations on International Carriage for Passengers and Baggage, Operation Certification: Large Airplanes Air Carrier (CCAR-121), Dangerous Goods Regulations and other current applicable laws, rules and regulations. General Conditions are one part of the contract of international cargo transport of Sichuan Airlines, the regulatory document at company level of Sichuan Airlines, and the described guidelines, policies, provisions and standards of international cargo transport are the tenet and criteria all staff and ground service agent must abide by in ticketing and ground service of international cargo transport. Each department and person engaged in international cargo transport, including branch, sales department, representative office and ground agent, must strictly follow and carry out the General Conditions. The issuance of General Conditions will instruct and improve the standardization, normalization and programming of the international cargo transport of Sichuan Airlines, and ensure constant improvement of flight operation safety, regularity and service of Sichuan Airlines. Sichuan Airlines General Manager: 01/12/2017 Table of Contents Chapter 1 Definitions Chapter 2 Applicability Chapter 3 Cargo Shipping Chapter 4 Air Waybill Chapter 5 Rates, Freight Charges And Other Charges And Fees Chapter 6 Shipment In Course Of Carriage Chapter 7 Delivery of Shipment Chapter 8 Carriage of Special Cargo Chapter 9 Charters Chapter 10 Claim, Liability and Indemnity Chapter 11 Legal Action Chapter 12 Effectiveness, Modification and Interpretation

01 04 05 10 11 14 19 22 24 25 30 31

CHAPTER 1 DEFINITIONS Art. 1 Definitions Except as otherwise provided herein, the implications of the below definitions in Conditions of International Carriage for Cargo of Sichuan Airlines hereinafter refers to: (1) CARGO Anything carried or to be carried in an aircraft except mail, and baggage carried under a passenger ticket and baggage check, but includes baggage moving under an air waybill. (2) INTERNATIONAL AIR TRANSPORT Any transport in which, unless otherwise stipulated by the convention, according to the contract of transport by air between the parties, the place of departure, the place of destination or agreed stopping place, whether or not there be a break in the transport of a transshipment, is not situated within the territory of the People’s Republic of China. (3) SHIPPER’S LETTER OF INSTRUCTION Shipper’s letter of instruction refers to the written file provided to the carrier, for the purpose of completing the air waybill when the consignor entrusts the carrier to fill in the air waybill. (4) AIR WAYBILL The air waybill made out by or on behalf of the shipper which initially evidences the transport contract between the shipper and carrier(s) for carriage of goods on the flights of the carrier(s). (5) SHIPMENT One or more packages, receipted for under a single air waybill, for carriage to one consignee at one destination address. (6) CARRIER Carrier refers to the air carrier including Sichuan Airlines that lists the airline code on the air waybill or the personnel or organization agrees to provide any services related to such air transport. (7) CONTRACTING CARRIER Any carrier who has concluded a contract of transport by air in his own name with a shipper. (8) ACTUAL CARRIER Any carrier to whom the performance of the whole or part of the transport has been authorized by the contracting carrier. (9) AGENT The individual or organization specifically authorized to act in the name of or on behalf of carrier or shipper in relation to the carriage of cargo. (10) SHIPPER The person or organization whose name appears on the air waybill or shipment record, as the party contracting with carrier for the carriage of cargo. (11) Consignee The person or organization whose name appears in the consignee column of the air waybill, and the carrier instructs whom to deliver the shipment. (12) DAYS Days refer to calendar days, including Sunday and public holidays; the day on which the transport document is signed, the day of flight departure, or the day of publishing notice is not included when validity period is determined. (13) Advance payment It refers to all fees related to the cargo transport that the shipper needs to pay for when shipping the cargo in line with the cargo transport contract. (14) Freight to collect It refers to the fees related to the cargo transport that the consignee needs to pay for when receiving the cargo. (15) Charters The shipper contracts all the shipping space of the aircraft to transport cargo. (16) Special Drawing Right—SDR It’s also called paper gold, which is a reserve asset and unit of account established by the International Monetary Fund. (17) Continuous transport It refers to the business that several carriers implement the transport in line with the Air Cargo Transport Contract, no matter it’s one contract or more than one contracts this business is a single transport that cannot be divided. (18) Code sharing The flight number (code) of one airlines can be used on the flight of another airlines. (19) Convention It refers to the following applicable documents. Convention for the Unification of Certain Rules for International Carriage by Air (Warsaw Convention for short) signed at Warsaw on 12th, Oct. 1929. Revision of the Convention for the Unification of Certain Rules for International Carriage by Air Signed At Warsaw On 12th, Oct. 1929 (Hague Convention for short) at Hague on 28th, Sept, 1955. Convention for the Unification of Certain Rules for International Carriage by Air (Montreal Convention for short) signed at Montreal on 28th, May, 1999. (20) Laws and rules Refer to the laws and regulations of the departure country; transit country and destination country; the regulations and orders of the local authority and related rules of the carrier. CHAPTER 2 APPLICABILITY Art. 2 Applicability (1) These conditions shall apply to the international carriage of cargo, including all services incidental thereto, performed by Sichuan Airline for remuneration. (2) Unless otherwise specified by the law and rules, this will be followed by the air transport of cargo among China main land; Hongkong; Macau Special Administrative Region and Taiwan Area. (3) Except as otherwise provided in the conditions, contract and air waybill of gratuitous carriage, therse conditions shall also apply to the gratuitous carriage which accepted by Sichuan Airlines. (4) With respect to carriage of cargo performed pursuant to a charter agreement, these conditions shall only apply to the conditions contained or referred to in such charter agreement and provisions of air waybill. (5) In the event of contradiction or inconsistency between these conditions and the applicable laws or rates rules of Sichuan Airlines, the latter shall prevail. The rest provisions of these conditions shall remain effective. (6) Except as otherwise provided, in case of divergence between these conditions and the provisions contained in the regulations of cargo transportation of Sichuan Airlines, these conditions shall prevail. (7) As for the carriage of mail, follow the agreement and treaty between governments, if there is any. These conditions are not applicable. (8) SCAL agent; employees or the representatives have no right to change, revise or abandon any items of this section. (9) For some flight routes, Sichuan Airlines operates cargo transport or the cargo transport entrusted by other carrier through code-sharing flight. This means that even though the shipper books Sichuan Airlines’ flight and holds the air waybill of Sichuan Airlines, the cargo shipped may be actually transported by another carrier. Under this circumstance, these conditions are also applicable for cargo carriage. CHAPTER 3 ACCEPTABILITY OF GOODS FOR CARRIAGE Art. 3 General (1) The Shipper is obligated to comply with applicable international conventions, national laws, government regulations of any country flown from, to, or over. (2) Subject to national laws and government regulations of any country flown from, to, or over, the shipper shall be obligated to comply with the formalities required by customs and other government authorities. (3) The shipper is obligated to comply with relevant regulations of SCAL related to the transportation of cargo. (4) The cargo to be transported shall be in compliance with the following conditions: 1. The transportation, the exportation or importation thereof is not prohibited by the laws or regulations of any country to be flown from, to or over; 2. They are packed in a manner meeting the requirements of carriage by air; 3. They are accompanied by the requisite and effective shipping documents; They are not likely to endanger aircraft , persons or property; They are not likely to cause annoyance to passengers. Art.4 Responsibilities of the Shipper The shipper shall be liable for any loss which may be caused thereby to SCAL or to any other person to whom SCAL is liable, by reason of the shipper’s violation of applicable laws, government regulations, orders and requirements. The shipper shall furnish such information and documents as am necessary to meet the formalities provided by laws and administrative rules and regulations before the cargo can be delivered to the consignee. The shipper shall be liable to SCAL for any damage occasioned by the absence, insufficiency or irregularity of any such information or documents, unless the damage is due to the fault of SCAL, his servants or agents. SCAL is under no obligation to inquire into the correctness or sufficiency of required information or documents unless otherwise provided by laws and administrative rules and regulations. (3) The shipper shall learn about cargo carriage related regulations and requirements of Sichuan Airlines before shipment. The shipper shall be responsible for the losses of Sichuan Airlines or others due to his violation of these regulations or requirements. (4) When shipper undertakes to lead a unit lead device (ULD) he must comply with SCAL’ s loading instructions and shall be liable for and indemnify carrier against all consequences of any non - compliance with such instructions. (5) Joint liability a. The shipper is liable for paying off all the fees to SCAL. Ensure that fees the consignee rejected to pay for or cannot afford are paid, including collected freight; poundage of the collected freight; custody charge and etc. The shipper should also bear the cost that the cargo are transported back under his/her instruction. 2. The shipper should ensure to pay all the charges; fines and loss that SCAL and related carried borne, which are caused by the following reasons; (1) There are prohibited goods in the cargo shipped. (2) The restricted cargo does not satisfy the restriction condition. (3) The label; number; address and package or the name of the shipper cargo are incorrect or incomplete. (4) The loss; delay or error of the import and export license; the license or documents needed. (5) The actual name; weight and size of the cargo shipper are not equivalent with thoses on the cargo freight sheet. (6) The fines; detention or refusal to entry the emigration delivered by the local authority such as the custom; police or inspection and quarantine, which are caused by the shipped cargo or documents. Art.5 Packing

(1) The shipper shall adopt appropriate materials for interior and exterior packagings and pack cargo in proper condition suitable for air transportation in accordance with the nature, weight of goods. As for the valuable cargo, currency and cash with the risk of being robbed or stole, the shipper shall adopt neutral packing which does not show the cargo contained inside. (2) The shipper shall ensure that the packaging of consigned goods in course of carriage would not be out of shape, damaged, dispersed and leaked, and the packaging would not cause personal injury, damage and pollute aircraft, equipment or other cargo, baggage, and mail. (3) Each consignment must be packed with the material satisfying the laws and regulations of the country of departure, stop-over and destination during cargo shipment. Art. 6 Marking and Labeling (1) Each package must be marked on the outside of the package with information of airport of origin, destinations, name and address of shipper and consignee, and telephone number, etc.. The writing should be clear; legible and persistent. If the cargo shipped is dangerous goods, the shipper must mark on the outside of the package in line with the requirements of applicable law and regulations. (2) For the carriage of cargo, identification label(s) shall be affixed or attached to each package. (3) If the cargo shipper is special cargo then the special cargo label(s) and handling label(s) shall be affixed or placarded to the outside of the package according to the nature of goods. (4) Any irrelevant mark(s) and label(s) already on the package reused shall be removed or obliterated to ensure fast, safe and accurate transport. Art. 7 Weight and Dimension (1) The unit of measurement of weight is kilogram, and the minimum rounding off unit is 0.1 kilogram. (2) Consignments, the extreme dimensions of which result in an average of more than 6000 cubic centimeters per kilogram, shall be calculated with 6000 cubic centimeters equaling to 1 kilogram. (3) SCAL may define the limits of weight and dimensions of cargo by routing, aircraft types, and airport facilities of origin, transit and destination. (4) The sum of length, width and height for each package shall not be less than 40 centimeters. If the size is smaller than this , the shipper should amplify the package. Art. 8 Declared Value (1) Declared Value refers to a special declaration of interest which a shipper has made to Sichuan Airlines at the time when cargo was handed over in delivery at destination. The declared value should be filled in corresponding column of the cargo freight sheet. (2) Except as otherwise provided, declared value for carriage of each air waybill shall not be in excess of USD 100,000 or its equivalent. (3) The waybill will be effective after the signature of both sides. The shipper cannot propose any change for the declared value filled on the waybill. (4) When the declared value exceeds 19 per kilogram SDRs or the equivalent money, the extra charge for the declared value should be paid. (5) SCAL has the right to decide the value limit of the cargo. If the declared value of the cargo exceeds the limit stipulated by SCAL, SCALwill request the shipper to exercise partial shipment or other safe measures. If the shipper does not exercise partial shipment or other safe measures, SCAL has the right to refuse the transport. Art. 9 Reservation Reservation shall be made in advance by the shipper if he consigns the urgent goods, special cargo, and cargo needing special handling. CHAPTER 4 AIR WAYBILL Art. 10 Air Waybill (1) An air waybill shall comprise of three originals, and nine copies. The three originals bear on the reverse the conditions of contract and have the same validity. Original 1 shall be for the issuing carrier, Original 2 shall be for consignee, and Original 3 shall be for the shipper. Ail air waybill is a nonnegotiable document, and a negotiated air waybill shall be invalid. (2) The shipper or his/her agent shall make out an air waybill, and shall deliver such air waybill to carrier simultaneously with the cargo. Upon the request of the shipper or his/her agent, the carrier may make out an air waybill, he shall be deemed, subject to proof to the contrary, to have done so on behalf of the shipper. After the waybill is filled, the shipper and SCAL should both sign or stamp before it come into force. (3) The shipper is responsible for the correctness, accuracy and completeness of the particulars and statements relating to the cargo which he inserts in the air waybill. The shipper shall indemnity the carrier against all damage suffered by him, or by any other person to whom the carrier is liable, by reason of the irregularity, incorrectness or incompleteness of the particulars and statements furnished by the shipper. (4) Air Waybills, the writing on which bas been altered or erased, need not he accepted by carrier. (5) If the particulars and statements inserted by shipper are incorrectness or incompleteness, SCAL may be authorized to complete or correct the air waybill or particulars or statements to its best ability without being under any obligation to do so. (6) Carrier has the right to require the shipper to make out separate air waybills when there is more than one package. (7) If the package of the shipped cargo has obvious defect, the shipper should annotate it on the waybill clearly, or else SCAL will request the shipper to annotate it again on the waybill or authorize SCAL to revise or re-annotate for him/her. If the waybill delivered with the cargo does not cover all required details or the details are not correct, the shipper can authorize SCAL (SCAL has no obligation) to supplement or revise the waybill as far as possible. CHAPTER 5 RATES, FREIGHT CHARGES AND OTHER CHARGES AND FEES Art. 11 Rates (1) The Rate is the amount charged for the carriage from the airport of departure to the airport of destination of a unit of weight (kg. or lb. ). (2) Rates will be used subject to the rules and conditions published in Sichuan Airlines’s regulations and rate tariffs. Art. 12 Freight Charges and Other Charges and fees (l) The Freight Charges governed by these conditions are those duly published by carrier and in effect on the date of the issuance of the air waybill by SCAL, and it is the amount to be calculated by multiplying the applicable rate per kg/lb by the chargeable weight, excluding charges of surface transportation, and other expenses between airport and municipal districts and between two airports at the same city. (2) Other charges and fees refer to the money that needs to be paid to SCAL when the shipper consigns the cargo or the consignee receives the cargo, which refer to all other fees related to the cargo transport except for the air transport fees and the extra charge of the declared value. Unless otherwise declared, the charges and fees should include but not limited to the following: 1. Service of cargo claim; cargo delivery form or to the airport or the cargo station in downtown that SCAL provides service. 2. Storage fees. 3. Insurance fees. 4. Service fees of freight collect. 5. Customs charges. 6. The charges or fines that the responsible institute requests including the customs duty. 7. The charges caused by the fix (SCAL) of package which is not in good condition. 8. The fees of reloading the cargo or the transport fees caused by the return of cargo in other forms or return to the departure station. 9. Extra fees. 10. Other similar service or charges. Art. 13 Payment of Freight Charges and Other Charges and Fees (1) The payment for the charges and other charges shall be made in the currency acceptable to SCAL. (2) All prepaid charges and other charges applicable to a prepaid shipment shall be paid by the shipper. Charges collect shipments will be accepted only when they are in full compliance with laws and regulations of state of destination and rules of SCAL. All charges and other charges collect to a collect shipment shall be paid by the consignee. (3) Full applicable charges, whether prepaid or collect, and other charges shall be deemed fully earned by SCAL, whether or not the cargo is lost or damaged, or fails to arrive at the destination specified in the air waybill. (4) The shipper shall also guarantee payment of all costs, expenditures, fines, penalties, loss of time, damage and other sums which SCAL may incur or suffer by reason of the inclusion in the shipment of articles the carriage of which is prohibited or restricted by law, or the illegal, incorrect or insufficient marking, numbering, addressing or packing of packages or descriptions of the cargo, or the absence, delay or incorrectness of any export or import license or any required certificate or document, or any improper customs valuation, or incorrect statement of weight or volume. (5) SCAL shall have a lien on the cargo in the event of non-payment until the shipper or the consignee pays for the freight charges and other charges and fees. SCAL shall have the fight to dispose of the cargo in the case of non- payment, provided that prior to such disposition carrier shall inform the shipper or the consignee addressed in the air waybill. Except as otherwise provided in the regulations of customs and other Government authorities, SCAL shall have the right to dispose of the cargo to be had a lien upon at public or private sale, and to pay itself out of the proceeds of such sale any and all such amounts. No such sale shall however, discharge any liability to pay any deficiencies, for which the shipper and the consignee shall remain jointly and severally liable. (6) The shipper and the consignee shall guarantee payment of all charges, other charges, taxes, and advances of SCAL, and remains jointly and severally liable to indemnify such charges. (7) SCAL may cancel the carriage or the delivery of the shipment upon refusal by the shipper to pay the charges and other charges. Art. 14 Adjustments in rates and other charges Rates and other charges, which have been adjusted, will not be applicable for the air waybill issued. CHAPTER 6 SHIPMENTS IN COURSE OF CARRIAGE Art. 15 Acceptance of Cargo (1) Carrier shall comply with applicable laws, government regulations, orders and requirements in the event of acceptance of cargo. 1. Carrier shall not accept the cargo prohibited by the applicable laws, government regulations, orders and requirements. 2. Carrier shall not accept the cargo which needs to accomplish the formalities of quarantine and inspection required by applicable laws and government regulations, orders and requirements before these formalities have not been fulfilled. 3. Sichuan Airlines will not accept the shipment which is out of handling capability and storage capability of Sichuan Airlines. (2) Sichuan Airlines will implement security check over shipped cargo as per regulations of administrative authority. When necessary, Sichuan Airlines will open the case to check the cargo and related documents or files, and the shipper has the obligation to assist Sichuan Airlines. Sichuan Airlines reserves the right to implement security check over the cargo consigned, cargo packaging, and related documents and files, but Sichuan Airlines shall be under no obligation to implement compulsory check. Carrier shall implement a security inspection or maintain other security procedures. Art. 16 Routings (1) Carrier shall undertake to carry the cargo with reasonable and rapid dispatch. (2) Carrier assumes no obligation to carry the cargo by any specified aircraft or over any particular route or routes, or to make connections at any point according to any particular schedule, notwithstanding that the same may be stated in the air waybill. Art. 17 Cargo Transportation Time Limits (1) To ensure that shipped cargo can be timely transported, the shipper shall predetermine transport flight and date with Sichuan Airlines. With no special reasons (such as government acts and force majeure, etc.), if the shipper has agreed with Sichuan Airlines on the transport flight and date or transport time limit and so indicated in the air waybill, Sichuan Airlines shall carry the cargo as per agreements; with no agreements achieved, Sichuan Airlines shall carry the cargo within the reasonable time limits in accordance with the sequence of receiving shipped cargo.. (2) Carrier may determine the sequence of dispatch on the basis of the time agreed with the shipper or in the order of acceptance of the cargo. (3) Times shown in carrier’s timetables or elsewhere are approximate and not guaranteed, and form no part of the contract of carriage, and not regard as the time of commencement and accomplishment of the carriage and delivery of cargo thereto. Art. 18 Precedence of Transportation (1) Subject to applicable government laws, regulations and orders, SCAL is authorized to determine the priority of carriage as between shipments, and as between cargo and mail or passengers. When necessary, SCAL can continue the flight without transporting any cargo or part of the cargo. (2) If as a result of determining such priority prescribed in the preceding paragraph of this Article, cargo is not carried or carriage thereof is postponed or delayed or if any articles are removed from a shipment, SCAL will not be liable to shipper or consignee or to any other party for any consequences therefore. (3) In the event of determining such priority, SCAL shall consider profits of the shipper and arrange reasonable carriage for the cargo postponed or delayed. (4) In order to avoid damage or danger and with the permit of the customs, SCAL can leave the cargo at any possible location or storage place during the transport meanwhile notify the shipper or consignee. Associated fees should be paid by the shipper and consignee. SCAL can also deliver the cargo to other carrier to continue the transport to the destination. Art. 19 Shipper’s Right of Disposition (1) Subject to his liability to carry out all his obligations under the contract of transport of cargo by air, the shipper shall have the right to dispose of the cargo by withdrawing them at the airport of departure or destination, or by stopping them in the course of the journey on any landing, or by calling for them to be

delivered at the place of departure, or in the course of the journey to a person other than the consignee named in the air waybill, or by requiring them to be returned to the airport of departure; provided that the shipper must not exercise this right of disposition in such a way as to prejudice SCAL or other shippers and he must repay any expenses occasioned by the exercise of this right, provided also that every exercise of the right of disposition must he applicable to the whole shipment under a single air waybill or a single shipment record. (2) The fight of disposition must he exercised fully in compliance with applicable laws, government regulations, orders, and requirements of concerned countries, otherwise, SCAL shall refuse to carry out the orders. (3) Instructions as to disposition must be given in writing with presenting the original air waybill (for shipper) to SCAL. (4) If it is impossible to carry out the orders of the shipper SCAL must so inform him forthwith. (5) The shipper should bear the costs incurred in exercising its right of cargo disposal and shall be responsible for the losses caused to Sichuan Airlines or other carriers due to the implementation of cargo disposal. Art. 20 SCAL’s Right of Disposition (1) To ensure timely transport of the cargo shipped, SCAL may change the flight, the route or routes, type of aircraft or carrier specified on the air waybill under the case that it is unable to or there is not enough time to inform the shipper. (2) SCAL reserves the right, without notice, to cancel, terminate, divert, rearrange or postpone any flight, or to proceed with any flight without all or any part of the cargo because of following factors. 1. Government regulations, instructions or requirements; 2. Force majeure, including but not restricted to weather, disturbance, political turmoil, embargo, war, curfew, strike, sabotage, unstable international situation, terrorism acts or the war or warning against terrorism acts from government, etc. (3) To achieve reasonable transport, SCAL is authorized to carry the consignment without notice wholly or partly by any means of surface transportation or to arrange such carriage. (4) To ensure flight safety or to follow laws and regulations, SCAL may decide to remove some or all articles consigned from a shipment, at any time or place whatsoever, and to proceed with the flight without them. (5) SCAL shall give prompt notice to the shipper or to the consignee in the event of exercising the right of disposition. (6) Unless otherwise stipulated by laws, Sichuan Airlines shoulders no responsibility for the cargo which is cancelled or rearranged or finally unloaded at other places other than destination airport, or the cargo carriage is cancelled, rearranged, proceeded with carriage or terminated due to factors stated in item (2). Art. 21 Suspension of Carriage (1) Carrier reserves the right to terminate the carriage of any cargo if carrier reasonably determines in good faith that the carriage of the cargo is in violation of any applicable law, government regulation, demand, order or requirement. The shipper shall be liable for any consequences therefore. SCAL may hand the cargo over to the competent authority if necessary. The shipper may at his own expense dispose of the cargo which is so terminated by requiring SCAL to return it to the airport of departure if it is prepared fully in compliance with air transportation conditions. (2) Cargo which, because of inherent defect, quality or vice or because of defective packing, is likely to endanger aircraft, persons or property may be transferred or destroyed by SCAL without notice any time at any place. Sichuan Airlines shoulders no responsibility. CHAPTER 7 DELIVERY OF SHIPMENT Art. 22 Notice of Arrival Notice of shipment arrival will be sent to the consignee promptly by SCAL, which will be sent by ordinary methods such as phone call or written paper. SCAL is not liable for non-receipt or delay in receipt of such notice which is not caused by SCAL. Art. 23 Delivery of shipment (1) The shipper’ s right of disposition shall cease at the moment when, after arrival of the cargo at the destination, the consignee takes possession or requests delivery of the cargo or air waybill, or otherwise shows his acceptance of the cargo. Nevertheless, if the consignee declines to accept the air waybill or the cargo, or if he cannot be communicated with, such right of disposition shall continue to vest in the shipper. (2) Except as otherwise specifically provided in the air waybill, delivery of the shipment will be made only to the consignee named therein. (3) Except as otherwise provided, the consignee must accept delivery of and collect the shipment at the place designated by SCAL. (4) In the case of loss or damage, delay to goods, the person entitled to delivery may make a complaint to SCAL forthwith at the time of delivery. After being examined and confirmed by both sides, as per actual situations, every complaint must be made in writing upon the air waybill or by filling in Report to Damage or Loss with signing or sealing by both sides. This record can be regarded as the evidence for the consignee to lodge a claim to Sichuan Airlines afterward. (5) Receipt by the person entitled to delivery of the cargo without complaint is prima facie evidence that the same has been delivered in good condition and in accordance with the contract of carriage. (6) Delivery to the consignee shall be deemed to have been effected, when the shipment has been delivered to customs or other government authorities as required by applicable State laws and regulations. Under these circumstances, the consignee or shipper will be notified. (7) By accepting delivery of the air waybill and/or the shipment the consignee shall become liable for payment of all costs and charges in connection with the carriage. Unless otherwise agreed the shipper shall not be released from his own liability for these costs and charges and will remain jointly and severally liable with the consignee. SCAL may make delivery of the shipment or the air waybill conditional upon payment of these costs and charges. (8) SCAL may take necessary measures of disposal without notice at the cost of the shipper, when the perishables become deteriorated, or live animals become dead, or any cargo which is likely to endanger aircraft, persons or property. Art. 24 Disposal of Non-Delivery Cargo (1) If the consignee refuses or fails to take delivery of the shipment within the prescribed period after its arrival at the airport of destination, SCAL will endeavor to comply with any instructions of the shipper set forth on the face of the air waybill, or in the shipment record. If such instructions are not so set forth or cannot reasonably be complied with, SCAL shall notify the shipper of the consignee’s failure to take delivery and request his instructions. (2) SCAL may take measures in accordance with the provisions set forth in carrier’s regulations applicable to the disposition of non-delivery cargo in the following cases: 1.failure to take delivery of the shipment within 14 days of receipt of consignment at destination; 2.refusal of consignee to accept delivery or to pay the relevant payments incurred; 3.failure to notify the consignee at the address stated in the air waybill. (3) SCAL will take the following methods to handle the cargo which cannot be delivered. 1. Notify the departure station, which should ask for handling comments from the shipper, and handle the cargo in line with the comments put forward by the shipper. 2. Send the cargo back to the departure station and wait for the instruction of the shipper. 3. When the storage period reaches 30 days, the cargo should be handled in line with the laws and regulations of the local country. 4. Exercise a public auction of all the cargo or part of the cargo. SCAL has the right to compensate the transport cost; fees; prepaid charges and fees caused by the auction for itself; the third party carrier or other legal claim settlement. All these charges should be paid by the shipper or the consignee and the auction of the cargo does not relieve the responsibility of the shipper and the consignee to pay the difference. (4) SCAL should notify the handling result to the shipper after it handles the cargo, which cannot be delivered, in line with the laws and regulations. (5) The shipper should pay for all the charges and fees caused by the cargo, which cannot be delivered, including the fees caused by the transport of the cargo back to the destination station and the consignee should have joint liability. (6) If the cargo consisting perishable goods faces deterioration due to the flight delay; unclaimed cargo; the consignee refuses to collect the cargo or other reasons, SCAL has the right to take all reasonable measures without previous notice, which are included but not limited to the following: 1. Request handling comments of the shipper and handle the cargo in line with the comments of the shipper, who should pay for all the fees. 2. Destroy or abandon all the cargo or part of the cargo. 3. Exercise proper handling of the cargo without advance notice on the basis that the shipper will bear all the risks. If the cargo will be sold off or exercise an auction, the revenue will be used to settle all the cost and fees of SCAL. CHAPTER 8 CARRIAGE OF SPECIAL CARGO Art. 25 Carriage of Special Cargo (l) Shipments to be termed as “Special Cargo”，which SCAL accept, refer to dangerous goods, live animals, perishables, valuable cargo, and human remains, etc.. (2) When the shipper undertakes to deliver special cargo, the provisions of this Chapter shall apply. In respect of cases which are not regulated by this Chapter, other related provisions of these Conditions may apply. Regulations about special cargo transport of related country and SCAL should be followed. (3) The carriage of special cargo must be in compliance with the conditions set forth in SCAL’s regulations applicable to the carriage of special cargo. The shipper shall be liable to and indemnify SCAL or any other person to whom SCAL is liable for all damage occasioned by non-observance of the regulations aforementioned. (4) The special cargo must be packed in accordance with the provisions in SCAL’s regulations applicable to the packing requirements of special cargo. (5) Special cargo is acceptable only under SCAL’s approval, and arrangement must be made in advance. (6) The shipper and the consignee shall deliver and take delivery of special cargo at the place designated by SCAL. (7) The carriage of special cargo whose nature is of more than one class or division shall be in compliance with the regulations of the respective class or division simultaneously. (8) With respect of carriage of special cargo, SCAL shall comply with regulations of special cargo on the basis of observance of the conditions relating to the carriage of general cargo. CHAPTER 9 CHARTERS Art. 26 Charters (1) The charterer may apply to SCAL for chartered flights, a charter agreement is signed therewith by both sides. (2) Both the charterer and SCAL shall undertake their respective responsibilities, rights, and obligations prescribed in a charter agreement except for any reason beyond their control or not reasonably to be foreseen, anticipated, and predicted. (3) The Shipper’s Letter of Instruction and the Air Waybill shall be filled out for each chartered flight as documentary evidences of the carriage. (4) The charterer and SCAL may determine whether attendants will be needed according to the nature of goods. The attendants will purchase tickets by the charter agreement and go through the prescribed check- in and boarding formalities. (5) In the event of modification to the charter agreement, the charterer shall pay to SCAL the relevant charges occurred in carrying out the charter agreement. (6) Any space of the chartered flights may be fully utilized by the charterer, nevertheless the maximum allowable traffic loads must not be exceeded. If SCAL needs to utilize the unused space of the chartered flight, he shall consult with the charterer. CHAPTER 10 CLAIM, LIABILITY AND INDEMNITY Art. 27 Claim (1) In the case of damage or delay to goods, a complaint is made to SCAL in writing by the shipper or the consignee. Such complaint shall be made within the periods prescribed in the following paragraphs: in the case of visible damage to or partial loss of the goods, immediately after its discovery and at the latest within fourteen (14) days in written form from the date of receipt of the goods; in the case of other damage to the goods, within fourteen (14) days in written form from the date of receipt of the goods; in the case of delay, within twenty-one (21) days in written form from the date on which the goods were placed at the disposal of the person entitled to delivery; In the case of non-delivery of the goods, within one hundred and twenty (120) days in written form of the date of issue of the air waybill. (2) Every complaint must be made in writing upon the document of transport or by separate notice dispatched within the periods prescribed in the preceding paragraph. (3) Failing to make complaint within the periods provided in paragraph 1 of this Article, the consignee or the shipper shall be deprived of the fight to claim compensation from SCAL, save in the case of fraud on the part of SCAL. (4) For the claimed settlement which does not meet the convention; laws and regulations, SCAL should give a clear reply to the shipper within specified time limit. Art. 28 Carrier’ s Liability (1) SCAL shall be liable for the destruction or loss of, or damage to any cargo, if the occurrence took place during the transport by air, excepted for the liability which SCAL is excluded by convention; laws and regulations. The “period of the transport by air” refers to the whole period during which file checked cargo is in the charge of SCAL, whether in an airport or on board a civil aircraft, or, in the case of a landing outside the airport, in any place whatsoever. (2) SCAL shall be liable for damage occasioned by delay in the transport by air of cargo; provided that SCAL is not liable if he proved that he and his servants or agents have taken all necessary measures to avoid the damage or that was impossible for him or them to take such measures. (3) SCAL is not responsible for the direct or indirect loss caused by force majeure or

www businessmirror com ph the case that the convention; laws and regulations are followed. When the shipped cargo is subject to certain kind of cargo that SCAL prohibited or against appropriate law and regulations, SCAL will refuse to transport and will not be responsible for this. (4) SCAL is not liable if he proves that the destruction or less of, or damage to, the cargo resulted solely from one or more of the following: 1. Inherent defect, quality or vice of that cargo; 2. Defective packing of that cargo performed by a person other than SCAL or his servants or agents; 3. Internal articles short or damaged with perfect packaging and sealing marks unchanged; 4. Rational spoilage of goods; 5. An act of war or an armed conflict; 6. An act of public authority carried out in connection with the entry, exit or transit of the cargo. 7. Force majeure. (5) Carrier shall not be liable for any consequential damage sustained in the event of destruction or loss of, or damage to, or delay in the carriage of cargo. (6) SCAL is not liable for the decay or deterioration of the cargo due to the change of weather; temperature or altitude or other normal cases or the transport time is within the due date. (7) SCAL will not be liable for any loss, damage or expense arising from death due to natural causes or death or injury of any animal caused by the conduct or acts of the animal itself or of other animals such as biting, kicking, goring or smothering, nor for that caused or contributed to by the condition, nature or propensities of the animal, or by defective packing of the animal, or by the inability of the animal to withstand unavoidable changes in its physical environment inherent in the carriage by air. (8) SCAL is not liable for any damage, delay or loss in connection with the carriage of cargo with attendants, unless such damage, delay or loss is proved to have been caused by the default of SCAL In no event will SCAL be liable for death or injury to an animal attendant caused or contributed to by the condition, conduct or acts of animals. (9) In the transport of cargo, if the carrier proves that the destruction, loss, damage or delay was caused by or contributed to the fault of the person claiming compensation, or the person from whom he derived his right, SCAL shall he wholly or partly exonerated from his liability in accordance with the extent of the fault that caused or contributed to such damage. (10) SCAL is not liable for any loss or damage arising from the exercise of shipper’s right of disposition, unless such loss or damage is proved to have been caused by the willful default of SCAL. (11) Sichuan Airlines issuing an air waybill for carriage over the lines of another carrier does so only as agent for such other carrier. Sichuan Airlines shall not he liable for the destruction, loss, damage or delay of cargo occurring on other carrier’s lines. (12) Unless otherwise stated, SCAL is not liable for the indirect loss caused by the damaged cargo or caused by the transport under this condition including the loss of turnover; profits; interest or income; missed opportunities; currency risk; reduction of output or administrative punishment and etc. , no matter whether SCAL knows about the possibility of above-mentioned loss. (13) Whenever the liability of SCAL is excluded or limited under these conditions, such exclusion or limitation shall apply to agents, servants or representatives of SCAL and also to any carrier whose aircraft of other means of transportation is used for carriage. (14) Carriage to be performed under one contract of carriage by several successive carriers is regarded as a single operation. In the case of transport to be performed by various successive carriers, each carrier shall be deemed to be one of the contracting parties to the contract of transport, and assume liability in so far as that part of the transport is concerned which is performed by it in accordance with the contract. Art. 29 Indemnity SCAL’s extent of liability is decided by the applicable convention and law. The following items are applicable unless otherwise stated by the applicable convention or law, which is stated for the profit of the legal claimant. (1) If the shipper has made a special declaration of value for carriage and has paid the valuation charges, any liability shall in no event exceed such declared value for carriage as the loss incurred in course of carriage. SCAL, who can prove that the actual loss or damage is below the declared value, will indemnify the shipper for the actual loss or damage. (2) As per regulations of Warsaw Convention, Hague Protocol and the Montreal Convention, for the cargo without a special declaration of value for carriage, the liability of SCAL shall not exceed 19. Special Drawing Rights ( SDRs) per kilogram or 20 USD or equivalent currency. SCAL, who can prove that the actual loss or damage is below such liability of carrier for damage, will indemnify the shipper for the actual loss or damage. (3) ln the case of destruction, loss, damage or delay of part of the shipment, or of any object contained therein, the weight to be taken into consideration in determining the amount to which SCAL’s liability is limited shall be only the weight of the package or package concerned. Nevertheless, when the destruction, loss, damage or delay of part of the shipment, or of an object contained therein, affects the value of other packages covered by the same air waybill, the total weight of such package or packages shall also be taken into consideration in determining the limit of liability. In the absence of proof to the contrary, the value of any such part of the shipment destroyed, lost, damaged or delayed as the case may be, shall be determined by reducing the total value of the shipment destroyed, lost, damaged or delayed has to the total weight of the shipment. (4) Claimant should provide with the actual value proof of the cargo when lodging the claim. (5) The insurance company should make compensation for the cargo lost in transportation, which insured air transport insurance, in line with related rules. CHAPTER 11 LEGAL ACTION Art. 30 Legal Action (1) The right to damages shall be extinguished if an action is not brought within two years, reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the transportation stopped. The method of calculating the period of limitation shall be determined by the law of the Court to which the case is submitted. (2) In the event of destruction or loss of, or damage to, or delay in the carriage of cargo which is performed by various successive carriers, the consignor shall have a right of action against the first carrier, and the consignee shall have a right of action against the last carrier, and further, each may take action against the carrier who performed the transportation during which the destruction, loss, damage, or delay took place. (3) In relation to the transport performed by the actual carrier, an action may be brought against that carrier or the contracting carrier separately, or against both together; the carrier against whom an action has been brought shall have the right to require the other carrier to join in the proceedings. (4) The Chinese law is applicable for the dispute derived from this condition or related to this condition. Under the precondition that the convention is applicable, the lawsuit about the loss can be exercised at the court which the claimant selected; the local court where SCAL head quarter located; or the court where the SCAL branch located, where the contract is signed, or at the place within the governance of the destination court or other judicial jurisdiction. CHAPTER 12 EFFECTIVENESS, MODIFICATION AND INTERPRETATION Art. 31 Effectiveness This provision takes effects since the day it issued. Should some items of this provision are considered invalid or cannot be performed as per applicable law, other items of this provision remain effective. Art. 32 Modification Sichuan Airlines reserves the right to modify any articles contained in these Conditions without notice in accordance with the procedures prescribed by CAAC. However, no such modification shall apply to a contract of carriage after the date of issuance of the air waybill by carrier. The agents, employees or representatives of Sichuan Airlines have no right to change, modify or give up any item of this provision. Art. 33 Interpretation The Conditions will be responsibly interpreted by Sichuan Airlines.

M

C

O

C

w

A

m

W

m S

S

w

A

SCA G S SCA

A

SCA w

A SCA

P C

mm

m

m

w

m

w

w

w

B

A

C

m

A

m

m

C

m

m

m P

m SCA m

w

wm m SCA

m

w mm

m

w

w

C

P

w

C

P SCA

w

R

m

m

w

R

m

m

m

m w

w

E

m

m

m

D

w w

w

mm m W N m

m

w m

w

m

m

m

C

m

S R E C

P

m m

m

m

m

w

m

O S C

m

m

S SCA

m w U

A

W w

P

S S

D w M m

D A

w

m

m

M

m

w m

SDR

M m

m

m

m

m

w m

m

m

m m w

w B

C

C

B

m

w w

w

U

m

w

B

B

m

D m w

m

w

m

M

m

w

A G E

R w

SCA

SCA

SCA

C SCA M

w

w

SCA w

m w

w

w w

C

C H C

R

m

C SAR M C

K

General Conditions of International Carriage for Passengers and Baggage

SAR w w

m

w

m

w

w

SCA M

C w

C

E

SCA

C

m

C

m

m C

m E

C A

Chapter 1 Definitions Article 1 The following terms used in General Conditions of International Carriage for Passengers and Baggage of Sichuan Airlines Co., Ltd (hereafter referred to as “the Conditions”) are defined as follows unless otherwise specified: (1) SCAL refers to Sichuan Airlines Co., Ltd. On the ticket, the word code of Sichuan Airlines is 3U. (2) Convention refers to whichever of the following instruments that is applicable: The Convention for the Unification of Certain Rules Relating to International Carriage by Air (“Warsaw Convention” for short), signed at Warsaw, 12 October 1929; The Warsaw Convention as amended at The Hague (“Hague Protocol” for short) on 28 September 1955; and The Convention for the Unification of Certain Rules for International Carriage by Air (“Montreal Convention” for short), done at Montreal on 28 May 1999. (3) International Carriage refers to air carriage in accordance with air carriage contract between SCAL and the passenger, whether there is a break or transfer in the transportation or not, of which the origin, appointed stopover or destination is not located in the People’s Republic of China. (4) SCAL’s Regulations refers to rules, other than the Conditions, published by SCAL and in effect on date of publication, governing carriage of passengers and/or baggage and shall include any applicable tariffs in force. (5) Carrier refers to the pub m w C

w

m

m

SCA

m w

A

S m

A

R

m

mm

w

SCA

w

m

m

R

A w

SCA w m

SCA

w

m

m

m

A

A

m

m

m

mm

m

m

m

mm

m

m

w

m

m

m w

mm

E

m

w

m

V m w m

w w

w

SCA SCA SCA SCA

w

SCA

SCA

w

m m

m

m

SCA w

W

m

m

P

SCA SCA

mm

V

P

A

w SCA

m P

SCA

w w

W

w w

m

m w

SCA

E

m mm

w

A

w

U

m

P

m m

S

Y

m

w

SCA w SCA SCA

SCA

SCA

A SCA

Table of Contents 01 05 06 13 14 15 17 18 31 33 34 38 39 42 42 43 44 44 46

R SCA

A

w

m

C

m

Sichuan Airlines General Manager: 01/12/2017

Chapter 1 Definitions Chapter 2 Applicability Chapter 3 Tickets Chapter 4 Fares, Fees and Charges Chapter 5 Reservations Chapter 6 Ticketing Chapter 7 Check-in and Boarding Chapter 8 Baggage Chapter 9 Schedules, Cancellation, Alterations of Flights Chapter 10 Changes to Tickets Chapter 11 Refunds Chapter 12 Conduct aboard Aircraft Chapter 13 Refusal and Limitation of Carriage Chapter 14 Arrangement of Extra Service Chapter 15 Administrative Formalities Chapter 16 Passenger Services Chapter 17 Successive Carrier Chapter 18 Liability for Damage Chapter 19 Effectiveness and Modification

G

w

m w

C Statement of the General Manager

m

w

B

General Conditions of International Carriage for Passengers and Baggage of Sichuan Airlines is developed in accordance with Montreal Convention, Warsaw Convention, Civil Aviation Law of the People’s Republic of China, Civil Aviation Regulations on International Carriage for Passengers and Baggage, Operation Certification: Large Airplanes Air Carrier (CCAR-121), Dangerous Goods Regulations and other current applicable laws, rules and regulations. General Conditions are one part of the contract of international carriage for passengers of Sichuan Airlines, the regulatory document at company level of Sichuan Airlines, and the described guidelines, policies, provisions and standards of international carriage of passengers and baggage are the tenet and criteria all staff and ground service agent must abide by in ticketing and ground service of international carriage for passengers. Each department and person engaged in international carriage for passengers and baggage, including branch, sales department, representative office and ground agent, must strictly follow and carry out the General Conditions. The issuance of General Conditions will instruct and improve the standardization, normalization and programming of ticketing, check-in service, and baggage transportation etc. in the international passenger carriage of Sichuan Airlines, and ensure constant improvement of flight operation safety, regularity and service of Sichuan Airlines.

SCA

SCA w

m B

W

C A

m

w

w

m

w

SDR

m A C

m m w

N

R

m

w

w

m

w

w w

m

w

SCA

mm m

m SCA

m

BusinessMirror

www businessmirror com ph takeoff time, SCAL will decide whether to extend the period of validity of such passenger’s tickets and tickets of the passenger’s accompanying persons in accordance with SCAL’s regulations applicable to the fare paid. (4) In the event of death of a passenger enroute, the tickets of his or her accompanying persons may be modified by extending the validity, or refunded in accordance with involuntary refunds regulations. Any such modification and refund shall be made upon receipt of a proper death certificate and any such extension of validity shall not be for a period longer than 45 days from the date of death shown on the death certificate. 3.4 Loss of Paper Ticket Article 10 General Rules Passenger shall be liable for the loss of unused tickets, flight coupons, miscellaneous charges orders or exchange coupons of MCO, or any other documents for transportation. SCAL will not be responsible for any effect on such passenger’s itinerary. SCAL will decide whether or not to refund, replace such documents in accordance with its concerned regulations and certain condition. Passenger has no right to claim that SCAL must refund or replace such tickets or documents. Article 11 Report of Loss of Ticket (1) In case of loss or mutilation of a ticket, or part thereof, or non-presentation of a ticket containing the passenger coupon and all unused flight coupons, the passenger must report in writing to SCAL or its authorized agents. Such passenger shall complete the form of “Application of Lost Ticket”. Formalities of reporting the loss of group tickets must be done before the deadline time of check-in. Report of loss cannot be done on tickets of charter flights. (2) When reporting for loss of a ticket, the passenger must present his/her valid identity document, advise the date and place of issuance and the agent coupon or its copy of the original ticket, and present proof of loss issued by the public security department where the ticket is lost and other data or proof satisfactory to SCAL. If the reporter is not the passenger, valid identity documents of the reporter and the passenger must be presented. (3) The application for report of loss of a ticket shall be handled as soon as possible within the period of validity of the ticket. (4) If someone other than the person entitled to be carried or to be refunded has traveled with or refunded the ticket, SCAL shall not be liable to the person so entitled. Article 12 Re-issuance of Lost Ticket and Deadline for Refunding (1) On principle, a fixed ticket, once lost, cannot be allowed to be reissued. But on special occasions, after it’s approved by SCAL’s direct sales department which deals with the loss report, and after the passenger provides proofs in accordance with Article 11 of the Conditions confirmed by SCAL, it is allowed to reissue a ticket on original flights if the following requirements are met: 1. Passenger fills Application of Loss Report for tickets of Sichuan Airlines Co, Ltd. 2. Passenger declares to agree to compensate for any damage caused thereby to SCAL, including the damage caused by others’ using or refunding the lost ticket, and the necessary lawsuit fees. (2) An open ticket or MCO, once lost, can only applied for refund and cannot be applied for re-issuance. (3) SCAL has the right to refuse to reissue lost tickets which have not been confirmed. In that case if passenger requests to continue to travel, passenger shall purchase a new ticket at fares applicable then. (4) The deadline for refunding tickets purely operated by SCAL is 60 days after 13 months from the date of commencement of travel, or the date of issuance if no portion has been used; if any sector is operated by another carrier than SCAL, the deadline for refunding is 60 days after 18 months from the date of commencement of travel; Within this period, if someone other than the person entitled to be carried or to be refunded has traveled with or refunded the ticket, SCAL shall not be liable to refund to the person so entitled. (5) If printed itinerary of e-ticket is lost because of reasons of passengers, according to Temporary Regulations on Itineraries of E-tickets of Air Carriage, it cannot be re-printed. 3.5 Sequence and Usage of Coupons Article 13 (1) Ticket purchased by passenger is only applicable for the transportation from the origin to destination via the any agreed transition point as listed on the ticket. The fare paid by passenger is based on SCAL’s tariff rules and the transportation listed on the ticket. Fare is the basic content of the transportation contract between SCAL and passenger. (2) Coupons of ticket must be used in the sequence listed on the ticket. Coupons that have been used not in sequence shall be refunded according to the refund restrictions of SCAL’s tariff rules within the period of validity. (3) If passenger wishes to change any aspect of transportation, he/she must contact SCAL in advance. The fare for passenger’s new transportation will be recalculated and passenger will be given the option of accepting the new price or maintaining his original transportation as ticketed. If passenger is required to change any aspect of transportation due to Force Majeure, passenger must contact SCAL as soon as practicable and SCAL will use reasonable efforts to transport passenger to the next stopover or final destination. (4) If passenger changes his transportation without SCAL’s agreement, SCAL will assess the correct price for passenger’s actual travel. Passenger will have to pay any difference between the price paid and the total price applicable for the revised transportation. (5) Some changes on the content of transportation such as changing the place of departure or reversing the direction of travel, can result in an increase of price. Many fares are valid only on the dates and for the flights shown on the ticket and may not be changed at all, or only upon payment of an additional fee. (6) Each flight coupon contained in a ticket will be accepted for transportation in the class of service on the date and flight for which space has been reserved, as shown in the flight coupon. When a ticket is originally issued without a reservation being specified, space may be later reserved subject to SCAL’s tariff rules and the availability of space on the flight requested. (7) If passenger does not show up for any flight, for which he/she is holding a reservation, without advising SCAL in advance, SCAL may cancel passenger’s return or onward reservations as shown in the ticket. 3.6 Over-booking According to the common practice of international civil aviation industry, SCAL may make suitable over-booking on some flights. Under particular circumstances, it may result in some passengers’ failure to travel on flights as arranged. When there is not enough space, SCAL will seek for passengers voluntary to disembark and will help them check in on priority. For passengers who cannot travel due to over-booking, SCAL will do its best to arrange them on the soonest available flight, and will give a certain amount of compensation. Chapter 4 Fares, Fees and Charges Article 14 Application of Fares (1) Fares apply only for carriage from the airport at the point of origin to the airport at the point of destination. Fares do not include fees for ground transport service and additional services. (2) The applicable fare refers to the fair published by SCAL and combination fare specified by SCAL if no fare is published. The applicable fare is the fare for the flights in effect on the date of commencement of the carriage covered by the first coupon of the ticket. (3) Once the ticket is issued, if the fare is adjusted, the payment remains the same. If the passenger requests to change the flight or date, the fare to be charged may be affected. (4) A special fare ticket is subject to the conditions specified thereof. Article 15 Routing Fares apply only to routings published in connection therewith. If there is more than one routing at the same fare, the passenger may specify the routing prior to issue of the ticket. If no routing is specified, SCAL or its authorized agent may determine the routing. Article 16 Taxes, Fees and Charges Any tax, fee or charge imposed by government or other authority, or by the operator of an airport, in respect of a passenger or the use by a passenger of any services or facilities will be in addition to the published fares and charges and shall be paid by the passenger and collected by airlines at the time of ticket issuance. On purchasing a ticket, passenger will be advised of taxes, fees and charges not included in the fare, most of which will normally be shown separately on the ticket. The taxes, fees and charges imposed on air travel are constantly changing and can be imposed after the date of ticket issuance. If there is an increase in the applicable tax or a new tax, fee or charge is imposed after ticket issuance, passenger will be obliged to pay it. Likewise, in the event any taxes, fees or charges which passenger has paid to SCAL at the time of ticket issuance are eliminated or reduced, passenger may be entitled to a refund of any such taxes, fees or charges as have been eliminated or reduced. Fuel surcharge and air insurance surcharge are published and charged by the carrier according to relevant regulations of the State or region. Infants are exempt from fuel surcharge; children are charged the same amount of fuel surcharge as adults. Article 17 Payment Fares and charges are payable in any currency acceptable to SCAL. When the currency paid is not the currency of published fare, passenger shall pay according to the exchange rate specified by SCAL. Unless otherwise agreed by SCAL and passenger, fares and charges are all paid in cash. Chapter 5 Reservations Article 18 Reservation Requirements (1) Reservations are not confirmed until recorded as accepted by SCAL or its authorized agents. Reservations shall be tentative unless and until the passenger makes payment by the time fixed by SCAL according to the formalities specified by SCAL, and SCAL or its authorized agents have issued a validated ticket for the carriage for such space is reserved and issued the related flight coupon to the passenger. (2) According to SCAL’s regulations, certain fares may have conditions that will limit or exclude the passenger’s right to change or cancel reservations. (3) SCAL keeps the right to suspend reservations for a certain flight when it is necessary. Article 19 Special Passengers (1) Passengers who need accompanying due to operation, safety and security reason (e.g., infants, children, the old, invalid, and person under escort etc.) must be booked in the same compartment as that of the accompanying person. (2) A special passenger is someone, during the flight, to be accorded courteous reception; or needing special care on account of his or her physical or mental conditions; or acceptable for carriage in certain conditions. The reservation may be accepted after SCAL and other carriers concerned consent to the carriage of such special passengers. Article 20 Ticketing Time Limits If a passenger has not paid for the ticket prior to the specified ticketing time limit, SCAL may cancel the reservation. Article 21 Personal Data (1) The personal data provided by passenger to SCAL is intended for reservation and arrangement of related carriage service. Therefore, passenger authorizes SCAL to retain his/her personal data and transmit the data to related SCAL departments, other carriers concerned, or service provider concerned, or organizations authorized by laws and regulations. The objects may be in any country. SCAL will keep the personal files provided by passengers in great confidentiality. (2) The validity period of valid document provided by passenger shall at least be 6 months since the date of commencement of travel. Passenger shall be liable for the authenticity of such data. SCAL will not be responsible for verification. (3) If passenger refuses to provide such data, SCAL may refuse for carriage. Article 22 Cancellation of Reservation (1) Application for change or cancellation of reservation must be raised within the valid period stipulated by SCAL. When fares have correspondent restrictions, passenger’s change or cancellation of reservation shall be subject to such restrictions. (2) If passenger does not use his/her reserved seat without advising SCAL or its authorized agents in advance, SCAL may cancel passenger’s return or onward reservations as shown in the ticket; and collect service fee from such passenger. Chapter 6 Ticketing Article 23 General Rules (1) Passenger can purchase tickets at the sales office of SCAL or SCAL’s authorized agencies, or at SCAL’s websites. Passenger can inquire or purchase ticket at SCAL’s hotlines: SCAL’s websites: http://www.sichuanair.com SCAL’s hotlines: 95378, 028-88888888 SCAL’s hotlines for direct sales: 95378、028-88888888 (2) Passenger shall fill up the Reservation Form for Passengers, providing valid identity document information of his/her own or other valid identity documents produced by public security departments; meanwhile passenger must ensure such information is the consistent with that of the documents during check-in, ensure the validity period of his/her passport is at least 6 months since the date of commencement of travel, and clearly notice the different route and class tariff, endorsement, and refund regulations. (3) SCAL has the right to request passenger produce his or her valid passport or other traveling documents, but will not bear responsibility for the authenticity and the validity of such documents. (4) When purchasing a ticket for child or infant, a valid birth certificate must be presented. (5) When purchasing a ticket for a passenger seriously sick or over 32 weeks pregnant, passenger shall provide a valid medical certificate issued by a county or city level medical department or equivalent medical department level for such carriage that is accepted by SCAL. SCAL will not accept a passenger who is over 36 weeks (included) pregnant for transportation. (6) Each passenger shall respectively hold his/her own ticket. (7) Passengers less than 5 years old must be accompanied by a passenger over 18 years old and with full capacity for civil conduct. Children accompanied by an adult should buy the ticket of the class service level same with his/her accompany.

(8) SCAL or SCAL’s authorized agencies shall sell one-way, consecutive, or round-trip tickets according to the request of passengers. (9) The sales venues or websites of SCAL or SCAL’s authorized agencies shall provide necessary materials such as flight timetable, flight map, air tariffs, passenger information, etc. Chapter 7 Check-in and Boarding Article 24 General Rules (1) The passenger shall arrive at the airport within the time limit stipulated by SCAL, and go through boarding formalities of ticket inspection, baggage consignment and boarding pass claiming on time with ticket and personal valid identification certificate. (2) If the passenger fails to arrive on time at the check-in counter, or fails to arrive at the boarding gate before the stipulated boarding gate closure time, or fails to show his/her valid identification certificate and transport certificate, or he/she is not ready to travel, SCAL may cancel the space reserved for the passenger and will not delay the flight. SCAL is not liable to the passenger for loss or expense due to the passenger’s failure to comply with the provisions of this Article. If the passenger wishes a refund, the amount of such refund shall be processed in accordance with the voluntary refund regulations. (3) Check-in deadline time varies at every airport; if passengers do not understand the check-in deadline time of SCAL flight departure airport, they shall consult sales staff in advance or search on SCAL official website http://www.sichuanair. com. Passengers shall reserve enough time for check-in formalities. If passenger fails to complete boarding formalities before stipulated flight checkin deadlines, SCAL has the right to cancel passenger’s reservation. (4) SCAL and SCAL’s ground handling agencies shall open check-in counters in time, accept valid tickets produced by passengers, and process check-in formalities quickly and correctly. In check-in, it shall carefully check the validity of passenger’s passport (at least 6 months since the date of commencement of travel), visa or endorsement. (5) Before boarding, passengers and their baggage and hand-carry items must go through security check. Article 25 Arrangement of Seats (1) SCAL will endeavor to honor advance seating requests, however, SCAL cannot guarantee any particular seat, and only is responsible to provide passenger seat according to his/her reserved class. (2) For operational, safety or security reasons, the passenger needing to be accompanied shall be seated next to his/her accompanying persons. SCAL reserves the right to assign or reassign seats at any time, even after boarding of the aircraft. (3) Seats near the aircraft’s emergency exits shall be specifically arranged by SCAL. Article 26 Mis-catch or Wrong Boarding (1) If mis-catch happens due to reasons of passengers, ticket shall be dealt according the rules of voluntary refund. (2) If mis-catch happens due to reasons of SCAL, SCAL shall arrange passenger to travel on the soonest flight; if passenger requests for refund, it shall be dealt according to rules of involuntary refund. (3) If passenger boards a wrong flight and the passenger requests to stop traveling at the destination of the flight boarded, no extra fee shall be charged and no fee shall be refunded. (4) If wrong boarding happens due to reasons of SCAL, SCAL shall arrange passenger to travel on the soonest flight to the destination listed on passenger’s ticket; no extra fee shall be charged and no fee shall be refunded. If passenger requests for refund, it shall be dealt according to rules of involuntary refund. Chapter 8 Baggage 8.1 General Rules Article 27 Baggage carried by SCAL, is divided into checked baggage and un-checked baggage according to the carriage responsibility. Article 28 Items Unacceptable as Baggage Passenger shall not include in his or her baggage (both checked baggage and unchecked baggage) or carry on to the cabin: (1) Items that do not constitute baggage as defined in paragraph 33 of Article 1 in Chapter 1 of the Conditions. (2) Items that may endanger the safety of aircraft, staff or property onboard, such as the items listed in the Technical Instructions for the Safe Transport of Dangerous Goods by Air issued by ICAO (ICAO-TI), Dangerous Goods Rules issued by IATA (IATA-DGR) and SCAL regulations, especially for the following items forbidden to transport (included but not restricted to), which are stipulated by SCAL: explosives; gas (including flammable gas, inflammable and nontoxic gas, toxic gas and compressed gas, etc.); flammable substance (including flammable liquid, flammable solid, such as lighter and match, etc.), spontaneous combustible substance and substance that would release flammable gas in contact with water; oxidizer and organic peroxide; toxic substance and infectious substance; radioactive substance or magnetic substance; corrosive substance; various dangerous goods such as threatening and stimulating substance, etc. (3) Carriage of the items is prohibited by applicable laws, regulations or orders of the departure country, destination country, transit country or the country over flown. (4) Articles those in the opinion of SCAL are unsuitable for carriage by reason of their weight, shape, size or character. (5) Live animals, except as pets and service dogs provided for in 8.6. (6) Firearms and ammunition other than for hunting and sporting purposes are prohibited from carriage as baggage. Article 29 Items unacceptable as checked baggage Passenger shall not include in checked baggage the following items. If such items included in checked baggage is lost or damaged, SCAL is liable for it only as common checked baggage. (1) Lithium battery and lithium battery mobile power bank (eg. power bank) cannot be accepted as check-in baggage or contained in check-in baggage. But each passenger may bring the lithium battery and lithium battery mobile power bank (eg. power bank) of following specification with him/her: 1. For lithium ion batteries with rated energy over 100wh but not exceeding 160wh and lithium metal batteries with a lithium metal content exceeding 2g but not exceeding 8g, 2 can be carried as carry-on baggage when approved by SCAL; for lithium ion batteries with rated energy over 50wh but not exceeding 100wh and lithium metal batteries with a lithium metal content exceeding 1g but not exceeding 2g, no more than 2 can be carried; for lithium battery mobile power bank (eg. power bank), regarded as back-up lithium battery, with rated energy no more than 160wh, regardless of the quantity of rated energy, only 2 can be carried at most. 2. The lithium battery with a safety defect recalled by the manufacture and the lithium battery and lithium battery mobile power bank (eg. power bank) with unclear marks, of which the rated energy or the lithium metal content cannot be identified are prohibited to carry. The lithium battery mobile power supply (eg. power bank) for other uses other than personal use is prohibited to be carried. The lithium battery mobile power supply (eg. power bank) is prohibited to be used during flight. (2) Fragile items; (3) Perishable items; (4) Cash or valuable securities; (5) Jewelry; (6) Precious metal and articles thereof; (7) Antiques and valuable paintings; (8) Computer and personal digital device; (9) Samples and valuables; (10) Lithium battery; (11) Important files and documents; (12) Traveling documents, medical certificates, X-ray films; (13) Prescribed drug that needs to be taken regularly. Article 30 Limitation on carriage The carriage of following articles is limited. They may be accepted only in accordance with the SCAL’s regulations as checked baggage. (1) Precision instrument and electric appliances shall be carried as cargo. They may be accepted only in proper packaging as checked baggage. Free baggage allowance does not apply to such items. (2) Sporting equipment, including firearms and ammunition for sporting purposes may be carried as checked baggage by presenting Certificate of Gun Transporting or the certificate issued by sport administration of the State Council, but may not be carried as unchecked baggage in cabin. It shall set the safe of sporting gun, remove the bullets and pack them properly. The carriage of ammunition shall follow the rules of dangerous goods transportation. (3) Edge tool and blunt other than controlled knives, such as kitchen knife, fruit knife, dinner knife, art knife, bistouries, scissor, and steel file, iron awl, axe, short stick, and hammer etc., shall be carried as checked baggage. (4) Dry ice, alcoholic beverage, medicinal or toilet articles and personal smoking materials intended for use by an individual shall not exceed the set quota. (5) Diplomatic envelopes, confidential files; (6) Pet or service dog which is specified in 8.6. (7) The wheelchair and/or other assistant devices for passengers in travel. (8) Liquid hand-carried by passenger. (9) Items not suitable to be carried in cargo compartment such as delicate musical instrument and not meeting the requirements of weight and size by 8.3, shall be carried in passenger cabin as seat-taking baggage. Extra fees shall be charged for such items, and such items shall be taken care of by the passenger. Article 31 Right to refuse carriage In the exercise of SCAL’s discretion, SCAL may refuse to carry passenger or his baggage after informing the passenger. In this circumstance passenger will be entitled to a refund. SCAL may also refuse to carry passenger or his baggage for any of the following reasons: (1) SCAL may refuse or stop carriage as baggage of such items described in Article 28 or Article 29 as are prohibited from carriage as baggage or checked baggage. (2) Unless advance arrangements for its carriage have been made with SCAL, SCAL may carry on later flight baggage that is in excess of the applicable free allowance (oversized bagage). (3) SCAL may refuse to accept baggage as checked baggage unless it is properly packed or its contents comply with the carriage requirements. (4) Such action is necessary to prevent a violation of any applicable laws, regulations, or orders of any State to be flown from, to or over. (5) The carriage of passenger or his baggage may endanger or affect the safety, health, convenience, comfort of other passengers or crew members. Article 32 Right of Security Check For reasons of safety and security, SCAL has the right to request that passenger permit a security check of his/her baggage; if necessary, it may check passenger’s baggage if passenger is not available. If passenger is unwilling to accept the check, SCAL has the right to refuse to carry the passenger. 8.2 Checked Baggage Article 33 Checked baggage must meet the following requirements: (1) Passenger must check baggage with a valid ticket. SCAL shall correctly enter the pieces and/or weight of checked baggage into departure system. Each passenger’s baggage must be recorded on his own record. If passenger holds a paper ticket, baggage content shall be written on the correspondent spot of ticket. (2) Passenger shall complete the formalities for checked baggage at the location and time designated by the carrier. (3) SCAL shall attach a baggage tag to each piece of passenger’s checked baggage, and give a baggage identification tag to passenger. (4) The weight and size of checked baggage shall not exceed SCAL’s restrictions; those checked baggage exceeding such restrictions shall be agreed by SCAL in advance. (5) Passenger shall attach name or other personal mark to the checked baggage before checking it in. (6) Checked baggage must be well packed, locked and bound, and must be able endure a certain amount of pressure, and can be safely loaded, unloaded and carried under normal operation conditions, and shall meet the following requirements: 1) Suitcase and handbags and so on must be locked; 2) It’s not allowed to bound more than two pieces of baggage into one piece; 3) It’s not allowed to attach other items to baggage; 4) Bamboo baskets, net bags, grass strings, grass bags and so on are not allowed to be used as packing materials; 5) Passenger’s name, detailed address and telephone number shall be written on baggage. (7) Checked baggage will, whenever possible, be carried on the same aircraft with passenger. When the checked baggage could not be carried on the same flight with the passenger (due to safety, security or operational reasons), SCAL shall explain the reason to the passenger. Under the preconditions of safety, passenger’s checked baggage could be carried on a subsequent flight and SCAL will deliver it to passenger, unless applicable law requires passenger to be present for customs clearance. 8.3 Free Baggage Allowance Article 34 Free Baggage Allowance (1)the baggage transport rules for all international and regional routes are all subject to piece: details as followed: a. The free checked-baggage allowance for the infant that not take a seat is one checked baggage, of which the sum of three sides shall not exceed 115cm(45 inch) and weight shall not exceed 10kg(22 pounds), and one baby car or baby stroller. b. The free allowance baggage standard is same as that for individual passenger. c. For more than two (included) passengers who take the same flight to the same destination, if they proceed with the baggage check formality at the same time and same location, their free baggage allowances may be calculated as one integrity in accordance with their respective cabin-class standards which they have purchased; d. As for the domestic leg of the international flight, the applicable free-baggage allowance for the passengers shall be handled as per the regulations for the international flight. If the ticket for domestic leg and international leg are purchased separately (that refers to the domestic flight is not a consecutive flight before/after the international flight), therefore, it is not satisfied with the conditions that mentioned above,

then the free baggage allowance should be conducted independently as per each applicable domestic and international rules. e. As for the passenger who buys mixed class ticket, the free-baggage allowance shall be counted as per the rules for each class of the flight. f. If the passenger is voluntarily to change his/her class level, he/she should enjoy a free baggage allowance that corresponding to he/her new ticket; If the passenger is unwilling to change the class level, he/she should enjoy the corresponding free-baggage allowance to his/her original level of ticket. g. When passenger had a stopover during his/her journey, he/she should enjoy the higher free baggage allowance during the whole journey, h. If the major flight leg is conducted by a flight sharing code with SCAL, then the free baggage allowance shall be carried in accordance with rules of the airlines that conducted the flight. (2) The free baggage allowance for international/regional routes refers to the standards published on the official website the Sichuan Airlines. (3) The Size limits for checked baggage a. The size limits of checked-baggage shall comply with the local laws and regulations, if there are no defined regulations on the size limits, then, the size of each checked-baggage shall not exceed 300cm(the sum of length, width and height)(118 inch) b. The checked-baggage that exceeds the above size limit shall be transport as a cargo. (4) The weight limits on checked-baggage. a. For the flights involved with British or british commonwealth of nations(e.g. Canada, Australia and etc. ), the weight for each checked-baggage shall not exceed 32kg(70 pounds) b. The weight limits of checked-baggage in other airports shall comply with the local laws and regulations, if there are no defined regulations on the weight limits, then, the weight of each checked-baggage shall not exceed 45kg(100 pounds). c. The checked-baggage that exceeds the above weight limit shall be transport as a cargo. Article 35 Free Hand-carry baggage (1) Weight and size Each passenger who is entitled to travel in first class can bring two pieces of hand-carry baggage, each of which must not exceed 5kg in weight. Each passenger who is entitled to travel in business or economy class can bring one piece of handcarry baggage, each of which must not exceed 5kg in weight. The sum of the three dimensions of each piece must not exceed 115cm. Such baggage can be placed in the baggage cabin or under the seat in the passenger cabin. If the baggage cannot be placed with the method mentioned above, or due to over-size and over-weight factors, or out of consideration of safety aspect, the baggage shall be carried as check-in baggage. (2) Bulky baggage Objects not suitable for transport in the cargo compartment (such as delicate musical instrument) and not complying with paragraph (1) above will only be accepted for transportation in the passenger cabin as seat-taking baggage and be taken care of by passenger, if due notice has been given in advance and permission granted by SCAL. The transport of such objects may be charged separately. Article 36 Checked baggage and un-checked baggage shall be weighed or piececalculated together at the time of check-in and the weight and pieces shall be entered in corresponding column of “passenger ticket and baggage check”. Checked baggage is under custody of SCAL during the journey, while the unchecked baggage shall be taken care of by passenger in the journey. 8.4 Excess (Oversized) Baggage Article 37 (1) Excessive (exceed the limit) baggage refers to the part of baggage in excess of the free baggage allowance of weight or in piece, the exceed part of baggage needs extra charges. (2) When charging for the extra fees for excessive (exceed the limit) baggage, a excessive (exceed the limit) baggage receipt needs to be filled. (3) The excessive (exceed the limit) baggage shall be charged in accordance with the number, weight and size in exceeding . (4) Charging standard for the excessive baggage refers to the standards published on the official website the Sichuan Airlines. (5) The default currency of above fess is RMB. In some cases (if the passenger has no RMB), the fees will be charged in local currency, which should be referred to the charge standard of the destination for the baggage. 8.5 Declaration and Charge Article 38 General Rules (1) A passenger may declare a value for checked baggage in excess of USD30 or its equivalent per kilogram, and shall pay an applicable charge. (2) The declaration for checked baggage must not exceed the real value of the baggage. The maximum declared value of each passenger is USD5,000 or its equivalent value in other currencies. If SCAL disagrees with a value declaration and the passenger refuses to be checked, SCAL has the right to refuse carriage. (3) No declaration value for pet will be accepted. (4) SCAL will charge an fee of 5‰ of extra declared value exceeding the limitation of paragraph (1) above. Article 39 SCAL will refuse to accept an excess value declaration on checked baggage when a portion of the carriage is to be provided by another Carrier who does not offer the facility. 8.6 Pets and Guide Dogs Article 40 Pets mean such little animals as domestic dogs, cats, birds and other household pets. Any wild and aggressive animal such as snakes, tibet mastiffs, and bulldogs will not be accepted for transportation. Animals which are not suitable for air travel (including flat-faced dogs and flat-faced cats) must not be carried as baggage. The carrier has the right to determine whether an animal can be carried and the way of transportation, and has the right to restrict the number of pets on a plane. Article 41 Pet may be accepted for carriage subject to following rules: (1) It shall be loaded in the container whose quality and size meets consignment standards, attached with valid Certification for Animals Quarantine and animal vaccine injection certificate. (2) Have valid certificates necessary for entry, exit and transit permits required by The People’s Republic of China and countries involved in transportation; (3) With the advance agreement of SCAL and other Carriers concerned, and formalities required by SCAL and other Carriers concerned. Article 42 The animal, together with its container and food carried by passenger shall be carried as checked baggage and passenger will be obliged to pay the excess (oversized) baggage fee. Except specially approved by SCAL, animals will not be carried in the passenger cabin of the aircraft. Article 43 (1) Guide dog refers to a dog trained to lead the blind or assist the deaf when if accompanies passenger with impaired vision or hearing dependent upon such dog. (2) The carriage of guide dogs shall be dealt in accordance with Article 41. Guide dogs, if they meet the requirements of the SCAL, may accompany in passenger cabin the disabled eligible to travel. The disabled eligible to travel shall provide valid certificate required by animal entry, exit and transit transport in the People’s Republic of China and associated countries during transport, and valid Certification for Animals Quarantine, animal vaccine injection certificate, Qualified Certificate for Pets Training, Employee’s Card of the Animals or Animal ID Card. Guide dogs, together with its cage and food can be carried for free, without taking up the free baggage allowance. Article 44 Acceptance for carriage of animals (include guide dogs) is subject to the conditions that the passenger assumes full responsibility for such animal unless due to SCAL’s faults. SCAL shall not be liable for injury to or loss, delay, sickness or death of such animal in the event that it is refused entry into or passage through any country, state or territory. Article 45 (1) The passenger is fully liable for all damages or injuries which a pet might cause to other passengers or crew members. (2) SCAL will have no liability in respect of any such animal not having all the necessary exit, entry, health and other documents with respect to the animal’s entry into or passage through any country or region. The passenger who carries this pet shall make a compensation for any penalty, fees, losses or debts to SCAL due to lack or incompleteness of documents required. (3) SCAL may refuse to accept the carriage of animals on non-stop long-haul flight or some specific type of aircraft due to the unsuitability. 8.7 Delivery of Baggage Article 46 Delivery of Baggage (1) Passenger shall collect his baggage as soon as it is available for collection at places of destination or stopover. At the time of collection, passenger shall show his or her “passenger ticket and baggage check” if SCAL requires. (2) With SCAL’s consent, passenger can collect his baggage at stopover under the agreement of SCAL, the unused payment of the excess baggage will not be refunded. (3) If the passenger does not collect his baggage in time, SCAL will charge the passenger baggage keeping fee. SCAL has the right to deal with the perishable items in passenger’s baggage 24 hours after the arrival of the baggage. (4) SCAL is under no obligation to ascertain that the bearer of the baggage identification tag is entitled to delivery of the baggage and SCAL is not liable for any loss, damage, or expense arising out of or in connection with such delivery. (5) If a person claiming the baggage is unable to identify the baggage by the baggage identification tag, SCAL will deliver the baggage to such person only on condition that he or she establishes to SCAL’s satisfaction his or her right thereto. And if required by SCAL, such person shall furnish adequate security to indemnify SCAL for any loss, damage or expense which may be incurred by SCAL as a result of such delivery. (6) Acceptance of baggage by the bearer of the baggage check, without complaint at the time of delivery, is prima facie evidence that the baggage has been delivered in good condition and in accordance with the contract of carriage. Article 47 Unclaimed Baggage If baggage is not collected after 90 days from the next day of baggage’s arrival, SCAL has the right to process it according to the regulations on un-delivered baggage. Article 48 Processing of Abnormal Carriage of Baggage (1) In the event of delay, loss or damage in the carriage of baggage, SCAL and SCAL’s authorized ground handling agency, together with passenger, shall fill up a Record Form of Accidents of Baggage Carriage, check out the situation and reasons, and report the results of investigation to passenger and departments concerned. If compensation for baggage happens, it can be processed at the journey’s origin, stopover or destination. (2) If the checked baggage fails to arrive in the same flight with the passenger due to SCAL reasons and thereby cause inconvenience for passenger’s life, SCAL shall give appropriate compensation for passenger’s temporary life use. Article 49 Compensation for baggage (1) Compensation Limit 1. If the weight of the baggage is not recorded on the baggage check, it is presumed that the total weight of the checked baggage does not exceed the applicable free baggage allowance for the class of service concerned 2. According to the above articles, the checked baggage which has made an declaration should made compensation as per the declared value. If the declared value is beyond the actual value of the baggage, the compensation should be made as per the actual value. 3. The route which applicable for Warsaw Convention a. In case of the absence of purchase invoice and lack of sufficient evidence，the highest compensation price per person should be 30 U.S. dollar per kilogram. b. If there are sufficient evidence， then the highest compensation price for checked baggage and non-checked baggage per person should be 1131 special drawing right 4. The compensation price for the route which subject to Warsaw convention is： a. 17 special drawing right per kilogram. b. 322 special drawing right for the unchecked baggage. 5. Special drawing right refers to SDR specified by International Monetary Fund (IMF). One SDR is equal to 1.37 US dollar, whose price ratio is floating. SCAL will convert the money in line with the exchange rate of the actual transport date. (2) Time limitation on claims and actions 1. Notice of claims a. No action shall lie in the case of damage to checked baggage unless the person entitled to delivery complains to SCAL forthwith after the discovery of the damage, and, at the latest, within seven working days from the date of receipt; and in the case of delay, unless the complaint is made at the latest within twenty-one working days from the date on which the baggage has been placed at his or her disposal. Every complaint must be made in writing and dispatched within the times aforesaid. b. Any claims shall be raised in written form within time limit, or no compensation shall be raised towards SCAL. 2. Any right to damages shall be extinguished if an action is not brought within two years reckoned from the date of arrival at the destination or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped. Chapter 9 Schedules, Changes and Cancellations of Flights Article 50 Schedules (1) SCAL undertakes to use its best efforts to carry the passenger and his or her baggage with reasonable dispatch and to adhere to published schedules in effect on the date of travel. (2) Except in the case of its acts or omissions done recklessly with intent to cause damage and with knowledge that damage would probably result, SCAL shall not be liable for errors or omissions in timetables or other published schedules. Additionally SCAL shall not be liable for representations made by employees, agents or representatives of SCAL as to the dates or times of departure or arrival or as to the operation of any flight. (3) The flight times and aircraft types shown in timetables may change between the date of publication and the date passenger actually travel. SCAL does not guarantee them to passenger and they do not form part of contract with SCAL. (4) Before SCAL accept passenger’s reservation for a flight, SCAL will notify the passenger of the scheduled flight time in effect as of that time, and it will be shown on Ticket. It is possible SCAL may need to change the scheduled

A7

Friday June 22 2018 flight time subsequent to the issuance of the Ticket. If passenger provides SCAL with contact information, SCAL will endeavor to notify the passenger of any such changes. If, after ticketing, SCAL makes a significant change to the schedule flight time, which is not acceptable to the passenger, and SCAL is unable to book the passenger on an alternate flight which is acceptable to passenger, passenger will be entitled to a refund in accordance with the regulation of involuntary refund. Article 51 Cancellation, Changes of Flights (1) For the following reasons, schedules are subject to cancel, terminate, change, or delay without notice: 1. For complying with any government law, regulation, or order; 2. For security of flight; or 3. Due to circumstances beyond its control or unable foreseen. (2) If SCAL results passenger failed to take the reserved seat due to one of the following reasons, SCAL shall make arrangement for passenger according to Article 53, and will not collect any fee: 1. Temporarily change the aircraft type of the flight; 2. Except the reasons listed in Article 52, temporarily cancel the flight; 3. SCAL cancels the flight that passenger has reserved seat, or cancel the flight to stop at passenger’s stopover or destination, or fails to operate according to the flight schedule, or fails to provide reserved seat and results in passenger to change his/her trip. Article 52 Involuntary Change (1) If passenger fails to travel due to the reason listed in Article 52(1), SCAL shall consider passengers’ reasonable requests and take one of the following measures: 1.Arrange on priority available seats on SCAL flights for passengers; 2. Make endorsement after agreed by passengers and carriers concerned. 3. Change the route listed on original ticket, and arrange passengers to arrive at destination or stopover point via SCAL or other carriers’ flights. 4. Refund according to rules of involuntary refund. 5. Assist in arrangement of passenger accommodation and provide ground transportation etc. (2) According to International passenger and luggage Transportation Rules of civil aviation of China，For those unvoluntary change the flight due to the reason state in article 52, item (2), the carrier shall provide a place for rest and drinks, foods, board and lodging or other services which carrier think are necessaries. Article 53 Voluntary Change Handle according to the applicable business notice of SCAL. Article 54 SCAL will take all measures that could reasonably be required to avoid delay in carrying passenger and his baggage. SCAL shall not be liable if it proves that SCAL has taken all measures that could reasonably be required to avoid the damage or that it was impossible for SCAL to take such measures. Chapter 10 Changes to Passenger Tickets Article 55 Involuntary Change (1) If such unpredictable non-SCAL reasons as weather, air traffic control cause SCAL flights’ cancellation, advancement, delay, change, mis-connection, or failure to provide reserved seats, SCAL shall consider passengers’ reasonable requests and take one of the following measures: 1. Arrange on priority available seats on SCAL flights for passengers; 2. Make endorsement after agreed by passengers and carriers concerned. (2) If such SCAL reasons as aircraft maintenance, flight readjustment cause SCAL flights’ cancellation, advancement, delay, change, mis-connection, or failure to provide reserved seats, SCAL shall consider passengers’ reasonable requests and take one of the following measures: 1. Arrange on priority available seats on SCAL flights for passengers; 2. Make endorsement after agreed by passengers and carriers concerned; 3. Change the route listed on original ticket, and arrange passengers to arrive at destination or stopover point via SCAL or other carriers’ flights, or via other refers to of transportation mutually agreed. Overpaid amount of ticket fare, excessive (oversized) baggage fee and other service charges will be returned, while deficiency of such fares and charges will be ignored. Article 56 Voluntary change of class, flight, and date Handle according to applicable rules of SCAL tariff notice. Article 57 Endorsement (1) In the event of involuntary change of carrier for passenger, endorsement formalities shall be done after agreed by passenger and carrier concerned. (2) In the event of voluntary change of carrier requested by passenger, SCAL can make endorsement when all the following requirements are met: 1. Passenger’s applicable fare does not have endorsement restrictions. 2. The carrier to be changed into must have has signed an interline agreement, and can issue or receive tickets mutually with SCAL. (3) When passenger does not meet all the above requirements in (2) and demands change of carrier, it shall be processed according to rules of voluntary refund. (4) Unless specially authorized by SCAL, SCAL’s sales agencies are not allowed to do endorsement formalities for passenger. Chapter 11 Refunds Article 58 General Rules (1) On failure by SCAL to provide carriage in accordance with the contract of carriage, or where a passenger requests a voluntary change of his or her arrangements, refund for an unused ticket or portion thereof shall be made by SCAL according to SCAL’s Regulations. (2) Except in the case of lost tickets, refunds will only be made on surrender to SCAL of the passenger coupon or passenger receipt and surrender of all unused flight coupons, and the conjunction tickets if any. For electronic tickets, refund must be applied not later than 13 months after the date of commencement of travel or the date of issuance (for all first flight coupon unused ticket). Application for refund will only be accepted when the coupon’s status is OPEN FOR USE, and with payment proof provided by passenger. (3) When refunding an electronic ticket, passenger is required to provide printed itinerary. Article 59 Person Receiving Refunded Fares (1) SCAL shall be entitled to make refund to the person named in the ticket. (2) If a ticket has been paid for by a person other than the passenger named in the ticket, and SCAL has indicated on the ticket that there is a restriction on refund, the refund will be made only to the person paying for the ticket or to that person’s order. (3) Passenger or payer who requests the refund shall present his or her valid identity certificate. If the person requesting refund is not the passenger or the payer, he or she must present the identity certificate of himself or herself and the authorization from the passenger or payer in addition. (4) A refund made pertain to Article 59 to anyone whom refund may be made in terms of (1), (2) and (3) of this Article shall be deemed a proper refund and shall discharge SCAL from liability and any further claim for refund. Article 60 Time limit for refund Refund must be applied not later than 13 months after the date of commencement of travel or the date of issuance (for all first flight coupon unused ticket). Application for refund will not be accepted after the time limit. Article 61 Place of refund (1) On principle, refund of tickets and MCO shall be processed in the original place of payment; exchanged tickets can also be refunded in the place of exchange. In the event of involuntary refund, refund can be processed in SCAL’s sales office in the place of original purchase, commencement of journey, stopover, or breakpoint of travel, or in SCAL’s authorized sales agencies in the place where the cause of involuntary refund happens. When passenger applies for refund in a place other than the original place of issuance, the SCAL’s sales office which is to process refund shall obtain authorization from the original place of issuance, and refund in the local currency at that day’s BBR according to the refunded amount provided by original place of issuance. (2) When passenger holding an open ticket applies for refund, refund must be processed in the original place of issuance. Article 62 Currency All refunds will be subject to Government laws, rules and regulations or orders of the country in which the ticket was originally purchased and of the country in which the refund is being made. Refunds will normally be made in the currency in which the ticket was paid for, or in another currency in accordance with SCAL’s regulations. Article 63 Involuntary refunds (1) Involuntary refund refers to any refund applied for by passenger entitled to travel on SCAL’s flights who cannot be carried according to carriage contract due to such uncontrollable or unpredictable reasons as weather, air traffic control, aircraft maintenance, flight readjustment. (2) Involuntary refund abides by the following rules: 1. If no portion of the ticket has been used, an amount equal to the fare paid including taxes and charges will be refunded, without charging refund fee. 2. If a portion of the ticket has been used, subtract the amount of individual or group fare on the used sectors and subtract the amount of used taxes and charges, and refund the remaining amount. the refund will be the higher of the one way fare (less applicable discounts and charges) from point of interruption to destination or point of next stopover and the difference between the fare paid and the fare for the transportation used. The refunded amount shall not be higher than the amount paid. No refund fee shall be charged. 3. If the flight lands at an airport other than the appointed stopover and flight of the same day is cancelled, and if the passenger demands for refund, fare from the landed airport to the destination at the same discount rate or sub-class with the original paid fare shall be refunded, but the refunded amount shall not be higher than the paid amount; no refund f A m m m W m m m m C w w w W m w A

A R

R V

S

V

m

A

R

C

C

w

SCA w

A E

R

A A

R U

m

m

C A

m

w

m

w

w m

A m

m

m P SCA

m

w w mm P m

R wm m m

w

m

A N A SCA E A R W

Sm

A W

B

S

w

PED w mm

A

R SCA m

D

m

m

w

m

S

m

w

w

m m

w

m

w m

m

m

SCA

w

w

w

SCA w

P A

A

m

SCA

SCA

w

SCA w

A

A

A SCA w m w

A

A A A

m m w

A U

C

m

m

m

SCA

m

A w

m

C A

A

w

m

C A

w

w

w

w

w

m w m

w

SCA m w SCA

w

G

m

m

m

w

SCA

m

SCA m w

SCA SCA m

SCA SCA

H w

S w

w

w

m

m mm SCA

m

SCA

m

SCA mm

SCA

m S C C

C

SCA

m

m

m

D m

SCA D

w SCA

mm

A

m mm

w SCA

w

W

C A

SCA

SCA SCA

m

w

SCA B w

m

SCA SCA G

m

U C

m SCA

SCA m m

A

U

A

SCA SCA

A

SCA

A

m

w

w

SCA

m w SCA

A m

w

m m

w

w

w

m

w SCA m w

m

m m m m SCA SCA m SCA SCA m m

w

A

w

SCA SCA

m

m m m

m

C

w w M

w P

m

m

m

A

A

w w

m

m

m

m

E

C

m

m w

m

m

M

A

C

A

SCA m

A

N w SCA

A

m m

C

C

H C

m

m

SCA

wC

w

SCA

m

C

SCA

m

C

m m

m

M

C

w

m

C m m

m

m

C

m

W

w

SCA

SCA w

m

C A

w

m

m

SCA

m S

A

w

w

P

A

m

m

SCA A

m

w

SCA

SCA m

w m

w

m SCA

m

SCA

E

w w

m

m

m

m

m

m

A

A

m

SCA

m

m

SCA

m

m

m m

w w

w m

w

SCA SCA

P U

m

w

w

m w

A

SCA m

m

m SCA

m

w m

m

w

m

m

SCA R m w

w m

m

A

C A

SCA SCA

w

w

m

m

A

m

w m

w

A m

A

m

S w

w w

w

SCA

m

m m

m

m

m

SCA w

w DVD

w

m

w

PED

m m

w m

D m

m

m

P

m m

Sm m m

SCA

m

m

w m

w

m P

E

SCA

m

w

m

m

m

w

A

w

m

m

P P P P

A

m

m

w w

m

SCA

A

w

m

m

m

m

m

P

SCA

m

m

m

SCA

m

m

m

P

P P

m

m m

m

A

w

m

C

P P P P S

w

m

A m

m

m

w

SCA

m

w

m

A

m

m

SCA m

C A

A

m

w

w

m

S

m

w

A O

A W

C

m

m

P P P

m

m

D

R R P W

w

w

w

w m

m

w w

w

m

m m CAAC m m

m C m

m

w w C

SCA

m C BM

UNE

& 9

08

A8

Agriculture/Commodities

Friday, June 22, 2018 • Editor: Jennifer A. Ng

BusinessMirror

www.businessmirror.com.ph

DA to hasten release of loans to farmers

D

By Manuel T. Cayon |

@awimailbox Mindanao Bureau Chief

T

AVAO CITY—The Department of Agriculture (DA) is creating teams that would help process loan applications and speed up the release of loans to farmers across the country.

Agriculture Secretary Emmanuel F. Piñol made this announcement during his visit to the DA’s research and experiment station in Tupi, South Cotabato, where he distributed farm equipment and postharvest facilities to local governments and farmers’ associations. Piñol noted that the concept of “loan facilitation teams” is part of the Production Loan Easy Access (PLEA) program being implemented by the DA. He said more teams will be created to fast-track the release of loans. The program was launched last year to extend loans to farmers who are members of a registered cooperative or association. PLEA loans carry an annual interest rate of 6 percent.

“Their main task is only to entertain [farmers’] applications for loan and prepare the documents,” he said. The DA teams would be as accessible as the loan sharks who extend small cash loans to farmers, according to Piñol. “Farmers prefer private lenders rather than avail [themselves] of government loans because of the complicated process and the endless list of requirements,” he said. “That is why we will create the loan facilitation teams in the provinces. They would only assess applications but also prepare the documents. We will get rid of the tedious process [of ava i ling gover nment loans],” Piñol added. The loan facilitation teams

Bulacan food maker inks supply deal with Mindanao tribes

FARMERS in Palawan are preparing to plant rice in this file photo. The Department of Agriculture said it will create teams that would speed up the release of loans to farmers under the Production Loan Easy Access program. NONIE REYES

would coordinate closely with local government units. Under PLEA, farmers could avail of loans of up to P50,000 to purchase seeds, fertilizer and other items they need for their farms. He said the loan program is an

alternative for farmers and will allow them to choose the best seeds. Piñol also disclosed that the DA will construct 2,000 solar-powered irrigation projects until 2019 to irrigate 100,000 hectares of rainfed rice areas. This is expected to hike rice output by an additional

1 million metric tons. “I would request the Department of the Interior and Local Government to send a memorandum to local governments to submit to us a list of areas which could be served by solar-powered irrigation,” he said.

Govt gives Soccsksargen farmers P168-million agri equipment By Jasper Emmanuel Y. Arcalas @jearcalas

M

ORE than 500 farmers from Soccsksargen received farm machines and postharvest facilities worth P168 million from the Department of Agriculture (DA) as part of the government’s mechanization program to hike their output. The DA said its DA-12 Regional Office awarded about P112 million and P15.5 million worth of production assistance to rice and corn farmers, respectively. Farmers who attended the awarding ceremonies also received P3.2 million worth of livestock interventions and P5.9-million assistance for the production of high value crops. On top of this, the Soccsksargen region received more than P18.4 million for the implementation of Bottom-Up Budgeting and Pamana project from the DA. The DA’s livestock program also gave P12 million to the local government of Cotabato City. Agriculture Secretary Emmanuel F. Piñol, who led the awarding ceremonies on June 18, said the DA would focus in “providing assistance that will enable

farmers to improve productivity and increase income.” Farm machines distributed by the DA to the Mindanao-based farmers include combined rice and corn harvester, farm tractors and other implements, according to Piñol. “DA Region 12 Director Milagros Casis said 24 units of the modern combined rice and corn harvesters were released during the activity as part of the agriculture department’s program to mechanize farming in the country,” the DA chief wrote on his official Facebook page on June 20. “The Philippines has one of the lowest farm mechanization rates among Asean member-countries, prompting the Duterte administration to pour billions into the procurement of farm equipment and machinery for distribution to farmers and fishermen,” Piñol added. The Soccsksargen region is one the country’s top producers of rice and corn. The region’s palay output in 2017 rose by nearly 10 percent to 1.319 million metric tons, from 1.2 MMT recorded in 2016. Corn production in the region reached 1.257 MMT last year, 9.88 percent higher than the 1.144 MMT recorded output in 2016.

R I B A L com mu n it ies i n Soccsksargen planting ube and camote have forged a marketing agreement with a Bulacan-based organic food manufacturer that would allow them to earn as much as P3.6 million annually, according to the Department of Agriculture (DA). Agriculture Secretary Emmanuel F. Piñol said the leaders of the Manobo and B’laan Tribes have entered into a supply agreement with Almay Gaw-See, CEO of Innovative Packaging Industry Corp. (IPIC). IPIC manufactures fruit crisps using organic ube or purple yam and camote. The product is marketed under the “Oh, So Healthy!” brand. Citing Gaw-See, Piñol said IPIC requires an initial supply of 10 metric tons (MT) of purple yam and camote monthly for its fruit crisps production. IPIC buys the produce at P35 per kilogram which would mean that the tribal farmers could earn at least P350,000 monthly, according to Piñol. “The market linkage started when I met Almay Gaw-See during the International Food Expo [Ifex] event last month at the World Trade Center in Manila,” he said in a post in his official Facebook page on June 20. “During my conversation with her, she confided that one of her problems was where to get her supply of organically grown purple ube and camote,” he added. Following his conversation with Gaw-See, the agriculture chief said he instructed DA’s Indigenous People’s Office chief Camilo Andi Jr., to reach out to different tribes in Central Mindanao that could supply the manufacturer’s requirement. “When the availability of the supply was validated, the tribal leaders were asked to meet with A lmay Gaw-See in time w ith my visit to the Tupi, South Cotabato, agriculture station for the distribution of farm mac h i ner y a nd equ ipment,” he said. “The deal was sealed with a handshake.” The country’s camote output in 2016 reached 529,472.03 MT, 1.22 percent lower than the 535,995.53 MT recorded in 2015, according to the Philippine Statistics Authority (PSA). PSA data showed that the camote output of Soccsksargen, or Central Mindanao, declined by 14.73 percent to 7,907.69 MT in 2017, from the previous year’s 9,273.81 MT. The region accounted for nearly 1.5 percent of the country’s total camote output in 2016. Philippine purple yam output expanded by 2.67 percent to 14,165.87 MT in 2016, from 13,797.61 MT in 2015. Soccsksargen’s ube output in 2016 declined by 15.71 percent to 246.72 MT, from 292.69 MT recorded in 2015. Jasper Emmanuel Y. Arcalas

Over 100 arrested in immigration raid at Ohio meatpacking plant

T

OLEDO, Ohio—More than 100 workers were arrested at an Ohio meat packing plant by federal agents following a yearlong immigration investigation, the second large raid in the state in the past two weeks. The investigation focused on whether the company knowingly hired people who are in the country illegally and used fake identities belonging to US citizens to get their jobs, Immigration and Customs Enforcement officials said. The arrests on Tuesday come as the US government steps up its focus on businesses that hire people in the country illegally as part of a broad range of immigration crackdowns under Republi-

can President Donald J. Trump. The 146 arrests in one of the largest workplace immigration raids in recent years happened at Fresh Mark’s meat-processing plant in Salem, in northeastern Ohio. Immigration agents and local authorities also carried out search warrants at the company’s two other locations in Massillon and its plant in Canton. Most of the workers arrested were from Guatemala, said Khaalid Walls, an agency spokesman. Several of those who were detained were processed and released on Tuesday because they are the sole care providers of children or they have health concerns, Walls said. Dustin White, a pastor in Canton whose ministry reaches out to doz-

ens of Guatemalans working at Fresh Mark, said he was told by families that some workers were detained at the Canton plant, as well. “From what I saw and heard they say their loved ones haven’t come home,” White said a day after the raid. “In many ways, the dust hasn’t settled.” No criminal charges have been filed against Fresh Mark, but authorities say the investigation is continuing. The company makes bacon, hot dogs, ham and lunch meat for the Sugardale and Superior’s brands. The company referred questions to federal authorities, but noted in a statement that Fresh Mark is a member of Immigration and Customs. AP

www.businessmirror.com.ph

The Regions BusinessMirror

Philex Mining chooses 37 for geologic aide training

T

UBA, Benguet—Thirty-seven of the more than 60 applicants interested in becoming geologic aides passed the recent screening done by the Philex Geo Aide Academy (PGAA), at Philex Mining Corp.’s Padcal mine in this province. The successful applicants make up the second batch of students who would train for about five months through a program organized, funded and run by the company. “We should all be thankful for this opportunity extended to us by the company,” Philex Mining Vice President for Exploration Redempta Baluda said in a speech during ceremonies welcoming the new batch on June 13. Addressing the batch members, six of whom are women, Baluda added: “Take it seriously because it’s a beautiful program.” “I enjoin you to take advantage of this project,” he said at Padcal mine’s Smith Hall, in this town’s Barangay Camp 3, on Wednesday. “You should be open to learning new things. That way, you can improve yourself.” In September last year, 23 geologic aides completed their training and/ or retraining through the same program. Seventeen of those graduates are now working full-time at the different departments of Padcal mine. Genesis D. Cellona, a Philex Mining geologist in-charge of the PGAA, said a select team of his colleagues has been tasked to administer lectures to and guide the field works, pro bono, of this year’s batch of PGAA. “The lectures and field works will

be done after office hours and during weekends, so these won’t hamper our regular work schedules,” Cellona added emphasizing that participants are set to learn structural and geologic mapping, sampling procedures and drilling, among other subjects. He added that besides acquiring new skills that would equip them to face life challenges, the participants could also become some sort of spokesmen for the company, serving as vehicles to disseminate information to their respective villages around the host towns of Tuba and Itogon on Philex Mining’s exploration activities, as well as its conscientious and responsible mining practices. Padcal mine’s Community Relations (Comrel) Department, according to Cellona, provided the budget of P170,000 for this year’s PGAA, slightly lower to last year’s P209,600. Cellona said most equipment needed for the program had already been bought. Comrel Manager Aurora Dolipas said the budget was made available through the Development of Mining Technology and Geosciences (DMTG), one of the three pillars of the company’s corporate social responsibility program. Being implemented for the company’s pursuit of programs to develop the mining industry, the DMTG complements the social development and management program and the information, education and communications campaign—all mandated by the Mines and Geosciences Bureau, according to Cellona. Mau Victa

By Lenie Lectura

T

The grid operator said on Thursday that over 200 jobs will be open for employment in the substation and transmission line portions of the project. These job vacancies range from site civil and electrical engineers, timekeepers, safety officers and nurses, to laborers and skilled workers like carpenters, welders, masons, warehousemen and electricians, among others. Local residents who are fit and qualified are given priority for the available positions. The MVIP, which will link Mindanao to the already connected Luzon-Visayas Grid, is currently in the works, and is targeted for completion in December 2020. With the construction of the

Tagum City nets 3 top drug targets

D

@llectura

HE P51.6-billion Mindanao-Visayas Interconnection Project (MVIP) of the National Grid Corp. of the Philippines (NGCP) will not only strengthen the country’s transmission network but will also open more opportunities for employment for host communities.

Philippine province during the first cropping. Agriculture activities are guided by the Rice Road Map of the Province of Pangasinan 2017 to 2022, which was approved by local officials in February. LAILA AUSTRIA

Two others in the wanted list, Antonio C. Argollosos and Ronald A. Abucejo, were also arrested later in the same day on separate drug buy-bust operation. Argollosos was arrested in his home in Barangay Mankilam and Abucejo in his residence in Barangay Magugpo South, at around 4:30 p.m. The operatives were able to buy two sachets of crystalline-like substance believed to be shabu from the suspects. Another four heat-sealed transparent cellophane containing allegedly to be shabu, two lighters, one paper cutter and the marked P1,000 bill were also

A9

NGCP sees 200 new jobs available in 4 Visayas, Mindanao provinces

EARLY HARVEST Farmers rush to harvest rice grains on this field in Pangasinan before the rainy season hits the northern

AVAO CIT Y—Davao del Norte’s capital bagged its top illegal-drugs suspects, killing one of them. The Tagum City Drug Enforcement Unit and Tagum City Police Station said on Tuesday one Akmad I. Morena, its most wanted in the illegal-drug list, fell into the police dragnet operation, and died as he engaged police and anti-narcotics agents in a shootout on June 7. Morena, aka Udlot, died in a police operation to arrest him in his home at Purok 4, Durian Avenue, Barangay Madaum, some 2 kilometers south of downtown Tagum. He died on his way to the Davao Regional Medical Center.

Editor: Dennis D. Estopace • Friday, June 22, 2018

recovered from the suspects. The two were detained at the Tagum Police Station. Meanwhile, the Army’s 71st Infantry Battalion said it confiscated four improvised explosives and six rifles in a brief gun battle with suspected New People’s Army guerrillas in Maco town, Compostela Valley, on June 11. Soldiers said the fleeing NPA guerrillas left behind the four explosives, two M16A1 rifles, one M653 rifle, and three AK47 rifles at Sitio Limpakan, Barangay Tagbaros, a remote area of Maco. Two days earlier, the 71st IB recovered three rifles in Barangay Tagbaros, also in Maco. Manuel T. Cayon

project to run in parts of Cebu in the Visayas and in Zamboanga del Norte, Zamboanga del Sur, and Lanao del Norte in Mindanao,

NGCP expects job opportunities to become available in these areas. The MVIP will directly traverse 35 barangays across the four provinces in the Visayas and Mindanao. With construction to run for about two years, many residents will benefit from these prospects. Last year the NGCP was given the go signal by the Energy Regulatory Commission to proceed with the interconnection project. The project was conceptualized by the government as early as in the 1980. The project was shelved until NGCP took over the transmission business. With the planned interconnection for a single, unified Philippine power grid, the country is expected to

benefit from a more safe and reliable grid with less power interruptions, and efficient use of energy resources nationwide. “This is the largest transmission undertaking in the country’s history,” the company said. “The benefits to the public will come not just when the facility is energized and begins to facilitate power exchange across the three main island groups, but will begin encouraging economic activity in remote areas as soon as construction begins this year.” The NGCP is a Filipino-led, privately owned company in charge of operating, maintaining and developing the country’s power grid, led by majority shareholders Henry Sy Jr. and Robert Coyiuto Jr.

A10 Friday, June 22, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

www.businessmirror.com.ph

editorial

Behind the headlines

W

e have learned in this age of the Internet that there are well-designed traps to get us to “click” on a particular web site. Spam e-mail is notorious for a “subject” line that will entice us to read. However, these high-tech methods of getting your attention were invented a hundred years ago by newspapers. A local newspaper printed a headline that might be hall of fame material: “PH to experience 2018’s longest day today.” To the unwary, this might be a story about an unusual situation. Maybe it has something to do with our local politics. Obviously, something is going on in the Philippines that would make the day the longest in 2018. The first sentence gives the reality: “The Philippines and the rest of the world will experience this day the longest daytime for the year.” It is the day of the Summer Solstice when the Northern Hemisphere of the earth is most tilted toward the sun. Unfortunately, though, the first sentence is completely wrong. It is only in the Northern Hemisphere that the sun shines longer. In the Southern Hemisphere, it is the “shortest” day of the year. This is not a big deal. The point is, we all have the responsibility to read more than the headline and maybe even question the “story.” Taken to a ridiculous extreme, someone might have had a horrible day by just reading the headline. “The Philippines has been cursed by the Current Administration to more daylight caused by Global Warming.” But another might walk with a smile thinking, “How lucky we are that the Current Administration has given us extra daylight.” Every topic must have a local politics viewpoint. In the US, the headline reads: “Chinese Investments in the US Plunge By 92 percent.” The first sentence gave the details. “China’s direct investments in the US plunged in the first half of 2018 as Chinese companies completed acquisitions and greenfield investments worth only $1.8 billion, a 92-percent drop over the past year, and the lowest level in seven years.” There also, this story needs a political slant. “Obviously the terrible economic policy of the Trump administration toward China is a disaster.” Or, “China deserves not to be able to take advantage of the great profit opportunities in the good old US of A.” As with the Philippine peso and the local stock market, “politics” is not the concern. A nation’s economic policies are going to affect subtopics of the economy like markets and investment. There are two sides to every story. China has been in a battle for three years to keep money at home. Xi Jinping’s crackdown on “corruption” by limiting funds going to the casinos of Macau had less to do with corruption than with capital outflow. The same is true of China’s foreign investments. While the current US trade policies give the Chinese an excuse not to invest in the US, the drop in investment is also attributable to that attack on capital flight, as well as the US government looking with great caution at Chinese companies buying into the US economy. While the year-on-year decline is 92 percent, it is important to note that 2017 saw a 35-percent drop from 2016. Things are not always what they appear to be, especially in the headlines. But we all need readers so let us tease you with a headline for tomorrow: “PHL will not experience 2018’s longest day today.” Since 2005

BusinessMirror A broader look at today’s business ✝ Ambassador Antonio L. Cabangon Chua Founder Publisher Editor in Chief Associate Editor News Editor Senior Editors

T. Anthony C. Cabangon Lourdes M. Fernandez Jennifer A. Ng Vittorio V. Vitug Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos Dennis D. Estopace

Online Editor Social Media Editor

Ruben M. Cruz Jr. Angel R. Calso

Creative Director Chief Photographer

Eduardo A. Davad Nonilon G. Reyes

Chairman of the Board & Ombudsman President VP-Finance VP Advertising Sales Advertising Sales Manager Group Circulation Manager

Judge Pedro T. Santiago (Ret.) Benjamin V. Ramos Adebelo D. Gasmin Marvin Nisperos Estigoy Aldwin Maralit Tolosa Rolando M. Manangan

BusinessMirror is published daily by the Philippine Business Daily Mirror Publishing, Inc., with offices on the 3rd floor of Dominga Building III 2113 Chino Roces Avenue corner De La Rosa Street, Makati City, Philippines. Tel. Nos. (Editorial) 817-9467; 813-0725. Fax line: 813-7025. (Advertising Sales) 893-2019; 817-1351, 817-2807. (Circulation) 893-1662; 814-0134 to 36. E-mail: news@businessmirror.com.ph.

www.businessmirror.com.ph

Printed by brown madonna Press, Inc.–San Valley Drive KM-15, South Superhighway, Parañaque, Metro Manila MEMBER OF

A stitch in time James Jimenez

spox

A

S we close in on the 2019 national and local elections, the weaknesses of electoral system’s legal infrastructure are coming into sharper and sharper focus. To be perfectly frank, there are only so many variations to dura lex sed lex, that a person can say before it gets depressing. In any case, I am not a fan of the defeatism implicit in that old saw. If the law is harsh—or in some cases, hopelessly behind the times—one shouldn’t have to simply accept it as a given. Laws can be changed; election laws are no exception, and these three suggestions—which are my own, not the Commission on Elections’s (Comelec)—are as good a place as any to start a discussion on possible legislative solutions. First, on the matter of premature campaigning, isn’t it high time to amend how the laws define the concept of “candidacy”? In the landmark Peñera decision, the Supreme Court pointed out that the laws in force explicitly say that a person can only be considered a candidate—and thus be subject to campaign rules—at the start of the campaign period. By amending the definition of “candidate,” to clarify exactly when a person becomes a candidate in the eyes of the law, campaign rules can be made to apply to persons from the moment they file their certificates of candidacy (COC). This would close the absurd loophole that allows premature campaigning to be committed only during the campaign period. Second, it occurs to me that it is equally timely to craft laws that can

be used to bar patently unqualified people from becoming candidates in the first place. Admittedly, this is going to be tricky. The current rule is that the Comelec has to accept certificates of candidacy, regardless of the filer’s obvious lack of eligibility. The task is, in legalese, ministerial. This rule has led to some ridiculous outcomes, such as a 40-year-old person running for Sangguniang Kabataan. Nevertheless the rule is, in fact, grounded on sound democratic principles, i.e., the Comelec cannot decide on a person’s right to vote and, by necessary implication, the right to be voted for (it’s in the 1987 Constitution); it can only determine compliance with statutorily declared requirements for eligibility. Since a person filing the COC is simply expected to swear an oath

By amending the definition of “candidate,” to clarify exactly when a person becomes a candidate in the eyes of the law, campaign rules can be made to apply to persons from the moment they file their certificates of candidacy. This would close the absurd loophole that allows premature campaigning to be committed only during the campaign period. that he is eligible—and there is no practical means for the Comelec receiving officer to determine the veracity of that assertion—validation is put off for a later date, after the COCs have been filed. Thus, although the mechanism to weed out ineligible persons does exist, it clearly comes into play too late. And with the administrative gears not exactly turning at a blistering pace, the most likely result is that the ineligible person actually gets to campaign and be voted on; in some cases, even win. As I see it, corrective legislative action need not be premised on giving the Comelec a power expressly denied to it by the Charter, but to simply enable it to prevent abuse. One way to do this is by mandating a sort of prefiling period where individuals who intend to run for office are required to submit documentary proof of their eligibility. The receiving Comelec officer will then have the means and the opportunity to reliably determine compliance with

eligibility requirements before the actual filing of candidacy; and if proof of noncompliance is available at that early stage, there ought to be no reason to accept the COC being filed in the first place. At the very least, the time needed to deny due course to the certificate of candidacy would be cut down drastically. As they say, a stitch in time saves nine. Third and finally, we need to ask: If there’s a viable legislative solution that will curb vote buying? Up to now, the only reliable way to address this is to wait for vote-buying to actually be committed. Law enforcement then swoops in to arrest the perpetrators. So we need to ask, is there a way to keep vote buying operations from getting off the ground in the first place? In 2013 the Comelec posited a solution, which, unfortunately, got stuck with the grotesque label “money ban.” That proposal was based on the fact that most vote-buying operations are cash transactions where amounts ranging from P20 to a few thousand are distributed with “sample ballots” or other campaign swag, like t-shirts. The solution, therefore, was to impose strict regulations— not a “ban” per se—on the possession of large amounts of cash during the period immediately prior to an election. In essence, the regulation creates a sort of disputable presumption that a person who is found holding, without clear justification, large sums of money, intends to use it to buy votes. This would potentially nip vote-buying operations in the bud, making elections that much cleaner and fairer.

Shake, rattle and roll is what’s needed in Japan

F

By Nisha Gopalan | Bloomberg Opinion

ew private equity markets are as highly contested as Japan. With funds’ cash levels, or dry powder, at record highs, assets are being bid up to heady levels by firms keen to put those big checks to use. But buyers had better be prepared to do battle if they’re to justify those prices. There are several reasons deals as large as the one for Toshiba Corp.’s former memory chip business, led by Bain Capital Lp., are getting done. Japan’s negative interest rate policy means capital is cheap, Prime Minister Shinzo Abe is urging corporate governance reform, and companies both small and large are under pressure from shareholders to jettison nonperforming or noncore assets. Succession issues are also coming to the fore. Aging Japan needs new

blood to take over. Little wonder the world’s private equity giants, from KKR & Co. to Bain and Carlyle Group Lp., are champing at the bit. Domestic players, too, want some of the action, with Japan Post Holdings Co.’s banking and insurance units in January establishing a company to invest in buyouts and ventures with promising technologies. But having the cash is only half the battle. In a low-growth economy like Japan, private equity investors can’t just buy into the hottest AI or health-care start-up and hope for the best, as they would in China. They’ll

have to be more proactive than that. Fortunately, Japan’s companies are in need of a shake-up. Calcified hierarchical structures need to be broken down and technologies, which in some cases are five to 10 years behind the US, need to be improved, according to Bain’s Naofumi Nishi, who spoke on Wednesday at AVCJ’s Private Equity & Venture Forum in Tokyo. That’s not a challenge every investor will be up for. Your average chief technology officer at most Western firms is a mid-tier executive, if that. In Japan they’re even lower down the ladder and so calls to overhaul legacy systems may go unheeded. Language can also be a barrier: Fewer Japanese executives are fluent in English than, say, those in China, which makes going global, even with private equity help, that much harder.

The biggest roadblock of all, though, is talent. Japan’s labor market is tight and, as Kevin Anderson, State Street Global Advisors’ head of investments for Asia Pacific, notes, its economy is “running out of spare workers.” For every 100 job seekers, there are 159 vacancies, and unemployment is at an almost 25-year low. That lack of staff is even more pronounced at the pointy end, and risk-taking types are in the minority. Japan Post Investment Corp. CEO Tokihiko Shimizu told a (mostly male) audience on Wednesday that, while his firm employs more than 30 people, it’s on the lookout for more. Private equity in Japan needs to keep pushing. While no one’s saying funds should reclaim their reputation as vultures, the softly, softly approach just won’t cut it.

Opinion BusinessMirror

www.businessmirror.com.ph

Culture of giving

After Richard Quinney’s ‘Ethnography of Everyday Life’

For the time being

Rev. Fr. Antonio Cecilio T. Pascual

SERVANT LEADER

A

S we crossed our path towards the 500 years of Christianity in our country, we are also crossing our path to our Lord Jesus Christ through giving, as it is the best way to express our gratitude for the good life that we have experienced. It is truly indeed that in every little thing that we can share or give, there are multiple in return, as “every man shall give as he is able, according to the blessing of the Lord your God, which He has given you.” (Deuteronomy 16:17). This act of generosity is what we promote in Caritas Manila through Youth Servant Leadership Education Program (YSLEP). This sustainable program for youth is an evolution of charity that transforms different lives of poor Filipinos. It is a great opportunity to promote giving as an act of spreading good news to others, because it will “enrich us in every way, so that we can be generous on every occasion, and through them our generosity will result in thanksgiving to God.” (2 Corinthians 9:11) As part of our duty to promote the value of generosity, we in Caritas Manila hold our Back to School Telethon in partnership with Radio Veritas. It captures different hearts of benefactors through life testimonies of the successes of grantees that are heard nationwide. The event had been successful

through the pledges and donations given by the faithful who have generous hearts. We are truly grateful that they “…exhort in their exhortation; gives with liberality; leads with diligence; and shows mercy with cheerfulness.” My dear brothers and sisters in Christ, let us continue to give and live in the culture of giving. It is true this act is not about physical things that are visible from our excesses but a sustainable effect to those righteous from our soul nourished by the spirit of mercy that we all have as what God grant to us. Through YSLEP, we in Caritas Manila are doing our best to make the cycle of charity as a practice and be part of every Christian’s life. To know more about Caritas Manila, visit or follow us on Facebook: CaritasManilaInc. For your donations, please call our DonorCare lines 5639311, 564-0205, 0999-7943455, 09054285001, and 0929-8343857. Make it a habit to listen to Radio Veritas 946 in the AM band, or through live streaming at www.veritas846.ph and follow its Twitter and Instagram accounts @veritasph and YouTube at veritas846.ph. For your comments, e-mail veritas846pr@gmail.com.

Unlike peak oil, peaker gas has a future in energy By Liam Denning Bloomberg Opinion

B

loomberg New Energy Finance (BNEF) has just released its annual tome of forecasts. The short story is that wind and solar power are getting cheaper, and we will all be using more of them—a lot more, and relatively soon. Not the most encouraging forecast for coal, obviously. Natural gas, though, is a bit more nuanced. While gas-fired electricity drops from 25 percent of the market to 17 percent, its absolute output isn’t cut in half as coal’s is. On the other hand, it doesn’t grow much either. That undermines the thesis of gas being a “transition” fuel, generating lower carbon emissions than coal and bridging power’s dirty past and cleaner future. Still, even under BNEF’s projection of a far greener energy sector, gas is expected to have a meaningful role, particularly as flexible capacity. The intermittency of solar and wind power requires more sophisticated management of demand for power, as well as storage and back-up options. Storage generally means batteries, and BNEF certainly foresees growth there, with capacity forecast to rise by a factor of more than 160 times by 2050. But the limitations of lithium-ion batteries—particularly in terms of meeting peak demand for long periods or providing storage over long periods of time—means BNEF foresees gas-fired plants continuing to provide back-up. What changes, however, is the type of plant required. Rather than the more efficient (and expensive) combined-cycle gas turbines that dominate the market now, simpler (and cheaper) “peaker” plants—which turn on only to meet high demand— will be more suited to competing with renewables and storage for those relatively infrequent periods where they can provide the last kilowatt-hour required. Hence, the mix of new gas plants being built shifts significantly. One striking aspect of that projection is the sheer size of the market, with orders for new turbines averaging almost 60 gigawatts a year. That contrasts sharply with the gloomier noises coming from manufacturers, such as Siemens AG and General Electric Co. GE is planning for a market of less than 30 gigawatts of new heavy-duty gas turbine orders in 2019 and 2020. BNEF’s projections imply that may be too pessimistic. Concurring with this, a new report

from Hugh Wynne and Eric Selmon of Sector & Sovereign Research Llc., also published this week, projects turbine orders to rise from 31 gigawatts in 2020 to 49 gigawatts in 2025 and 70 gigawatts in 2030. Even under its more-bearish scenario—where batteries are deployed much more quickly—annual orders rise back toward 50 gigawatts by the end of the 2020s, in part simply to replace retiring plants (on that note, it’s worth pointing out BNEF’s projections imply net additions to capacity averaging just 31 gigawatts a year out to 2050). If that offers a hopeful note for turbine-makers, it comes with caveats. The shift toward peakers rather than baseload gas plants means even if orders are higher than expected, that will be partly because they are cheaper. There’s no other way to compete in a market becoming more defined by renewable sources, where deflation is structural. Plus, as peakers, they will be used less often. Cheaper plants requiring less maintenance mean the revenue opportunity for turbine makers probably won’t be as big as those higher order numbers imply. The other issue to consider is this: Who will finance and build those gas plants? In the past, merchant generators played a big role in the gas-plant boom in the United States. But that model has come under increasing pressure as power demand has flattened and things like renewable energy and demand management have muscled in—all of which will intensify from here. Future gas-peaker plants may instead have to be built by utilities (funded by ratepayers) or require some other incentive mechanism similar to the capacity auctions currently run in some US regional power markets. In this country, at least, the energy transition and the political maneuvering to undercut it make getting to a sensible and, from a developer’s perspective, reliable planning environment doesn’t look like a sure thing. Above all, the biggest wildcard is that transition itself. If storage technologies, in particular, advance much more rapidly, then natural gas’ role begins to look more doubtful. Even the concept of peaks in power demand is shifting as a result of renewable energy’s penetration and the likely impact of more electric vehicles getting on the road (and into sockets). The overriding message from BNEF’s report is that the world is changing profoundly; gas will have to fight for its place in it.

Friday, June 22, 2018 A11

Tito Genova Valiente

annotations

R

ICHARD Quinney is a sociologist, and he has authored many books on sociology and social theories. As a sociologist, he writes a book about ethnography, which is commonly known as a systematic study of cultures, using a methodology that allows the social scientist to take into account the total description of cultures. An ethnography is considered to be more encompassing, limited as it is not by questions to ask and the manner of encoding the answers common in surveys, interviews and structured observation. Still, the new anthropologists and sociologists, as well, are feeling how rigid certain theories and methodologies are that we end up framing realities and individuals, describing communities following the structures we create to facilitate our knowledge of others. What therefore appears to be a liberating approach to describing realities is really a theoretical underpinning that once more reminds us that we can only see so much, write so much about what we see or write so little. Quinney, thus, explains the book he wrote, which bears the title, For the Time Being: An Ethnography of Everyday Life. He tells us the book is about the passing of time. The passing of time involves the writer, as well. The writer writes about the time, the things that are happening within time or anything that the writer feels is enclosed in that time. And yet, the writer can always step out of that time. Everyday, we make sense of life, of those sets of actions that spell life. As we look at the sea, for example, we are looking at the body of water. When we write about that day, it is possible that we remember that day as the day we left for some place. The day becomes a place. Then we pass by the sea and remember that day. The sea disappears because maybe we do not write about the sea. The decision to write is the decision also to describe something to a point. When you leave, you do not need the sea. You could write about something else, or not write anything at all. When you go back to days, you

do not go back to that day that is unwritten or has not been written. Anything that exists arises from the everyday. Quoting Henry Lefebvre, the French Marxist philosopher, Quinney defines for us the everyday life of ours as “the most universal and the most unique condition, the most social and the most individuated, the most obvious and the best hidden.” Quinney goes on: “We work, we play, we sleep, we love, we walk the streets from place to place—such an ordinary existence. But if we let the ordinary escape our attention and our care, we miss life itself.” For Quinney, much “depends upon the mundane.” Or, there is no mundane at all. “With imagination, the mundane and the sublime are one.” I was at the gate of the mundane

as I wrote this article one evening. With the rains gone, my nephew came in from a long ride from his office. He was carrying food, and it was only for him. He asked me to eat with him, but I knew he bought the food with his taste and hunger in his mind. I was not hungry but I still wanted him to ask me to eat with him. He did ask me, and I politely said, I was not hungry. As he was eating, he told me the old lady a few doors from us had died already. When we talk of shifts and changes, we never talk about life; we talk about death. The change has to be about death. We forget the in-between, the waking hours, the movement, the life from one life to another life. In the morning, when we wake up, do we look around and check the skies? Perhaps, we do, but waking up, as we move from sleepiness to wakefulness, what songs are there, what memories accompany us from the bed to the porch? Beside me now is a pouch of saltine crackers, and a cup of coffee. I am writing, but there is also the sound of the faucet. Leaks. My white shirt bellows outside, and I keep on looking for the sign of rain. The shirt has to dry. It will look good on me tomorrow. Tomorrow, what shall it be? I will wake up tomorrow, look at the walls around me, and the clouds, and remember as I walk from the room to the window that there are other sounds, there

are other windows. Perhaps, I will think of a wondrous day. Perhaps, I will write of the wonder of that day with my own modifiers. They shall be my day. It is the thought of one man making sense not of the world but of the moments. When you read about my day, you, my reader, shall have, following Quinney, the second chance, another chance to understand my attempt at an ethnography of the everyday. Removed from it, you will see things, hear things, read your own wakefulness, your day, the shifting of little earths at your feet. I believe this piece is going to be, in my column, a series: reflections and insights on books I bought from secondhand bookstores worth P25 and P30. I publish the acquisition not so much to diminish—for it will never—the importance of the book but, rather, to highlight my own literary harvest, to marvel at how treasures can be had in stores that purportedly sell stuff because they are cheap, and to celebrate works that transcend commerce and marketing. I started with Gore Vidal’s Julian, and this follows—a work that seems to be a flowing, rambling meditation but, in its real, empirical life, is hailed as a contribution to ethnographic methodology even as it, according to a review by Martha K. Huggins, “provides academic materials for anthropology, sociology, the environment, religion, peace and masculinity studies.”

E-mail: titovaliente@yahoo.com.

Democracy’s dividend is the right kind of growth

W

By Mihir Sharma | Bloomberg Opinion

E are at a fraught point in history, one where it seems that country after country wishes to turn its back on the messiness, moral ambiguity and confusion that decision-making in representative democracy entails. Books with titles, such as Why Liberalism Failed and The Death of the West herald a new consensus—forged by the global financial crisis and the rise of the People’s Republic of China—that autocracies produce better economic outcomes than democracies. As Russian President Vladimir Putin, the most self-aware and articulate of a new breed of strongman leaders, told the United Nations General Assembly in 2015, it now appears to many that “no one has to conform to a single development model that someone has once and for all recognized as the only right one.” By generating stability, illiberal regimes can, in theory, produce a more conducive environment for growth than their disorderly democratic counterparts can. Let’s not pretend, however, that there’s anything especially new about Putin’s argument. Even in the early-1990s, at the height of the West’s history-is-dead triumphalism, questions were being raised about whether democracy was truly a more effective delivery mechanism for economic well-being. In 1994 Harvard economist Robert J. Barro wrote a famous paper arguing that, while democracy might help growth in countries that were

mostly unfree, once a higher level of freedom was attained, “the overall effect of democracy on growth was weakly negative.” Among economists and political scientists, this debate has only become more heated over time. Other economists, led by Daron Acemoglu at the Massachusetts Institute of Technology, have reexamined Barro’s question and found radically different answers. Institutionalists, such as Acemoglu, insist that the “right” political institutions create the conditions for growth. Others continue to argue that growth inevitably leads to pressures for democratization. When the data tell you two different things, you’re asking it the wrong question. Does democratization raise a country’s GDP? Perhaps, perhaps not. More likely, GDP is simply the wrong benchmark. And, surely, it should be clear by now that voters worry about more than that single number at a particular point in time. They care about

how growth is shared geographically. They care about its distribution across time, and across generations. Their notion of a “good” economic outcome for society isn’t straightforward or one-dimensional. If tomorrow the best of all studies proved conclusively, once and for all, that democracies grew faster than autocracies, I doubt any minds would be changed. The real question is whether democracy is better suited to assuaging citizens’ real worries—and meeting their aspirations—than autocracies are. And, in one very important sense, I’d argue that it is. Once you look at broader economic outcomes, you begin to see the democratic process as an economy’s immune system, stopping dangerous diseases before they spread. Consider one unpalatable reality, painfully clear to anyone from India who visits China: Democracies can’t build infrastructure as quickly as authoritarian states. In China, if it’s decided that a highway is needed, then the organs of the state—from its shackled financial sector to its local satraps to its giant public-sector enterprises—press ahead and build the road. In India, anyone from a local court to a prickly nongovernment organization to a showboating provincial politician could stall that project at any time. Infrastructure takes years to build; voters can

change their minds in months. And even if they don’t, the institutions of liberalism—set up to protect and amplify dissenting voices—might. But infrastructure isn’t everything. The Soviet Union dug thousands of miles of canals, electrified a vast country and poured millions of tons of concrete—while writing ambiguous poems about it. It built the infrastructure of a superpower. It was also, indisputably, an economic failure. It failed to use the capital it extorted from its work force efficiently or wisely. Can we see that happening anywhere today? Of course we can. In China, a system that has normalized financial repression, workers have mortgaged their individual futures to pay for the hundreds of millions of tons of concrete poured in a few decades. No democracy could match that; its citizens would demand a fair return on their savings. Equally, democracies abhor white elephants. Cavernously empty small-town airports, cozy public-sector monopolies, corrupt local officials—these are excesses that liberal institutions reveal and democratic processes strive to correct. In an authoritarian system, you don’t even know when you’re being robbed. Democracies may grow slower at times. But at least they grow right.

2nd Front Page BusinessMirror

A12 Friday, June 22, 2018

DOF chief woos sovereign wealth, pension fund heads By Rea Cu

F

@ReaCuBM

INANCE Secretary Carlos G. Dominguez III has called on institutional investors managing Asian pension and sovereign wealth funds to take part in the Philippines’s economic emergence by investing in the country’s $170-billion infrastructure modernization program, or its “Build, Build, Build” program.

Dominguez told members of the Asia Pacific Investors Cooperation (APIC) network that now is a good time to build partnerships with the Philippines, which has emerged as one of the main growth engines in the region and aims to sustain the status by embarking on its ambitious infrastructure program “with a great sense of urgency,” according to the Department of Finance (DOF). “The modernization of our infrastructure and our governance will bring enhanced connectivity to the Philippine economy. They will open many opportunities for

the global investment community. I hope that you will examine our ongoing programs and decide to participate in the strong emergence of the Philippine economy,” Dominguez said at the APIC meeting held at the Shangri-La Hotel in Tokyo, Japan, on Thursday. The APIC is a private network exclusively created by and for Asian sovereign wealth funds, government funds, central banks and public and private pension plans. The finance chief explained that, in the Philippines, state pension funds also play a role in funding infrastructure projects, as he cited

7.3%

The ratio of infrastructure investments to GDP by 2022 as targeted by Duterte administration

the investments made by the Government Service Insurance System (GSIS) in this field. The GSIS invests in private infrastructure assets through the Philippine Investment Alliance for Infrastructure, which is the first private equity fund earmarked for the country’s infrastructure projects. A mong the investments made under this fund are solar power and wind fa r m projec t s, power pl a nt s and railways. “It is our desire to see the strategic projects completed at the shortest possible time in order to immediately realize their economic value and lessen unnecessary financing costs,” he added. The finance chief also pointed out that, besides the country’s tax-reform program, the Philippines’s $170-billion infrastructure program will be financed through the following: increased Official Development Assistance

f lows from Japan and China, which have committed $9 billion each worth of investments; as well as from South Korea, which has also pledged up to $1 billion in ODA; investments from multilateral institutions, such as the Asian Development Bank, World Bank and Asian Infrastructure Investment Bank; floating bonds at investment-grade rates; and hybrid public-private partnerships in which the government under t a kes t he projects a nd completed ones are passed on to private partners for management or acquisition. The government, Dominguez said, has combined loans and grants from these funding sources, “to arrive at economically astute and technically superior designs for the projects we intend to undertake.” The Duterte administration plans to increase infrastructure investments from 6.3 percent of the country’s GDP in 2018 to 7.3 percent by 2022 through its 75 flagship infrastructure projects. The Tokyo visit of Philippine government officials from June 18 to 21 includes a Philippine Economic Briefing, the second to be held in Tokyo since last year, and the fifth regular meeting of the Philippines-Japan High-Level Committee on Infrastructure and Economic Cooperation.

Believe it or not: Solar panels can provide you clean drinking water By Cai U. Ordinario

T

@cuo_bm

HE Asian Development Bank (ADB) and the National Electrification Administration (NEA) are piloting solar hydropanels to provide clean drinking water to far-flung communities in the country. These solar hydropanels can create drinking water using sunlight, water vapor and technology. The ADB already has four of these installed on its roof, providing its staff with clean drinking water. The solar hydropanels, called Source Hydropanels, were developed by United States-based Zero Mass Water Inc.. Together with its Filipino partner, Green Heat Corp., ZMW distributes Source Hydropanels in the Philippines. “From ADB to NEA, it’s a small grant, and we want to demonstrate the viability of this system— whether it’s working, whether the beneficiaries would appreciate it, whether there are difficulties operating this,” ADB Energy Sector Group Chief Yongping Zhai told reporters on Thursday. Zhai said ADB extended a grant worth $80,000 to NEA to purchase the solar hydropanels, with each solar hydropanel costing $2,000. This is exclusive of installation cost that will be shouldered as counterpart funding of the NEA. The project is being done in eight island communities in the Philippines. One such island is Silakis island in Bolinao, Pangasinan, near the province’s eco-adventure tourist destination Hundred Islands. He said that, once ADB and NEA are satisfied with the results of the pilot, which is currently ongoing, the NEA could craft a “larger-scale package” that may involve a loan from the ADB. “The deployment of climate-proof

Partnering with local solar provider Green Heat Corp. and the Asian Development Bank (ADB), United States-based Zero Mass Water (ZMW) launched the Source Hydropanel, a hydropanel that requires only sunlight and air to produce potable water at the ADB Headquarters. In photo, zmw Founder and CEO Cody Friesen (right) explains how the Source Hydropanels work to (from left) Green Heat General Manager Obeth Martin, Green Heat Director Glenn Tong, ZMW Marketing Head, Kaitlyn Fitzgerald and ZMW EVP for Business Development Robert Bartrop during its launching. NONOY LACZA

drinking water through the Source Hydropanels will help address the water-supply problems in rural and off-grid areas, especially in small islands in the Philippines, which lack access to both reliable drinking water and electricity,” Zhai said in a statement. Based on an ADB statement, the solar-powered Source Hydropanels extract water vapor from the air into a proprietary absorbent material. The water flows into a reservoir where it is mineralized with calcium and magnesium for health and taste benefits. Each hydropanel displaces

up to 50,000 standard PET bottles, providing high-quality drinking water and eliminating plastic pollution. ZMW Founder and CEO Cody Friesen said Source Hydropanels have a one- to four-year return on investment, and each panel has a 15-year life. The panels are 98-percent recyclable. “The Philippines’s fragmented geography adds extra barriers for reliance on traditional water infrastructure, yet makes it ideal for our technology [to provide] families, communities and businesses with drinking-water resilience in

the form of a sustainable drinking water supply,” Friesen said. Green Heat Corp. will distribute, install and provide customer service for Source Hyddropanels in the Philippines. They will also be partnering with ZMW in scaling up the technology in the country. ADB extends $5 billion worth of funds annually for clean energy projects, which forms part of its total development assistance to the region. In 2017 ADB financed $32.2 billion-worth of projects in the region, including $11.9 billion in cofinancing.

www.businessmirror.com.ph

NTC STRENGTHENS financial criteria for 3rd telco player By Sharmaine O. Paden

Special to the BusinessMirror

T

HE National Telecommunications Commission (NTC) is strengthening the financial criteria for the selection of the third telco player, a Cabinet official said. Department of Information and Communications Technology (DICT) Acting Secretary Eliseo M. Rio said the regulator has two weeks to draft the new scope of the selection process, noting issues raised by the oversight committee for the third telco. “They have to make a new one because of the comments of the oversight committee,” Rio said. “In two weeks, they should be able to present it.” Finance Secretary Carlos G. Dominguez III expressed concerns last week over the “weak” prequalification criteria in choosing the third player in the Philippine telco space, saying the requirements are widely

Villar. . .

Continued from A1

tariffs collected from rice imports. “There will be a rice competitiveness enhancement fund [RCEF] from the tariffication. But if we are going to wait for that, then our farmers would lose right away,” she said. “The government has to frontload P10 billion.” Villar said she is “lukewarm” to the House of Representatives’s proposal to limit the effectivity of the RCEF to six years. “[The RCEF] should be perpetual unless the [law] is amended. For me, I am not keen on a six-year effectivity period. It should only be removed once the farmers are competitive,” she added. The House version of the ricetariffication bill includes a provision mandating the creation of the RCEF, which would consist of all the tariffs earned from rice imports. But if necessary, Congress could pass a measure amending the law to extend the life of the RCEF. The earlier House version indicated that the RCEF would be perpetual. It was later on amended to reflect the recommendation of the Department of Finance to limit the fund’s effectivity to six years. Removing the QR on rice by amending Republic Act 8178 would allow the government to generate P27 billion annually, according to a paper published by the Philippine Institute for Development Studies (PIDS). The PIDS paper noted that the projected revenues would come from the importation of some 2.2 million metric tons of rice at a 35-percent tariff. Purchases of imported rice are expected to increase once the government removes the QR. Economists and some farmers’ groups said the P10 billion is not enough to make Filipino rice planters competitive. “Our preference is to earmark all tariffs collected from rice imports to the sector, as indicated in the House version of the bill,” Raul Q. Montemayor, national business manager and program officer of the Federation of Free Farmers, told the BusinessMirror. “The P10 billion is less than what is expected be collected in just the first year. We basically support the House version but would prefer a longer earmarking period,” Montemayor added. He said his group would recom-

based on “commitments.” Based on the latest draft, the selection committee shall determine the new major player with the highest calculated and responsive bid, based on the net present value of “committed investments” and the company’s net book value, among others. Rio noted that while the new terms of reference (TOR) will still take into account the level of service, it will also give prime importance to the financial aspect of the auction. “The level of service, which used to be the main parameter, will become a secondary requirement, while financial requirements will become the primary parameter,” he said. “So we will completely change the whole picture.” Spectrum allocation will also be based on best practices from other countries—using auction to source more revenues for the government. See “NTC,” A2

mend an effectivity period of 10 years for the RCEF, which could be reviewed to determine whether it should be extended. Dr. Rolando T. Dy, executive director of the University of Asia and the Pacific’s Center for Food and Agri Business, said the life of the RCEF should be limited to only 10 years. “I think 10 years is enough to be competitive or not. The key is choice. Either [rice farmers] become productive, or they diversity their crops in 10 years,” Dy told the BusinessMirror.

‘Counterproductive’

Some experts said, however, that the creation of a fund to help farmers cope with the removal of the QR could discourage competitiveness, especially if it does not have a clear timeline. Sans a “time bound” fund, former Tariff Commissioner George Manzano told the BusinessMirror that rice farmers could become “complacent.” “It may be better if the fund is time-bound or there are performance measures for it to be extended,” Manzano said in a phone interview on Thursday. Manzano said the fund is a form of cash transfer that can be periodically reviewed. This, he said, is crucial, since the source of the fund will initially come from the national government and then from tariffs collected by the Bureau of Customs.

Not a subsidy

He also said the rice fund should not be considered as a form of subsidy, which is widely frowned upon by other member-countries of the World Trade Organization (WTO). National Economic and Development Authority Undersecretary for Planning and Policy Rosemarie G. Edillon shared this sentiment and said that the rice fund is a form of “welfare assistance” to poor farmers. “We think the WTO will agree with the social objectives of the fund, given the poverty incidence in the sector,” Edillon told the BusinessMirror via SMS. She said one of the goals of the fund is to help rice farmers increase their competitiveness and diversify to other crops. “The details of the fund are still being worked out. Broadly, it’s intended to increase competitiveness, in the case of productive rice farms. For unproductive farms, it will support diversification,” Edillon said.