Businessmirror march 02, 2016

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Wednesday, March 2, 2016 Vol. 11 No. 146

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CRISTOBAL SAYS INVESTMENT TARGET REFLECTS JFC’S OPTIMISM

$7.5-B annual FDI haul doable in 3 years–DTI T

By Catherine N. Pillas

rade Secretary Adrian S. Cristobal Jr. said the country can hit the “aspirational” goal of attracting $7.5 billion in foreign direct investments (FDI) annually—the same target set by the Joint Foreign Chambers (JFC) in its Arangkada Philippines blueprint—in three years, provided the policy reforms and liberalization thrust are continued in the next administration.

$3.9B

BMReports

‘Con-dorms’ offer challenges to traditional students’ lodging

PHL’s average FDI haul from 2011 to 2015

Cristobal admitted that the JFC’s target was a bit ambitious in the previous years and aspirational today.

“That $7.5 billion is doable in the next three years if we continue the Continued on A2

NONIE REYES

INSIDE

Super Tuesday: Clinton, Trump look to pull away from rivals

By Mia Rosienna Mallari | Researcher Dennis D. Estopace | Editor

S

Conclusion

53

ANDWICHED between a convenience store and a commercial complex stands a building with white paint peeling from its walls.

Upon closer inspection, its walls are exactly fit to its neighbors’. The number of The rust-encrusted fire exit is on establishments registered the third floor, secured outside a window barred with jalousies. with the Manila City Hall A rickety wooden door opens. Bureau of Permits and Through a stainless-steel en- classified as dormitories/ trance appeared a man in wrinkled plain white round-neck shirt boarding house.

Source: Manila City Hall Bureau of Permits and loose red basketball shorts.

“Kuya [older brother] Tino,” as he is known in these parts, manages the 16-year-old boarding house near the building with peeling white paint. The unnamed place, open to both male and female tenants, is small and covert, easily overlooked by pedestrians coming in and out of a nearby Continued on A2

world

a6 Trade Secretary Adrian S. Cristobal Jr. fields questions at the BM Coffee Club on Tuesday. He expects a regime of high growth if the next administration will continue to adopt the needed structural reforms. Stephanie Tumampos

JFC crafting new Arangkada blueprint FORBES: “The economy is moving; these recommendations are being [put in place], but not 100 percent of what we originally suggested in 2010.”

T

By Cai U. Ordinario

he national government had a slow start, only improving in 76 of the 462 recommendations forwarded by the Joint Foreign Chambers (JFC) in 2010, or a 16-percent success rate; obviously not enough to deliver the desired results to boost the country’s competitiveness as an investment destination, the Fifth Anniversary Assessment Report of JFC’s Arangkada Philippines blueprint showed.

PESO exchange rates n US 47.5680

Based on data, the government’s performance did not improve— but also did not decline—in 327 recommendations, while performance declined in 44 recommendations. But the JFC was still modest in its assessment.

“Of the 462 recommendations relayed by investors going back 2009 and 2010, there has been great progress, not enough progress, but great progress,” said John D. Forbes, senior advisor of the American Chamber of Commerce in the Philippines.

Between 2014 and 2015, Forbes said the difference in the progress made was “statistically insignificant.” He noted that in 2015, 333, or 74.5 percent, of total recommendations were started, while in 2014, 331, or 74.22 percent, of total recommendations were started.

In 2011 the assessment report showed 232 recommendations were started by the government. This represented 51.44 percent of total recommendations made by the JFC.

Continued on A12

Rating upgrades made shift to dollar debt easy

A

s President Aquino closes out a presidency that delivered the Philippines four Standard & Poor’s rating upgrades, investors are turning to the country’s dollar debt to shelter from peso losses.

T he nation’s US cur renc y bonds are rising almost twice as fast as local notes, pushing the yield on the securities due 2024 down 52 basis points this year to 2.49 percent. The peso is the only major Southeast Asian currency to weaken in 2016 before a May 9 presidential vote, in

which there are five contenders and no clear front-runner.

“Peso weakness and dollarbond strength ref lect locals sheltering in dollar assets preelections,” said Edwin Gutierrez, who helps oversee about $11 billion as head of emerging-market sovereign debt at Aberdeen Asset Management Plc. in London.

“The market will monitor any signs of fiscal slippage with concern, since the Aquino administration has done a fantastic job in that regard.”

See “Rating,” A2

n japan 0.4222 n UK 66.2004 n HK 6.1165 n CHINA 7.2579 n singapore 33.8225 n australia 33.9540 n EU 51.7302 n SAUDI arabia 12.6865

Source: BSP (1 March 2016 )

A2 Wednesday, March 2, 2016

BMReports BusinessMirror

‘Con-dorms’ offer challenges to traditional students’ lodging Continued from A1

university. He lets the BusinessMirror in.

There are nine rooms and five common bathrooms in the establishment. The three-story building houses 37 students from different schools on the University Belt.

According to Kuya Tino, the building’s fire escape has been like it is since he was hired as caretaker of the boarding house five years ago.

“There aren’t many rules here,” he told the BusinessMirror. “As far as I’m concerned, they [tenants] just pay the rent and cause no trouble.

I’m just the caretaker. I just look after the place.”

A female employee helps in keeping the boarding house clean.

Tino said the owner lives in Makati and checks in every month to collect the P4,000 rent. He did not have the slightest idea whether the building is registered with the local government. “Like I said, I’m only the caretaker, I just do what I am told,” he shrugged.

Dormitory registry not up to date

THE BusinessMirror has counted 194 accommodation establishments bordering the University of Santo Tomas (UST). Out of the total, 177 of these were classified as dormitories and boarding houses, and 17 as condominium-type dormitories, or “con-dorms.”

Of the total, 47 are houses built with wood and most of which appear to have aged over time. On their doors and windows are signs saying “Room for Rent” or “Bedspace Available,” in bold letters on bond paper. Edifices that stand elegantly next to their rundown counterparts advertise on tarpaulins.

Data from the Manila City Hall Bureau of Permits show that as of December 2015 there are five establishments officially listed as dormitories and 53 registered under the dormitories/ boarding classification. This is for the entire city of Manila.

Meanwhile, other accommodations listed were nine “room for rentals,” 16 apartments and 55 rooms-for-rent establishments. Rooms for rentals accommodate transients and are paid on a nightly basis, according to city hall documents.

Those under the leased properties totaled to 4,235. These are establishments that are possible places of student residence, but were not specified as such. Data for the previous years were not available as of this writing.

Amarillo Marquez, owner of a ladies’ dormitory on Padre Noval Street, said her dorm is registered. Hers is a two-story house sporting sliding 4x6 window frames with capiz shells and ventanilla (sliding panels between the floor and windows). It has been running for 30 years now. It doesn’t have a fire escape, except

for the main door.

“I’ve received no complaints and we have been keeping our residence safe,” the 67-yearold owner said. As a landlady to the homey residence, she makes it to a point to check on her tenants, especially if they are not home by the 9:30 p.m. curfew.

Marquez said she also takes in transients, but only those who are personally referred by her dormers, previous and current.

Aiming for standardization

IN May 2015 Rep. Rolando Andaya of Camarines Sur filed House Bill 5716 aiming to eradicate so-called illegal operations of dormitories and other residential facilities. The lawmaker said he seeks to standardize the operations of these establishments.

The bill considers it unlawful to own, maintain or operate any dormitory or boarding house without any permit from its respective local government. It also requires the establishments to visibly post the license. The proposed law also requires operators to declare the number of boarders and employ at least one helper for every 20 tenants for maintenance and safety regulations.

The bill also specifies that the establishment keep a registry containing information on their boarders, including course studied and person to contact in case of emergency. These are information that the boarding house Tino manages lack. “All I have here are their names, addresses at home and contact numbers,” Tino told the BusinessMirror.

Furthermore, the bill entails that students receive a 10-percent discount on their rent, provided that they present validation that they are currently enrolled in a school.

Andaya stated in the explanatory note of the bill that the residence must be “safe, healthful and sanitary, and have amenities conducive to learning and living.”

Naturally, the bill obliges dormitories to comply with the minimum requirements arranged by the National Building Code and Fire Code of the Philippines.

Rise of the con-dorms

EMMAN Yabut laughed upon hearing the term “con-dorm,” which the BusinessMirror correspondent Jasper Almiras claims to have coined since he lives in one.

The first word that comes to my mind is “safe,” Yabut said.

“It’s safer here compared to other places I’ve stayed in. We have what they call as biometrics.

All the tenants have fingerprint access.” Yabut then points to a wall near a steel door where juts out a box with pulsing pin-size green light. He presses his thumb on a black recess below the

light and led the BusinessMirror inside.

The Liberal Arts senior student pushed past the door and pointed out the receiving area. Two screens showed clear live feeds from closedcircuit television cameras in the building as two women sat behind a counter. One called on passing tenants where she handed out mail.

The other asked guests to write their names, person/s to visit, purpose to visit and the time they arrived. She then gives out visitor ID cards and logging in the guest details.

“In some dorms, they have guards, but they are just contractual and are replaced every three months or so,” Yabut said, recalling his experience with other lodging place.

He added that he is staying at a legitimate place that is why he never feared for his safety. Admittedly not one for being early, he is glad that the building is only a minute walk to UST through one of the various inner streets in Dapitan.

“We know that the BFP [Bureau of Fire Protection] looks into our building,” he said. “All of the permits are framed in the lobby, even from the BIR [Bureau of Internal Revenue].”

Yabut said he is aware the building has two fire exits on each floor, and fire alarms and water sprinklers in each room. Inside his rectangular 18-square-meter room are a cabinet, table and chairs that were provided by the “con-dorm.” The bathroom is fully furnished.

The steel frame for his bed was already there when he roomed in.

Yabut said the establishment provides use of a laundry station and water station at the ground floor for a “minimal” fee.

Rent costs P9,000 a month, excluding the electric and water bills, according to him. “We also have an intercom to contact the lobby in case of emergency needs or repairs.”

Freshman Louis Rafael Espinosa resides in one of the five towering condominium-type dormitories, or con-dorms along Padre Noval Street. Among 51 regular dormitories on the eastern street of the UST, Espinosa said he opted to spend his semesters living in a more commercialized space.

“It feels like you’re living already in a condo,” said the painting major who shares the room with three of his friends. He’s been living in a 21-sqm whitewashed room for almost two semesters now. According to him, the plus points of the con-dorm are its amenities and the ambiance.

The only differences are the pricing and variations of the room, especially brand-new units on higher floors, which are definitely costly.

What he cannot endure are cockroaches that, he said, crawl on the floor despite the daily cleaning. Espinosa and his friends cough up a monthly rent of P13,800.

Espinosa’s group is bound to hunt another condorm, “Sanitary issues are definitely important.

www.businessmirror.com.ph

$7.5-B annual FDI haul doable in 3 years–DTI Continued from A1

reforms that we’ve established.

That includes the ease of doing business reforms; what more if we open up certain sectors of the economy,” Cristobal said at the BM Coffee Club forum on Tuesday.

The Philippines’s FDI from 2011 to 2015 amounted to some $20 billion, AmCham Senior Adviser John Forbes estimated earlier, or averaging about $3.9 billion annually over the said period.

That’s way below the $7.5-billion average yearly haul over a 10-year period—or a total of $75 billion—that the JFC targeted under the Arangkada Philippines. “We share that kind of aspiration and we will work hard to make it happen and institutionalize the needed reforms. The confidence of the JFC is clear; they believe it can be hit,” Cristobal stressed.

He said with the current trend, the country should be hitting a 10year total of $55 billion to $60 billion in FDI by 2020. But if the needed reforms are implemented, Cristobal said this figure would climb further.

The JFC target used the $1-billion FDI in 2010 as jump-off point.

The inflow of foreign capital steadily increased until it peaked at $6.2 billion in 2014. Initial data for 2015 gave little chance that the 2014 haul would be exceeded.

“Admittedly, we’re trailing behind other Asean nations. Several factors ’yan: the basic elements of ease of doing business, infrastructure is also a factor and what is important is the openness of the economy, which includes the constitutional and legal limitations on foreign-equity ownership,” the Department of Trade and Industry (DTI) chief said.

The opening up of some sectors of the economy, in particular, should be high on the agenda of the next administration if the country hopes to embark on greater trade liberalization vis-á-vis more free trade agreements and partnerships, such as the Trans-Pacific Partnership (TPP) agreement.

Rating. . .

“We’re negotiating for instance with the European Union...and we’re looking at the TPP because our competitors are there, so that means more liberalization. So how will we carry out a calibrated liberalization of the economy? So in the next six years we will have to face this, which includes the constitutional provisions of the economy,” Cristobal said.

Aside from foreign-equity restrictions, other challenges that must be addressed include improving the business climate through protecting the sanctity of awarded contracts, lack of infrastructure and the complicated tax structure.

But, even with these setbacks, the country has its advantages, Cristobal said.

The absence of labor strikes has long been touted as a feat drawing in foreign investors. The country has, likewise, attained some measure of political stability compared to decades past, he noted.

On the industry side, he said a significant sector that can draw in more FDI is manufacturing.

“Our FDI approval last year was up, according to the Philippine Statistics Authority, and more than 50 percent was in manufacturing. For Japanese firms, we’re already No. 1; we’re the preferred site already, so we’re seeing an influx of Japanese investments,” Cristobal noted.

With no foreign-equity restrictions in manufacturing, the sector remains a bright spot to generate more employment and draw in FDI. Currently, the country’s main investment-promotion agency, the Board of Investments, attracts more investment commitments in energy and real estate.

With manufacturing only being third on the list, the DTI is now studying how to attract more projects and investments in that area.

The sector is listed in the agency’s rolling three-year InvestmentPriorities Plan, which offers fiscal and nonfiscal perks to companies engaging in sectors and activities on the list of preferred activities.

Continued from A1

The success of the President in shrinking the budget deficit to around a sixth of the P314 billion ($6.6 billion) when he came to power in 2010 has been rewarded with a more than halving of the sovereign’s local-currency borrowing costs and a record-low yield paid at a dollar debt sale last month.

Vice President Jejomar C. Binay, who topped a poll of contenders last month, has promised to pay for generous income-tax exemptions by boosting collection.

Binay was picked by 29 percent of 1,200 respondents in a Social Weather Stations survey conducted from February 5 to 7. Sen. Grace Poe, the daughter of a famous actor turned politician, and Rodrigo R. Duterte, the crime-busting mayor of Davao City, received 24 percent each. That beats the 18 percent for Manuel A. Roxas II, a former secretary of the interior department endorsed by Mr. Aquino, who’s prohibited from running for another term. Poe has also said she favors lowering taxes.

“There is fiscal risk moving forward based on populist measures that some of the candidates are espousing,” said Joety Cuyegkeng, an economist at ING Groep NV in Manila. “That’s why we’ve been a bit cautious,” although the market is largely being driven by external factors and the risk of a runaway fiscal deficit is low, he said.

The Philippines posted a budget deficit of P46.5 billion in the first 11 months of last year, compared with a shortfall of P73 billion for the whole of 2014. The country’s debt-to-GDP ratio is 45.5 percent, lower than the 53.5 percent in Malaysia and 50.6 percent in Thailand.

Default swaps

The peso has fallen 0.8 percent in 2016, trailing gains of 3.1 percent in Indonesia’s rupiah, 2.6 percent in Malaysia’s ringgit and 1.3 percent in the Thai baht. That marks a reversal of fortune for the Philippine currency, Southeast Asia’s best performer last year. The 50 basis-point drop in the yield of the Philippine 10-year dollar bond this year compares with a 27-point decline in same tenor peso notes to 3.83 percent.

There isn’t much election nervousness, as it would take time for economic fundamentals to deteriorate, said Smith Chua, chief investment officer for the asset management and trust arm of Bank of the Philippine Islands in Manila. Dollar notes are benefiting from the nation’s relatively strong economic fundamentals and because investors want to hedge their peso risk, he said.

The cost to insure five-year Philippine sovereign bonds using credit-default swaps rose 11 basis points to 119 this year, compared with a drop of 3 to 230 for Indonesian debt and a decline of 7 to 175 for Malaysian notes.

“Unless there is clarity that the fiscal program is sustainable, interest rates will rise, crowding out government development spending and damping private investment,” said Romeo Bernardo, director at the Institute for Development and Econometric Analysis Inc. in Manila. The next administration must pursue its investment and expenditure program “responsibly,” said Bernardo, who was finance undersecretary from 1990 to 1996.

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Wednesday, March 2, 2016 A3

World Bank: PHL needs to go back to agri

T

By Cai U. Ordinario

he next administration needs to focus on labor-intensive sectors, such as agriculture, to lift millions from poverty, according to experts and members of the Joint Foreign Chambers (JFC).

At the Fifth Arangkada Forum on Tuesday, JFC members and experts, including World Bank East Asia and the Pacific Poverty Reduction and Economic Management’s Lead Economist Rogier van den Brink, said there is a need to “go back” to agriculture.

“To get to inclusive growth, we need to go back to agriculture.

Why is this? Many countries in the region have really done very well in terms of economic growth and poverty reduction by starting with agriculture: Japan, Korea, Taiwan, China. There are 600 million people that were lifted from poverty from China,” van den Brink said.

He added, however, that the lifting of 600 million people from

poverty in China happened in phases, and with the manufacturing sector in tow.

The first phase moved people in farms to factories to meet local demands; and then the second phase occurred when factories began producing goods for the international market.

Agriculture can lift millions from poverty because it can raise farm profits and incomes, as well as increase nonfarm incomes and profits through multipliers. With greater productivity and better incomes, food prices remain low. “[The Philippines’s] long history of policy distortions has slowed the growth of agriculture and manufacturing in the last six decades.

[As a result] agricultural productivity has remained depressed; manufacturing has failed to grow sustainably; [and] low-productivity, low-skill services sector has emerged as the dominant sector of the economy,” van den Brink said in a presentation.

American Chamber of Commerce of the Philippines Agribusiness Committee Cochairman Varinia Tinga agreed, saying there is also a need to increase researchand-development budgets, as well as diversify public spending in agriculture.

Tinga said the government should not only focus its spending on rice and corn, the country’s food staples, but also on high-value commercial crops (HVCCs), which cost more to produce but have huge returns.

HVCCs include products such as coffee, cacao, fruit crops, root crops, vegetable crops, legumes, pole sitao, spices and condiments, and cut flower and ornamental plants.

She added the government must create a comprehensive crop-insurance system, which could serve as the Conditional Cash-Transfer Program of the government in the farm sector.

To get to inclusive growth, we need to go back to agriculture.

Why is this? Many countries in the region have really done very well in terms of economic growth and poverty reduction by starting with agriculture: Japan, Korea, Taiwan, China. There are 600 million people that were lifted from poverty from China.”—van den Brink

Tinga also said there is a need to rationalize agriculture-extension services. Under the local government code, these extension services are under the purview of local governments.

“We believe the Department of Agriculture should reassert its leadership and put some sense of order into this [extension services] and, more important, to strengthen links to research and development, and be able to use this position to share this information to farmers,” Tinga said.

Canadian Chamber of Commerce

of the Philippines President Julian Payne added that apart from agriculture, mining is another area that the next administration needs to focus on.

Payne said these two sectors have a huge potential to employ millions of Filipinos. As it is, the Philippines already missed out on the recent increases in mineral prices.

He said the new administration must make mining a part of the national priority and ensure that the government will honor the “sanctity of mining contracts,”

since these contracts are crafted for the long term.

In January Ateneo Center for Economic Research and Development Director Leonardo A. Lanzona Jr. said the Philippine electorate needs to elect a president who is pro-agriculture.

Lanzona added that a pro-agriculture president can look at the agriculture sector as a means to lift millions of people out of poverty and as a means to improve competitiveness.

Eagle Watch Senior Fellow Alvin Ang said that, while agriculture only accounts for 10 percent of the country’s GDP, its share in employment is 30 percent.

The slow growth of the agriculture sector in the past 20 to 30 years has prevented the rise in incomes of farmers and their liberation from poverty.

Lanzona also said the country’s food-manufacturing sector is dependent on agriculture and, thus, can have significant impact on the country’s commodity exports.

This is crucial, Ang said, since McKinsey & Co. data showed the Philippines, compared to its Asean neighbors, has a competitive advantage in food, beverage and tobacco manufacturing.

A4 Wednesday, March 2, 2016

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Japan to supply defense equipment to PHL

J

apan signed an agreement on Monday to supply defense equipment to the Philippines, the first such Japanese defense pact in a region where the US allies have been alarmed by China’s advance in disputed territories.

Defense Secretary Voltaire T. Gazmin said the agreement he signed with the Japanese ambassador to Manila, Kazuhide Ishikawa, provides a framework for the supply of defense equipment and technology, and will allow the Asian countries to carry out joint research and development projects.

Future talks will determine what defense equipment could be supplied, although Gazmin told reporters, without elaborating, that Japan has initially offered a surveillance aircraft.

“This agreement would really substantiate the Philippines and Japan being strategic partners,” Gazmin said in remarks during the signing ceremony at the Department of Defense in metropolitan Manila. “Let me stress that what underpins this agreement is not only our desire to enhance our respective defense capabilities but also to contribute to regional peace and stability.”

Neither side mentioned China’s increasingly assertive behavior in disputed areas, but that has been

a major security concern for both countries, which are close American allies. “It’s not directed against any country,” Gazmin said of the new defense deal on Saturday.

The Philippines has turned to the US, and now Japan, as it scrambles to modernize its ill-equipped military after territorial disputes with China began escalating four years ago. Japan has a separate territorial spat with China that has flared on and off in the East China Sea. The Philippines’s security aspirations dovetail with Japan’s nascent steps to be a larger security presence in the region, where memories remain of its brutal World War II invasions.

The two countries have openly brought their security and political ties to new levels, including by holding joint naval search-and-rescue drills last year.

President Aquino and Japanese Prime Minister Shinzo Abe have swapped visits and vowed to intensify defense cooperation, sparking talks about a possible security pact

A Chinese flag lies burning as a protester displays an American flag during a rally from across the US Embassy in Manila, to protest recent island-building and alleged militarization by China off the disputed Spratlys group of islands in the South China Sea, on Monday. The protesters also lauded the US military for its presence in the South China Sea. AP

that will allow Japanese forces to hold larger drills with Filipino troops in the Philippines. The Philippines has signed such visiting forces accords with the United States and Australia.

Last year Japan’s parliament approved contentious legislation that enhances the role of the country’s military by loosening post-World War II constraints. Its military can now defend its allies, even when the country isn’t under attack, and work more closely with other nations.

Japan has forged similar pacts with the US and Australia, but the Philippines is the first Southeast Asian country to have such a defense deal with Tokyo, Gazmin said.

Aside from China and the Philippines, Vietnam, Malaysia, Brunei Darussalam and Taiwan have conflicting claims in the South China Sea, a major conduit for world trade.

The US lays no claims to the waters, but says it has an interest in ensuring freedom of navigation and

This agreement would really substantiate the Philippines and Japan being strategic partners.”–Gazmin overflight and nonuse of force and coercion to assert claims.

Foreign Secretary Albert F. del Rosario earlier said Beijing should foster a world order based on international law by heeding the expected decision this year.

The Philippines asked the tribunal in The Hague in early 2013 to rule on the validity of China’s vast claims in the South China Sea based on the United Nations Convention on the Law of the Sea and to define whether certain disputed reefs and atolls mostly controlled

by China give it the right to territorial waters. China has refused to take part in the arbitration and is expected to ignore any decision. The five-member tribunal decided last October that it has the authority to

hear and rule on the case this year.

On Thursday Chinese’s Foreign Minister Wang Yi accused the Philippines of shutting the door to bilateral negotiations over the dispute and called Manila’s move a “political provocation.”

He said the decision by the Philippine government was “irresponsible to the Filipino people and the future of the Philippines.”

Wang added that China wanted to contribute to the economic development of the Philippines.

Del Rosario said the Philippines “had countless meetings with China to try to address the issue between the two of us to no avail.”

The Philippines also tried unsuccessfully to invite China to join the arbitration, he said. AP

GrabBike defends operation

By Lorenz S. Marasigan

W

hen the operations of GrabBike stopped last month, the majority of partner-drivers have essentially lost their jobs.

“It has affected the drivers more than anything else. Roughly 70 percent of our riders are full-time drivers, and they are usually unemployed people who owns a motorcycle,” GrabBike Head Angeline Tham said in an interview on Tuesday.

With this, Grab Country Marketing Head Khriztina Lim said her company is “eager to restart its full operations to help both the commuters and the bikers.”

“We have always pushed forward solutions that will help solve traffic congestion while providing the public with safer modes of transportation. As part of our commitment to safety, we have stringent processes in place to make sure our high safety standards are met by our bikers.”

The operations of GrabBike was suspended on February 5 by the Land Transportation Franchising and Regulatory Board due to the lack of transport guidelines on the app-based ride-hailing service.

Winston M. Ginez, the chairman

16,208 Average motorcycle accidents in the country annually

of the agency, said in a previous interview that his office decided against the transport mode as it is still not embedded in the revised transport rules and regulations on transport network companies.

He also said that, because motorcycle is the most economical and easiest means of transportation to beat traffic congestion in the city, they are also involved in alarming statistics on motorcycle accidents in the world, citing a report by the World Health Organization (WHO).

It a study, the organization found that 1.25 million people have died globally due to road accidents, with motorcyclists comprising 23 percent of the figure.

The WHO report also said that more than half—or 53 percent—of those who die in road accidents in the Philippines are motorcycle riders.

There are about 3.4 million motorcycle users in the Philippines

and most of them are beginners.

Studies showed there are about an average of 16,208 motorcycle accidents recorded in the country every year.

Despite the implementation of the helmet law in the country, motorcycles have the highest fatality accident rate in Metro Manila from January to November 2015, according to statistics compiled by the Metropolitan Manila Development Authority’s Metro Manila Accident Recording and Analysis System (MMARAS) Database.

The MMARAS database also shows that of the 696 road fatalities recorded in that period, 236 were due to motorcycle accidents.

The database also recorded a total of 166,883 vehicles involved in road accidents in Metro Manila, with motorcycles coming in second with 18,482, next to private cars with 81,837.

Lim noted, however, that her company puts safety as the highest priority.

“Every GrabBiker and passenger will have personal protective equipment, like helmets and facemasks, to make sure they operate safely. In addition to the equipment, all rides are ensured for both bikers and passengers,” she said.

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AseanWednesday BusinessMirror

Vietnam coffee exports seen falling to six-year low, pepper sales to rise

C

1.2 MMT

offee expor ts from Vietnam, the biggest producer of robusta beans, may fall to the lowest in six years, as Forecast Vietnam farmers hold out for higher prices, amid a forecast coffee shipments global supply shortage, this year, lowest according to the nation’s since 2010 largest shipper.

Shipments are forecast at 1.1 million metric tons (MMT) to 1.2 MMT this year, Do Ha Nam, the CEO of Intimex Group, said in an interview last week. That would be the lowest level since 2010, according to customs data.

Robusta futures, which slumped 20 percent in 2015, may rebound this year because of concerns over global supply, said Nam, who is also the vice chairman of Vietnam Coffee and Cocoa Association. Rabobank International and Olam International Ltd. are also anticipating gains in the coffee markets.

“Prices are still on a down trend so farmers are not intending to sell, especially as prices are approaching their cost of production,” Nam said. “A crisis of global shortage could happen in April and May as there will be little supply from Indonesia and Vietnam.”

Robusta, used by companies including Nestle SA, gained 3.4 percent to $1,413 a ton on ICE Futures Europe on Monday, trimming their decline for the year to 7.7 percent.

Editor: Max V. de Leon • Wednesday, March 2, 2016 A5

Mahathir quits Malaysia ruling party citing Najib’s scandals

Prime Minister Tunku Abdul Rahman, and in 1988 the party was dissolved following election irregularities. He formed a party called “New UMNO” in 1988.

UMNO last week suspended its deputy president Muhyiddin Yassin for undermining the organization in his quest to oust Najib, the latest indication of the premier strengthening his grip on power, after months of political turmoil.

Najib’s bank accounts

Vietnam differentials

Should prices remain at those levels, the premium for farmers in Vietnam will climb to $50 a ton or more, Nam said. The current domestic premium of about $30 hasn’t attracted farmers to sell stockpiled beans, he said in the interview from Ho Chi Minh City on February 26.

Total production in Vietnam in 2015-2016 will not be more than last season’s 1.5 million tons because of impact from El Niño, Nam said. Production in the 2016-2017 harvest will continue to be limited, as low prices have reduced replanting.

Growers are replacing old coffee trees with pepper or fruit crops. The total planted is forecast to drop to 600,000 hectares this year from 650,000 hectares last year. Green bean exports will also drop due to more investment in instant coffee production, Nam added.

Intimex’s coffee exports in 2016 are forecast to rise to 400,000 tons, from 350,000 tons last year as the company markets higher-quality products, he said.

Coffee prices are set to increase as certified stockpiles are drawing down at an alarming rate, Olam CEO Sunny Verghese said on Monday. Robusta futures may gain as much as $200 a ton in coming months, as exports from Brazil and Indonesia are set to fall after dry weather curbed yields and farmers in Vietnam may decide to continue withholding beans, Carlos Mera Arzeno, an analyst at Rabobank, said earlier this month.

Pepper shipment

Pepper shipments from Vietnam, the world’s biggest producer, will likely rise 13 percent this year, pushing down export prices, according to the chairman of the nation’s industry group.

Exports will climb to 150,000 metric tons from about 133,000 tons in 2015, Do Ha Nam, the chairman of the Vietnam Pepper Association, said in an interview. While production will also rise—by 10 percent to about 140,000 tons—he said output from the likes of India, Indonesia and Malaysia will probably decline because of the impact of El Niño, limiting the effect on global supply.

The average export price of Vietnamese pepper will drop from last year, while remaining higher than 2014, Nam said.

The rate was about $9,500 a ton in 2015 and $7,750 the year before, customs data show.

“Vietnamese farmers still have relatively strong capability of controlling prices so prices may not fall much,” Nam said on February 26 in a phone interview from Ho Chi Minh City. “Growers are still making huge profits so they aren’t holding back sales.”

The area of pepper plantings will rise to 100,000 hectares (ha) (250,000 acres) this year, from 80,000 to 85,000 ha last year, he said. The new vines will take three years to come into production, eventually dragging on prices, he said.

Bloomberg News

Mahathir Mohamad, Malaysia’s former prime minister, works at his office in Kuala Lumpur, Malaysia, on Thursday. Mahathir said he is quitting the party he led for more than two decades. Bloomberg

F

ormer Malaysian premier Mahathir Mohamad said he is quitting the party he led for more than two decades, increasing the stakes in his monthslong campaign to oust Prime Minister Najib Razak.

Mahathir, 90, said the United Malays National Organization (UMNO)—the largest party in the ruling coalition— no longer exists as he knows it and has been “hijacked” by Najib, who is its president. Mahathir told reporters on Monday that he doesn’t want to be associated with a party whose leader has been tarnished by political scandals.

Mahathir, whose influence has waned in recent years, has a history of leaving the party since the late 1960s. He’s been a vocal critic of Najib and has repeatedly called for the premier to resign, warning UMNO could otherwise lose the next election, which must be held by 2018.

Authorities are conducting several investigations into Mahathir, the country’s longest-serving leader, including for potential defamation.

Malaysia’s attorney general closed the door on a graft probe of Najib in January, clearing him of wrongdoing over a “personal contribution” of $681 million from Saudi Arabia’s royal family and money from a company linked to a state-investment fund that appeared in his personal bank accounts. Under the constitution, a decision to start a criminal prosecution lies solely with the attorney general. Najib has consistently denied any wrongdoing.

I decided I cannot be a party to all these things so the least I can do is to leave the party.”—Mahathir ‘Very ashamed’ “I am very much ashamed of all that is happening,” Mahathir said at a briefing in the administrative capital of Putrajaya. “I decided I cannot be a party to all these things, so the least I can do is to leave the party.”

Hundreds of millions of dollars were deposited in Najib’s accounts in 2011 and 2012, before the $681 million already known in 2013, the Wall Street Journal reported on Tuesday, citing two people it didn’t identify. Najib’s office would not immediately comment on the report.

No impact

Mahathir had said for months that he didn’t intend to leave UMNO. He said on Monday there are no plans to set up

a new party as it would create confusion and disunity. While Najib’s office didn’t comment on Mahathir’s announcement, members of his Cabinet said the move won’t hurt the party.

“As a party with more than 3 million members and entrenched organization, UMNO will survive any attempt to destabilize it including resignations,” Abdul Rahman Dahlan, minister for urban wellbeing, housing and local government, posted on Twitter Monday.

Mahathir’s resignation is a “sad part” part of UMNO’s history and the events of the last year would be remembered more than his accomplishments as leader, according to Communications Minister Salleh Said Keruak.

“This is probably for the best, because when one’s relationship with the party or the party leader is no longer tenable, then it is pointless for one to remain in the party,” Keruak said on his blog on Monday. “Dr. Mahathir’s actions are hurting the party and for him to remain in the party while at the same time going against the party does not seem logical. If Dr. Mahathir wants to continue to attack UMNO then he should do so outside UMNO.”

Successors panned

It’s the second time in the past decade that Mahathir is quitting the party to protest a chosen successor. In May 2008 he left over the leadership of then-premier Abdullah Ahmad Badawi, who he’d picked to replace him in 2003. Abdullah stepped down in 2009 to make way for Najib, whom Mahathir had endorsed and he rejoined UMNO that year.

Mahathir had also left UMNO before that: In 1969 he was expelled for a period after criticizing the leadership of then-

Najib received hundreds of millions of dollars in his private bank accounts in 2011 and 2012, according to the Wall Street Journal.

There was more money in the accounts than the previously known $681 million which appeared before the 2013 general election, the paper reported, citing two people it didn’t identify.

Investigators in two countries believe the $681 million originated from state investment company 1Malaysia Development Bhd. (1MDB), rather than a personal donation from Saudi Arabia as stated by Malaysian authorities, it said, citing people familiar with the global probes.

The Wall Street Journal didn’t give details on the funds that were deposited in 2011 and 2012. It reported that investigators said two former Abu Dhabi officials helped move the $681 million through complex transactions across several countries before it entered Najib’s accounts.

Najib’s office would not immediately comment on the report, while a 1MDB spokesman declined to comment.

Attorney General Mohamed Apandi Ali in January closed the door on a graft probe of Najib, clearing him of wrongdoing over a “personal contribution” from the Saudi royal family in early 2013 and money from a company linked to 1MDB that appeared in his personal accounts.

Returned funds

The premier returned $620 million in August 2013 that was not utilized, Apandi said, without specifying what the rest of the funds were used for. The Wall Street Journal reported on Tuesday that people familiar with investigations also said the bulk of the money was returned.

Najib and 1MDB have consistently denied any wrongdoing. 1MDB reiterated on February 19 that it hadn’t paid any funds to personal accounts held by Najib.

In January, the Swiss Attorney General’s office said a probe of 1MDB revealed “serious indications” that about $4 billion may have been misappropriated from Malaysian state companies, and some former public officials had funds transferred to Swiss accounts.

Najib is “not one of the public officials under accusation,” it said.

In response to queries on 1MDB, Singapore authorities said they had seized a “large number” of bank accounts in connection with possible money-laundering carried out in the island nation.

Bloomberg News

Asean’s start-up boom seen jump-starting regional deals

M

RAMBO’s RAMPAGE

An elephant dubbed Rambo, but also called by his nickname Golf, is chained to a tree on the resort island of Samui, Surat Thani Province, in Thailand. A Scottish tourist had been gored to death by the elephant that he and his 16-year-old stepdaughter were riding on the island, Thai authorities said. Police Lt. Rotjanart Kiewjan said the animal threw Gareth Crowe and Eilidh Hughes to the ground during a trek on Monday. The elephant then gored Crowe with his tusk and stomped on him. AP

ergers and acquisitions will drive technology startup exits in Southeast Asia in coming years, with the number of deals rising more than sixfold to at least 250 annually by 2020, according to Golden Gate Ventures.

The surge reflects an influx of capital investments into the region, policies that put foreign players at a disadvantage and global firms seeking a foothold in growth markets, the Singapore-based venture capital firm said in a report on Tuesday. The tendency toward acquisitions contrasts with other markets including the US where initial public offerings (IPOs) are typically the preferred way to cash out from an investment.

“In Southeast Asia, it’s the opposite,” Vinnie Lauria, managing partner at Golden Gate, said in a statement. “A trade sale will often result in larger financial returns than going public, especially if the acquirer has a strong strategic interest in the region.”

$2B

Funds poured into Asean-focused start-ups in 2015

Like China a decade ago, Southeast Asia—home to 600 million people, whose income is on the rise—is an emerging market on the brink of “something big,” the report said.

In 2015, companies including Sequoia Capital, KKR & Co., Golden Gate and Singapore-based private-equity firm Northstar Group started or backed Southeast Asia-focused new funds with a total capitalization of as much as $2 billion.

Increasing Internet and mobile

penetration and affluence is spurring a regional entrepreneurial boom, nurturing well-funded start-ups like GrabTaxi Holdings Pte., Lazada and MatahariMall. Yet while they’re expanding in everything from e-commerce to ridesharing across Southeast Asia, the region’s technology industry remains nascent compared with the West.

That’s changing, as investment activity keeps pace with the market, driven in part by foreign companies’ desire to navigate complex and fragmented markets with the help of a local player.

Since 2005, there have been only 11 tech IPOs in Southeast Asia, compared to 127 acquisitions during the same period, according to the report. Some of the biggest recent tech startup acquisitions in the region include Seek Ltd.’s purchase of JobStreet and REA Group Ltd.’s acquisition of iProperty Group Ltd., an online advertising business.

Bloomberg News

The W

Business

A6 Wednesday, March 2, 2016 * Editor: Lyn Resurreccion

Zika can cause temporary paralysis, study says

L

ONDON—Scientists may have the first evidence that Zika can cause temporary paralysis, according to a new study of patients who developed the rare condition during an outbreak of the virus in Tahiti two years ago.

Zika is currently spreading with alarming speed across the Americas. The World Health Organization (WHO) declared the epidemic to be a global emergency several weeks ago based on suspicions it may be behind a surge in disturbing birth defects and in GuillainBarre syndrome, a neurological illness that mostly lasts a few weeks.

Before reaching South America last year, the mosquito-spread Zika had triggered outbreaks in the South Pacific on Yap Island in Micronesia and in French Polynesia, including its largest island, Tahiti.

Researchers in Tahiti, France and elsewhere went back and analyzed blood samples from all 42 adults diagnosed with Guillain-Barre syndrome from the 2013-2014 outbreak; nearly everyone showed signs of a previous Zika infection.

They were compared with patients who did not have the condition and did not have any Zika symptoms but were treated at the same hospital for other illnesses.

Tests showed only half of that group of 98 had apparently been infected with the normally mild virus. The research was published online on Monday in the journal Lancet.

“The evidence that links Zika virus with Guillain-Barre syndrome is now substantially more compelling,” said Peter Barlow, an infectious diseases expert at Edinburgh Napier University who was not part of the study. But he noted in a statement that more research was needed before reaching the same conclusion about the outbreak in the Americas, where local factors may be playing a role.

Zika is mostly spread by mosquito bites and in most people causes symptoms including fever, muscle pain and a rash. About 80 percent of people who catch the disease don’t report any illness.

Guillain-Barre syndrome is typically seen after a viral or bacterial infection so a possible connection to Zika isn’t entirely unexpected. It occurs when the body’s immune system attacks the nervous system, often for unknown reasons. It can cause muscle weakness and breathing problems; about 5 percent of patients die from the disorder. Of the patients observed in Tahiti, none died and three months after leaving the hospital, about 40 percent could walk unaided.

The study also considered whether Guillain-Barre was the result of people being infected with both Zika and a related tropical disease, dengue, by comparing them with people who had Zika but no neurological symptoms. It found no hint that having dengue upped the risk.

Based on their findings, the scientists estimated that of 100,000 people with Zika, about 24 would develop Guillain-Barre syndrome. In Europe and North America, the average rate of the syndrome after infections like flu and dengue is about one to two people per 100,000. David Smith of Australia’s Curtin University said it was difficult to know exactly how often Zika causes Guillain-Barre syndrome. Smith coauthored an accompanying commentary in the Lancet. AP

A man helps children to run away after Macedonian police fired tear gas at a group of the refugees and migrants who tried to push their way into Macedonia, breaking down a border gate near the northern Greek village of Idomeni on Monday. No arrests or injuries were reported. About 6,500 migrants are stuck on the Greek-Macedonian border at Idomeni, waiting to travel north, but Macedonia is only admitting a trickle. AP/Petros Giannakouris

Europe’s crisis worsens

Migrants face razor wire, tear gas

I

DOMENI, Greece—Pressed against coils of razor wire and shouting “Help us!,” refugees and migrants at Greece’s northern border were pushed back by Macedonian police using tear gas and stun grenades, as authorities here raced to build more camps to shield the escalating number of stranded people from winter.

A top European Union (EU) official prepared to visit the region on Tuesday to try and ease the crisis that produced more scenes of chaos: Syrian and Iraqi refugees and others forced their way through part of a Macedonian border fence, some clutching infants or struggling to free duffel bags caught in the razor-wire. They were met by Macedonian riot police.

Volunteer doctors said at least 22 migrants, including 12 children, were treated for breathing difficulties and cuts. Authorities in Macedonia said one policeman was injured and that dozens of special forces officers were flown in by helicopter to help quell a refugee protest.

“Tragically, there seems to be more willingness among European countries to coordinate blocking borders than to provide refugees and asylum-seekers with protection and basic services,” said Giorgos Kosmopoulos, head of Amnesty International in Greece.

Some 7,000 migrants, mostly from Syria, Iraq and Afghanistan, are crammed into a tiny camp at the Greek border village of Idomeni, and hundreds more are arriving daily. The Greek army completed more temporary shelters in northern Greece over the weekend, and at the government’s request, local authorities in central Greece opened indoor stadiums conference centers and

hotels that have gone out of business to house migrants, while the Education Ministry called on school children to join the effort with donation drives.

“Of course, Greece over the next one or two months will do what it can to help these people. But it must be made clear that the burden of this crisis must be distributed in Europe,” Greek Prime Minister Alexis Tsipras said in an interview with private Star television.

The border bottleneck began 10 days ago, when Austria and four ex-Yugoslav countries on the Balkan migrant route north into Western Europe cut border access for migrants to a trickle.

Donald Tusk, the European Council president, begins tour of those countries on Tuesday, starting in Vienna, which has been strongly criticized by other EU nations for its caps on asylum-seekers, and ending on Thursday in Athens.

Tusk is aiming to prepare for a meeting of leaders from the EU and Turkey on March 7, where the key topic will be trying to halt the flow of migrants from Turkey to Greece.

T h e nu m b e r o f m i g r a nt s stranded in Greece topped 25,000 on Sunday, according to government estimates. Thousands have been sleeping outside in parks and fields and even

along highways, as refugee shelters quickly overflowed.

“Very many people were forced to sleep in the open, without tents, wrapped in blankets,” said 45-yearold Syrian refugee Nidal Jojack, who has been camped out with her family at Idomeni for three days.

“It was very cold. The borders are effectively closed, it’s a huge problem. To get food, we have to wait in very long queues.”

Jojack said she hopes to reach Germany, where her 18-year-old son has already arrived.

Despite receiving the bulk of the refugees seeking the safety of Europe, Germany has opposed unilateral border restrictions and continued to back an EU-wide solution for the migrant crisis.

German Chancellor A ngela Merkel is resisting calls at home and elsewhere in Europe for limits on refugees like Austria.

“We can’t do this in such a way that we simply abandon Greece,” she told public ARD television.

“This is exactly what I fear: When one country defines its limit, another must suffer. That is not my Europe.” At next Monday’s summit, EU leaders “will discuss how we can restore the [passportfree] Schengen system step by step with Greece,” Merkel said.

But Austria’s deputy chancel-

lor, Reinhold Mitterlehner—in a sign of continued diplomatic tensions—declared on Monday that the refugee restrictions “are necessary [and] we’re going to maintain them.”

Wolf Piccoli, head of research the global advisory firm Teneo Intelligence, said the EU was making a “risky bet” with its strategy on migration. “ The EU is betting on incremental steps, hoping that the bac k log w i l l deter potent i a l m ig ra nt s before tensions i n Greece raise concerns over the country’s institutions,” he said.

So far, border closures have not stopped mig rants from coming. Greek authorities say over 1,800 people a day have reached Greece’s islands from Turkey in Februar y, slightly down from 2,175 a day in January. Accidents are frequent as dozens cram into unseaworthy boats provided for a high price by smuggling gangs.

Ninety-six people have drowned in Greek waters alone so far this year, with another 34 missing at sea. Struggling to cope with the crisis, Greece’s government has issued a temporary ban on journalists visiting migrant camps and called opposition party leaders to an emergency meeting on Friday with Prime Minister Alexis Tsipras. AP

Super Tuesday: Clinton, Trump look to pull away from rivals W ASHINGTON—Republican Donald Trump and Democrat Hillary Clinton are eyeing an opportunity to pull away from their rivals on Tuesday in multiple state contests across the country that could accelerate their march toward the general election.

Voters from Vermont to Colorado, Alaska to American Samoa and numerous states in between were heading to polling places and caucus sites on what is known as Super Tuesday, the busiest day of the 2016 primary campaign.

The contests come at a turbulent moment for Republicans as they grapple with the prospect of Trump becoming the party’s nominee. His main rivals, Florida

Sen. Marco Rubio and Texas Sen. Ted Cruz, are engaged in a frantic effort to stop the billionaire real-estate magnate—with Rubio in particular lobbing surprisingly personal attacks—but it was unclear whether they had made their move too late.

Tensions boiled over during Trump’s rally on Monday in Radford, Virginia, where he was repeatedly disrupted by demonstrators, including 20 or more chanting “Black lives matter.”

At another point, he asked a protester, “Are you from Mexico?” after he was interrupted during remarks about immigration.

He ordered several people to be removed, then cast himself as a unifying political force.

“Believe it or not, we’re going to unify this country,” he said.

Like Trump, Clinton has won three of the four early-voting contests, including a thrashing of rival Bernie Sanders in South Carolina on Saturday. Her victory there was due to overwhelming support from black voters, putting her in position for a strong showing in several Southern states with large A fr ican-A mer ican electorates that vote on Tuesday. Clinton has shed nearly all references to her Democratic opponent in recent days, choosing instead to focus on Trump. She is casting herself as a civil alternative to the insults and bullying that have consumed the Republican race.

“What we can’t let happen is

the scapegoating, the flaming, the finger pointing that is going on the Republican side,” she told voters gathered on Monday in Springfield, Massachusetts. “It really undermines our fabric as a nation. So, I want to do everything I can in this campaign to set us on a different course.”

Sanders, a self-described democratic socialist who has energized young voters with his call for a political revolution, was seeking to stay close to Clinton in the South and pick up victories in states, including Minnesota and his home state of Vermont.

But Sanders faces tough questions about whether he can rally minorities that are core Democratic voters. Still, Sanders has

the resources to remain in the race through the last primaries in June, with his campaign announcing it had raised more than $41 million in February alone.

Democrats will vote in 11 states and American Samoa on Super Tuesday, with 865 delegates up for grabs. It will take 1,237 delegates to secure the nomination at the party’s national convention in July in Philadelphia.

Republicans will vote in 11 states, with 595 delegates at stake—nearly half the 1,237 delegates needed to gain the nomination at the party’s convention, also in July, in Cleveland.

Trump was seeking to sweep the South, which would be a massive blow for Cruz. The Texas senator,

a favorite of the region’s social conser vatives and evangelical Christians, expected the South to be his firewall, but now is simply hoping to emerge with a victory in his home state.

Rubio’s goal on Super Tuesday is even more modest. He’s seeking to stay competitive in the delegate count and hopes to pull off a win in his home state of Florida on March 15. The Florida senator has cast himself as Republicans’ best chance to win in a general election and has received a flood of endorsements from party officials after other more mainstream candidates dropped out. But he’s failed to win a state so far, raising questions about his strategy for topping Trump. AP

World

sMirror

news@businessmirror.com.ph | Wednesday, March 2, 2016

A7

Chinese factories lose more momentum, surveys show

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ONG KONG—China’s m a nu fac t u r i ng lost momentum again last month, according to two surveys of factory activity released on Tuesday that highlighted sluggish conditions in the world’s second biggest economy. An index based on an official survey of factory purchasing managers declined to 49.0 in February from 49.4 in January in the seventh straight month of contraction.

The index has not been at a lower level in seven years; it fell to 45.3 in January 2009 as the global financial crisis was unfolding.

The reading by the China Federation of Log istics and Purchasing is based on a 100 -point scale with the 50 mark dividing expansion from contraction. Separately, a private survey also showed further deterioration in manufacturing. The Caixin/Markit purchasing managers’ index slipped to a five-month low of 48.0 last month from 48.4 the previous month.

“The index readings for all key categories including output, new orders and employment signaled that conditions worsened, in line with signs that the economy’s road to stability remains bumpy,” said He Fan, chief economist at Caixin Insight Group. He said the government faces more pressure to continue rolling out “moderate” stimulus policies to prevent growth from slowing too sharply.

The latest such move came on

Monday night when the central bank freed up more money for lending by cutting the amount banks need to hold in reserve.

Caixin’s survey mostly covers smaller, private enterprises while the federation report focuses on larger, state-owned companies. Economists cautioned the numbers were distorted by the Lunar New Year holiday, which falls at different times in the first two months of the year. Factories typically stock up on raw materials and scramble to fill orders before shutting for an extended break that began this year in early February.

Attempting to iron out the distortions, ANZ Bank economists Raymond Yeung and Louis Lam noted that the official index’s average for January and February together was 49.2, which still indicates contraction.

There was some better news for China’s ser vices sector, with an official survey of nonmanufacturing business activity slipping but continuing to grow last month, coming in at 52.7 from 53.5 in January.

Services have helped offset manufacturing weakness in China’s economy, which last year posted its slowest expansion in a quarter century as growth ebbed to 6.9 percent.

China’s economic slowdown comes as policy-makers in Beijing try to wean the economy off a tired model based on manufacturing and investment and refocus it on self-sustaining services and domestic consumption. AP

Trade deals must bolster govt rights, Canada minister says

C

anada agreed to reopen its trade deal with the European Union (EU) to strengthen state rights to regulate without fear of legal challenge and to ensure the pact was approved by European lawmakers, Canadian Trade Minister Chrystia Freeland said. Freeland and European Trade Commissioner Cecilia Malmström jointly announced on Monday the conclusion of so-called legal scrubbing on the long-delayed Comprehensive Economic and Trade Agreement. The process saw changes made to boost government powers in trade disputes with companies.

The changes were spurred by opposition in Europe to investor-state dispute settlement (ISDS), procedures that have become a sticking point in talks over the Transatlantic Trade and Investment Partnership, a pact between the EU and US. Freeland praised the rewrite in the Canadian pact.

“What we feel we’ve done together is create a really positive evolution of the dispute-resolution system—something fit for the 21st century,” she said in a telephone interview. “Dispute resolution was never meant to be about limiting government’s right to regulate.

It was about being confident that foreign investors would not be discriminated against.”

Long delays

The revisions also create a deal the trade minister is confident will be passed and implemented by “early” 2017 after having sat idle since an agreement was reached

by Canada’s previous Conservative government. Freeland and her Liberal colleagues took power last November after Prime Minister Justin Trudeau’s majority election win.

The changes also create what Canada ca lled a “per manent, transparent and institutionalized dispute-settlement tr ibuna l,” with 15 appointed members to adjudicate claims: five Canadians, five EU nationals and five from third-party countries.

“It’s important to reach an agreement which can actually fly, and Commissioner Malmström and I are confident that, with this now fully legally scrubbed version, we’ve achieved just that,” Freeland said. “It was a real problem that we weren’t able to get it across that finish line of the legal scrub.”

Trade-dispute resolution systems are familiar to Canada, thanks to the North American Free Trade Agreement (Nafta).

One recent high-profile case is that of TransCanada Corp., which filed a legal claim earlier this year under Nafta after US President Barack Obama rejected the Keystone XL pipeline. Freeland declined to discuss it specifically.

Testy disputes

“When it comes to a specific Nafta suit, the ones that I closely follow are the ones where the government of Canada is implicated,” she said.

“What I will say about dispute resolution and its intent is, a dispute resolution mechanism exists so that a foreign investor can defend against being discriminated because of being a foreign investor.”

Adam Taylor, who worked in the office of former Conservative Trade Minister Ed Fast, said European push-back over ISDS had long been brewing. “It’s now clear that Europe’s underestimation of the anti-ISDS forces in Europe forced them to back away from what they’d already negotiated, and, therefore, forced Canada into the position where it had to renegotiate these things,” Taylor, now a consultant at Ensight Canada, said in an interview. The changes are designed to appease opponents of ISDS, whose fears were stoked more by the looming American trade pact than the Canadian one, Taylor said. “That’s what fueled a lot of it: ‘If this is what they agreed to with little Canada, imagine if this is what they agreed to with the big, mighty United States,’” he said.

“That’s what ultimately forced the hand of both sides.” Bloomberg News

A construction worker works on the site of Solitair Brickell, a 48-story rental tower being built in downtown Miami. AP/Lynne Sladky

Next US recession may not be big but could be a long one

I

f the US enters a recession this year, it may end up a lot like a boring conversation at a cocktail party: painfully long and shallow.

The world’s largest economy has a host of strengths, from wellcapitalized banks to financiallystable households, which should help limit the depth of a downturn should one happen.

Yet, with interest rates barely above zero, Federal Reserve (the Fed) Chairman Janet M. Yellen and her colleagues are short of measures to lift the economy quickly out of a rut, economists say.

“If a recession were to occur, it might be shallow but somewhat more extended than the 1990 and 2001 episodes since interest rates can’t be lowered as much,” said Kevin Logan, chief US economist for HSBC Securities (USA) Inc. in New York.

Both those downturns lasted eight months and were mild by historical standards. GDP fell by just 0.3-percent peak to trough in 2001. It dropped 1.3 percent on that basis from 1990 to 1991.

By contrast, the 2007-2009 recession was the deepest and longest since the Great Depression. It went on for 18 months and saw output plunge by 4.2 percent. If a slump does begin this year, it “will probably look more like the 2001 or the 1990-1991 recession,” said Bruce Kasman, chief economist at JPMorgan Chase and Co. in New York.

“It won’t have the same kind of financial dislocations and stress that was associated with” the last one.

With the global economy looking shaky and financial markets unsettled, the chances of a US downturn

20% Recession over the next 12 months

have risen, according to economists surveyed last month by Bloomberg.

They pegged the odds of a recession over the next 12 months at 20 percent, up from 15 percent last December, based on their median estimate. The main reason many economists are betting against a decline in GDP this year is the same one that argues against a deep drop.

The US is mostly free of the kinds of economic distortions that could drive output sharply lower.

“Other than an inventory overhang, the US doesn’t have any big imbalances,” said Peter Hooper, a 26year veteran of the Fed who is now chief economist for Deutsche Bank Securities in New York. Growth slowed to 1 percent in the final three months of 2015 from 2 percent in the third quarter, in part because companies pared stock building.

Housing’s impact

Housing, the epicenter of the last crisis, is far from the frothy levels that prevailed prior to that downturn. Residential construction amounted to 3.4 percent of GDP

last year, nearly half its 6.5-percent share in 2005. Mortgage debt is more than $1.1 trillion lower than its record high in 2008. And while housing prices have been on the rise, they’ve only just recently recouped all the ground lost during the bust.

Consumers are in much better shape financially after spending years working off debts built up during the housing boom. That’s critical because personal consumption expenditures totaled more than 68 percent of GDP in 2015.

Delinquencies on credit cards issued by banks are near a 15-year low. The saving rate is much higher than it was at the end of the previous expansion. And workers are just starting to see signs of a pickup in wage growth more six-and-a-half years after the recession ended.

“For the household sector in the US, the underlying momentum has been great,” said James Sweeney, chief economist for Credit Suisse Securities (USA) Llc. Banks too are looking stronger.

The number of financial institutions on the Federal Deposit Insurance Corp.’s so-called problem list fell below 200 in the fourth quarter for the first time in more than seven years. Total industry capital now stands at $1.8 trillion, 25 percent higher than at the end of the recession, according to the American Bankers Association in Washington.

Less vulnerable

“Banks are well prepared for any slowdown domestically or globally,” said James Chessen, chief economist for the association. There are pockets of potential weakness, of course. Kasman worries that companies will cut back on their spending and hiring in response to a squeeze on their earnings.

Profits as measured by the Bureau of Economic Analysis probably fell 7 percent in the fourth quarter of 2015 from a year earlier, he said in a February 19 video posted by JPMorgan. Perhaps the biggest risk to the economy comes from outside the US Economist David Levy argues the country already is heading into a recession, dragged down by an economic breakdown in China and other emerging markets.

He sees the global economy suffering a worse downturn than it did in 2008, when output dropped by about 2 percent. While the US is relatively better off than much of the rest of the world, it’s not strong enough on its own to withstand the hit from abroad, added the chairman of the Jerome Levy Forecasting Center in Mount Kisco, New York.

A big danger, according to Levy, is the Fed’s limited ability to counteract any economic weakness.

In and around the 2001 recession, the US central bank cut its target federal funds rate 5.5 percentage points, to 1 percent in 2003. From 1990 to 1992, it reduced it 5.25 points to 3 percent.

The Fed’s target for the rate that commercial banks charge each other for overnight loans currently stands at just 0.25 percent to 0.5 percent after the central bank raised it last December for the first time since 2006.

“We are not positioned for something that could really throw us down very hard, but we’re also not positioned to have the same kind of policy support that we normally get when we go into recession,” Kasman said. The upshot, according to Jan Loeys, JPMorgan’s chief market strategist: The slump, if it occurs, “is more likely to be a drawn-out U, even if it’s not as deep, than a big, sharp V.” Bloomberg News

The World BusinessMirror

A8 Wednesday, March 2, 2016

briefs

Iraqi forces launch push to retake area

BAGHDAD—Iraq says security forces have launched a new push to retake a key area north of the capital, Baghdad, and dislodge Islamic State (IS) militants from there.

A statement by the Joint Operations Command says the “new offensive” began early on Tuesday in an agricultural area northeast of the city of Samarra, with the aim to cut IS supply lines. Samarra is 95 kilometers north of Baghdad.

The command says paramilitary forces, mostly Shiite militias, and the Iraqi air force are backing the push on the area, called Jazerat Samarra.

The offensive comes on the heels of two massive bombings in as many days by the IS group in the area—in the town of Muqdadiyah and in Baghdad—that killed at least 110 people. AP

Editor: Lyn Resurreccion • news@businessmirror.com.ph

Russian warplanes sit idle W in Syria during cease-fire

Pentagon wages cyberwar vs I.S.

Pakistan steps up security for funeral of executed officer RAWALPINDI, Pakistan—Pakistan has closed all schools and stepped up security in the capital, Islamabad, and the adjacent city of Rawalpindi ahead of the funeral there of an executed former police officer who assassinated a governor in 2011, accusing him of blasphemy.

Police official Ashfaq Tarar says the measure is a precaution against violence by supporters of Mumtaz Qadri, the executed killer whose supporters are converging on Rawalpindi for the funeral later on Tuesday. Roads around government buildings, the Parliament and diplomatic compounds have been closed off.

Qadri’s hanging on Monday triggered street protests in several Pakistani cities as some religious, political leaders and militant groups have publicly defended him.

Qadri was on guard duty when he fatally shot secular Gov. Salman Taseer, who had called for reforms of the country’s harsh blasphemy laws. AP

West Bank clash with Israeli soldiers kills Palestinian JERUSALEM—Palestinian health officials say a 22-year-old Palestinian was killed and four others were wounded in clashes with Israeli forces in the West Bank.

The Palestinian Red Crescent says Eyad Sajadiyeh was shot in the head.

The Israeli military says troops entered the Qalandia refugee camp, north of Jerusalem, early on Tuesday to retrieve a pair of soldiers who had lost their way and came under attack. It says their jeep was pelted with rocks and firebombs and the soldiers had to flee after it caught fire.

They were later rescued. Five Israeli soldiers were wounded in the violence.

It’s the latest in five months of neardaily Palestinian attacks that have killed 28 Israelis. At least 167 Palestinians have been killed, most of them said by Israel to have been attackers. AP

Nepal to extend permits of 2015 Everest climbers KATHMANDU, Nepal—Mountaineering officials say Nepal will extend the permits of climbers who were unable to climb Mount Everest last year due to an earthquake-triggered avalanche that killed 19 people at a base camp.

Mountaineering Department official Gyanendra Shrestha said the climbers can attempt to climb the world’s tallest peak this year or next year without paying new fees.

The April 25 earthquake last year killed thousands of people in Nepal and triggered a massive avalanche at the base camp that forced climbers to abandon their climbs.

Climbers have to pay $11,000 each for a climbing permit from the Nepalese government, which is generally valid for one season that runs from March to May. Sixteen people were killed in 2014 and 19 in 2015 in natural disasters on Everest. AP

U.S. to renegotiate arms-control rule for hacking tools

WASHINGTON—The Obama administration plans to renegotiate portions of an international arms control arrangement so it’s simpler to export tools related to hacking and surveillance software, since those technologies are also used to secure computer networks, a lawmaker said on Monday. AP

A Russian soldier stands guard next to a Su-34 bomber at Hemeimeem air base in Syria.

Russian warplanes were idle on Tuesday at the Russian air base in Syria. AP/Vladimir Isachenkov

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EMEIMEEM AIR BASE, Syria—Dozens of Russian warplanes sat idle on Tuesday on the tarmac at this Russian air base in Syria on the fourth day of a cease-fire brokered

by Moscow and Washington.

The apparent lull in action witnessed by the Associated Press (AP) on a trip to the base, which was organized by the Russian defense and foreign ministries, contrasts with the hectic operation AP reporters saw here on a previous visit in January.

The cease-fire that began at midnight on Friday has brought a notable reduction in hostilities for the first time in the five-year war that has killed more than 250,000 people, displaced half of Syria’s population and flooded Europe with refugees.

But the truce has remained highly fragile with violations reported in many areas with the opposition and the Syrian government blaming each other.

The Islamic State (IS) group and al-Qaeda’s branch in Syria, Jabhat alNusra, are excluded from the truce.

The Russian military said on Monday that its warplanes struck al-Nusra targets north of Aleppo. It

said that groups that have declared their adherence to the cease-fire are not being targeted.

During the five-month Russian air blitz that began last September 30, each jet flew several combat sorties on an average day, amounting to an impressive total of more than 6,000 missions.

The Russian Defense Ministry said late on Monday that the ceasefire was largely holding despite sporadic violations. Lt. Gen. Sergei Kuralenko, who heads the ceasefire coordination center at the Russian base in Syria, voiced satisfaction with what he described as a good level of coordination with his US counterparts in Amman, Jordan.

Russia and the US have agreed to exchange information about opposition groups abiding by the truce and jointly tackle any possible violations.

For President Vladimir Putin,

the cease-fire deal offers a chance to capitalize on a successful air campaign that has helped Syrian President Bashar al-Assad’s military reverse the tide of war and make significant gains near Aleppo and in several other areas.

The US-Russian-brokered truce agreement achieves Putin’s key strategic goal of having Moscow appear as an equal partner of Washington in tackling the Syrian crisis.

The deal raises Russia’s global clout, allows Putin to appear as a peacemaker and marks the first time Russia has engaged the US in a military-to-military dialogue since the start of the Ukrainian crisis two years ago.

By exchanging target information with the US, Moscow also hopes to deflect Washington’s criticism that it was striking moderate opposition groups instead of its declared target, the IS. The truce comes at a time when Assad’s military has cut most supply routes to Aleppo, Syria’s largest city and its commercial capital before the war that has been split into government- and opposition-controlled parts since 2012.

The Syrian army’s successes around Aleppo and in other areas have strengthened Assad’s hand ahead of planned peace talks in Geneva tentatively set for next week.

The negotiations broke down a few weeks ago before starting in earnest with the opposition demanding an end to the Russian air strikes as a key condition to proceed.

6,000 Missions, Russian air blitz in last five months

The cease-fire’s success is seen as essential for resuming peace efforts.

The Hemeimeem air base is in the coastal province of Latakia, the heartland Assad’s Alawite minority, at a safe distance from the front lines. Still, the base’s personnel maintain the usual strict security routine, with soldiers armed with assault rifles deployed around its facilities and helicopter gunships buzzing the perimeter to spot any possible threats.

Massive S-400 air-defense missiles towering over the middle of the field, a forceful message to Turkey, which downed a Russian jet at the Syrian border last November.

Putin ordered the long-range S400s, capable of striking aerial targets 400 kilometers away, deployed to the base in response. The Russian military has warned it will destroy any target that threatens its warplanes.

The cease-fire deal has reduced the threat of a possible showdown between Russia and Turkey. Ankara was upset by an offensive by Syrian Kurdish forces north of Aleppo and was mulling possible military action in Syria. AP

Chinese pastor fired from provincial office over court case

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EIJING—A leading pastor in an eastern Chinese province, where authorities have been cracking down on churches, has been barred from the pulpit and removed as head of the provincial state-sanctioned Protestant church association.

Monday’s action in Zhejiang province against Joseph Gu Yuese followed his arrest last month on charges of embezzlement and other economic crimes.

Supporters say the case against Gu was drummed up in retribution

for his public opposition to a campaign by Zhejiang officials to forcibly remove hundreds of rooftop crosses from churches.

Notices posted on Tuesday on the web sites of the official provincial Christian Association and Three-Self Patriotic Movement said the charges against Gu required his removal, despite his case not having gone to trial.

Gu, who was taken into custody on January 28 in Zhejiang’s capital of Hangzhou, had been senior pastor at Chongyi Christian Church,

one of China’s largest.

Over the past two years, Zhejiang has led the charge in tearing down church crosses and other outward symbols of the Christian faith, saying they violated building codes.

Critics say the rapid growth of Christian groups has made the ruling Communist Party nervous. The dispute has been complicated by the fact that they have received help from overseas supporters at a time when the Chinese government is particularly sensitive to what it considers foreign meddling in domestic issues.

While authorities have long targeted unsanctioned “house churches,” the current crackdown is remarkable because it involves members of the usually compliant official religious bodies.

In a related case, a husband and wife who led their congregation in opposing the cross removals were sentenced recently to 14 and 12 years in prison on charges of disturbing social order, illegally organizing people to petition the government and “tricking” congregants into donating money used toward personal expenses. AP

ASHINGTON—US commanders mounted a cyberoffensive against Islamic State (IS) in Syria for the first time in recent weeks by deploying military hackers against the extremist group’s computer and cell-phone networks, according to the Pentagon.

The digital assault, launched from Fort Meade in Maryland, marked the first major integration of US Cyber Command into a major battlefield operation since the command was established in 2009.

More important, Secretary of Defense Ashton Carter’s disclosure of a government-sanctioned cyberattack represents a shift in America’s war-fighting strategy and power projection. No other nation has publicly acknowledged launching cyberwar.

But last December, after deadly terrorist attacks in Paris and San Bernardino, California, frustrated officials in the White House pushed the Pentagon and intelligence agencies to crack down harder on IS’s use of the digital realm to recruit and radicalize followers, handle logistics and communicate with commanders and fighting units.

Carter said on Monday at the Pentagon that the goal was to “overload their networks” and “interrupt their ability to command and control forces” with jamming and other cybertools.

“This is something that’s new in this war,” Carter said before he left on a four-day swing through the West Coast to meet Silicon Valley executives, address a cybersecurity conference in San Francisco and visit Amazon and Microsoft in Seattle.

Carter did not reveal details of the new cybercampaign, and its effect and extent are difficult to assess.

Gen. Joseph F. Dunford Jr., chairman of the Joint Chiefs of Staff, who appeared with Carter, said secrecy was necessary to ensure IS commanders don’t know if they’re under attack, or just suffering technical problems.

“We don’t want the enemy to know when, where and how we’re conducting cyberoperations,” he said. “We don’t want them to have information that allows them to adapt over time.”

Just as the Pentagon seeks to avert civilian casualties in air strikes, it needs to calibrate cyberattacks to avoid unintended consequences.

Blocking all communications in territory held by the militants, for example, could hamper US collection of intelligence on their locations, operations and plans. It also could affect civilian networks or those used by humanitarian groups in Syria’s civil war.

But US officials said targeted denial of service and other cyberattacks, plus more than 85 coalition air strikes, helped US-backed Syrian rebels retake the strategic town of Shaddada and nearby oil fields in mid-February, a major prize in the war.

The officials, who were not authorized to speak publicly about ongoing operations, said teams working from Fort Meade identified and jammed IS online communication networks during the four-day battle.

The victory severed a critical route that the militants used to funnel fighters and supplies from the Iraqi border to Raqqah, their selfdeclared capital and chief stronghold in northeastern Syria.

Pentagon officials described the growing role of Cyber Command as part of a “strategic shift” from cyberdefense to cyberoffense, as the military adopts digital sabotage as a new tool for combat and counterterrorism.

Cyberoffense doctrine remains secret, but Carter has spoken about the need to mobilize Cyber Command to counter IS’s sophisticated use of social media and other Internet platforms.

The effort was set in motion last December, shortly after IS sponsored an attack in Paris that killed 130 people, and a couple loyal to the group killed 14 in San Bernardino.

In a White House meeting, officials directed senior Pentagon officials to prepare options for more aggressive cyberoperations. TNS

The World BusinessMirror

news@businessmirror.com.ph

Editor: Lyn Resurreccion • Wednesday, March 2, 2016

A9

How strong is N. Korea’s massive military?

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OKYO—With tensions high and the United States and South Korea ready to hold their massive annual war games next week, which North Korea sees as a dress rehearsal for invasion, Pyongyang is warning it will respond to any violations of its territory with “merciless” retaliation, including strikes on Seoul and the US mainland.

“Military First” is the national motto of North Korea, which is ever wary of threats to its ruling regime and still technically at war with Washington and Seoul. Nuclear-armed and boasting the world’s fourth-largest military, it is persistently seen as the biggest challenge to the security status quo in East Asia, an image it loves to promote and showcased in an elaborate military parade last October.

The joint South Korea-US military exercises are to begin on March 7 and last more than a month. Tensions always go up when they do.

Pyongyang has poured huge resources into developing its nuclear and missile arsenals and maintaining its conventional forces. About 5 percent of its 24 million people are on active military duty, and another 25-percent to 30 percent are in paramilitary or reserve units, ready for mobilization.

But just how strong is Kim Jong Un’s army?

Here’s a look, based on what the Associated Press (AP) reporters and photographers have seen on the ground and the latest report to the US Congress by the Office of the Secretary of Defense:

On the ground

By the numbers: 950,000 troops, 4,200 tanks, 2,200 armored vehicles, 8,600 pieces of field artillery, 5,500 multiple-rocket launchers.

Behind the numbers: This is, and always has been, North Korea’s real ace in the hole. While its threat to launch a nuclear attack on the US mainland appears to be well beyond its current capabilities, turning the South Korean capital into a “sea of fire” is not.

The ground forces of the Korean People’s Army (KPA) form the largest segment of the military, by far. Seventy percent of them are

forward-positioned around the Demilitarized Zone for quick mobilization in a contingency with South Korea; they are extremely well dugin with several thousand fortified underground facilities.

Their arms are mostly “legacy equipment,” produced or based on Chinese and Russian designs dating back as far as the 1950s. But they have in recent years unveiled new tanks, artillery and infantry weapons.

In the October parade, the KPA displayed a new 240 millimetre multiple rocket launcher with eight tubes on a wheeled chassis. Kim Jong Un was recently shown by state media observing a new, longer-range anti-tank weapon.

“Despite resource shortages and aging equipment, North Korea’s large, forward-positioned military can initiate an attack on the ROK (South Korea) with little or no warning,” the US report concluded.

“The military retains the capability to inflict significant damage on the ROK, especially in the region from the DMZ to Seoul.”

At sea

By the numbers: 60,000 sailors, 430 patrol combatant ships, 260 amphibious landing craft, 20 mine warfare vessels, about 70 submarines, 40 support ships.

Behind the numbers: Divided into east and west fleets, with about a dozen main bases, the navy is the smallest branch of the North Korean military. But it has some significant strengths, including hovercraft for amphibious landings and one of the largest submarine forces in the world.

An estimated 70 attack, coastal or midget-type subs provide stealth and strongly bolster coastal defenses and possible special operations. It has no “blue water”—or

North Korean soldiers march across the Kim Il Sung Square during a military parade in Pyongyang, North Korea, on October 10, 2015. AP/Wong Maye-E

long-range—naval forces and relies heavily on a large but aging armada of small coastal patrol craft. But it, too, is upgrading some of its surface ships and has made a show of its efforts to domestically develop a submarine capable of launching a ballistic missile.

In the air

By the numbers: 110,000 troops, over 800 combat aircraft, 300 helicopters, more than 300 transport planes.

Behind the numbers: Here’s where the “legacy” aspect of the North Korean military really kicks in. North Korea hasn’t acquired any new fighter aircraft for decades. Its best fighters are 1980s-era MiG29s bought from the Soviet Union, the MiG-23 and SU-25 ground attack aircraft. They all suffer chronic fuel shortages and pilots get little training time in the air.

Its air-defense systems are aging and it continues to maintain lots of 1940s-era An-2 COLT aircraft, a single-engine, 10-passenger biplane, which would probably be most useful for the insertion of special forces troops behind enemy lines.

Interestingly enough, it also has some US-made MD-500 helicop-

950,000 Troops in North Korea’s army ters, which it is believed to have acquired by bypassing international sanctions. They were shown off during a parade in 2013.

Special forces

By the numbers: Not specified in report to Congress. Somewhere around 180,000 troops. Estimates vary.

Behind the numbers: North Korea is fully aware that it is outgunned, technologically inferior and logistically light years behind its adversaries. But it also knows how to shift the equation through asymmetric tactics that involve stealth, surprise and focusing on cheap and achievable measures with an outsized impact.

Special forces operations are among them—and the North’s special forces are the “most highly

trained, well-equipped, best-fed and highly motivated” units in the KPA. Commandos can be inserted into the South by air or sea and possibly on foot through tunnels across the DMZ. The North is working hard on its cyberwarfare capabilities, another key asymmetric military tactic. It is believed to have a growing number of drones.

Nukes and missiles

By the numbers: Number of nuclear weapons not specified in report to Congress. Possibly more than a dozen, outside sources estimate 50 ballistic missiles with 800-mile range, 6 KN08 missiles with a range of 3,400-plus miles, unknown number of Taepodong-2 missiles with roughly same or longer range. Possibly one submarine-launched ballistic missile. Various shorter-range ballistic missiles.

Behind the numbers: North Korea claims to have tested its first hydrogen bomb on January 6, the day after the Department of Defense report came out. That claim has been disputed, but there is no doubt it has nuclear weapons and its technicians are hard at work boosting their quantity and quality.

Major caveat here: The opera-

tional readiness of its nuclear weapons and many of its ballistic missiles is debatable.

Pyongyang’s main hurdles are making nuclear warheads small enough to fit on its missiles, testing reentry vehicles required to deliver them to their targets on an intercontinental ballistic missile and improving and testing the arsenal for reliability and accuracy. Its Taepodong-2 ballistic missile is the militarized version of the rocket it launched on February 8 with a satellite payload. North Korea has yet to demonstrate that it has a functioning ICBM, generally defined as having a range of over 3,418 miles.

Chemical, biological

This one is a question mark. The US Defense Department claims Pyongyang is continuing research and development into both and could use them, but offered no details on biologicals in its recent assessment.

It said Pyongyang “likely” has a stockpile of “nerve, blister, blood and choking agents” that could be delivered by artillery shells or ballistic missiles. The North is not a signatory of the Chemical Weapons Convention and its troops train to fight in a contaminated environment. AP

Australian cardinal denies deflecting child sex-abuse blame C ANBERRA, Australia—Interrupted by jeers from observers, one of Pope Francis’s top advisers on Tuesday denied an accusation that his testimony to an inquiry into child-sex abuse was an attempt to deflect blame for the Catholic Church transferring Australia’s worst pedophile priest from parish to parish.

Australian Cardinal George Pell was a priest in the 1970s in the town of Ballarat where he advised Bishop Ronald Mulkearns about the placement of priests within the diocese.

Pell, now the pope’s top financial adviser, told the Royal Commission into Institutional Responses to Child Sexual Abuse that he had no idea that priest Gerald Ridsdale was repeatedly transferred by the bishop for more than a decade because of pedophile accusations.

Pell rejected an accusation made by the lead counsel assisting the commission, Gail Furness, that his answers were designed to remove his own responsibility for Ridsdale’s crimes.

“My answers were designed to answer your questions accurately and completely,” Pell told the

Sydney inquiry via videolink from a Rome hotel.

Asked if he accepted any responsibility of Ridsdale’s repeated transfers within the Ballarat diocese, Pell replied: “No, I don’t.”

The royal commission, which is Australia’s highest form of investigation, is investigating how Pell dealt with abuse allegations as a priest, educator and adviser to Mulkearns, as well as how the Melbourne archdiocese responded to allegations of abuse, including when Pell served as a Melbourne auxiliary bishop.

Tuesday was the second day of evidence for the 74-year-old cleric, who because of ill health could not travel to Australia to give evidence in person at the inquiry into decades of child abuse.

On Monday, Pell dubbed Mulkearns’s handling of Ridsdale a “catastrophe for the church.”

He said Mulkearns was a prime candidate for the Vatican’s proposed tribunal for negligent bishops, although there is no indication the elderly Mulkearns would stand trial by the time the tribunal is operational.

Commission chairman Peter Mc-

Clellan asked Pell on Tuesday whether it was surprising that he hadn’t heard rumors about the scandal Ridsdale had created in the diocese.

“Not necessarily, given the work I was doing,” Pell said. “I wasn’t working full-time in the diocese.”

Furness said that as an adviser to the bishop—one of a group of Ballarat priests known as the College of Consultors—Pell should have questioned why Ridsdale was frequently transferred.

“I was happy to take the bishop’s word that it was appropriate for him to be shifted,” Pell said.

“Gentle and euphemistic language...was regularly used by Bishop Mulkearns on these occasions, so that some of us were kept in the dark,” he said.

Pell accompanied Ridsdale to court in 1993 when the pedophile faced his first child-molesting charges. He was convicted in 1993, 2006 and 2013 with sexually abusing more than 50 children.

Pell told the royal commission Mulkearns’s refusal to act on the allegations against Ridsdale was extraordinary.

“Unfortunately, I would have to say that I can’t nominate another bishop whose actions are so grave and inexplicable,” Pell said.

Pell agreed with McClellan that even if a priest did not have a legal responsibility to stop Ridsdale’s crimes, a priest would have a moral responsibility to do whatever he could to prevent such abuses.

“I think that is a reasonable proposition,” Pell said.

The Royal Commission last December accepted medical advice that 85-year-old Mulkearns was dying and was unfit to testify. He was Ballarat’s bishop from 1971 until he retired in 1997.

The bishop’s former adviser, priest John McKinnon, told the Royal Commission in December that Mulkearns was “profoundly sorry” for relocating suspected pedophile priests, but could no longer remember details.

Ballarat, Pell’s hometown, has been devastated by disclosures about the huge number of abuse victims, scores of whom killed themselves in a cluster of abuse-related suicides.

Two dozen Australian abuse

survivors and their companions traveled across the globe to witness Pell’s testimony in a hotel conference room, a significant show of accountability in the church’s long-running abuse saga.

Pell said priests didn’t discuss with him the allegations against Ridsdale.

Pell’s testimony was interrupted by jeers from the public gallery as he explained the moral framework in which priests live.

“We work within a framework of Christian moral teaching, or certainly we should, and discussion of the secret faults of others is not encouraged,” Pell said.

Furness told Pell that Ridsdale’s crimes were not “secret,” since they were common knowledge in the towns of Apollo Bay and Inglewood, where Ridsdale had been the parish priest, and police had reported their suspicions to the church.

Pell said he had not known the sexual abuse was common knowledge in Inglewood.

“I didn’t know whether it was common knowledge or whether it wasn’t. It’s a sad story and it wasn’t

of much interest to me,” Pell said, bringing audible gasps and jeers from the public gallery.

Andrew Collins, a clergy-abuse victim from Ballarat, said outside the Rome hotel that he found Pell’s denials of any knowledge of pedophilia allegations against Ridsdale “absolutely unbelievable.”

“He’s always been seen as an ambitious man and ambitious people have knowledge. They crave knowledge,” Collins told reporters.

“They know everything that’s going on and he wouldn’t be in the position he was today if he was the sort of person who sat back and didn’t pay attention to what was going on,” he added.

Before Pell’s testimony on Tuesday, he told reporters: “I’ve got the full backing of the pope.”

The Vatican said a private audience Pell had with the pope on Monday was a long-scheduled appointment related to Pell’s duties as Holy See finance minister, and had nothing to do with the abuse hearings.

Pell will testify for a third fourhour session late on Tuesday, Rome time. AP

A10 Wednesday, March 2, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Grossly disadvantageous to the government

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N a supreme exhibition of incompetence, the Department of Transportation and Communications (DOTC), under the leadership of Secretary Emilio A. Abaya, has presided in the last five years over the deterioration of the Metro Rail Transit (MRT) 3. Far from being humbled by its lack of knowledge on the operation of a modern rail line, the DOTC leadership has either rejected or ignored all proposals from the private sector to modernize MRT 3.

First was the proposal of Metro Pacific Investments Corp. (MPIC) which, in partnership with MRT 3 owner Metro Rail Transit Holdings Inc. (MRTH), is offering the investment of $524 million to overhaul and modernize the system, double its capacity to 700,000 passengers a day, and effectively release the government from paying billions of pesos in equity rentals, all at no cost to the government. The train system currently serves about 300,000 commuters daily, below its rated capacity of 350,000. Submitted in 2011, the proposal was rejected by then-Transportation Secretary Manuel A. Roxas II. The other proposal came from the German firms Schunk Bahn-und Industrietechnik GambH and HEAG Mobile GambH, in partnership with Filipino company Comm Builder and Technology Philippines Corp. This group proposed to modernize the system through a transformation program that will include the overhaul of the 73 light-rail vehicles of the system, replacement of the rails, upgrading of the line’s ancillary system, track circuit and signaling system, modernization of the conveyance system, and implementation of a three-year maintenance contract. Total cost for the government: P4.64 billion. As far as can be ascertained, the DOTC simply sat on this proposal.

Comes now the musings of MRTH, the very owner of MRT 3, proposing to fix the train system in the next nine months to bring service “back to normal,” at no cost to the government. As described by the president of MRTH, the firm will invest $150 million to overhaul the system, change the 19 kilometers of rail that are now dilapidated, procure 96 new train cars and rehabilitate the existing 73 coaches, increasing the capacity of the system fourfold, to 1.2 million passengers a day. If this is a private-sector spin as it appears to us, it must be ignored totally.

At the moment the government has laid out a P9.7-billion multiyear program to enhance the service levels of MRT 3, through the procurement of new trains to expand the capacity of the facility.

Something is clearly wrong with the DOTC. It is totally insensitive to the long-suffering commuters of greater Metro Manila. Why not approve the MPIC proposal, which is obviously the best of the proposals submitted?

Secretary Roxas has obviously committed a mistake and he must be reversed. Why spend anything at all, let alone P9.7 billion yearly, when MPIC is proposing to modernize the rail line at no cost to the government? There is such a thing as a decision that is grossly disadvantageous to the government. Ask the Ombudsman.

Value for money Susie G. Bugante

All About Social Security

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alue for money is often defined as utility derived for every sum of money spent. Every financially savvy person would often look at the value for money every time he or she spends and this would probably explain why mall sales often get mobbed by bargain hunters. That is well and good. But have you thought of value for money that is saved? Or is there such a thing?

Consider your Social Security System (SSS) contributions as savings for your retirement. At present, the maximum salary subject to social security contributions is P16,000.

Even if you are earning way beyond this amount, you and your employer will only contribute a total of 11 percent of P16,000 or P1,760 a month of which your share is P580.80 (3.63 percent) and your employer’s is P1,179.20 (7.37 percent). If you are a self-employed person earning P16,000 a month or more, then you pay the entire P1,760.

Assuming that you contribute the maximum amount for the next 20 years before retirement, you would have contributed a total of P422,400.

How much pension will you get?

Under the social-security law, the following pension formulas shall be used and the one that gives the highest result shall be applied in determining the pension amount of the memberpensioner: 1) The sum of P300 plus 20 percent of the average monthly salary credit (AMSC) plus 2 percent of the AMSC for each credited year of service (CYS) in excess of 10 years; 2)

40 percent of the AMSC; 3) P1,200, if the CYS is at least 10, but less than 20 years or P2,400, if the CYS is 20 or more years. In the example above, the first formula gives the highest result of P6,700.

Assuming again that you receive this amount for the next 20 years, including the yearly 13thmonth pension, you can expect to get P1,742,000. If you are survived by your spouse, 100 percent of your pension is transferred to your spouse until his or her lifetime or until he or she remarries. That’s more than four times your total contribution!

Even greater value for money if you only count your share.

What about someone who contributes based on a salary of P1,000?

(Yes, Virginia, there are many who declare P1,000 as their monthly salary!) At 11 percent contribution rate this means P110 a month contribution. Assuming that the member contributes for 10 years, he would have paid a total of P13,200. When he or she retires, the minimum pension of P1,200 would be given him or her; and for the next 10 years, he or she would have received a total

of P156,000, including the yearly 13th-month pension. That would be about 12 times more than what was contributed! Again, the pension crosses over to the spouse when the pensioner passes on.

Truly, as a forced savings scheme, your SSS contributions give value for money. Aside from your pensions, you also get to enjoy short-term benefits, such as sickness and maternity, while actively contributing.

Now as to the adequacy of benefits, that is a more complex matter that is a challenge to policy-makers, social-security administrators, as well as SSS stakeholders. In order to implement meaningful social security reforms, everyone concerned has to contribute.

For more details on SSS programs, members can drop by the nearest SSS branch, visit the SSS web site (www.sss.gov.ph), or contact the SSS Call Center at 920-6446 to 55, which accepts calls from 7 a.m. on Mondays all the way to 7 a.m. on Saturdays.

Susie G. Bugante is the vice president for public affairs and special events of the SSS. Send comments about this column to susiebugante. bmirror@gmail.com.

Distributed leadership–Everyone, every time!

Henry J. Schumacher

view from the 19th floor

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rganizations and leaders are facing the convergence of three megatrends that are reshaping their value propositions, customer relationships and talent management. Alone, each of these megatrends is a significant challenge.

Together, they present an existential threat to the business—or an evolutionary opportunity.

Megatrend No. 1: We live in a transparency era. In the past, organizations were able to create a perfect image of themselves through carefully crafted marketing and publicrelations (PR) activities. Today, the complete operation is displayed for all to judge and comment on. Organizations have discovered that this new reality has zero protection from PR fig leafs.

Megatrend No. 2: Change is no longer an event; it is a life reality. Remember when change management departments would usher in new technology platforms, new regulation-based policies and other changes? Life was, by and large, quiet, with several peaks of change-related noise. Today, change happens so rapidly we can no longer call it “change”.

This term implies some form of normalcy with occasional interruptions.

But the interruptions are the new normal. Change needs to be developed as a new skill set to handle everything from new technologies and

evolving customer tastes to upstart competitors that challenge decadesold business models.

Megatrend No. 3: The value proposition has been redefined as “purpose and passion.” The evolution of organizations’ value proposition from products to services and then to experience has reached its ultimate destination: purpose and passion. The quality of products has increased dramatically in past decades, and process efficiencies have been created through programs such as Lean and Six Sigma.

Today’s customers seek purposebased vendors that match their value system. They want to partner with passionate organizations that deliver authentic value. The definition of “value” through purpose and passion brings with it a new challenge for leaders. What is the purpose of the organization, and how do you bring passion to life in a way that will be authentic and appealing?

When examining the megatrends

outlined above, we can conclude that the era of centralized leadership is over. Purpose and passion are not the outcome of a PR campaign, but rather the result of employees’ performance every day with customers. And in the transparency era, there is no budget large enough to force employees to smile sincerely. Every employee is exposed to the same level of scrutiny.

The speed of change requires adoption at the execution level—not only the decision level—of the organization. Embracing change ought to be done faster and occur at every function and department level. Welcome to “distributed leadership.”

Distributed leadership is defined as the practice in which every employee at every interaction is fully empowered to act in the best interest of the customer and the organization. The assumption is that the employees bear full ownership, at the moment of truth, of making and executing the right decisions. Distributed leadership is not a new package for the old “empowerment” mantra.

It is a new foundation for developing, managing and spurring innovation in the organization.

One of the most difficult elements of the shift to distributed leadership is the requirement that senior executives share equally with all their employees (and for that matter, their customers) the answer to a single question. It is the question they not only don’t know how to answer but often refuse to answer: “Why?” To combat corporate cynicism and adapt to the new Gen Y employment expectations, we need to learn to explain

“why” and engage employees on a human level. Think about the “why” as the ultimate leadership coaching!

The next question that can set the organization free from the shackles of centralized leadership and steer it toward distributed leadership is “What’s next?” Today’s organizations seek to “repeat and reinforce” and are focused on a different question: “What is best?” They seek out best practices and try to institutionalize them. Institutionalizing practices and processes is the exact opposite of moving and evolving at the speed of light. It is a constant attempt to control behaviors, and it does not free employees to innovate and adapt. By focusing on “what’s next,” you accept that whatever happened yesterday was good for yesterday. Condition the organization to embrace and seek change.

Distributed leadership is the answer to the convergence of the era of transparency, change as the new romance and the purpose-driven customer. It shifts the responsibility for leadership from a few senior leaders to employees. In reality, leadership has already been distributed if employees are expected to create an exceptional experience in every transaction and adapt to changing customer demands. Transparency requires everyone in the organization to become a chief spokesman and defend the organization’s actions.

Adaptation to change is happening faster than we are willing to admit.

In conclusion, distributed leadership has crept into organizations as we speak.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Wednesday, March 2, 2016 A11

Rebating and inducement Streams of unconsciousness With pithy and powerful under the Insurance Code statements, the candidates Teddy Locsin Jr.

Free fire

Atty. Dennis B. Funa

INSURANCE FORUM

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hile rebating is seemingly proconsumer, the main reasons for the prohibition are actually grounded on consumer protection, to wit: one, is that rebating encourages “price discrimination,” since policy-holders, in the same actuarial pool, may not receive the same rebates; two, is that the practice will lead to the insurer’s insolvency, because the premium received will be less than that approved; and, third, rebating undermines agent professionalism.

The first would apply where rebates are given only to a select group; the second would appear valid only in cases of excessive rebates. The third argument is that agents should focus more on the quality of service, rather than on the price and commissions.

Various court decisions have dealt with the antirebating law. The Pennsylvania Supreme Court stated: “The thrust of the antirebate provisions of the statute is against the placement of insurance, whereby the insured secures the insurance at a favored rate, regardless of the mode of the manner in which such favored rate is obtained.

The court below well stated that, “as is universally stated and recognized, a reduction of cost is the test of whether or not the statute is being violated.”

The prohibition against rebating is gathering discussion in the US, with the Supreme Court of Florida (in 2000) and California striking down antirebating statutes and ruling that it is a valid practice. It continues to be prohibited in the other 48 states of the US. In 2012 the state of New York, in amending the antirebating law, passed a law allowing insurers and agents to give nominal promotional and advertising materials worth up to $25 to the insured or prospective clients during the insurance sales process. It is called the “keepsake” exception and covers such merchandise as pens, calendars, key chains and flashlights.

The New Hampshire Insurance Department ruled that the promotional item cannot be tied to the purchase of insurance. Meaning, the promotional item must be offered to a consumer whether or not the consumer purchases a policy. The New York Insurance Department has issued advisories on prohibited acts, such as: offering to supply free cellularphone device to those who complete an insurance application; and offering a free car wash to prospective

clients to whom the agent is providing an automobile insurance quote. In Florida an insurer refused to provide infant car seats to automobile policyholders, citing the antirebate law.

In Washington State the insurance commissioner advised agents that a promotional free trip to Seattle to watch a football game was illegal inducement. Indeed, there are advocates for the repeal of the antirebate law, invoking free-market and competition. It has even been pointed out that rebating is difficult to regulate, as it is not easy to detect and that it is widely considered as a legitimate marketing activity for the benefit of the public.

The prohibition against rebating started in the 1800s, when serious abuses in the sales of life insurance became rampant. Cutthroat competition flourished to the detriment of the insured. Any means were employed just to make the sales and increase profits. Some agents called “lightening agents” even committed outright fraud by selling policies and then simply disappearing. The most common, of course, was splitting the commission with some policyholders. As the practice became rampant, insurers gave larger commissions to enable agents to give larger rebates.

From 10 percent on new business and 5 percent on renewals in 1860, it increased to 33-1/3 percent and 16-2/3 percent, respectively, in 1866.

It spawned a race to attract agents with higher commissions. Moreover, with varying rebates being given out randomly, some policyholders were, in effect, subsidizing the rebates being given to other policyholders, and, thus, the issue of discrimination.

The chaotic state, needless to say, led to ruinous competition among the insurers.

F

Instead, the argument went, there is other stuff—like Powerpoint presentations or telling people in the audience to stand up or making showbiz allusions for comic effect—that serves as well, if not better, in connecting with the public who are looked down upon as idiots by the candidates.

But just because you cannot find the talent for it does not mean you do not need it, when formal speeches are needed for the high purposes of politics and state. At the

proclamation rallies three weeks ago, the speeches—which should have intellectually distinguished the candidates—were rambling, trivial and baduy. They lacked as much distinction in expression as sense in content. Shouting the trivialities merely worsened what are best described as streams; yes, streams of unconsciousness.

A proclamation speech is just that: the proclamation of the main candidate onstage and the declamation of the reasons he or she is

standing there. Without those reasons, what reason could there be for them to be there? It is certainly not good looks. With pithy and powerful statements, the candidates must convey the rationale for running, so that the elegance of expression and the substance of the speech show the care they have taken to prepare their speeches out of respect for the public and the elective offices that they seek.

Sure, there is a time and a place for showbiz, usually round about noontime, when near-naked kids gyrate. As for place, there are

Dennis B. Funa is currently the deputy insurance commissioner for Legal Services of the Insurance Commission. E-mail: dennisfuna@yahoo.com.

The world economy needs action, not words inance ministers and central bank governors of the Group of 20 major economies ended their meeting in Shanghai this weekend with the usual promises to bolster the global economy. They resolved to take all appropriate measures (and no inappropriate ones).

It’s a familiar incantation. What’s needed is some action to match these endlessly repeated words.

The world economy is frail, and investors everywhere are nervous.

The US is doing relatively well—but only because the prospects are so poor elsewhere.

Much of the European Union is stagnant. Japan’s recovery is faltering. Fears of a worsening slowdown in China haven’t abated. Many emergingmarket economies are reeling from the fall in commodity prices. Growth in the volume of world trade is sluggish. In January the International Monetary Fund again cut its projections for growth in world output to 3.4 percent this year and 3.6 percent next. It says another downward revision is likely soon.

Can anything be done to improve this dismal outlook? Indeed, it can.

Two kinds of policy are needed: one, to support demand; and, the other, to boost potential supply.

E

VER since Cory Aquino stepped down, there has been a mad scramble to show that a presidential candidate, and even an elected president, can do without the great formal speeches that distinguished her career, just because her successors could not find the talent to write or deliver them.

must convey the rationale for running, so that the elegance of expression and the substance of the speech show the care they have taken to prepare their speeches out of respect for the public and the elective offices that they seek.

appropriate venues, like stages in studios and street corners, of late. Any attempt to mix politics and showbiz may get a candidate elected, but the mix is sure to “idiotize” politics and the public.

This is evident in the way mainstream media tend infantilize issues in a vain attempt to compete with showbiz in the ratings; a competition media is sure to lose. Not because entertainment is intelligent, but because the public can tell the difference between what should make them laugh—showbiz—and what should make them think— public affairs. The result of mixing the two only makes them cry buckets of tears.

Entertainment is all very well and good, but only for the purpose of entertainment. Indeed, for me the day is not complete without a daily dose of Ang Probinsyano.

But when what is at stake is the fate of a nation, something else is in order, something respectful of the people that showbiz cannot and never can replace.

On the supply side, the difficulty is more political than economic. Governments ought to stimulate competition by cutting excessive regulation, especially of labor markets, and by renewing their efforts to lower barriers to trade and migration. Trade agreements, such as the Trans-Pacific Partnership and the Trans-Atlantic Trade and Investment Partnership, should be concluded and put into effect as though the need is urgent—because the need, as tepid growth in trade proves, could hardly be more so. There’s always resistance to such reforms, and dimming economic prospects strengthen it. This vicious circle of pessimism is apparent wherever you look, not least in the US. It’s up to governments to break it, by pressing the case for growth.

Boosting demand poses a different problem. In many countries, interest rates have been cut to nothing—in some cases, to less than nothing. Central banks have also bought bonds on an enormous scale, a policy that can’t safely be expanded any more. Monetary policy can do only so much.

The answer is fiscal policy. The right kind of fiscal stimulus works on demand and supply simultaneously. Tax cuts and investment in infrastructure raise spending and expand productive potential at the same time. BloombergView

Bring the presidential debates to the masses Michael Makabenta Alunan

on the contrary

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he announced series of presidential debates, the first of which was televised, thanks to GMA 7, is a good platform to educate the people about the candidates and what they stand for on specific issues.

Unfortunately, people who need to hear the debates or those who need to know the candidates, particularly those in the rural areas and urbanpoor communities, hardly have access to a TV set or the Internet.

A good friend, Dave Garcia, suggests that if local government units (LGUs) can afford to show live payper-view fights of Manny Pacquiao, surely, they can easily host a public viewing on big screen, as the presidential debates are telecast on free TV. What better way to have their constituents better informed. In fact, this will level the playing field and will allow voters to make a wise choice. Poor people will also get a glimpse of the candidates’ respective characters based on how the presidential bets react to critical questions.

Similar to the US electoral primaries, where town-hall debates are held from state to state, we should

hold more presidential debates in coordination with the media networks, Commission on Elections and the LGUs. These events can be held in school auditoriums, public social halls or town plazas. Apart from the presidential debates, local candidates and local issues can be integrated in these events.

While we can organize several of such events before the May elections, these “town-hall political dia-

Similar to the US electoral primaries, where town-hall debates are held from state to state, we should hold more presidential debates in coordination with the media networks, the Comelec and the LGUs. These events can be held in school auditoriums, public social halls or town plazas. Apart from the presidential debates, local candidates and local issues can be integrated in these events. logue” and debates can ideally evolve into people’s development councils (PDCs), which is sorely absent in local governance. I understand the only existing, one-of-its-kind and still-working PDC is the one set up in Naga City by the late former Mayor and Interior Secretary Jesse Robredo.

These people’s dialogue can be in-

stitutionalizedinthefuturethrough a law creating and mandating the formation of these PDCs. The dialogue between the people and government officials can shift into high gear during elections, but these can be done regularly all year round as part of the process of public consultation on policy reforms and other initiatives.

This can be a dynamic institutional mechanism for transparency and accountability. With the regular public dialogue institutionalized through the people’s development councils, and with good media coverage, ordinary people will be more exposed to discourse and opposing views in a healthy democratic exercise.

In fact, the establishment of PDCs at the local level all over the country will be the best example of democracy in action.

You may reach Michael Alunan at e-mail: mikealunan@yahoo.com.

2nd Front Page BusinessMirror

A12 Tuesday, March 2, 2016

www.businessmirror.com.ph

Shangri-La at The Fort opens its doors

By Ma. Stella F. Arnaldo

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Special to the BusinessMirror

HE Malaysia-based Kuok Group’s sixth hotel property in the Philippines finally opened its doors to the public on Tuesday, with about 70 percent of its initial 120 rooms already occupied by both foreign and local guests.

The constant stream of hotel guests since 4 a.m. on Tuesday indicates the “high anticipation and excitement” for the new Shangri-La at The Fort in Bonifacio Global City (BGC), Lesley Anne Tan, the hotel’s director of communications, said in a media briefing.

Underscoring the property’s uniqueness, Shangri-La at The Fort is the “first mixed-used development in the country under a single management,” John Rice, hotel general manager, stressed in a separate inter v iew w ith the BusinessMirror.

“Manila, particularly the Fort Bonifacio area, is one of the emerging corporate developments in Southeast Asia. It has one of the highest growth rates. It’s also a 24/7 lifestyle destination, in the sense that you can work, you can sleep, you can eat, you can play, you can do whatever you want in that whole [area],” he said. “So

A1

₧12B

Initial investment for the development of the ShangriLa at The Fort Shangri-La [Hotels and Resorts] saw an opportunity to enter that niche in the market with a mixeduse complex.”

Compared with other Shang properties in the country, Tan, for her part, added, the BGC property “exudes contemporary luxury and has a young vibe. It is a lifestyle complex with the following components: the hotel, with 576 rooms; 97 Shangri-La Residences, for extended stays; the dedicated recreation club of Kerry Sports Manila; 98 residential homes called Horizon

Shangri-La at The Fort is now officially open. Gracing the hotel’s soft opening on Tuesday are (from left) Alain Borgers, area manager and general manager, Makati Shangri-La; Federico Noel, director, Shang Properties Inc.; Christopher Liu, executive vice president for Projects, Shangri-La Hotels and Resorts; Wilfred Woo, executive director, Shang Properties Inc.; and John Rice, general manager, Shangri-La at The Fort. The hotel offers 576 guestrooms with suites ranging in size from 90 to 235 square meters. NONIE REYES

Homes, for private investors; and a two-level retail podium, with 40 shops and restaurants.”

Aside from the 120 guest rooms, the only open outlets for now are Kerry Sports, which features an

NBA-grade basketball court, fitness machines, tennis courts and a swimming pool over 8,000 square meters of floor space; one of two grand ballrooms with a 1,800-seat capacity; and the High Street Café, which offers the most affordable lunch buffet among city hotels at P1,550 net.

Tan explains that the hotel is offering a competitive lunch buffet rate to fit the profile of the BGC market, one of the most vibrant business and residential districts in Metro Manila, with an array of similarly priced food establishments in the area. “So it wouldn’t make sense to price our buffets like the usual hotel buffets, which run to about P2,000++; this won’t make the people come to the hotel when there are other restaurants in the area to choose from.”

The hotel will be fully open by July this year, Tan said. Construction of the hotel began in 2011, with an initial investment of $250 million (P12 billion). The building was designed by the US-based Handel Architects, while rooms and interiors were made by Hirsch Bedner Associates.

The key markets the hotel is attracting are tourists from Singapore, Hong Kong, the Middle East, Australia, the US and Japan. Tan added that many of the “views” on its web site, as well as other sell-

ing partners, like TripAdvisor and Agoda.com, are from mainland China, as well, “so we have set up a business development office to cater particularly for that market.”

Most local hotels have been pinning their hopes on the Chinese market, the fourth-largest source of tourist arrivals in the country, with the residents growing purchasing power and penchant for overseas travel.

Of the 19 accommodations available in the BGC area, ShangriLa at The Fort is the third hotel to open after F1 Hotel Manila and Seda BGC—the rest being serviced residences—and the only hotel in the luxury category.

Aside from its deluxe rooms, reputed to be the “largest lead-in guest room sizes in the city, starting at 45 square meter, Shangri-La-at the Fort also has 41 premier suites (90 to 92 sq m); four specialty suites (135 to 141 sq m); and the ShangriLa Suite (235 sq m).

Its private residential homes are almost completely sold, Rice said.

Horizon Homes defies most residential-development categories: “We’re unique, in the sense we’re not calling them condominiums, we’re not calling them apartments; we’re calling them homes. We’re calling them homes, for the simple reason that they’ll have a lot of longevity.

You know, when you set yourself

a family home, you’re able to pass it from one generation to generation. It doesn’t follow a trend, it doesn’t date, and people will always love it.”

Future residents can choose from units ranging from two to four bedrooms, in homes measuring 250 to 417 sq m, depending on their needs, each equally designed to be extra spacious and comfortable.

The largest home is 797 sq m for the penthouse units (“we have three of those”), which sit on top of 250-meter-high structure. “It’s literally your home in the sky,” Rice enthused. Turnover of the Horizon Homes will be at the end of the year.

Horizon Homes, Rice stressed, puts a premium on privacy, with only five units per floor serviced by their own private elevators, and exclusive basement parking area.

“There are luxurious floor-to-ceiling windows with panoramic views of the city, with a spacious openfloor layout. [There are] views to the north, views to the south, views to the east, views to the west; uninterrupted water views; views of the Makati skyline, Laguna de Bay, Manila Bay —fabulous! Depending on where the home is, you have a sunrise or sunset [view]. It affords home-owners the luxury of staying in their own private Shangri-La.” A Horizon homeowner will also have access to private amenities and entertainment areas, ’roundthe-clock security and personal concierge services. “You can take a leisurely swim in the pool, have a sumptuous meal delivered by any of the hotel’s food and beverage outlets, then head on to Kerry Sports Manila to enjoy more facilities.

Homeowners can enjoy the luxury of staying in their own private Shangri-La,” he underscored. Homeowners, likewise, are able to tap the property’s engineering, maintenance and housekeeping services.

And because of its unique location at Shangri-La at The Fort, Horizon Homes residents can walk comfortably to nearby shopping areas, explore nature, the arts and science, as well as other food and beverage outlets. Moreover, they can easily access the domestic and international airports, international schools, a world-class medical facility and other exclusive leisure clubs, Rice said.

The penthouse units are no longer on the market, Shangri-La sources indicated, with a long line of prospective buyers currently being entertained by management.

Kerry Sports Manila, an integrated gym and sports facilities brand also owned by the Kuok Group, is the first in the Philippines and will also operate its own spa. ShangriLa Hotels and Resorts is the hotel property arm of the Kuok Group.

JFC crafting new Arangkada blueprint…

Continued from a1

“Look at that as a totality.

The economy is moving, these recommendations are being [put in place], but not 100 percent of what we originally suggested in 2010. The Competition Act took 27 years; not everything in a democracy can be done overnight as we wish,” Forbes explained.

“It takes hard work, persistence and, on occasion, working with different branches of government; work with the media, work with the private sector, civil society.”

The assessment stated that, compared to last year, areas where the most improvements occurred were in power, mining, infrastructure policy and manufacturing.

However, zero improvements

were made in areas such as economic growth, competitiveness, agriculture, water, labor, local government, macroeconomic policy and poverty.

Data also showed the most number of recommendations that had the most declines were in creative industries; social services, particularly on education; seaports; and water, among others.

Forbes said given that elections will be held this year, he said there is a need to create a new set of recommendations that can be presented to the next administration.

“The results of the May elections will serve as a platform to reinforce the development of a long-term reform agenda that will

strengthen the governance and economic pillars to enhance the country’s competitiveness,” the JFC said in a statement.

This will help the new government continue and improve on the changes made by the current government to further the country’s development aims.

The JFC covers 3,000 firms that represent $200 billion worth of trade and $30 billion worth of investments in the Philippines.

It is comprised of the American, Australian-New Zealand, Canadian, European, Japanese and Korean chambers of commerce, as well as the Philippine Association of Multinational Companies Regional/ Operating Headquarters Inc.