Businessmirror june 28, 2016

BMReports

Tales of past presidential inaugurations

Superstition and history

By Fil V. Elefante

@elefantefil

Second of three parts

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S bad luck associated with presidential inaugurations?

The answer is “Yes.” That’s according to superstitious folk living in Bulacan.

Prof. Xiao Chua, a member of the history department of De La Salle University, pointed this out during an interview about presi-

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dential inaugurations in 2010, shortly after the inaugural rites for President Aquino.

Chua said this superstition stemmed from the observation that Emilio Aguinaldo, president of the First Philippine Republic, and Joseph E. Estrada, third president of the Fifth Philippine Republic, both lost the presidency. Both presidents took their oath of office in Barasoain

Church in Malolos, Bulacan.

Estrada took his oath of office in Malolos in 1998, as part of the commemorative events to mark the centennial of Philippine independence. By coincidence, Aguinaldo declared Philippine independence on June 12, 1898, though his formal inauguration as president took place six months later on January 23, 1899.

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THEN-President-elect Aquino was given full military honors when he took his oath of office as the 15th president of the Philippines at the Quirino Grandstand six years ago. In his inaugural speech, Mr. Aquino vowed “to end bad governance,” starting with a review of his predecessor President Gloria Macapagal-Arroyo’s midnight appointments. NONIE REYES

BusinessMirror

United nations

2015 environmental Media Award leadership award 2008

A broader look at today’s business

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Tuesday, June 28, 2016 Vol. 11 No. 262

Congestion won’t derail PHL aviation growth–expert

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By Lorenz S. Marasigan

@lorenzmarasigan

ommercial aviation in the Philippines, generating hundreds of billions of pesos a year from foreign travelers alone, was seen to persist on a growth path over the next three years, no matter persistent congestion at the nation’s main international gateway, a well-regarded industry expert said on Monday.

INSIDE

‘INDEPENDENCE DAY: RESURGENCE’ IS A DULL DISASTER

I think, within the next two to three years, we will regain double-digit growth in air traffic.”

—Zapanta Avelino L. Zapanta, an expert in the civil aviation industry, said air hubs in other key cities in the Philippines should see higher passenger volumes this year due to the See “Congestion,” A2

P25.00 nationwide | 5 sections 32 pages | 7 days a week

Economic production more vulnerable to climate change DATABASE

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Cecilio T. Arillo

new study shared to “Database” by the Potsdam Institute for Climate Impact Research (PIK) and Columbia University has shown for the first time how enhanced connectivity of the global network of supply can amplify production losses and these losses can spread more easily across countries.

Continued on A11

SHOW

Brexit shock may have silver lining for Asian investors

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FACEBOOK CITES GROWTH IN ADVERTISING PLATFORM BusinessMirror two new models oF oracle database appliances launched

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R ACLE Corp. announced on Ju ne 22 t wo ne w models of its database appliance targeting small- and medium-sized businesses.

The launch comes as the International Data Corp. (IDC) pegged Oracle as having a 24-percent market share in the worldwide integrated systems in the first quarter of the year, generating revenue in that period of $379.62 million. IDC defines integrated systems as pre-integrated, vendor-certified systems containing server hardware, disk storage systems, networking equipment and basic element, or systems management software.

“Since Oracle owns the entire stack, its systems are fully hardware-software integrated, pretested and optimized from silicon to applications,” Oracle quoted IDC analyst Peter Rutten as saying.

CER Inc. cited its customercentric strategy is the key to its success in the local consumer technology market.

According to Ray Gozon, senior marketing manager for Acer Philippines, one out of three Filipinos buy Acer products. This has made the brand No. 1 in the local market for 10 consecutive years, Gozon said.

But in a financial report for the first quarter of the year, Acer’s sales dropped to NT$56.3 billion (roughly $1.73 billion), compared to worldwide sales of NT$67.9 billion (about $2.1 billion) in the same period last year. However, gross margins were higher in the first quarter at 11.8 percent, compared to the 9.8 percent in the same period last year, the Acer financial data showed.

Revenue from informationtechnology hardware product in the first quarter of the year in Pan Asia Pacific, however, rose by 1 percent to 38 percent, compared to the 37 percent in the same period last year. Pan Asia Pacific includes Asia Pacific, Japan, Taiwan, Hong Kong and Mainland China. The

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“They are quickly deployed, extend smoothly to Oracle’s cloud, and the various systems seem to work well together.”

According to Rutten, analyst for IDC’s Computing Platforms Group, the latest Oracle database appliances “should help small- and medium-sized businesses put a fully operational entry-level Oracle database in place— apparently no screwdrivers required.”

IDC pegged the Integrated Systems market to have generated revenues during the first quarter of 2016 of $1,584.25 million. The amount, IDC said, represented a year-over-year increase of 1.8 percent and 62.8 percent of the total market value. Oracle said its database appliances start at a price of $18,000 (about P845,685) for new, entry-level database appliance for single or small database instances.

PHILIPPINE STOCKS RECOVER A trader at the Philippine Stock Exchange’s (PSE) trading floor in Makati City flashes the thumbs-up sign to indicate that the market is up. The PSE index, which nosedived on Friday following the decision of the United Kingdom to leave the European Union, rose by 86.18 points to 7,715.90 on Monday. In a news conference, British Ambassador to the Philippines Asif Ahmad said the UK’s decision will have “minimal” impact on trade relations between the two countries. NONIE REYES

Dennis D. Estopace

acer: customer-centric strategy key to success

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Tuesday, June 28, 2016

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company’s report to its investors revealed worldwide sales of desktop personal computers (PCs) rose by 1 percent to 18 percent, compared to the 17 percent in the first quarter of last year.

Sale of Acer display, smartphones and other products also rose to 14 percent, 3 percent and 5 percent, respectively, in the first quarter of the year, according to the firm’s investor report.

Sales in tablets and notebook PCs dropped in the first quarter of the year to 5 percent and 55 percent, respectively, from 6 percent and 59 percent, respectively, in the same period last year.

Gozon said the company is banking on giving free items with the purchase of Acer products to maintain its local market leadership. Likewise, he said the firm backs its projectors and laptops with a three-year warranty.

“We are crazy over customers,” Gozon said. “We live each minute, each second spent in our office, to understand and anticipate the needs and wants of the customers.” Dennis D. Estopace

this illustration, courtesy of Facebook inc., shows the book, title O Menino e o Foguete (The Boy and the Rocket), by brazilian writer marcelo rubens paiva on a canvas platform in Facebook.

Facebook cites growth in advertising platForm

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ACEBOOK Inc. announced recently more than 100 years of time have been spent viewing its advertising platform called “Canvas” since the company launched it in February.

In a statement, the company said more than 180 countries h av e “e x p e r ie nc e d C a nv a s ,” which loads 10 times faster than mobile Web. Facebook said the average dwell time on a Canvas ad is 31 seconds.

Facebook cited as example the use of Canvas by Itau Unibanco Holding SA, the biggest financial conglomerate in Latin America.

Itau, according to Facebook, encouraged the reading of books, as time spent by Brazilians on reading books grew less at 312 minutes a week. The Philippines ranked fourth at 450 minutes a week, according to the NOP World Culture Index of 2005.

On the other hand, Brazilians were spending more time on Facebook at 406 minutes a week,

just two notches below the Philippines (306 minutes), which is No. 2, and a notch above the US, which is at No.5 in a Facebook Insights ranking.

“And if parents are staying more and more time online, we shall put the books there so they can read on their timelines,” Itau said in a video, presenting its “Kidsbook Collection,” described as “a new kind of pocket books displayed on the perfect shelf: parents’ timeline.”

T he company said it made this possible by hacking Canvas, the interactive format on Facebook. “And instead of creating ads, Itau created a new way of reading to children.” The fist book that Itau shared is titled O Menino e o Foguete (The Boy and

the Rocket) by Brazilian writer Marcelo Rubens Paiva.

“One of the most exciting things to see is how Canvas has captured people’s fundamental desire to create and share in visual ways,” Zack Hendlin, product manager at Facebook, was quoted in a statement as saying. “We’ve had dog walkers, journalists, bands and small businesses embrace Canvas as enthusiastically as some of the most respected brands in the world.”

Facebook said it will put a new feed unit to Canvas to entice users to engage in the platform. The company added it will also make Canvas available for all pages to use in a post, even when it’s not promoted as an advertisement.

Dennis D. Estopace

incoming administration must continue supporting development oF start-ups Story & photo

by Rizal Raoul Reyes @brownindio

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HE incom ing ad m inistration must continue to support the development of start-ups to enhance the country’s wealth generation drive in the digital economy, according to a leading official of the newly created Department of Information and Communications Technology (DICT). “Through their efforts, start-ups are contributing to the growth of the economy, and I hope the next administration w ill continue supporting the startups so their community will become bigger,” said Monchito B. Ibrahim, deputy executive director of the DICT in a news briefing during the launch of the Geeks on a Beach (GOAB) 4 held in Makati City.

Start-ups, according to Ibrahim, can contribute a lot to inclusive growth, as these companies can introduce innovative ideas that can be game changers in the economy. “ T he Phi l ippine sta r t-up communit y is one of the sectors that have lobbied for the creation of the DICT. We hope the DICT w il l continue to work together w ith var ious publicprivate stakeholders to empower the start-up communities to drive faster-economic growth,” I brahim said.

Digital life

organizers of geeks on a beach 4 briefs the media on this year’s program for the start-up communities in the country, which will be held on august 25 and 26 at the bellevue hotel in panglao, bohol. pldt vice president and head of ict research and development Joey limjap (from left), smart communications developer evangelist paul pajo, pldt sme nation head of community partners Francis oliva, department of information and communications technology deputy executive director monchito b. ibrahim, happy garage cofounder mark deutsch and ideaspace Foundation executive director diane eustaquio

He said GOAB can catapult the start-ups of the country at the forefront of change by opening doors to investors and capital from within the Asean region, along with North American and European, Japanese and other investors. The previous GOAB conferences had 20 percent to 30 percent of its attendees coming from outside the country.

The first three GOAB events generated positive results, including funding of start-ups, as well as crafting of the Philippine start-up road map, which is now being pursued by the government, and the

community leading the way for local start-ups to achieve success.

Paul Pajo, developer evangelist of Smart Communications, said the country has a lot of talent in engineering, sciences and information and communications technology (ICT) that can be tapped for future startups. To discover these hidden talents, he said the government and the private sector must work together to conduct activities, such as the monthly hackathons, to find out the people, especially those belonging to the millennial generation, who have the

solutions, apps and innovation, and those leveraging technology solutions for their businesses, should join the conference to know more about the latest developments in the industry and meet the key people in the tech start-up world.

“The Philippines’s remarkable work-play environment complemented by the famous Filipino hospitality and a unique cultural mix of East and West makes it the natural cultural doorway to the Asean for geeks and investors alike,” Amper said.

Invited to speak are Techstars cofounder and Managing partner David Brown, Startup Weekend cofounder Marc Nagerm, Chris McCann of Greylock Partners, Crowdsourcing Week CEO Epi Ludvig Nekaj, 500 Startups M a n a g i n g P a r t n e r/ I n v e s t o r Khailee Ng, 500 Startups Corporate Innovation Director Arnaud Bonzom, Zalora Philippines Managing Director Constantine Robertz, Bo’s Coffee CEO Steve Benitez, PLDT Inc. SME Nation Head Mitch Locsin, Ideaspace. ph Director Dianne Eustaquio, TechTalks.ph Chief Content Officer Robert Cristobal, Citrix Principal UIX Designer Philip Mckay and STAC Silicon Valley President Cristina Laskowski.

Organized by TechTalks.ph and the DICT, GOAB 4 will be held on August 25 and 26 at the Bellevue Hotel in Panglao, Bohol.

brilliant ideas that are waiting to be harnessed.

Globally, Pajo said hackathons are held daily, and the Philippines is getting recognized for being active in holding such events.

“The Philippines is definitely getting recognized because of the presence of a big number of talented people,” Pajo said.

Ibrahim said the long-term goal is to develop and form a bigger pool of technology workers to make the country a formidable force in the global ICT industry.

He said the major step to boost the population of technolog y

workers is to encourage the millennials to pursue innovation in the fields where they excel.

Tina Amper, founder of TechTalks.ph, said the GOAB 4 will facilitate the connection between start-ups and potential venture capitalists, and encourage networking among the participants discuss potential business opportunities. She added that the conference has grown to attract a bigger and more diverse audience since it opened in September 2013.

She encouraged people who are into digital technology, Web

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By Cai U. Ordinario

tennis elite: Not us

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TENNIS ELITE: Sports BusinessMirror

NOT US The mosquito-borne disease has been linked to severe birth defects in infants born to infected women, and possible neurological problems in adults, but the Olympics outweigh the risks.

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By Foster Niumata The Associated Press

ONDON—While the Zika virus and family concerns have notably deterred some of golf’s best players from going to the Rio de Janeiro Olympics, the tennis elite isn’t put off.

Defending men’s champion Andy Murray said at Wimbledon on Saturday, “My plan is still to play.”

Roger Federer was also full steam ahead. “I’ll put mosquito spray on my body and take the precautions I have to,” said Federer, the runner-up to Murray in the London Games four years ago and a doubles gold medalist in the 2008 Beijing Games.

“I’m not afraid of Zika,” said Petra Kvitova, the two-time Wimbledon champ from the Czech Republic. “I will definitely go there.”

Rafael Nadal headlined the Rio Open in February and has said he will go to the Olympics, if fit.

Then there was the blissful ignorance of French Open champion Garbine Muguruza.

“I don’t really know what is Zika,” she said. But the Spaniard was sure the Olympics would not proceed if the virus posed a serious threat.

The mosquito-borne disease has been linked to severe birth defects in infants born to infected women, and possible neurological problems in adults, but to Kvitova, the Olympics outweigh the risks.

She said she receives updates from a doctor with the Czech Olympic team, but admits she doesn’t read them all. But there was no way she was missing the games. “For me,” she said, “it’s like another Grand Slam.”

Federer, the father of four kids, respected the choices by the likes of golfers Rory McIlroy and Charl Schwartzel to be unavailable for Rio selection because of the virus. Other absentees, such as Adam Scott, Louis Oosthuizen and Graeme McDowell, did not cite Zika.

“I have never reconsidered my decision,” Federer said at Wimbledon. “I know I will play. I will try everything I can to be there. For me, it’s always been a big deal, the Olympics, regardless of [tournament] points or not, or where it is.”

Murray, who had his first child in February, has always been positive about going to Rio, but has always sought the latest medical advice.

“The doctor in British tennis, who has been working there for 35-40 years, he thinks [Rio is] pretty safe, and we should be OK,” Murray said.

“When I’m done here [at Wimbledon], I’ll have another chat to make sure.”

The most troubled venue for the Rio de Janeiro Olympics—the indoor cycling velodrome— meanwhile, is almost ready to go with the games

opening in just under six weeks.

Rio organizers took possession of the building on Sunday with about 30 mostly Brazilian cyclists spinning around the banked track during a practice session.

This is the last permanent venue at the Olympic Park being handed over to organizers. Repeated delays and contract disputes forced two cycling test events to be canceled.

The first real racing on the track will be after the Olympics open on August 5. It will follow months of complaints from the International Cycling Union (UCI), the sport’s ruling body.

“It’s certainly not ideal, but given the circumstances, we’re very happy to have some practice this weekend,” said Gilles Peruzzi, the UCI technical delegate.

After all the setbacks, he called the venue a “positive outcome.”

However, the venue is still a work in progress. Temporary seating still must go in, along with concessions and other behind-the-scenes facilities. Window cleaners were still working on Sunday at one end of the track, and painting remains to be done.

“We see that the building is still under construction, so there is a bit of dust on the track,” said Swiss rider Gael Suter, who practiced on Sunday and has already qualified for his first Olympics. “Maybe it is not 100 percent yet. But no doubt it will be ready for the Olympics, and it will be a fast track.”

Rio Mayor Eduardo Paes, who has spoken at handovers of almost every Olympic project, repeated his standard speech. He said limited public money was spent on the Olympics, with private companies handling key projects.

This came in exchange for concessions from the city, including exemptions in zoning laws and access for developers to prime real estate in the upscale suburb of Barra da Tijuca, the heart of the games.

Rio is spending between $10 billion to $12 billion, a mix of public and private money, to prepare for the Olympics.

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| Tuesday, June 28, 2016 mirror_sports@yahoo.com.ph sports@businessmirror.com.ph Editor: Jun Lomibao Asst. Editor: Joel Orellana

SERENA WILLIAMS has surprised many by failing to win any of the last three Grand Slam tournaments. AP

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Ready to play at Wimbledon

ONDON—Top-ranked Serena Williams hasn’t won a Grand Slam since Wimbledon a year ago, but the 21-time major champion appeared confident about her chances of retaining the title on the eve of the tournament.

“Honestly, I don’t feel any pressure,” said Williams, keeping her answers short at a

pretournament news conference on Sunday. “I feel good and confident.”

Williams surprised many by failing to win any of the last three Grand Slam tournaments.

She fell to Roberta Vinci of Italy in the 2015 US Open semifinal, Angelique Kerber of Germany in the 2016 Australian Open final and Garbine Muguruza of Spain in the French Open final earlier this month.

Instead of bemoaning those losses, however, Williams prefers to focus on coming back stronger.

“I think it’s important to learn

from every loss that you have,” she said. “I think, in particular, throughout my whole career [I] have been able to learn a lot to come back a much better player.”

Williams enters Wimbledon maintaining her No. 1 ranking for what will be an impressive 300th week at the top.

Nevertheless, Muguruza, Kerber, Agnieszka Radwanska and Simona Halep are all positioned to oust Williams from the top spot by the end of Wimbledon.

Williams will play 148th-ranked qualifier Amra Sadikovic of Switzerland, a player she admits knowing

nothing about, in the first round on Tuesday.

“It doesn’t matter who I play,” she said. “It doesn’t matter to me.”

When she captured her sixth Wimbledon trophy last year it capped the second time in her career she held all four Grand Slam titles in a noncalendar year. She first achieved that distinction in 2002 and 2003.

“It was a great accomplishment to win four Grand

Slams in a row twice in my career,” Williams said. “It’s pretty cool. It’s really awesome.”

Like Williams, two-time defending champion Novak Djokovic arrived at Wimbledon without having played a grass court tune-up tournament.

Where the two don’t agree is in their attitude: Williams insists she feels no pressure to perform this fortnight, while Djokovic believes it’s impossible to escape those expectations.

“It’s always present. Pressure is part of what we do,” he said. “It’s inevitable to face this kind of sensation as a top player, being expected to do well and to go as far as last four at least in the tournament, or finals.”

Djokovic starts his campaign for a fourth Wimbledon trophy by taking on British wildcard James Ward in a first meeting between the two.

As tradition dictates, Djokovic, as the men’s defending champion, will open the Centre Court competition.

“It’s going to be the first match on the untouched grass,” Djokovic said. “That’s probably one of the most special tennis matches that you get to experience as a professional tennis player.”

Djokovic understands the emotions behind simultaneously holding all four Grand Slam titles, which he achieved upon winning his first career French Open title earlier this month.

Last year Williams had a chance to win a calendar Grand Slam, but came up short at the US Open.

This year Djokovic remains in contention to be the first man since Rod Laver in 1969 to achieve a calendar Grand Slam having already won the Australian and French Opens.

Williams, for one, says Djokovic could be the player to get the deed done.

“He has every opportunity to do it,” she said. “I think he’ll get it easy. So he should be fine.”

That said, Williams is most interested in matches finally getting under way at this year’s edition of the tournament. “I’m definitely ready to start playing at this point,” Williams said.

“I’m kind of over practicing every day for two hours, then going to the gym for some time.” AP

Sports

ANDY MURRAY: My plan is still to play. AP

New admin to review ₧3-T infra plan

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@cuo_bm

he fate of the three-year rolling infrastructure plan (TRIP) hangs in the balance, as the Duterte administration is keen on reviewing the plan before it is implemented.

The National Economic and Development Authority (Neda) said the TRIP is the modified version of the Comprehensive and Integrated Infrastructure Program (CIIP).

The CIIP is a consolidated list of all infrastructure programs of the government.

The Neda initially estimated the

PESO exchange rates n US 46.8660

The Duterte administration cannot fund projects that are not authorized

by Congress in the 2016 budget. That would violate the Supreme Court’s decision on the Disbursement Acceleration Program.”

—Diokno

government will require at least P3 trillion between 2017 and 2019 to finance ongoing and new infrastructure projects. The TRIP’s 2017 budget has already been included in the proposed national budget.

“We will review the three-year

rolling infrastructure plan, [as] the 2016 budget is still [President] Aquino’s budget. The Duterte administration cannot fund projects that are not authorized by Congress in the 2016 budget.

See “Infra,” A2

sia’s equity markets were the first to suffer through a Brexit-fueled rout. Old Mutual Plc. and Citi Private Bank are betting they may be the first to recover.

As Britain’s shock decision to leave the European Union saw asset managers desert stocks across the world, RS Investment Management says declines have left equities in Greater China looking more attractive.

Shares in Shanghai are insulated from global sentiment, because local investors dominate trading, while the turmoil may delay an increase in US interest rates, making higher-yielding Asian securities more appealing.

More than $2.5 trillion was wiped off equities around the world on Friday, with $582 billion of those losses coming in Asia, data compiled by Bloomberg show.

“It is very much a European issue,” said Joshua Crabb, Hong Kong-based head of Asian equities at a unit of Old Mutual. “For us in Asia, it’s opportunity to look around for things you want to buy.”

The region has value on its side. The MSCI Asia Pacific Index trades near the cheapest levels versus global peers in at least 15 years, as concern about China’s economic slowdown and the US interest-rate outlook made the gauge a serial underperformer. The Asian measure fell 5.3 percent in the five years through June 24, compared with an advance

of 22 percent by Europe’s benchmark index and a rally of 61 percent by the S&P 500 Index.

The victory of the “Leave” campaign stunned many investors who’d put wagers on riskier assets over the past week, as bookmakers’ odds suggested the chance of a so-called Brexit was less than one in four.

MSCI’s Asian measure dropped 3.7 percent on Friday, led by losses in Japan, South Korea, Australia and Hong Kong.

A gauge of Asian currencies weakened the most since China devalued the yuan last August.

“This is just a knee-jerk reaction,” said Tony Chu, a Hong Kong-based money manager at RS Investment Management, which oversees about $17 billion. “Most stocks we look at in Greater China have little to do with the United Kingdom or the European economies. We still like Internet-related stocks, consumption and health-care stocks. That’s where we see relatively better earnings prospects.”

The Shanghai Composite Index slid 1.3 percent on Friday, while volume increased less than other major Asian benchmark gauges. Foreign investors are limited by quotas from buying and selling mainland Chinese equities, with local individuals accounting for about 80 percent of trading.

See “Brexit,” A2

n japan 0.4616 n UK 62.9129 n HK 6.0393 n CHINA 7.0731 n singapore 34.5823 n australia 34.7277 n EU 51.6370 n SAUDI arabia 12.4969

Source: BSP (27 June 2016 )

A2 Tuesday, June 28, 2016

Brexit. . .

Continued from A1

Asian markets were mixed on Monday. The Topix index rebounded 0.9 percent by lunch break, as the Shanghai gauge climbed 0.7 percent.

Australia’s S&P/ASX 200 Index added 0.2 percent, while South Korea’s Kospi index slipped 0.5 percent and Hong Kong’s Hang Seng Index was down 0.9 percent.

To be sure, in the short term, fund managers are girding for higher volatility and a flight out of all but the safest assets. Asia can’t escape a global deterioration in risk sentiment, Harvest Global Investments Ltd. says.

Market correlation

“In the medium term, there’ll be some benefits to Asia because the uncertainty in Europe will rise, but the problem is, in the short term, correlation between global markets will be very high,” said Thomas Kwan, Hong Kong-based chief investment officer at Harvest Global Investments. “When they derisk, they’ll derisk together.”

Plus, some of the region’s biggest stock markets are vulnerable to concern about the outlook for the UK and Europe, as well as the rush into haven assets. The Topix plunged 7.3 percent on Friday, as the yen soared, and London-based HSBC Holdings Plc. sank 6.6 percent to be the biggest drag on Hong Kong’s Hang Seng Index.

A slumping euro would hurt earnings for Asia’s exporters, while Royal Bank of Scotland Group Plc. said the rally in the dollar may make it harder for China to keep a lid on capital outflows.

Fed outlook

Speculation the Federal Reserve

BMReports BusinessMirror

(the Fed) will wait longer to raise interest rates is a boon to Asia’s emerging and frontier markets, the region’s best performers in 2016. Among seven such markets tracked by Bloomberg, six saw inflows from foreign investors this year. The chance of the US central bank increasing borrowing costs by year-end slumped to 15 percent on Friday, from 50-50 before the Brexit result, the Fed fund futures show.

“When the panic settles down, I think two conclusions can be made: the Fed will not raise rates, that will be delayed much longer, and the US dollar will weaken after the panic because of the Fed,” said Ken Peng, an Asian investment strategist at Citi Private Bank in Hong Kong. “These two are, together, generally positive for emerging markets.”

Acting as bulwarks against Brexit-fueled turbulence are optimism about Pakistan’s potential entry into MSCI Inc.’s developing nation gauge, President-elect Rodrigo R. Duterte’s pledge to spur Philippine growth and T hailand ’s infrastr ucture largess. Stock indexes in Karachi-, Manila- and Bangkok-led regional gains in 2016, rallying at least 9.7 percent through Friday, compared with the MSCI Emerging Markets Index’s 1.5 percent advance.

Direct implications

“The direct economic implications for emerging Asia of the UK’s vote to leave the EU should be small,” Capital Economics Ltd. said in an e-mailed statement on Friday, noting that exports to Britain make up just 0.7 percent of the region’s GDP. “Most emerging Asian economies are well placed to survive even a prolonged period of financial stress.” Bloomberg News

Congestion. . .

Continued from A1

integration of countries under the Asean into a single economic bloc, paving way for the socalled Asean Single Aviation Market (Asam).

The integration, he said, should translate to more sanguine aviation forecasts, as the ongoing process result to more flights to and from Asean. But with the congestion at the Ninoy Aquino International Airport (Naia) still unresolved, Zapanta quickly said the industry was likely to expand in the mid single-digit rate this year, instead.

“Naia congestion will continue to impede commercial aviation growth. However, if local and foreign airlines will recognize the potential of other airports, like Clark, Cebu, Davao, among others, both domestic and regional [travel] might register hefty growth considering the Asam,” he told the BusinessMirror.

The Philippines recently joined peers in Southeast Asia by signing Protocols 5 and 6 of the Asean Multilateral Agreement in Air Services.

This signifies the country’s participation in Asean open skies, which opened opportunities for local flight carriers, improved connectivity and translated to more competitive fares and services for the air travelers.

Consider, for example, Silkair, the regional arm of Singapore Airlines. It is currently considering operations in other Philippine airports due to the congestion at the Naia.

“I think we will manage 5 percent to 6 per-

Infra. . .

Continued from A1

“That would violate the Supreme Court’s decision on the Disbursement Acceleration Program,” incoming Budget Secretary Benjamin E. Diokno told the BusinessMirror.

Neda Deputy Director General for Programming Rolando G. Tungpalan said the agency has yet to present the TRIP to President-elect Duterte and incoming Economic Planning Secretary Ernesto M. Pernia. Neda officials said the TRIP will be finalized toward the end of July in time for President-elect Duterte’s first State of the Nation Address.

www.businessmirror.com.ph

cent,” he said. “Clark and Cebu will play important roles and Davao just might become a beehive of aviation activity because of [President-elect Rodrigo R.] Duterte.”

But should the government provide relief to the problems hounding the Naia vis-à-vis developing regional airports, thus, attracting more local and foreign carriers to come and participate, the local commercial-aviation sector may once again grow in double-digit rates.

“I think, within the next two to three years, we will regain double-digit growth in air traffic,” he said.

The government has been implementing various initiatives and infrastructure projects to absorb and further promote growth in the civil aviation industry and its related industries. These developments are not focused mainly on Manila.

The government has tapped the much-touted Public-Private Partnership Program to develop several more airports in the region.

One of the recent projects undertaken by the private sector pertains to the redevelopment of the Mactan-Cebu International Airport. It was turned over to the group of Megawide Construction Corp. in late 2014.

The government is also bidding out contracts for the development, and operations and maintenance of regional airports in Iloilo, Bacolod, Davao, Laguindingan and Bohol. These, however, are now effectively in limbo, as the tender process continues to stagnate under the Aquino administration.

Tourism is one of the key economic drivers in the Philippines, given strong, continued and uninterrupted growth in both visitor arrivals and receipts.

Foreign-visitor arrivals recorded a compounded annual growth rate (CAGR) of 8.77 percent from 2010 to 2015, higher than the 7.76-percent CAGR achieved in nine years, from 2001 to 2010. International tourism receipts also showed a dramatic twofold surge, from P112.55 billion in 2010 to P227.62 billion in 2015.

International visitor receipts in 2015 were also 6 percent higher than the P214.88-billion earnings in 2014.

South Koreans continued to be the top spenders in 2015 at P66.55 billion; followed

by Americans at P42.31 billion; Australians at P12.83 billion, overtaking the Japanese who spent P12.2 billion; and the Chinese at P10.19 billion.

Among the top 12 tourism markets for the Philippines, Canadians spent the most per capita at P65,537, while Germans came in second at P58,308.29. They were followed by Americans at P55,808.05. Other top markets with high percapita spending included the United Kingdom (P54,912.69), Australia (P53,846.21) and South Korea (P48,973.54). Last year foreign visitors spent an average of P4,888.82 per day on an average stay of 10 nights. In 2015 total inbound tourists grew by 11 percent to 5.3 million.

Tourism employment last year was estimated to have reached 4.99 million, with a share of 12.7 percent to national employment.

In May documents obtained by the B usiness M irror showed that infrastructure spending under the TRIP could reach P1.15 trillion in 2017. The largest amount of projects submitted came from the Department of Public Works and Highways, which proposed P449.75 billion for fiscal year 2017.

Other government agencies that submitted the most projects were the Department of Education with P150.57 billion and government-owned and -controlled corporations (GOCCs) with P113.03 billion.

The list of GOCCs that submitted projects for funding under the TRIP included the National Irrigation Administration,

Local Water Utilities Administration, Philippine National Railways and the Light Rail Transit Authority, among others. The list of outcomes from the 2017 to 2019 TRIP include transportation facilities, such as roads and railways; water projects, such as irrigation and water supply; energy projects; and social infrastructure, such as classrooms and health facilities.

Under transport, the TRIP aims to finance 10,699.53 kilometers of new national roads to help ease congestion and improve connectivity and mobility issues. It will also fund the rehabilitation and improvement of 15,130.19 km of national and local roads.

BMReports Tuesday, June 28, 2016

www.businessmirror.com.ph

A3

A protester has her cheek painted with a slogan outside the Chinese Consulate to protest China’s occupation and island-building in the disputed Spratly Islands group in the South China Sea on June 10 in Makati City’s financial district east of Manila, Philippines. The protesters are calling on the new administration to reject China’s proposal of bilateral talks instead of the arbitration case filed by the Philippines in The Hague. AP/Bullit Marquez

Duterte to remain mum on territorial dispute with China pending UN tribunal’s decision

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By David Cagahastian

@davecaga

resident-elect Rodrigo R. Duterte said he would refrain from commenting on the territorial dispute in the South China Sea, pending the decision on the case filed by the Philippines before the United Nations (UN) Permanent Court of Arbitration, which is expected to be out in July.

Duterte also said he would consult the pertinent government officials before making statements on the territorial dispute, which could have repercussions on the Philippines’s position, coming from the top official in the country. Earlier,

Malacañang urged Duterte to be more circumspect in issuing statements on foreign policy, since he, being the President-elect, would be in command of the Philippines’s foreign policy and his pronouncements on certain issues could be misinterpreted to the detriment

of the country’s foreign relations.

“In the West Philippine Sea issue, we shut up. We will wait for the decision before we make any public statement. We’re just waiting for the arbitral judgment,” Duterte said during his speech on Monday at the Davao City flagraising ceremony, where he still serves as mayor until noon of June 30, when he would have already been sworn in as the Philippines’s 16th president.

“I will not dwell on it yet. I have to talk to everybody in the government to decide [on the matter], including the military,” he said.

Earlier, Duterte added that he would try to enforce the ruling of UN’s arbitration court, which is expected to be favorable toward the Philippines, since China has questioned the jurisdiction of the court and did not take part in the proceedings.

However, Duterte said should no benefits come out for the

Tales of past presidential inaugurations

Superstition and history Continued from A1

Aguinaldo lost the presidency when US forces captured him with the aid of Macabebe Scouts on March 23, 1901, in Palanan, Isabela, roughly a little over two years after he took his oath of office.

Estrada was president from June 30, 1998, until January 20, 2001, when he was ousted from office. His presidency lasted six months longer than Aguinaldo’s.

There is another superstition regarding Estrada’s presidency. Though Estrada is the third president of the Fifth Republic, he also holds the distinction of being the 13th president overall of the Republic of the Philippines. For the superstitious, Estrada’s fall from office may be attributed to the “unlucky” number 13.

Chua said there were really no laws governing how a presidential inauguration should be done or where it should take place.

“The only thing stipulated in our Constitution is the President-elect must assume his office by noon of June 30,” Chua said. This provision also applies to whoever is elected vice president.

There’s one key ritual before a person can formally assume the presidency and the vice presidency. The president-elect and the vice president-elect must take their oath of office. Files of the Presidential Museum and Library showed the oath of office for both the president and the vice president has remained “essentially unchanged” since 1935.

Under Section 5, Article 7 of the Constitution, the president, the vice president or the acting president, shall take the oath of office before any of them can begin executing their office.

This can either be by oath or affirmation:

“I do solemnly swear that I will faithfully and conscientiously fulfill my duties as president [or vice president or acting president] of the Philippines, preserve and defend its Constitution, execute its laws, do justice to every man and consecrate myself to the service of the nation. So help me God.” If this is done through affirmation, the last line is omitted.

President Aquino took his oath office before then Associate Justice Conchita CarpioMorales, now the Ombudsman.

“This was the fourth time an associate justice has administered the oath of a Philippine president,” said an article on presidential inaugurals published by the Presidential Museum and Library. “This happened twice during the period in exile of the Commonwealth government, and once during the revolutionary oath-taking

by Corazon C. Aquino.”

“In 1899 the oath was administered by the Speaker of the Malolos Congress, since President Aguinaldo was elected by Congress,” the article said. “Since 1935, the Legislative branch of government w i t n e s s e s a n d p a r t i c i p at e s i n t h e inauguration in this manner.”

“From Aguinaldo to Elpidio Quirino, presidents did not swear on the bible, a legacy of the Revolution of 1896 and the separation of Church and State,” the article added. “President Ramon Magsaysay was the first president to swear on the bible, in fact, using two, one from his father’s and mother’s branch of the family. The bibles were placed on the lectern. In 1957 Bohol Gov. Juan Pajo held the bible, as Carlos P. Garcia, a fellow Boholano, took his oath.

President Marcos, in 1969, also swore on two bibles, one from his father, the other a gift from his wife.”

There is one important point about the ritual of taking the oath of office. The vice president-elect is sworn into office ahead of the president-elect. There is an important reason for this.

The vice president-elect is sworn into office first to maintain a clear line of succession to the presidency. This is done to ensure there is a vice president available to take over the helm of the republic in the unfortunate event that the president-elect fails to assume the presidency.

This is in accordance to the Section 7, Article 7 of the Constitution regarding the president-elect and the vice president-elect.

There are three specific provisions here.

First: “If the president-elect fails to qualify, the vice president-elect shall act as president until the president-elect shall have qualified.”

Second: “If a president shall not have been chosen, the vice president-elect shall act as president until a president shall have been chosen and qualified.”

Third: “If at the beginning of the term of the president, the president-elect shall have died or shall have become permanently disabled, the vice president-elect shall become president.”

Article 7 of the Constitution also defines the line of succession to the presidency.

In case both the president-elect and vice president-elect are unable to qualify for their office, die or become permanently disabled at the beginning of the term, the Senate President succeeds to the presidency. This is the main reason a certain number of senators continue to retain their seats of office during the transition from one administration to the next. Whoever among them holds the Senate Presidency during this event is designated by law to be president.

Ph i l ippi nes w it h i n t he ne x t two years after the decision, he would seek bilateral negotiations with China to settle the territorial dispute.

He said that, instead of agitating China with the Philippines’s unilateral decision to file the arbitration case against China and haul them into court to settle the issue of economic rights over the South China Sea, the government under him would try to maintain cordial relations with China, even amid the territorial dispute to get mutual benefits for both sides.

A mong the projects, which Duter te said he wou ld push for f unding from China, are railway projects t hroughout t he Philippines, especia l ly in Mindanao, which is now seen as a new area for economic grow th, because of the focus that the new administration w ill put on the development in the area.

The incoming Department of Finance had already signified its intention to fast track the Philippines’s inclusion into the China-led Asian Infrastructure Investment Bank (AIIB) by paying the country’s subscription to the bank ’s capital.

The total capital stock of the AIIB is $100 billion, 20 percent of which is paid-in. The indicative paid-in capital of the Philippines is $196 million—which is payable in five years, or $39 million per annum. The AIIB is a multilateral development bank that aims to fund infrastructure projects in the Asia-Pacific region.

Last December 31 the Philippines beat the deadline for signing with the AIIB as the 57th and last founding member. By doing so, the Philippines has signified its intention to join the treaty and subscribe to $979.1 million worth of shares of stocks in the AIIB, or roughly 1 percent of the total out-

standing capital stock of the bank.

Stakeholders from the government, banks and business in the country have earlier expressed their support for the Philippines’s decision to join the AIIB. Bangko Sentral ng Pilipinas Deputy Governor for the Monetary Stability Sector Diwa C. Guinigundo told the BusinessMirror that being a signatory to the AIIB further liberalizes the choices of infrastructure investors on their funding requirements—thus, providing them with greater ease to implement the projects more quickly.

“While we have sufficient domestic liquidity and credit, current banking regulations do not allow banks to be unduly exposed to single or a few borrowers,” Guinigundo said in an interview.

“The resources that will be made available through the AIIB could be a potential source of additional funding for infrastructures.”

If the Senate President is unable to take over the helm of the State, the Speaker of the House is next in line of succession.

Based on this, there should be no controversy over the issue of holding separate inaugurations for President-elect Rodrigo R. Duterte and Vice President-elect Maria Leonor G. Robredo. The important thing that must be followed is that Robredo is sworn into office before Duterte.

In the history of the Philippines, Andres D. Bonifacio, president of the Katagalugan Republic, had no formally designated vice president. That was in 1894.

Aguinaldo had a vice president in 1897.

He was Mariano Trias, acknowledged as the country’s first vice president. Trias served from January 23, 1897, until November 1, 1897. The Office of Vice President was dissolved shortly before Aguinaldo signed a truce with the Spanish colonial government. In exchange for signing the truce, Aguinaldo and his men were granted amnesty and P800,000.

When Aguinaldo returned from his exile in Hong Kong for the second phase of the Philippine Revolution in 1898, he formed a new government. However, he did not have a vice president because he assumed the title of “dictator” and he ruled by decree.

When the Commonwealth government of the Philippines was established in 1935, the vice presidency became an elective post.

Under the Japanese Occupation in 1942, the Commonwealth government moved to Washington, D.C., and became a government-in-exile. In its place in the Philippines, the Philippine Second Republic was formed under President Jose P. Laurel. He had no vice president.

When Osmeña was inaugurated president of the Commonwealth on August 1, 1944, after the death of Quezon, Osmeña didn’t have a vice president.

“The position of the vice president was vacant until Vice President Elpidio Quirino assumed office on May 28, 1946,” according to the Official Gazette. This was the Third Republic.

“In the post-World War II era of the

Third Republic, vice presidents were traditionally appointed as the secretary of foreign affairs,” the Official Gazette said. “Exceptions were vice presidents Fernando Lopez, who opted to become secretary of agriculture; and Diosdado Macapagal, the first vice president from a party different from the president’s, who was not assigned to any Cabinet post.

“Quirino (1946-1950), Carlos P. Garcia (1953-1957) and Emmanuel Pelaez (19611963) were concurrently vice presidents and secretaries of foreign affairs. During this period, there were two presidents who, at some point, did not have vice presidents: Quirino, from 1948 to 1949, and Garcia, from March to December 1957.”

As stated in the historical record, there is a precedent for a vice president not having a Cabinet position. It would not be a break in tradition if Duterte decides not to give Robredo a Cabinet portfolio.

Part of the traditional inauguration rites is holding military honors for both the incoming head of state and the outgoing president. “At the inaugural venue, a 21gun salute, accompanied by the honor guard presenting arms, and four ruffles [drum rolls] and flourishes [trumpet blasts] and the playing of the national anthem herald the arrival of the president and the president-elect,” according to the file on presidential inaugurations at the Presidential Museum and Library. “This is the last time the Armed Forces of the Philippines [AFP] renders honors to the incumbent president as head of state.

The incumbent president will troop the line and receive the salute of the honor guard and bid farewell to the major service commanders.”

After this, it is customary for the outgoing president to leave the inauguration venue, which is a tradition that originated from the inauguration of President Ramon Magsaysay in 1953.

For the inauguration of President-elect Duterte, the military will render honors to Mr. Aquino within the Palace grounds.

Shortly after that, President Aquino is

expected to formally leave the Palace, thus, completing the spirit of the abovementioned ritual.

Chua explained this was the heart of the rituals behind every presidential inauguration. “It symbolizes the peaceful transfer of power from one administration to the next,” he said. “There may be changes in how the inauguration is held, but the essence of the rituals remain the same. At the heart of the rituals of every presidential inauguration is the peaceful transfer of power from the outgoing president to the incoming president.”

There is one piece of historical trivia Chua added about the gun salute during presidential inaugurations.

“The military only gave Manuel L. Quezon a 19-gun salute when he became president of the Philippine Commonwealth,” Chua said.

“There was a reason for this. Though Quezon was president of the Commonwealth, the Commonwealth operated under supervision of the US government. Thus, the 21-gun salute was reserved only for the highest official and that was the US president.”

During the inauguration of Aquino as president, an additional rite was included, Chua said.

“This was the Panata sa Pagbabago [Pledge for Change],” Chua explained.

Whether this innovation in the inaugural rites will be retained in Duterte’s presidency is not known. However, it is likely that this will be dropped because of Duterte’s preference for simple inaugural rites.

Th o u g h t h e i n a u g u r a l r i t e s f o r Duterte’s presidency will be held in the Palace on June 30, there is a reason previous presidential inaugurations were held in Luneta. Chua explained his personal view on the issue of holding presidential inaugurations at the Quirino Grandstand, which was originally known as the Independence Grandstand.

“When Miguel Lopez de Legazpi ousted Rajah Soliman from his enclave in Manila, Soliman moved his encampment to Bagong Bayan, which is today’s Luneta,” Chua said. To be concluded

BMReports BusinessMirror

A4 Tuesday, June 28, 2016

news.businessmirror@gmail.com

Indonesia ban won’t immediately affect PHL’s coal imports, supply–Monsada

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By Lenie Lectura

@llectura

HE Department of Energy (DOE) on Monday dismissed fears that the country’s coal supply would be immediately affected by the ban imposed by Indonesia on all vessels en route to the Philippines.

Outgoing Energy Secretary Zenaida Y. Monsada cited three reasons coal importation in Indonesia won’t be affected. For one, Monsada said most of the large sailing vessels that transport coal to the Philippines do not bear the Indonesian flag.

“The coal itself may come from Indonesia, but the vessel that will transport the coal to the Philippines does not bear the Indonesian flag.

Remember that the travel ban is only for vessels bearing the Indonesian

flag,” Monsada said.

“Besides, only small ships would be affected. The vessels that transport coal to the Philippines are usually large ones and these do not bear the Indonesian flag,” she added.

The ban came after several Indonesian sailors onboard a coal tugboat in Sulu Sea were kidnapped by the Abu Sayyaf Group (ASG).

The DOE chief also cited ample coal supply, which could still last for 20 to 30 days. Monsada said coal-

plant operators are set to brief her on their respective inventory within the week.

Moreover, Monsada said the country could source coal from other countries, such as Russia, Australia and Vietnam. “We haven’t diverted sourcing coal from Indonesia.”

“Nonetheless, we are still coordinating with the Department of National Defense and the Department of Foreign Affairs with regards to security,” Monsada added.

The country’s coal supply is mostly sourced from Indonesia because it is cheaper.

DOE records show that the country imported 16.55 million metric tons (MMT) of coal from Indonesia in 2015. The volume represented 95.11 percent of the country’s total coal importation last year, which stood at 17.4 MMT. Aside from Indonesia, the country’s coal supply is being sourced from Russia, Australia and Vietnam.

Meanwhile, the country’s total

The coal itself may come from Indonesia, but the vessel that will transport the coal to the Philippines does not bear the Indonesian flag. Remember that the travel ban is only for vessels bearing the Indonesian flag.”—Monsada

consumption of coal stood at 22 MMT. Of this volume, coal used for power accounted for 79.77 percent.

Suspected militants in the southern Philippines boarded an Indonesian tugboat and abducted seven of 13 crew members in a third such attack in the volatile region, the Indonesian foreign minister said on Friday.

The crewmen were believed to be taken by two separate groups to a jungle camp in Sulu, a predomi-

nantly Muslim province about 950 kilometers (590 miles) south of the Philippine capital, Manila, Foreign Minister Retno Marsudi told a news conference in Jakarta.

Jolo island in Sulu province is a stronghold of militants from the ASG, notorious for ransom kidnappings and beheadings of hostages.

“This third incident absolutely cannot be tolerated,” Marsudi said.

“The government will do everything possible to ensure the release of all

those hostages. The safety of the seven Indonesians will be prioritized.”

She said the government received confirmation that six of the 13 crew members of the tugboat that was towing a coal barge were freed with the vessel and on their way to Indonesia.

Filipino militants held 14 Indonesians among more than 20 hostages after raiding tugboats in separate incidents in late March and early April. The Indonesians were freed last month, following reports that a ransom was paid, but the Indonesian government denied it gave money.

After meeting security ministers and military and intelligence chiefs on Friday, Marsudi said Indonesia extended a moratorium on coal exports to the region until the Philippine government can guarantee security for coal barges in its waters.

She said Indonesia supplies more than 90 percent of coal to the southern Philippines. With a report from AP

Air pollution seen costing trillions, IEA says

A

ir pollution will continue rising in the next decades unless nations around the world invest trillions in cleaner energy and emissions controls, the International Energy Agency (IEA) said.

The Paris-based agency is calling for governments to adopt a strategy to cut pollutants by half, a plan that would add about 7 percent to the total energy investment needed through 2040, according to a report on Monday. That includes $4.8 trillion for advanced pollution control and accelerating the transformation of the energy industry.

“Clean air is a basic human right that most of the world’s population lacks,” Executive Director Fatih Birol said. “We need to revise our approach to energy development, so that communities are not forced to sacrifice clean air, in return, for economic growth.” The IEA’s strategy pushes for cleaner fuels, energy efficiency, better cooking facilities and emissions controls. It also calls for a collective long-term air-quality goal, policies for implementation and regulations to monitor and enforce it. The agency said the efforts may cut pollutionrelated deaths by more than 3 million a year.

Poor air quality is affecting the entire planet, with 80 percent of cities that monitor levels failing to meet

standards set by the World Health Organization.

Public pressure is mounting in countries, such as China, prompting ambitious renewable-energy agendas. The developed West also has its fair share of smog, with London surpassing the European Union’s annual limits on air pollution just eight days into 2016.

The energy industry is the single largest man-made contributor to poor air quality, the IEA report said. Most of it comes from unregulated and inefficient fuels. The agency sees air pollution as the fourth-largest threat to human health, after high blood pressure, poor diet and smoking.

What’s actually clogging up our air? These three pollutants have the biggest impact on health.

1. Particulate matter (PM): Tiny particles that float in the air, and can be either liquid and solid. They’re linked to detrimental health impacts, such as chronic lung diseases. The severity depends on the size of the particles. The bigger they are, the more damage they can do to your respiratory system. About 85 percent of PMs comes from the energy industry, according to the IEA. 2. Sulfur dioxide: A gas made from burning fossil fuels. Most of it comes from power plants and industrial processes, such as metals process-

ing with almost all from the energy industry. It causes adverse health effects and can also be dissolved into water, resulting in acid rain.

2. Nitrogen oxide: A greenhouse gas that contributes to climate change. Almost all of it comes from the transportation sector and power plants that burn fossil fuels. It’s a toxic gas that causes lung inflammation and other health problems when inhaled.

What are the main causes of air pollution?

1. Poverty: There are 2.7 billion people in the world who burn biomass for cooking. Smoke inhalation from this, as well as burning kerosene for lighting, is estimated to cause 3.5 million premature deaths a year, mostly women and children in developing Asia and Sub-Saharan Africa.

2. Fossil-fuel intensive industries: Power plants that burn fossil fuels and industrial facilities are major emitters. Burning coal is responsible for 60 percent of combustion-related sulfur-dioxide emissions.

3. Urbanization: Tightly packed cities with roads full of traffic lead to dirty air. Two-thirds of the $2.3-trillion investment into pollution control technologies recommended by the IEA is to comply with elevated vehicle emissions standards. Bloomberg News

The World Health Organization has just classified air pollution as carcinogenic to humans, while Beijing redoubles efforts to clean its smoggy skies. Eric Prine

Asian stocks rebound after Brexit vote victory triggers sell-off

A

sian stocks rebounded from the steepest slump since August after last week’s British vote to leave the European Union (EU) roiled global markets. Rallies in Japan and China overshadowed declines in other benchmark gauges across the region.

The MSCI Asia Pacific Index rose 0.5 percent to 125.91 as of 2:40 p.m. in Hong Kong, erasing earlier losses of as much as 0.3 percent. Japan’s Topix finished 1.8 percent higher, rebounding from its worst loss since the aftermath of the March 2011 earthquake.

The Shanghai Composite Index advanced after Credit Suisse Group AG and Citigroup Inc. advised clients to buy Chinese shares following last week’s selloff. Investors are watching for policy action by central banks globally to ease the market turmoil and pump liquidity into financial markets.

“We are in for a volatile period, but I don’t think it’s one way down,”

said Shane Oliver, head of investment strategy at Sydney-based AMP Capital Investors Ltd., which oversees about $116 billion. “The dust will settle and investors will realize there’s a long way to go for all of this and markets will eventually start to grind higher again.”

Brexit wiped more than $2.5 trillion from global equity values on Friday. Prime Minister David Cameron resigned without spelling out when the UK intends to leave the EU, and eight members of Labour Party leader Jeremy Corbyn’s team quit amid calls for his ouster. US Secretary of State John Kerry travels to Brussels and then London on Monday as Nicola Sturgeon, the first minister of Scotland, which voted to remain in the EU, said there’s a possibility of a second referendum on independence from the UK. Japan Prime Minister Shinzo Abe issued instructions for various measures to stabilize markets,

Finance Minister Taro Aso told reporters in Tokyo after a meeting on Monday. Abe ordered the Bank of Japan (BOJ) to provide funds to support the financial system, and gave instructions to ensure liquidity, BOJ Deputy Governor Hiroshi Nakaso said. The yen swung between gains and losses, while the British pound plummeted to a 31year low as investors grapple with unanswered questions on the details of Britain’s exit from the EU.

More referendums

“Investors are looking for further developments in the Brexit aftermath,” said Bernard Aw, a strategist at IG Asia Pte in Singapore. “My main worry is related to Brexit, especially on the possibility of more referendums from EU countries. Should such a scenario gain traction, we can expect more risk aversion in global markets.”

Japan’s Topix index rose on Monday as the yen traded at 101.90

a dollar. The yen was closing in on 99 at one point on Friday as investors rushed for the relative safety of Japanese government bonds.

Some strategists and investors say the rally in the currency isn’t over, with HSBC Holdings Plc. and GCI Asset Management Corp. mooting a rise to 95 against the greenback.

Defensive rally

The rally in Japan was led by socalled defensive shares, including drugmakers and food producers.

Yamazaki Baking Co. climbed 7.6 percent. Japan Tobacco Inc. rose 5 percent. Astellas Pharma Inc. advanced 6.6 percent.

The fallout from the British vote continued to hit exporters. Toyota Motor Corp. slid 1.7 percent after plunging 8.7 percent on Friday.

Mazda Motor Corp. plunged 9.7 percent after Nomura cut its rating on the automaker, citing a slowdown in the European car market and a stronger yen.

The Shanghai Composite Index increased 1.5 percent, with energy and materials companies pacing gains after policy-makers said they will reduce overcapacity in the coal and steel industries. China’s central bank weakened the daily fixing of the yuan reference rate by the most since August on Monday.

“China-specific companies that are not too related to Brexit, such as the steel and coal sectors, should be beneficiaries,” said Hao Hong, chief China strategist at Bocom International Holdings Co. in Hong Kong. “Product prices in the two sectors are already oversold, so any surprise cut in capacity can lead to an increase in prices.”

Australia’s S&P/ASX 200 Index climbed 0.5 percent at the close.

Still, losses at companies with earnings generated in the UK continued Friday’s declines. Henderson Group Plc. slumped 16 percent and BT Investment Management Ltd. sank 10 percent.

Regional gauges

New Zealand’s S&P/NZX 50 Index gained 0.3 percent, erasing earlier losses of as much as 1.2 percent.

South Korea’s Kospi index added 0.1 percent, reversing a 1.3 percent drop. Taiwan’s Taiex Index fell 0.2 percent. Singapore’s Straits Times Index declined 0.1 percent.

The Hang Seng Index retreated 0.5 percent. The city’s benchmark slumped 2.9 percent on Friday, its biggest drop since February 11, as HSBC Holdings Plc. and Standard Chartered Plc. tumbled. Cheung Kong Infrastructure Holdings Ltd., which counts Britain as its second-largest market by revenue, slumped 4.6 percent on Monday.

Cathay Pacific Airways Ltd. sank 4 percent as analysts downgraded the stock amid earnings concerns.

Futures on the S&P 500 Index dropped 0.1 percent. The US equity benchmark index declined 3.6 percent on Friday, the most since August 2015. Bloomberg News

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TAP PROFESSIONAL SERVICE PROVIDERS TO IMPROVE BUSINESS ORGANIZATIONS

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By Leony R. Garcia

life of your business. Accountants are aware of the best legal loopholes from which businesses can benefit immensely to cut down on costs while auditors provide a trusted second opinion on the organization’s financial statements and, in turn, give some insight as to how well it is being run.

If hiring an accountant and an auditor as full-time employees is difficult for you, you can decide on a pay-forservices model initially or professional services firm, to keep track of your business growth in the long term.

ost entrepreneurs doing business for the first time try to cut down on costs and save up by managing the finances themselves. Sooner or later they realize that it was wrong because the financial aspects of a business are delicate matters and they require a dedicated person to handle them.

One person, the business accountant, whose job is to manage, record and give advice to the business owner about finances, should be there. An accountant helps manage expenses. This is, by far, according to GoodAccountants.com, the most essential role a business accountant plays. They help owners keep an eye on all the outgoing and overheads.

Having a business accountant to do this can help business owners save a lot of time, which they can use to work on growth and expansion.

Particularly in the first few months, a business accountant is vital for a business and they help it survive and excel toward maturity.

In the same manner, an audit plays a valuable role for companies and even charitable organizations to maintain integrity and attain specific goals. According to True and Fair, an audit confirms the financial claims as stated by an organization in various ways. An audit provides investors and shareholders confidence by providing trusted information concerning financial statements and how well the organization is run.

An audit inspects internal control systems, ensuring they are sufficiently strong and working properly.

In addition, an audit benefits accountants and tax collectors by addressing accounting problems and offering up-

Professional-services providers

to-date information on techniques, rules and regulations. Finally, financial analysts use an audit to determine

the value of an organization’s shares.

Hiring a professional accountant or auditor obviously means you will

have to spend a substantial chunk of money. Look at it as an investment in the long-term profitability and

IF you are interested in working in an accountancy firm or in the finance team of another type of company, that’s a professional services job. If you work in an audit, tax or management consultancy team, your job will be to help provide companies with the financial and business advice they need.

A job in audit could mean that you will be helping companies with their accounts or analyzing financial results for them. If you chose a job in tax, it could mean you will be advising businesses on how to be tax efficient or completing their tax-returns. Working in management consultancy could mean that you will be working with See Professional services... on A6

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Why is accounting important in starting a business?

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tarting a business often requires entrepreneurs to understand and complete a variety of business functions. An important business function, when starting a small business, is accounting. Although many entrepreneurs may be fearful of dredging through endless stacks of financial documents, accounting often provides entrepreneurs with the clearest picture of their business’ success. Entrepreneurs must also keep copious amounts of records regarding the small business startup for tax and legal purposes.

Many small businesses started as a hobby or side business use cash basis accounting. This accounting method records and recognizes transactions when cash changes hands. It provides entrepreneurs with a simple method for maintaining accounting information. As companies grow and expand, they may need to change to the accrual accounting method. Accrual accounting is the most widely used method in business; it records and recognizes transactions as they occur, regardless of cash changing hands.

Forecast financial estimates

Entrepreneurs may need to provide banks, lenders or investors with a financial forecast relating to the new small business venture. This information is essential for obtaining outside financing for business startup costs. Entrepreneurs usually write a business plan, which includes an economic forecast, expected startup and monthly expenditures, and pro forma financial statements. This accounting information is heavily relied upon by lenders or investors to ensure the entrepreneur has an accurate and reliable picture of financial expectations.

Budget expenses

An important accounting function for starting a

small business is the creation of a budget. Budgets outline the expenditures needed for various aspects of the business. Entrepreneurs may budget capital for hiring employees, advertising strategies, inventoried purchases and other types of business expenditures. Sticking to a budget helps entrepreneurs avoid wasting capital on non-essential business items. Budgets can also create a historical record of how the small business spent capital for producing consumer goods or services.

Determine profitability

Accounting is the predominant way a company determines its profitability. Although a small business may be able to generate high amounts of sales revenue, failing to generate enough profits may doom the business to failure. Entrepreneurs need to understand how well they are using assets to generate services and the costs of inventory compared with the company’s profit margin. Banks, lenders or investors may also require the small business to release financial information to ensure that these individuals will be repaid in a timely manner.

Expert insight

Small businesses may seek advice from public accounting or an individual public accountant.

Professional accountants usually offer copious amounts of education, experience or expertise when helping the entrepreneur is set up their small business accounting operations. These individuals may also offer lower rates to small businesses to help defer startup costs. Entrepreneurs may also need professional help when filing business tax returns and ensuring that all business issues are accounted for at year end. Osmond Vitez/ smallbusiness.chron.com

Professional service...

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companies to help them reduce costs or reorganize them to be more effective or innovative.

In the Philippines companies that provide professional services, are Alas Oplas & Co., Reyes Tacandong & Co., Punongbayan & Araullo (P&A), among others.

Professional services are occupations in the tertiary sector of the economy requiring special training in the arts or sciences. Some professional services require holding professional licenses, such as architects, auditors, engineers, doctors and lawyers.

Other professional services involve providing specialist business support to businesses of all sizes and in all sectors; this can include tax advice, supporting a company with accounting, information-technology services or providing management advice.

Professional services support businesses of all sizes and in a wide range of industries. People working in professional services provide specialist advice to their clients. This includes things, like providing tax advice, supporting a company with accounting or providing business advice. Finance and business advice drives all companies, be it a large private sector company or a public sector organization. The kinds of services provided mean that the professional services sector helps to improve productivity and growth across the economy.

The tertiary sector

THE tertiary sector of the economy (also known as the service sector or the service industry) is one of the three economic sectors, the others

being the secondary sector (manufacturing) and the primary sector (agriculture, fishing and mining).

The service sector consists of the “soft” parts of the economy, i.e. activities, where people offer their knowledge and time to improve productivity, performance, potential and sustainability, which is termed as affective labor. The basic characteristic of this sector is the production of services, instead of end products.

Services (also known as “intangible goods”), include attention, advice, access, experience and discussion.

The tertiary sector of industry involves the provision of services to other businesses as well as final consumers. Services may involve the transport, distribution and sale of goods from producer to a consumer, as may happen in wholesaling and retailing, or may involve the provision of a service, such as in pest control or entertainment. The goods may be transformed in the process of providing the service, as what happens in the restaurant industry. However, the focus is on people interacting with people and serving the customer rather than transforming physical goods.

The major growth in this sector also involves the transfer of funds from the governmental to the contractual profit, non-profit and hybrid sectors of the economy.

The service sector is comprised of firms offering intangible goods, such as entertainment, retail, insurance, tourism and banking. The service sector will make use of manufactured goods, but there is an additional component of offering a better service to customers.

A cafe selling coffee is an example

of the service sector. It is making use of raw materials (primary sector)—coffee beans and manufactured goods (cups and saucers and coffee machine).

Examples of tertiary industries that require professional services may include the entertainment, telecommunication, hospitality and tourism industry, mass media, healthcare/ hospitals, IT, waste disposal, financial services, banking, insurance, investment management, accounting, legal services, management consulting, casino gaming, retail sales, franchising, real estate, education.

Tertiarization

IN the past 100 years, developed economies have seen a transition from a manufacturing-based economy to one where the service sector or tertiary sector dominates. Tertiarization involves the service sector coming to comprise the biggest element of the economy.

A key factor behind tertiarization is improved labor productivity.

Better technology and improved labor productivity have enabled a higher output of manufactured goods and agriculture with less labor. This increased productivity has led to increased incomes of workers to spend on services. A growing service sector is a sign of increased living standards; it enables consumers to enjoy more leisure-based service activities, such as tourism, sport and restaurants.

In a developed economy like the UK, the service sector is the biggest component of the economy, comprising nearly 80 percent of GDP and a similar ratio of employment. In the US, the service sector comprises 70 percent of the workforce.

In the Philippines, areas that have the highest growth potentials and generate the most jobs include tourism, business process outsourcing (BPO), mining, agri-business and forest-based industries, logistics, shipbuilding, housing, electronics, infrastructure and other industries with high growth potential.

Leveraging on service-sector growth in the Philippines

THE Philippines is often referred to as a country from which export of services, rather than manufactured goods, is the principal engine for economic growth, as the share of the service sector in gross domestic product has exceeded that of the industry sector since the mid-1980s.

Three major opportunities for leveraging service-sector growth stand out. One is expanding the scale and scope of the export and domestic markets IT-BPO and other modern services in urban areas.

Second is expanding tourism to foster economic development across social groups and regions including poor and remote rural areas. Third is enhancing the domestic prospects for Filipino technical, managerial and entrepreneurial talent so they will work in the Philippines rather than overseas. To take advantage of those opportunities, there is a need for concerted efforts to improve infrastructure, logistics; broadband connections, the power supply; education, healthcare, financial, legal and public administration services; and more generally, the overall business environment for foreign investors and local entrepreneurs.

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&A Grant Thornton is a leading professional services firm committed to unlocking the potential for growth of both its people through its various professional development program and of dynamic organizations by providing insightful, actionable advice and services.

It delivers value-added services to clients through its client-caring team of outstanding audit, tax, advisory and outsourcing business professionals who utilize leadingedge systems and technology and are guided by the highest standards of quality, integrity and competence. Our clients continue to enjoy superior customer experience and rely on us to help them achieve their business objectives.

Punongbayan & Araullo (P&A) is the Philippine member firm of Grant Thornton International Ltd., one of the world’s leading organizations of independently owned and managed accounting and consulting firms.

The firm was founded in 1988 by two prominent leaders in the accounting profession in the Philippines, Benjamin R. Punongbayan

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and Jose G. Araullo.

From its original team of only seven certified public accountants, P&A Grant Thornton has grown to a 700-strong work force with offices in Makati, Cebu, Davao and Cavite.

P&A Grant Thornton provides local and multinational clients a full range of services and Audit & Assurance, Tax Advisory and Compliance, Advisory Services, and Finance and Accounting Outsourcing.

The people of P&A Grant Thornton share a commitment to excel in the endeavor they undertake both in the exercise of their profession and their involvement in worthy causes, earning recognition from their peers and the business community. Guided by the CLEARR values (collaboration, leadership, excellence, agility, respect and re-

The P&A Grant Thornton Leadership Team (L-R): Jessie Carpio, head of Finance & Accounting Outsourcing; Jun Cuaresma, managing partner & COO and head of Audit & Assurance Division; Marivic Españo, chairperson and CEO; Lea Roque, head of Tax Advisory & Compliance Division; Third Librea, CIO and head of Advisory Services Division; Chris Ferareza, head of Branches; and Nelson Dinio, head of Japan desk

sponsibility), P&A Grant Thornton’s main goal is to unlock the potential for growth of its clients, its people and the community. This serves, as

the firm’s competitive edge. In addition, P&A Grant Thornton provides services which are tailor-made to the clients’ needs.

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25 years of credibility and honor

F

OR a quarter century, amid the busy Central Business District that is Makati City, Alas Oplas& Co., CPAs is recognized as one of the outstanding and leading auditing firms in the country.

The firm’s secret? Credibility and honor. These are just two simple words. But when you put them side by side, you define what Alas Oplas is. We embody these two words, all the way from the founding partner to its staff. These words matter when we present ourselves to our clients, as credibility and

honor is the standard of our work and services.

It is also an “institution of generosity”, according to Quality Assurance Partner Alvin Santos, who has been in the firm for five years. True enough, Alas Oplas does not fail to recognize its employees’ efforts and gives enough consideration.

Mostly, young certified public accountants look for a firm that will provide and care for them, as well. These young people want to continue learning, while they are in the field, which Alas Oplas can guarantee. The firm provides the training, exposure and experience through “[handling] the whole cycle of the account.” As one of the 80 member-firm countries of the BKR International, an association who has more than 160 independent accounting and business advisories in over 500 offices worldwide, Alas Oplas spares no amount when it comes to training its people. Through the BKR, auditors will be sent off to secondment programs in different member-firm offices abroad. Since training the people to become

more competent and efficient is part of Alas’s goal for the firm’s success, as well.

It also helps that Alas Oplas’s working environment is different from the other firms. An office full of happy professionals doing their work under pressure, getting along so well, having a high respect for one another, especially to their superiors,and of course, aiming to grow professionally. Most important, we keep each other motivated to move forward.

A future with the firm is also one of the main reasons Director Racquel Villarante is staying since the firm was founded. “If [Alas] sees that you’re willing to learn, then he’ll support you all the

way,” Villarante expressed.

Truly, Confucius’s infamous adage never grows old: Choose a job you love, and you will never have to work a day in your life. An organization truly tested by time, Alas Oplas stood valorous and staid, because it has already “[found] ways to [surpassed] challenges such as employee turnover, getting new clients, and government regulations,” which will not be possible if it weren’t for thecombined “strength and commitment of everyone [else].”

Moreover, for almost three decades of providing its noteworthy and premium services, it is proven that “the firm [is] a quality service provider” and by valuing its clients, since they played the biggest part

in the monopoly of the industry.

Still empowered by credibility and honor in every endeavor, the firm wants to prove that clients would get its services, not only because of the best quality of work that it can provide, but for the transparency and honesty that it can provide them back.

In a world full of deceit and corruption, “when everybody’s doing it wrong, I don’t want to compromise,” Alas strongly stated.

Alas Oplas & Co., CPAs would welcome anyone with the willingness to learn,especially if you embody the firm’s ideals. It is through patience and perseverance, that you will thrive and have a future with the firm.

news@businessmirror.com.ph

The World BusinessMirror

Editor: Lyn Resurreccion • Tuesday, June 28, 2016

A9

Leaders picking through Brexit rubble

T

he stakeholders of the global economy are struggling to plot a course through the aftershocks of Brexit.

From what’s legal to what’s possible to what’s desirable, little has been clarified in the four days since United Kingdom voters took the unprecedented step of choosing to take their country out of the European Union (EU). Making matters even more complicated are the meltdown in Britain’s two main political parties and the enduring legacy of the 2008 financial crisis.

“Uncertainty is bad,” said Kit Juckes, global strategist at Société Générale SA. “That wouldn’t matter if the global economy were ticking along nicely, but it isn’t.”

German Chancellor Angela Merkel and fellow European leaders kicked off crisis talks on Monday.

Central bankers meet in Portugal as they consider whether ever-more extraordinary measures are needed to shore up growth.

The task for all the policy-makers is to devise a strategy before traders force their hand—as they did after the collapse of Lehman Brothers Holdings Inc. and Greece’s debacle.

Leaders in Asia on Monday tried to mitigate the Brexit’s short-term impact. Chinese Premier Li Keqiang said the vote has increased uncertainties for the global economy; South Korean President Park Geun-hye called for all necessary steps to stabilize markets; and Japanese Prime Minister Shinzo Abe ordered his central bank to provide funds to support the financial system.

Messy confusion

Investors are already bracing for further declines in the pound after the sterling plummeted to a three-decade low against the dollar; weaker equities worldwide and gains in bonds and havens, like gold, are in the cards.

“The political situation right now is more confusing than ever,” said Nicola Marinelli, a portfolio man-

ager at Pentalpha Capital in London, which oversees about €160 million.

“For the investment community it’s a big mess.”

In the UK alone, the fight within the Conservative Party to replace British Prime Minister David Cameron is under way with some members of parliament moving to block pro-Brexit lawmaker Boris Johnson from the top job.

Labour Party leader Jeremy Corbyn is also facing a revolt, while Scottish First Minister Nicola Sturgeon is readying another run for independence and threatening a veto over last week’s referendum result.

That’s all coming before the government even begins thinking about negotiations over the terms of its new relationship with the EU. Cameron will address the UK Parliament on Monday and Chancellor of the Exchequer George Osborne is also due to make a statement on the economy.

Leaders mobilize

The overriding question for international policy-makers is, how big is the blast zone? A sign of the concern: US Secretary of State John F. Kerry, whose boss Barack Obama urged the UK to stay in the EU, jets into Brussels and London on Monday.

Aiming to chart the way forward, Merkel is hosting French President François Hollande and Italian Prime Minister Matteo Renzi in Berlin.

The heads of what will be the EU’s three biggest economies once the UK departs are seeking to forge a response before meeting the 24 other members of the bloc on Tuesday in Brussels. Cameron will appear for part of the meeting before being asked to leave for the rest.

Item one is, how far to push Britain? While Cameron wants to delay triggering the mechanism that will

People walk past a money-exchange shop decorated with different countries’ bank notes in Hong Kong on Monday.

Japanese and Chinese stocks rose on Monday, but other Asian markets declined, crude prices fell further and US shares appeared headed for a lower opening, as jittery traders watched for more fallout from Britain’s vote to exit the European Union. AP/Vincent Yu

begin divorce talks with a limit of two years, timing has become the first—and certainly not the last— stumbling block to a resolution.

EU Parliament President Martin Schulz, a German Social Democrat, told Bild am Sonntag newspaper that the UK should start the exit process this week, to avoid the uncertainty that would endanger investment and jobs.

He was slapped down by Peter Altmaier, Merkel’s chief of staff, who told German radio that UK politicians should be given time “to reflect again on the consequences of an exit.”

Spanish election

The calendar isn’t the issue for Erik Nielsen, chief economist at UniCredit Bank AG. He says those that remain in the EU will want to make the UK an example, to deter potential followers.

Protest movements are gaining ground in France, Italy and the Netherlands, though results from an election in Spain on Sunday suggested voters had balked at insurgent political forces in favor of the incumbent.

“You want to be sure that there is no illusion that you can leave and be treated quite well,” Nielsen said.

“You’ve got to play by the rules.”

Nielsen predicts the Brexit result will force the EU leaders to make some effort to curb immigration and, perhaps, also consider easier fiscal policy to reinforce the glue that binds them. The central bankers who have been on the front lines of crisis-fighting for almost a decade will probably have to step in again.

Coincidentally, many are meeting on Monday in Sintra, Portugal.

Originally planned as an academic debate, it’s now anything but. European Central Bank (ECB) President

Mario Draghi is the host and Federal Reserve (the Fed) Chairman Janet Yellen is on the guest list.

Bank of England Governor Mark Carney withdrew.

More action?

Having already committed to ensure ample liquidity in world markets, investors will now seek clues of what more they’re willing to do.

The Bank of England may have to cut interest rates and even buy more bonds after warning Brexit could prompt recession. For the Fed, it’s a question of whether to wait before raising interest rates again, while the ECB and Bank of Japan may need to consider more stimulus. Japan may also intervene to weaken the yen.

“It’s important that central banks use the dovish tone they’ve done in the past to suppress any financial market volatility,” said Kallum Pick-

ering, an economist at Berenberg Bank in London. “It’s the volatility from the Brexit uncertainty, which will harm the real economies in other parts of the world, not the break from the EU itself.”

The worry is that yet again policy-makers fall short almost a decade since they had to react to the demise of Lehman Brothers and then address subsequent turmoil in Greece and emerging markets. The legacy of that period lives on in the form of the weak economic growth and the topsy-turvy world of negative interest rates.

“The Brexit ‘crisis’ is a continuation of a series of watershed events over the past decade,” said Martin Malone, global macro policy strategist at Mint Partners in London. “The crisis—triggered by electorate activism, caused by political failure to action progrowth reforms—delivers an watershed opportunity for action.” Bloomberg News

British political turmoil deepens after Brexit Premier Li: China wants

L

ONDON—Britain’s shocking decision to remove itself from the European Union (EU) brought more political turmoil on Sunday, as Scotland’s leader threatened to block the move and the opposition Labour Party’s leader faced a coup attempt from his own legislators.

The sense of unease spread as European leaders stepped up the pressure on Britain to begin its complex exit from the 28-nation EU immediately, rather than wait several months as British Prime Minister David Cameron prefers.

The vote to leave sent the pound and global stock markets plunging. Britain’s Treasury said finance minister George Osborne was set to make an early morning statement on Monday “to provide reassurance about financial and economic stability” before the London Stock Exchange reopens.

The leaders of the successful campaign to leave the EU stayed largely out of the public eye, as opponents accused them of lacking a plan to calm the crisis the result has triggered. In his first statement since Friday morning, “leave” leader and former London Mayor Boris Johnson used his column in the Daily Telegraph newspaper to urge unity and say “the negative consequences [of the vote] are being wildly overdone.”

He said Britain would forge “a new and better relationship with the EU— based on free trade and partnership, rather than a federal system.”

The vote, however, risks causing a political schism in the United Kingdom.

Scottish First Minister Nicola Sturgeon said she would “consider” advising the Scottish Parliament to try to use its power to prevent Britain from actually leaving the EU.

She said Scottish lawmakers might be able to derail the move by withholding “legislative consent” for a Brexit.

“If the Scottish Parliament was judging this on the basis of what’s right for Scotland, then the option of saying ‘We’re not going to vote for something that is against Scotland’s interests,’ of course, that is on the table,” she said of the possibility of withholding consent.

Sturgeon said she believes Scotland’s approval is required for the move but conceded the British government would likely take “a very different view.”

Thursday’s UK-wide vote to leave the EU was very unpopular in Scotland, where 62 percent cast ballots to stay, and Sturgeon says she is studying ways to keep Scotland part of the EU bloc.

The Scottish question looms large because Sturgeon also has said another referendum on Scottish independence from Britain is “highly likely” as a result of Britain’s EU vote.

A Scottish referendum in 2014 ended with voters deciding to remain in Britain, but analysts believe Britain’s withdrawal from the EU may strengthen the independence movement.

In Northern Ireland, which also is part of the UK, Deputy First Minister Martin McGuinness said his priority is forging “special arrangements” to enable Northern Ireland to maintain its EU ties. Some Brexit opponents have also talked of trying to use Northern Ireland’s Assembly to try to block Britain’s departure.

Northern Ireland voters also expressed a preference for keeping Britain in the EU. The unhappiness with the results in both Scotland and Northern Ireland is adding to the sense that the Brexit vote may over time lead to the breakup of the UK.

11

The number of “shadow Cabinet” members who resigned on Sunday

Northern Ireland Secretary Theresa Villiers, Cameron’s lead official in Belfast, played down the suggestion that the Scottish Parliament or the Northern Ireland Assembly had the standing to prevent a British departure from the EU. She said decision-making power resides solely in the British Parliament, which is expected to abide by the results of the referendum, which showed 52 percent of British voters wanted out.

“In the weeks and months ahead, we will be working with both the Scottish government and the Northern Ireland executive on all these matters,” she told BBC. “But, ultimately, it is [the British] Parliament’s decision.”

Adam Tomkins, a law professor and member of the Scottish Parliament, agreed with this assessment. The Conservative Party legislator tweeted that it was “nonsense” to suggest the Scottish party could block a British departure simply by withholding consent.

The vote is already cutting short Cameron’s career. He said after the results that he would resign as prime minister when the Conservative Party chooses a new leader, who will be charged with implementing the separation from the EU. The new party leader, who will become prime minister, is expected to be

in place by October. At that point, he or she may choose to call a quick election to solidify a mandate—and the prospect of an election in the near future may have spurred a revolt on Sunday against Labour leader Jeremy Corbyn that has been simmering for months.

Corbyn, a longtime critic of the EU who was criticized by many for doing a weak job presenting the party’s position favoring membership, for the first time faces an open rebellion from senior members of his “shadow Cabinet”—the opposition party’s mirror government of senior lawmakers.

Eleven shadow Cabinet members resigned on Sunday after Corbyn fired shadow Foreign Secretary Hilary Benn overnight for reportedly plotting a rebellion against him.

The dissidents want Corbyn, who represents the far-left wing of the party, ousted before the next general election because many believe he cannot win.

In her resignation letter, shadow Health Secretary Heidi Alexander bluntly told Corbyn he had to go. “I do not believe you have the capacity to shape the answers our country is demanding and I believe that if we are to form the next government, a change of leadership is essential,” she wrote.

In a statement released late on Sunday, Corbyn said he would not resign and would run in any new leadership contest. Senior allies said he still has strong support among the party’s rank-and-file members, who chose him as leader last year.

“I regret there have been resignations today from my shadow cabinet,” Corbyn said. “But I am not going to betray the trust of those who voted for me—or the millions of supporters across the country who need Labour to represent them.” AP

‘united and stable’ EU

B

EIJING—China’s premier called on Monday for joint efforts to restore global economic confidence following the shock of Britain’s vote to leave the European Union (EU).

Last week’s referendum “has had an obvious impact on international financial markets. We are seeing increasing uncertainties in the world economy,” said Li Keqiang, speaking at the World Economic Forum in the eastern city of Tianjin.

The unusually direct comments by China’s top economic official, who rarely discusses foreign political affairs, reflected the scale of official concern about the impact from turmoil in the 28-nation EU, the country’s top trading partner. Any weakening of European demand could hurt export industries that employ millions of workers.

“Under such circumstances, we need to jointly handle challenges, strengthen confidence and create a stable international environment,” the premier told an audience of Chinese and foreign businesspeople. He gave no details of possible joint initiatives.

Li said Beijing wants to see a “united and stable” EU and a “stable and prosperous” United Kingdom—a possible reference to concern the vote might inspire separatist sentiment in other EU nations or portions of Britain.

Chinese leaders had taken the unusual step of publicly urging Britons to stay in the EU ahead of the vote.

During a visit by Chinese President Xi Jinping to London last October, the Chinese foreign ministry issued a statement that called Britain “an important member of the EU” and expressed hope it would play a role in promoting Chinese-EU ties.

The ruling Communist Party is in the midst of a marathon effort to reduce reli-

ance on exports and nurture more selfsustaining growth based on domestic consumption. But those plans call for holding exports steady to protect employment.

China also is a big and growing investor in Britain. Chinese companies have acquired the makers of MG autos, London taxi cabs and Weetabix breakfast cereal.

Its sovereign wealth fund owns a stake in London’s Heathrow Airport.

London is the second-largest center outside mainland China for settling transactions in the Chinese currency, the yuan.

“It is impossible for us to talk about our own development with no regard for the international economic environment,” Li said.

“Therefore, we need to work together to make progress through joint efforts.”

Economists have suggested some Chinese companies might rethink plans to make Britain a European base or shift transactions to economies that remain in the EU. But they say the direct economic impact on China should be modest.

A more serious problem for Beijing is turmoil in currency markets that is putting downward pressure on China’s yuan, economists said.

The People’s Bank of China spent tens of billions of dollars in 2015 to defend its state-set exchange rate after a change in the mechanism for deciding that rate fueled expectations Beijing was trying to depress its value. That led investors to move capital out of China.

The dollar has strengthened against the euro and the British pound, and if the People’s Bank allows it to gain against the Chinese currency, “this could set off a renewed bout of fears over renminbi depreciation and a pick-up in capital outflows,” said Julian Evans-Pritchard and Mark Williams of Capital Economics in a report. AP

A10 Tuesday, June 28, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Instant hysteria

W

e live in a world that can only be described as driven by “instant hysteria.” You see it all the time on social media, where people frantically post a news item or commentary from one, two, or even five years ago as something current. Information from “Fake News” web sites are presented as factual.

While the use of “sound bites” to show a person’s position or opinion on a topic are old style, now not only are words twisted, but quotes are edited to distort as much as possible. Money is not the root of all evil. The correct biblical quotation is, “The love of money is a root of all sorts of evil.” But truth is not important if you are trying to push a particular agenda.

As Niccolò Machiavelli—author of the political treatise The Prince— did not say, “The end justifies the means.”

Look at all the instant hysteria over the United Kingdom voting to leave the European Union (EU). You would think from the reaction of the financial markets and the commentators that World War III had been declared. First, the referendum is only a “suggestion” to the British parliament to leave the EU. It still must vote on the proposal. Second, there is a specific provision in the 2007 Treaty of Lisbon that created the constitutional framework of the EU for nations to leave.

Article 50 provides that “any member-state may decide to withdraw from the union in accordance with its own constitutional requirements.”

Further, “a member-state, which decides to withdraw, shall notify the European Council of its intention. The union shall negotiate and conclude an agreement with that state, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the union.”

In other words, the UK and the EU will work out what the future relationship will be, including trade agreements, before the actual split takes place.But, according to the instant hysteria created in large measure by the losing side and the bankers and members of those EU countries desperate not to have the UK leave, the zombies will begin attacking at nightfall any day this week.

This type of nonsense can be dangerous. Decisions made too quickly and without correct information can be costly. Certainly, liquidating stocks positions in the global markets on the massive selloff last Friday may have made sense. But what does Brexit really have to do with the Philippines in the short term?

Having said that, it is also important in investing—whether with stocks or a business—to be comfortable and to be in, at least, some control. However, we must be on guard from being manipulated by the press and media that help create this instant hysteria whether in politics or economics.

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Inauguration for real change Manny B. Villar

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THE Entrepreneur

here are still places in the Philippines, most probably in small communities far from the crowded cities, where one can take a stroll at night, without fear of being attacked by criminals. Sadly, such places are more of the exception, rather than the rule, in today’s Philippines.

Just watching the morning and evening news programs on television would be enough to convince many people that the peace-and-order situation has deteriorated to the extent that it is no longer safe to live or raise families in many parts of the country.

Closed-circuit television (CCTV) cameras installed in many public places and buildings record theft, robbery, assault and even killing perpetrated by bad elements almost every day.

Just last week two men were apprehended after allegedly robbing and raping two women aboard a colorum van. One suspect was killed when he tried to grab the gun of the arresting policemen. Live reports of police activities show drug dens being raided, drug dealers being apprehended or killed. Yet, it seems trafficking in illegal drugs

continues to flourish.

During a concert at the open parking area of a big mall in Pasay City on May 21, five people died.

Preliminary investigation showed the victims took illegal drugs, including some that were laced with dangerous chemicals unfit for human consumption, which were sold by illegal-drug dealers amid the dancing of the audience.

The peace-and-order situation became a major issue in this year’s presidential elections, and President-elect Rodrigo R. Duterte’s overwhelming victory was credited in large part to his tough stance against crime, and his commitment to establish peace and order in the early part of his term. As many have observed, the vote for the new President was driven by the people’s frustration over the widespread crime in the country.

I believe that with the new President, based on his record as local executive of Davao City for many years, we can expect the government to really address the peaceand-order situation. Under his watch, Davao was listed as one of the safest cities in the world.

The new President’s economic team has included the peace-andorder issue as part of efforts to improve the country’s attractiveness as an investment destination. This may be the only time that peace and order is being made an important component of the national government’s economic agenda.

As I mentioned in a previous column, the economic team believes that reducing crime in an area will increase businessmen’s sense of security and encourage them to bring in investments.

On June 30 Davao City Mayor Duterte will take his oath as the new President of the Republic. We have a chance now to see a leader that can really initiate the kind of change our country needs.

I refer in particular to the peaceand-order problem, which has been lacking in attention for so long, based on what people see happening every day.

I believe that with the new President, based on his record as local

Brexit: Globalization failure John Mangun

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OUTSIDE THE BOX

he textbook definition of globalization from the Levin Institute at the State University of New York is as follows. “Globalization is a process of interaction and integration among the people, companies and governments of different nations, a process driven by international trade and investment.”

The idea I have of globalization comes from buying a box of tea at the supermarket carrying the brand name of a company started in Scotland in 1871. The tea itself might come from the world’s largest tea exporter—Kenya in Africa. The materials to make the packaging, including the box, the tea bag and the “string,” may also come from many countries.

Philippine abaca is popular for making the bag for premium brands of tea. All these goods and the finished product may be moved around the world on vessels owned by the largest ocean shipper, Denmark’s Maersk Line, which will have at least a few Filipino seamen on board.

But look at that definition again: “Globalization is a process of interaction and integration.” “Interaction” and “integration” are vastly different ideas. Interaction means the people living in my small village have rules and do not park in front of each other’s driveway. Could integration mean, at some point in the future, that my neighbor can park in my garage and I can invite myself to his dinner table?

The European Union (EU) has institutionalized integration and the proposed Trans-Pacific Partnership (TPP) will do the same. The EU, in the interest of “free trade,” can limit a country’s exports of a particular product to the benefit of another

The European Union (EU) has institutionalized “integration” and the proposed Trans-Pacific Partnership (TPP) will do the same. The EU, in the interest of “free trade,” can limit a country’s exports of a particular product to the benefit of another country. The TPP will set the rules of trade and production regardless of what a country’s existing laws may be.

country. The TPP will set the rules of trade and production regardless of what a country’s existing laws may be.

And who exactly will make the rules?

Certainly, the organization members will vote. As someone once said, “A democracy is two wolves and a lamb voting on what to have for dinner.”

Globalization as the political and economic integration of various nations is nothing new. By 117 AD, the Roman Empire stretched from Spain to Iraq, from Egypt to England ruling 55 modern-day countries. In the 13th century, the Mongols had expanded their control from China to Eastern Europe.

The Romans brought sanitation,

executive of Davao City for many years, we can expect the government to really address the peace-andorder situation. Under his watch, Davao was listed as one of the safest cities in the world.

Some people may question his style, which is so different from previous presidents, but I don’t think they will doubt his sincerity in addressing extremely difficult problems, like crime and illegal drugs.

To me, he is very sincere in his desire to change the peace-and-order situation in the country. His agenda and intentions are very clear.

President Duterte has appointed very qualified people to form his economic team, and I am confident that they can sustain the country’s economic growth.

For his part, the President will have to address five extremely difficult challenges, including peace and order. As I mentioned in a previous column, the other challenges waiting for the new Chief Executive are: the dispute with China over the West Philippine Sea, the Muslim secessionist movement, communist insurgency and illegal-drug trafficking.

Fortunately, these issues are also the focus of attention of the new President.

For comments, e-mail mbv.secretariat@gmail. com or visit www.mannyvillar.com.ph.

roads and education for women.

The Mongols created an empirewide mail service and a merit-based civil service. Both empires allowed diverse religions, languages and social customs to coexist. The British Empire circled the globe and all of these empires created enormous trade opportunities for all.

The Romans and Mongols took political control and then created trade empires. The EU, like the British Empire, started with trade control, hoping to avoid the mistakes of the past. But the British Empire and the EU evolved into something much greater. And like the empires of the past, the EU is collapsing for the same reasons.

American revolutionary Patrick Henry said: “Is life so dear, or peace so sweet, as to be purchased at the price of chains and slavery?” Today it is, “Is free trade so sweet, as to be purchased at the price of giving up a nation’s economic and political policy decision-making?”

E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

Opinion

opinion@businessmirror.com.ph

Higher electricity rates in the horizon?

Ernesto M. Hilario

ABOUT TOWN

L

ike other electricity consumers, you don’t want to pay more than you should every month. But it appears that the Energy Regulatory Commission (ERC), the government agency mandated to encourage competition and more investments in the power sector so that electricity consumers will enjoy lower rates, is doing just the opposite with its issuance of several controversial resolutions on Retail Competition and Open Access (RCOA) in the electricity market.

The country’s largest power distributors, like Meralco—Manila Electric Co. (Meralco)—is up in arms against ERC Resolutions 5 and 10. These resolutions enumerate the entities that can apply for licenses as suppliers, and lay down guidelines to determine a “contestable consumer” (or one with a monthly average peak demand of at least 1 megawatt) in the retail electricity market.

ERC Resolution 11, meanwhile, prohibits power distributors, like Meralco, from engaging in the supply of electricity in a “contestable market,” or a group of customers that the ERC has allowed to choose their own electricity suppliers.

Meralco has filed a case in court seeking to nullify these ERC resolutions, as well as a circular of the Department of Energy supporting these rulings, on the grounds that the ERC rulings would discourage competition and unnecessarily increase electricity rates.

The ERC insists that, instead of opposing the rulings, Meralco should support its rulings on RCOA, because these were really intended to give electricity customers a choice and promote competition in the retail electricity market.

ERC Chairman Jose Vicente B. Salazar is urging the DU to “rethink its position against the RCOA” and to stop blocking retail competition.

“The RCOA is good both for its [Meralco’s] customers and its businesses. We can no longer set back the gains of the power sector. The RCOA is a big step toward putting the power of choice of electricity supplier in the hands of the customers,” Salazar said.

Careful scrutiny of the ERC resolutions would show, however, that these would neither ease the woes of electricity consumers nor encourage competition to attract more investors.

The rulings would perpetuate the status quo that Presidentelect Rodrigo R. Duterte wants to overhaul to ensure that economic growth would be inclusive and would benefit the poor.

And far from pursuing further reforms in the power sector, the ERC may be actually undermining the Electricity Power Industry Reform Act (Epira).

The ERC would actually lead to higher electricity prices and leave customers with a limited choice of electricity suppliers.

Prohibiting power distributors, like Meralco, from participating in the competitive retail market as electricity suppliers limits the choices of customers.

The ERC rulings also impose a market cap or limit on how much retail electricity suppliers (RES) can supply in the market. Resolution 11 states that “RES shall not be allowed to supply more than 30 percent of the total average peak demand in the retail market.”

The ERC orders would lead to a distortion of market forces because cost-efficient RES that offer cheaper electricity prices would be forbidden from supplying contestable customers once the cap is reached.

The rulings would perpetuate the status quo that Presidentelect Rodrigo R. Duterte wants to overhaul to ensure that economic growth would be inclusive and would benefit the poor.

And far from pursuing further reforms in the power sector, the ERC may be actually undermining the Electricity Power Industry Reform Act. Under Resolution 11, the ERC set the dates, making it mandatory for electricity customers to be part of the contestable market. For customers consuming at least 1 MW, the requirement to secure a retail supply contract will become mandatory

by December 26 this year.

For customers consuming 750 kW to 999 kW, the mandatory date is June 26, 2017. End users consuming at least 500 kW are required to secure a retail supply contract by June 26, 2018.

With more and more customers required to be part of the contestable market, a situation will emerge where contestable customers will be at the mercy of suppliers.

The limited availability and capability of the remaining RES to serve customers will, therefore, lead to a spike in electricity rates.

Industrial users would have fewer suppliers to choose from, thus forcing them to face a regime of higher electricity prices.

As industrial and commercial users have to pay exorbitant power rates, they have no choice but to pass them on to consumers by increasing the prices of their goods and services.

Is this compatible with the incoming Duterte administration’s propoor and probusiness stance?

Of course not.

The ERC resolutions do not even have solid legal foundations, as Meralco has pointed out.

Section 29 of the Epira law and its implementing rules and regulations allow power distributors, like Meralco, to engage and take part in the competitive retail electricity market as supplier. DUs may even do so without the need of securing a license from the ERC. Barring power distributors, like Meralco, from being suppliers of electricity reduces the number of choices for consumers, along with their right to choose the one that can offer the lowest tariff and the best service. Hence, instead of encouraging competition, the ERC will actually stifle it.

The ERC rulings are incompatible with President-elect Duterte’s propoor economic agenda, which includes attracting more foreign direct investments by addressing restrictive economic provisions in the Constitution and our laws, and enhancing our economic competitiveness.

But how can the economy attract foreign investments if regulatory agencies, such as the ERC, tend to make decisions that could lead to higher, not lower, electricity prices?

E-mail: ernhil@yahoo.com.

BusinessMirror

Trust and teamwork

Edgardo J. Angara

W

hen he was sworn in as Canada’s Prime Minister, Justin Trudeau introduced his 30-person, gender-balanced and ethnically diverse Cabinet. He described the group as one that “looks like Canada,” promising that his government would be based on “trust and teamwork.”

After the May 2016 elections, incoming President Rodrigo R. Duterte’s spokesman said the President-elect wanted his Cabinet patterned after that of Justin Trudeau’s, similarly based on “trust and teamwork.”

The incoming President has made it clear that he values trust, appointing to many posts familiar friends, former classmates and

co-alumni, work associates and Davaoeños. Quite a homogeneous group. But some appointees he had handpicked came from entirely unexpected quarters. A rainbow Cabinet, thus, appears forming in the horizon. Top ex-military men will sit side by side with tough ideologues of the National Democratic Front.

On the other hand, the rightists and the Left will have to deal with

Tuesday, June 28, 2016 A11

A rainbow Cabinet, thus, appears forming in the horizon. Top ex-military men will sit side by side with tough ideologues of the National Democratic Front. On the other hand, the rightists and the Left will have to deal with probusiness centrist officials. On the surface, such a diverse Cabinet could be a recipe for bureaucratic in-fighting, gridlock and disharmony. The various departments may end up divided into silos, following their agenda in isolation rather than in collaboration with each other. probusiness centrist officials.

In short, opposing world views are easily identifiable in the incoming new Cabinet, making it almost inevitable that disagreements would emerge. Incoming Social Welfare Secretary Judy M. Taguiwalo already openly disagreed with the

proposed burial of former President Ferdinand E. Marcos at the Libingan ng mga Bayani.

On the surface, such a diverse Cabinet could be a recipe for bureaucratic in-fighting, gridlock and disharmony. The various departments may end up divided into silos, following their agenda in isolation rather than in collaboration with each other.

On the other hand, having a rainbow Cabinet could serve as the foundation for a working and highly effective government. A 2013 study, led by Katherine Phillips of Columbia Business School, found that, when individuals anticipate going into a homogeneous environment— such as when most in a team share their beliefs—they do not process information as deeply or effectively, as when they anticipate going into a diverse environment.

E-mail: angara.ed@gmail.com.

Economic production more vulnerable to climate change Cecilio T. Arillo

database Continued from A1

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he study also revealed that the susceptibility of the global economic network to workers’ heat-stress has doubled in the last decade, lead Potsdam-Institute for Climate Impact Research (PIK) author Leonie Wenz said, as he explained that climate damages do not only depend on the warming of our planet, but also on the resilience of our societies and economies.

“Our study shows that, since the beginning of the 21st century, the structure of our economic system has changed in a way that production losses in one place can more easily cause further losses elsewhere,” Wenz said.

“What is self-evident for us today is really a phenomenon of the past two decades,” Wenz explained, adding that the study examined the example of local heat stress-related productivity reductions causing global effects.

“Across the world, production is interlinked,” he argued.

According to the PIK study, Supertyphoon Haiyan in the Philippines destroyed more than half the world’s production of coconut oil, which is one of the two most commonly used vegetable fats in food production worldwide.

The study also mentioned that the 2011 flood in Queensland stopped production in the fourth-

biggest coal-exploration site on Earth for weeks, with economic repercussions well beyond Australia.

PIK and Columbia University researchers focused on the effects of small daily perturbations due to extreme temperatures that lead to heat-stress among workers in construction, agriculture and other economic sectors. “While single major shocks to economic networks like these illustrate how economic activity is globally linked, previous research showed that increasing temperatures decrease productivity because, for instance, workers get exhausted more rapidly,” the researchers said.

Combining data on temperature, population and the global economic network from 1991 to 2011 and based on existing research on temperature effects on workers, the scientists run computer simulations of heat-stress consequences in order to find out more about the network’s

Keep calm and go slow

B

ritain’s decision to leave the European Union (EU) came as an enormous shock to investors worldwide, Europe’s leaders and, apparently, many of the people who voted for it. Nonetheless, the choice has been made, and attention must now turn to making the best of it.

That means taking things slowly.

Disentangling the UK from 43 years of engagement with EU laws and procedures will be a long process, and the new relationship between Britain and the EU is far from clear.

Dithering is to be avoided—and so are hasty declarations about what can or cannot be done.

Why Britain voted to leave the EU German Chancellor Angela Merkel struck the right tone this weekend when she said that Britain would remain a close partner and that the terms of separation weren’t about “deterrence.” Other EU leaders weren’t so magnanimous.

One can understand why. Many felt betrayed by Prime Minister

David Cameron’s decision to call a referendum in the first place—fearing this very result. They might be forgiven for thinking that Britain must reap what it has sown. Many will also think that punishing the rebellious Brits serves a tactical purpose by stifling populist rebellion elsewhere in the union.

Such an approach would be unwise. Managing this transition smoothly is very much in Europe’s interests, and restoring calm should be paramount. EU leaders shouldn’t need reminding that stress can easily get out of control. In addition, Britain’s two-way trade with the EU is substantial: There’s a vital mutual interest in maintaining it. As for punishing the Brits to quell anti-EU sentiment elsewhere, that could all, too, easily backfire. Scaring the public into staying doesn’t work so well, as the UK government can attest.

The UK needs a pause to restore some semblance of political stability. Cameron has said he will resign within months. An election

The impacts of adverse weather on supply chains are missing from the assessments of the Intergovernmental Panel on Climate Change and, with a few exceptions, are being ignored in discussions around adaptation.

This is a mistake. Adaptation requires a global strategy, not just local ones.

vulnerability to the propagation of production losses in each year.

The study covers economic flows between 26 industry sectors from mining and quarrying to textiles and wearing apparel, and to post and telecommunications, as well as final demand in 186 countries.

“With unabated climate change, the rise in global mean temperature will have severe impacts on natural and societal systems,” coauthor Anders Levermann said.

He pointed out: “To estimate the costs of future climate change, we need to assess global economic impacts of more frequent heat extremes and meteorological impacts, such as floods and tropical storms, and understand their relation to the economic network’s structure.”

“This is the basis for implementing appropriate adaptation measures in a warming world and with more intense weather extremes, it is likely that society needs to become more resilient and more flexible,” Levermann said.

He explained that links in global economic chains and world markets mean that extreme weather in one place can have repercussions else-

isn’t immediately in prospect, but the country’s new prime minister and Cabinet are yet to be decided, so preparations for exit can’t move forward with proper leadership. The opposition Labour Party is also in turmoil, and calls are mounting for a new leader. Nerves need to settle before Westminster can move this process forward.

Scotland and Northern Ireland present additional challenges, with leaders in both places calling for their own referendums on independence. These questions will have to be addressed, but new polls should wait until the UK’s future relationship with the EU—and what it means for Scotland and Northern Ireland—becomes clearer.

In forming the new government in Westminster, one of the new team’s biggest challenges is already apparent. The Leave campaigners are divided between an outward-looking faction favoring open markets and permissive rules for skilled immigrants, and an inward-looking faction concerned

where. For example, a combination of exceptional rainfall and Cyclone Yasi in 2010–2011 paralyzed the world’s fourth-largest region of coal exploration in Queensland, Australia. Cooking coal prices rose the following year by 25 percent. In 2011 droughts and floods in Russia, Pakistan and Australia caused global food prices to climb, possibly contributing to the escalation of civil unrest in Egypt, Syria and Saudi Arabia.

“Yet, the impacts of adverse weather on supply chains are missing from the assessments of the Intergovernmental Panel on Climate Change and, with a few exceptions, are being ignored in discussions around adaptation. This is a mistake. Adaptation requires a global strategy, not just local ones,” Levermann pointed out.

Stressing further, he said: “It is these unanticipated and sudden shocks from extreme weather events on global trade that are most disruptive for society; gradual changes can be foreseen and are easier to adapt to. Sitting in a bathtub with the tap running, it is easy to stop the floor getting wet, as the water rises by placing a few towels (up to a point).

“But the effect of climate change is like throwing rocks into the water. Our interlinked societies, the dynamics of which we are only beginning to understand, are like dominos lined up on the edge of the tub. One wave can make them all tumble.”

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

above all with controlling immigration more tightly. It’s crucial for Britain, and all of Europe, that the new government sets a liberal, outward-looking course.

Again, if the EU’s leaders take an unduly hard line, they’ll make that result less likely. The EU shouldn’t want Britain to succumb to inwardlooking populism—a prospect that would risk further energizing the same sentiments in the rest of the EU. There’s no template or timetable for the talks. Article 50 of the EU’s Lisbon Treaty provides for two years of negotiations before the UK withdraws, but it has never been invoked. Some of Europe’s leaders are pressing to start the clock as soon as possible. There’s no need. They shouldn’t set a deadline without a full understanding of the work required before it comes due.

Britain and Europe should get this done as soon as possible—but no sooner. Right now, everybody should take a deep breath, think more and pronounce less.

Bloomberg View

2nd Front Page BusinessMirror

A12 Tuesday, June 28, 2016

www.businessmirror.com.ph

UK eyeing bilateral FTA with PHL after Brexit

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By Catherine N. Pillas

@c_pillas29

he United Kingdom may explore the possibility of having a bilateral freetrade agreement (FTA) with the Philippines, after the British voted to leave the European Union (EU) last week.

British A mbassador to the Philippines Asif Ahmad said the UK may “readjust” its trade policy, particularly since negotiations for the EU-Philippines FTA have just gotten off the ground this year.

“If you look at every single FTA that the EU has signed since the UK has been a member, we’ve very much signed up to the design of the FTA,” Ahmad said on the sidelines of a news briefing in Taguig City.

“So in many respects, if not in their entirety, the FTAs we have are one that we would ideally like to see translated straight across on a bilateral basis,” he added.

Ahmad said negotiating for bilateral FTAs could give the British government a chance to further improve its trade relations with other countries.

“If the EU-Philippines FTA happens within the time period [ before the UK leaves], then that will be in the same boat as with other countries. We have to redefine what the agreement means bilaterally,” he said.

However, the British envoy said establishing bilateral agreements with trading partners come second to forging a “clear” trade agreement between the UK and the EU. Ahmad made an assurance that, as far as the economic picture is

concerned, there will only be some “short-term uncertainties” as financial markets worldwide react to Brexit. But, he said, there are “grounds for confidence” for the Philippines.

The newly independent UK, he said, will not deviate from its stance when it comes to market access and its trade relations with partners, like the Philippines.

“The fact that the majority of companies in the Philippines listed in the Philippine Stock Exchange have significant UK shareholdings or investment portfolios: that will continue, there will be no sudden flight of capital that will come in and out Philippines,” Ahmad added.

Once the British government activates Article 50 of the Lisbon Treaty, which specifies the exit process for members of the economic bloc, it could take the UK two years to exit the EU. This can only come after the incumbent Prime Minister David Cameron steps down from office in October and a successor is named, a new Cabinet is formed, and the British Parliament approves the referendum result.

Dr. Alvin Ang of the Ateneo Eagle Watch said British investments will likely be unaffected, as there will only be some

The fact that the majority of companies in the Philippines listed in the Philippine Stock Exchange have significant UK shareholdings or investment portfolios: that will continue, there will be no sudden flight of capital that will come in and out Philippines.”

—Ahmad “rechanneling” of investments to the UK from the EU. According to the Philippine Statistics Authority, seven of the country’s top investment promotion agencies (IPAs), including the Board of Investments, have approved P4 billion worth of investments from the UK in 2015.

The amount is 1.6 percent of the total approved foreign investment pledges recorded by the seven IPAs in that year.

In the first quarter of 2016, UK investments to the Philippines amounted to P1.8 billion, representing 7.6 percent of total foreign investment pledges during the period.

VILLAR Family donates land to U.P. for new campus in Vista City The University of the Philippines (UP) and Vista Land & Lifescapes Inc. have entered into a partnership to develop the country’s first School of Technopreneurship, to be located in Vista City’s University Town. The Villar family donated the land where the facilities will be built. In photo are (from left) UP Technology Transfer and Business Development Office Director Dr. Luis G. Sison; UP College of Engineering Dean Aura C. Matias; UP VP for Academic Affairs Dr. Gisela Concepcion; UP VP for Development Dr. Elvira Zamora; UP President Alfredo Pascual; Vista Land Chairman Manny Villar, Sen. Cynthia Villar, Vista Land President and CEO Paolo Villar; Vista Land Managing Director Camille Villar; and Rep. Mark Villar of Lone District of Las Piñas.

Pacquiao, de Lima snub Senate briefing

By Butch Fernandez @butchfBM

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NLY three of five neophyte senators made it to a scheduled orientation-briefing on Monday, with two other newly elected lawmakers—boxing champion Emmanuel D. Pacquiao and former Justice Secretary Leila M. de Lima—listed as no-shows.

“He [Pacquiao] is supposed to be here, but he has to fly to General Santos [City] to attend a meeting with local government officials of Saranggani and Gensan,” Kit Mercado, Pacquiao’s chief of staff, told Senate reporters, while de Lima sent word she could not make it, owing to conflict in schedule.

Mercado explained that Pacquiao originally intended to attend even as the newbie senator’s staff admitted he was not aware of the nature of the Saranggani and Gensan events that coincided with the Senate briefing.

“We don’t know why he had to fly there, but he is supposed to be here talaga. Nag-confirm naman siya,” he said, adding they just “don’t know exactly kung ano ang pag-uusapan kung bakit he [Pacquiao] has to fly

to Gensan for the meeting.”

In attendance were incoming Senators Joel Villanueva, Risa Hontiveros and Sherwin T. Gatchalian, who completed the briefings conducted by key officials of the Senate secretariat led by Secretary Oscar G. Yabes for the incoming senators.

The three newly elected senators and their staff were given an overview of the functions of the different offices in the Senate during the briefing also attended by Sergeantat-Arms Jose V. Balajadia Jr., Deputy Secretary for Legislation Edwin B. Bellen, Deputy Secretary for Administration and Finance Arnel Jose S. Bañas, Legal Counsel Valentina S. Cruz and Senate Tax Study and Research Service Rodelio T. Dascil.

Interviewed after the briefing, Villanueva said he found the briefing “very helpful” having been away from lawmaking duties as for mer congressman for the past six years. “But there is so much similarities sa pinanggalingan [ko], sa House of Representatives.”

For his part, Gatchalian confirmed they tackled various subjects, mostly admnistrative in nature that, he said, would help facilitate their law-making tasks.“Maraming administrative,

importante makilala kung sino ang makakatrabaho namin for the next six years and services na puwedeng magamit sa Senate. Very informative, mostly house rules.”

Yabes reported that during the orientation, the new senators were introduced to other officials of the Senate secretariat, as well as the functions of their respective offiices.

“Mainly baguhan lang ang pumunta, but notice something: they are all former congressmen so, more or less, alam na nila. Lalo na iyong sa legislation matters,” Yabes told reporters. “So, the other matters, puwedeng bago sa kanila, like iyong aming external affairs, administrative procedures, which they already know, but they are all former congressmen, so alam na nila halos lahat iyan,” the senate official said, adding that it was more like “getting to know each other.”

As for neophyte senators-elect Pacquiao and de Lima who failed to attend the briefing, Yabes conceded they could not be faulted for failing to show up. “They already know, probably they will be given the brochures that we prepared,” Yabes said.“Walang kaso because they have their own chiefs of staff na nandito.”