Businessmirror march 06, 2018

DO YOU KNOW WHERE YOUR DATA IS?

By Henry J. Schumacher

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CUTEIMAGE | DREAMSTIME.COM

veryone should be worried about data privacy and cybersecurity, given the stringent laws covering both issues here in the Philippines and most part of the rest of the world. Of course, the easy answer to the above question is: Our data is in the cloud! Then comes the next question: Where in the cloud? And the normal answer is: I don’t know where it is! This is followed by the hand-wringing about transferring data across international borders, about the European Union’s privacy rights that fall into place on May 25 this year, and about cyber thieves. That’s the time everyone panics.

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Tuesday, March 6, 2018 Vol. 13 No. 146

Hike in PCC M&A threshold to spur graduation of SMEs

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By Bernadette D. Nicolas @BNicolasBM & Elijah Felice E. Rosales @alyasjah

he Philippine Competition Commission (PCC) has set new thresholds for merger and acquisition (M&A) deals that it will review, following careful evaluation of the notifications it has received and to keep pace with developments in the domestic economy.

GOVT NEEDS TO INCREASE ITS PALAY SUPPORT PRICE, BUT BY HOW MUCH?

By Jasper Emmanuel Y. Arcalas @jearcalas

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he depletion of the National Food Authorit y ’s (NFA) rice stockpile has once again revived calls for an increase in the government’s support price for paddy. This, after the food agency’s buffer stock— from which cheaper rice sold in markets and those distributed to victims of natural disasters are drawn—has fallen to precarious levels. Because the NFA could not import rice before June, it had resorted to urging rice farmers to help the agency beef up its stockpile by selling their paddy to the NFA. For farmers to do this, Agriculture Secretary Emmanuel F. Piñol said the NFA Council (NFAC—the highest policy-making body of the NFA—should consider increasing the palay support price to P20

₧20/kg The buying price proposed

by Agriculture Secretary Emmanuel F. Piñol at farm-gate level

per kilogram from the current P17 per kg.

“The rule of thumb is that the commercial price of rice is double the farmgate price. So if the buying price is P20 per kg, the retail price should only be P38 to P40 per kg,” Piñol told the Business M irror in an interview. “I think the retail price is affordable to everyone.

The increase in support price would also make farmers happy.”

See “Govt,” A2

Senators turn conservatives on House-initiated divorce bill

By Butch Fernandez @butchfBM

S

enate leaders have yet to firm up counterpart measures for the House-backed divorce bill, even as several senators thumbed it down, voicing preference for a less costly option by enacting a remedial law relaxing rules on annulment of wedding vows instead.

Majority Leader Vicente C. Sotto III admitted over the weekend he has yet to conduct a formal headcount to assess the chances of the divorce bill that was reported to have gained wide sup-

port in the House of Representatives.

In fact, on February 21, it was approved at the level of the Committee on Population and Family Relations, the first time ever that a divorce bill has reached plenary debates at the House. This emboldened Speaker Pantaleon D. Alvarez, an ardent supporter of the measure—and who is reported to be in an extramarital relationship—to predict that the measure could hurdle third reading by endMarch. Alvarez denied his personal status has anything to do with his advocacy.

See “Senators,” A12

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OFW deployment ban a timely move

₧2B and ₧5B The new thresholds set by the competition body for Size of Transaction and Size of Person, respectively

This was immediately welcomed by the business sector, as the move allowed companies more elbow room in transacting with each other.

In its Memorandum Circular 18-001 released on Monday, the PCC adjusted the new thresholds to P5 billion for the Size of

Manny B. Villar

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THE ENTREPRENEUR

hen will this inhuman treatment of Filipino workers end?

When will the upliftment of their human dignity begin?”

When President Duterte raised these questions in a news conference on February 9, he was not just seeking answers—he was expressing extreme disappointment and maybe even outrage— following the discovery on February 7 of the body of a domestic worker that was hidden in a freezer for a year in Kuwait.

Continued on A10

Continued on A12

BMReports

One Charter under siege: Would amending Constitution enhance PHL economic devt?

By Bianca Cuaresma @BcuaresmaBM

& Jovee Marie N. dela Cruz @joveemarie

A

Part Two

few years before Sen. Benigno Aquino Jr. was assassinated, the Philippine banking system has been slogging through adverse financial shocks. Insolvencies in financial investment houses and finance companies were rampant in 1981, leading to a massive shift of funds from these institutions to large commercial banks.

According to an Asian Development Bank (ADB) paper, the Aquino assassination in August 1983 precipitated an even bigger crisis leading to a plummet in local and international investor-confidence levels on the entire financial system.

“Years of protracted crisis took their toll on other aspects of the financial system. Uncertainty and risks in lending stifled the long-term loan market,” according to the paper authored by Ma. Socorro Gochoco-Bautista. “The number of bank offices declined in absolute terms—as several banks collapsed—and so did the total assets of the banking system.”

The government was also forced to devalue the peso in response to

Aerial view of the reclamation area of Manila Bay in Pasay City. According to some lawmakers, the 1987 Constitution has hobbled the country’s steps to further economic growth as there are provisions making the Philippines less attractive for foreign direct investments. NONIE REYES

massive capital flight and currentaccount deficits, as well as impose a moratorium on external debt payments, ration foreign exchange and raise interest rates, GochocoBautista wrote.

It was the 1987 Constitution, which strengthened the then Central Bank of the Philippines as

an “independent” central monetary authority, and signaled to foreign markets the country is seriously putting its financial house in order.

Stronger CB

THE ratification of a new Constitution in 1987 affirmed the Central Bank’s focus on rehabilitation

of weaker banks, particularly the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines, now both owned by the government.

The Central Bank implemented the order of then-President Corazon Aquino to clean DBP’s books, Continued on A2

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Source: BSP (5 March 2018 )

A2 Tuesday, March 6, 2018

BMReports BusinessMirror

www.businessmirror.com.ph

One Charter under siege: Would amending Constitution enhance PHL economic devt?

Continued from A1

undertake staff reorganization and infuse an initial operating budget.

More than three decades later, the DBP vows to grow its loan portfolio to a third of a trillion pesos.

Three decades after the ratification of the 1987 Constitution, it seems these actions have paid off.

The Bankers’ Association of the Philippines (BAP) told the BusinessMirror that the Philippine banking industry, in general, is stronger now compared to the early years of a new Constitution.

“The banks have learned from the challenges in the past and have become more proactive in responding to risks. The banks have various system checks in place to verify thousands of transactions per day,” the BAP said when sought for a comment on the readiness of the banking sector to handle political crises, such as those that led to

Govt. . .

Continued from A1

Edwin Y. Paraluman, chairman of the Philippine Farmers Advisory Board, agreed with the chief of the Department of Agriculture (DA). Paraluman, who represents the farmers’ sector in the NFAC, said the increase in support price is warranted as the cost of production inputs has become more expensive in recent years.

“If farmers’ cost of production is P12 per kg, then they would earn P8 per kg.

If a farmer harvests an average of 4 metric tons [MT], then his net income would reach P32,000 per harvest,” Piñol said.

“That is good enough.”

Data from the Philippine Statistics Authority (PSA) showed that farmers posted the highest net income average in the past decade in 2014, when the average annual farm-gate price of palay was at P20.07 per kg. That same year, PSA data showed that rice farmers recorded an average net income of P31,365.

Four years ago PSA data indicated that the cost of producing paddy was at P12.17 per kg. This translated to a net profit-cost ratio of 0.65, which means a rice farmer earned 0.65 centavos for every peso he spent for production inputs.

But for Pablito M. Villegas, an economist and former vice president of the Land Bank of the Philippines, a P1 hike in

deposing then-President Ferdinand E. Marcos.

The 1987 Constitution provided for the establishment of the New Central Bank Act—only enacted seven years after its promulgation—thus, reorganizing the then-Central Bank of the Philippines to the current Bangko Sentral ng Pilipinas (BSP). “[N]ew reforms were introduced to improve the standing of the financial sector, such as relaxing rules of FCDUs [foreign currency deposit units] and ATMs [automated teller machines], opened the Philippine banking system to foreign banks, and improving the environment for banks to compete,” the BAP said in response to BusinessMirror’s questions.

“These new policies from the lessons we learned from the past, …led us to what the Philippine banking industry is today: stronger and more equipped to face the

palay support price would be acceptable for both the farmers and consumers.

“Raising the support price to P20 per kg might hurt consumers because it would translate to a retail price of P40 per kg,” Villegas told the B usiness M irror in an interview. “Besides, the Philippines is not as competitive as neighboring rice-producing countries, such as Vietnam.”

A farm-gate price of P18 per kg would already allow farmers to earn, according to Villegas. He said, however, that farmers could even earn more if the current rice supply value chain is not controlled by middlemen.

“At P18 per kg, rice will be traded at P36 per kg. Farmers will already earn at that price point. He would earn more if he could directly sell his produce. The government must support farmers and remove middlemen and traders if it wants to keep the retail price of rice at P36 per kg,” Villegas said.

‘Law of supply and demand’ Roehlano M. Briones, senior research fellow at state-run Philippine Institute for Development Studies, told the B usinessM irror that the government should let the market dictate the farmgate price of paddy. “[Price] should depend on supply and demand prevailing at the time. And the farm-gate price is a [result] of that supply and demand situation,” Briones said.

“We prefer to let the market determine

challenges of the next century,” the BAP said. The BAP also said banks were able to survive the fall out in the early-1980s due to the policies implemented to strengthen the banking industry.

“The Central Bank introduced new reporting requirements for commercial banks and guidelines for asset valuation and loan-loss provisions. Mergers were encouraged by the Central Bank to meet minimum capital requirements for banks to operate while restricting entry into the banking sector,” BAP said.

Liberalizing the Charter

HOWEVER, there is still a strong push for changing the Charter.

An impetus comes from former Speaker Feliciano R. Belmote Jr. who believes the 1987 Constitution contains “restrictive provisions.”

“In order to realize the full benefit of inclusive growth, the the appropriate farm-gate price.”

The latest data from the PSA showed that the farm-gate price of paddy as of the third week of February rose for the seventh straight week, settling at P19.93 per kg. The figure was 8.08 percent higher than the P18.13 per kg quotation in the same period last year.

Notably, an increment of more than 1 percent in average farm-gate price was recorded for two straight weeks.

And it was during this period when the NFA disclosed that its buffer stock is depleted and is equivalent to only two days of national consumption and the NFAC announced that it has green lighted the importation of 250,000 MT of rice. Despite the NFAC’s announcement, the retail prices of regular-milled rice and well-milled rice rose to an eight-week high.

Briones noted that this can be explained by the “isolation” of the country’s rice market. He said the implementation of rice-import quotas, which limits the entry of the staple produced abroad, has prevented consumers from enjoying cheap rice.

Under the current setup of the Philippine rice market, Piñol said rice traders dictate prices and are dependent on market reaction. “For example, right now, there’s rampant buying of paddy after the NFA announced that its buffer stock is already depleted. The country’s rice market is speculation-driven.”

restrictive economic provisions in the Philippine Constitution, which hamper the flow of foreign capital investments, must be lifted,” Belmonte said.

Belmonte explained tweaking the Charter comes as “there is growing global interest in Asia [that] provides an opportunity for the Philippines to compete for more investments.” According to Belmonte, poverty incidence remained constant for the past years, despite economic growth. He believes amending the Charter is a way to urgently address the issue.

Rep. Luis Raymund F. Villafuerte Jr. of the Second District of Camarines Sur, the vice chairman of the House Committee on Appropriations, cited two provisions as culprits.

“It’s the constitutional provisions [that, one puts] a 40-percent cap on foreign ownership and [two, bars] foreign participation in certain sectors, such as the media

‘Price ceiling’ According to Briones, the increase in prices could prompt to release more rice stocks so they could earn more. This would then arrest the continuous appreciation in rice prices.

“I’m not that worried about rising prices. What I lament is the isolation of the Philippines from the international rice market, which makes it difficult for our consumers to benefit from low-cost rice,” he added.

Victorio A. Dimagiba, president of Laban Konsyumer Inc., however, said the jump in the retail price of the staple is “unwarranted.”

“I do not think [that the increase in rice prices] is justified. The numbers, the retail prices, do not seem to justify what they are saying that there is enough supply,” Dimagiba, a former trade undersecretary, told the BusinessMirror.

“If you will apply the law of supply and demand, and there is a lot of rice in the market, why is the price of rice continuously increasing?” he added.

The DA earlier announced that the Philippines has a carryover stock of about 3 million metric tons (MMT) at the start of 2018, which was sufficient for 87 days.

Dimagiba urged the government to impose a suggested retail price (SRP) for rice to prevent unwarranted price hikes.

“I am also proposing that the government inspect warehouses and survey the prevailing price of rice and palay

that have been a deal breaker for prospective foreign investors,” Villafuerte said.

He explained the country’s protectionist economic policy is an anachronism under the new global free economy or borderless world.

“This is why FDI [foreign direct investments] have remained relatively anemic despite Philippines’s newfound investment-grade status as Asia’s new bright star,” Villafuerte said. “True, there has been a 40-percent jump in FDI inflows to $7.9 billion to the Philippines in 2016, based on Association of Southeast Asian Nations’s data.”

He added: “This is peanuts when compared to the $53.9 billion that went to Singapore the same year.

Malaysia had $11.3 billion in FDI. Even erstwhile tail ender Vietnam got $12.6 billion in FDI, which is a third higher than what we got despite Philippines’s successive credit ratings upgrade.”To be continued

and then impose an SRP.” “If they are selling over and above what should be the SRP, then there are three possible reasons, under The Price Act: there is profiteering, hoarding or cartels are at work,” he added.

In an earlier interview with the BusinessMirror, Piñol revealed that he proposed to President Duterte the imposition of a “price cap” on rice sold in the market to avoid increases.

Making rice cheaper Villegas and Paraluman agreed that the best way to lower the retail price of the staple is to reduce production cost.

“Increase the productivity to 6 to 8 MT [per hectare] on a dry basis. That will bring down the cost of production, hence, the farmers would make more money,” Villegas said.

“Lowering the cost of production and a farm-gate price of P20 per kg would make farmers very happy. In fact, farmers would be content with a farm-gate price of P17 per kg if they will incur lower production costs,” Paraluman added.

More than cutting the cost of producing paddy, Piñol said “empowering” rice farmers and helping them become entrepreneurs and eliminating middlemen would make rice affordable.

“Our advocacy really is to capacitate and empower the farmers to not only plant and harvest [palay], but also to process and market their products,” the DA chief said.

Boracay. . .

Continued from A12

Club Paraw, a popular resort along Station 1, declared in a signboard tacked onto a tree that it “complied with the 25+5 easement [and was issued] certificate of compliance no.

2013-0133 [on] Nov. 5, 2014 [by the] Boracay Redevelopment Task Force.”

A former member of the task force, who requested anonymity, as he was not authorized to speak on the matter, explained, however, that it was the local government unit (LGU) of Malay that issued the certificates of compliance, and not the task force itself.

“That was issued by the LGU based on the list given by the DENR,” he stressed.

Among the resorts cleared by the LGU as of February 27, 2014, were Bamboo Lounge, Willy’s Beach Resort, Boracay Plaza Resort, Blue Lilly Villa and Obama Grill. But during Environment Secretary Roy A. Cimatu’s inspection of resorts along the main white beach on February 23, Boracay Plaza and Willy’s were among those tagged as having violated the easement regulation. Cimatu even wrote on Boracay Plaza’s wall in an alley it shares with Willy’s the demarcation of the 25+5 easement.

All over Station 1, a number of resorts were similarly tagged by the DENR as violators and bore signboards that say these were subject to demolition.

Cimatu was supposed to have presented an update on his agency‘s compliance to the directive of President Duterte to clean up Boracay, and a recommendation whether or not to close the island, at the Cabinet meeting on Monday. The meeting had yet to start as of press time.

Hike. . .

Continued from A12

The new thresholds will be effective 15 days after its publication. The revised thresholds will apply to M&A transactions with definitive agreements executed after the effectivity of the memorandum circular.

They do not apply to mergers or acquisitions pending review by the commission, notifiable transactions consummated before the effectivity of the memorandum circular, and transactions already subject of a decision by the PCC. To date, the PCC has received 152 notifications (equivalent to 134 transactions).

It approved 125 transactions worth a total of P2.25 trillion, while the others are in different stages of review. The majority of these came from the manufacturing, financial, electricity, real estate and transportation sectors.

For the Philippine Chamber of Commerce and Industry (PCCI), the recalibration will benefit small and medium enterprises (SMEs) aiming to grow with giant firms. PCCI Chairman George T. Barcelon said raising the thresholds “is a proper thing to do” to give businesses the room to transact freely with each other.

“I think that is a proper thing to do because if you look at the P1-billion [threshold] before, it is only equivalent to $20 million. You don’t want an acquisition of $20 million and [then] go to the PCC. Going through the PCC is a very tedious process. There are a lot of things that they have to comply with and things like that,” Barcelon told the BusinessMirror.

He explained the adjusted thresholds will entice investors to merge with SMEs.“We would like to encourage more investors [to come in] and [look] at the SMEs,” Barcelon said.

“SMEs would be in the vicinity of, say, anything between P1 billion and P2 billion.

Now that they put it at P2 billion, I think that is better. A lot of acquisition below P2 billion would not have to go to the PCC. That would be more attractive to foreign investors or even local [businessmen],” he added.

Barcelon also said as part of rationalizing the local industry, giant firms are inclined to acquire marginal players. He noted, though, with the former P1-billion threshold, both parties become disinterested to merge because they still have to get the PCC’s nod.

Sought if the amended thresholds might erode competition in the market, the business leader was quick to dismiss that possibility. He claimed most medium-sized businesses are now valued at P1 billion or even higher.

“When you talk about [a] P1-billion acquisition [in relation to] competition, I don’t think that would be a very big factor. A lot of companies now, if you look at their assets… [are] very easily P1 billion,” Barcelon said.

It is when banks take over banks that the PCC should intervene and play the regulator role, he pointed out, because these are the acquisitions amounting to as much as P100 billion. “I would not think [the recalibration will affect competition in the market], unless the buying company is, like, P50 billion, like when banks are taking over banks,” Barcelon said.

Meanwhile, brand-marketing consultant Freida Dario-Santiago expressed concern over the proposed demolition of illegal structures on the island, especially along the main white beach where the DENR is looking to enforce easement regulations.

A Boracay resident since 2003, she appealed to national government agencies to make sure the demolition is done properly and the debris is not just left along the beaches. She noted that when Boracay West Cove “self-demolished” its viewing deck upon orders of Cimatu, “they jackhammered the deck and I didn‘t see any nets to catch the cement debris. What a nightmare!“ She added that the “pristine white sand of the island would be destroyed if the demolition of illegal structures is not done right. The debris will be left on the shore or, worse, these could fall into the sea then during the monsoon season, the debris will wash back to the shore. They should make sure they don‘t do more harm than good.“ She stressed that the national government should spend for the proper disposal of the debris.

In 2012 then-President Benigno S. Aquino III ordered the creation of a technical working group to review the development problems in Boracay and Baguio. This later gave rise to the formation of the Boracay Redevelopment Task Force composed of the secretaries of the DENR and the departments of Tourism, the Interior and Local Government, and of Justice. The task force also included the provincial governor of Aklan, and the mayor of Malay, which has jurisdiction over the island resort.

By March 2013, a joint resolution by the old task force agreed that the “easement along the shoreline is 25+5 meters measured landward from the mean high water mark.”

www.businessmirror.com.ph

The Nation BusinessMirror

Editor: Vittorio V. Vitug • Tuesday, March 6, 2018 A3

No compromise on PHL SolGen’s petition to SC seeks sovereignty, Palace says to nullify Sereno’s appointment

By Bernadette D. Nicolas @BNicolasBM

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residential Spokesman Harry L. Roque Jr. on Monday said it is wrong to believe that joint explorations are compromising the country’s sovereignty, citing previous joint exploration agreements in other countries, including between Vietnam and China.

According to Roque, many countries had done joint oil explorations with China, including claimants to parts of South China Sea, such as Vietnam and Brunei Darussalam. “[T]hey are wrong in saying it’s not allowed under our Constitution. And they are also wrong in saying that you’re compromising sovereignty. Our point being, it’s being done,” he said.

Roque added we could also look into the treaty between Vietnam and China as our model on joint exploration. Vietnam and China’s joint exploration deal covered Beibu Gulf, a shared area by two countries.

“All this joint exploration agreements means that if ever we enter to a joint exploration and development agreement, it wouldn’t be the first in the world as in fact CNOOC [China National Offshore Oil Corp.] already has existing joint exploration agreements even with Vietnam and in fact we could look to the Vietnamese, Chinese treaty on joint exploration and development as a model for possible relationship between the Philippines and China,” Roque said.

Roque issued his comment after Supreme Court (SC) Acting Chief Justice Antonio T. Carpio disputed Roque’s statement that the high tribunal affirmed joint exploration within the Philippines’s exclusive economic zone (EEZ).

Carpio said that the ruling refers “to the extraction of minerals on land territory,” and not the “extraction of oil and gas” in the EEZ. Roque said last week that the SC “sanctioned” joint exploration, citing the 2004 decision on La Bugal-B’laan Tribal Association v. Victor Ramos case.

“The decision is correct, it’s about mining in land territory. But you see even if it is mining in land territory, the decision said, you could allow foreigners to engage in exploration and exploitation of mineral resources even in areas subject to complete sovereignty. And that is the decision of the Court. How much more in an area where there is only sovereign rights?”he said.

Roque added “it is for the state to determine if it wants to share what should otherwise be exclusive.”

“So if the ruling applies to land territory, I don’t think there is any reason for it not to be applicable in an area where there is only sovereign rights,” he said.

“The key is that the state must exercise full control and supervision over the exploration, development and utilizations of natural resources. However, the Court was careful to state that full control and supervision cannot be taken literally to mean that the state controls and supervises everything down to the minutest detail and makes all required actions,” Roque said.

He added Carpio was only one of the four justices who dissented in the La Bugal case.

“On reconsideration, the Court came up with the majority opinion, saying ‘no.’ And as I said, you cannot be myopic about it; you cannot strangulate economic development because of myopic views.”

Telcos told to inform prepaid users of each load deduction

By Butch Fernandez

@butchfBM

A

cting on mounting complaints against “vanishing load,” senators on Monday moved to protect prepaid mobile-phone subscribers against scrupulous value-added service (VAS) providers offering assorted “promos” to prey on and eat up prepaid load of cell-phone users.

Interviewed after presiding over a joint hearing of the Senate Committees on Science and Technology and on Public Services, Sen. Paulo Benigno Aquino IV sought firm commitments from private telecommunication companies—Globe and Smart—as well as the government’s telco regulators, to step up efforts to protect rights of mobile subscribers.

One solution reached at the joint committee hearing is for telco companies to promptly indicate remaining balance of prepaid cell-phone users every time telcos deduct from their load for services rendered.

“A clearer solution to the vanishing load was presented at the hearing; for every load deducted to a cell-phone user, there will be an automatic notice through text

messages, such as VAS deductions,” Aquino said. “For every VAS transaction, there is an immediate notification,” he added.

Aquino affirmed the most basic solution to the vanishing load problem is for cell-phone subscribers to receive immediate information on their load wallet.

He confirmed that the telcos had committed to restore the practice of “automatic balance information” after making calls, adding that the senators expect additional solutions and comments from telcos at the next committee hearing before the end of March.

This developed as Sen. Nancy Binay also suggested that victimized prepaid cell- phone users complaining against unexplained vanishing loads could still go to court if they do not get redress from their telcos.

“Estafa is classified as a criminal offense,” Binay added.

For its part, Department of Trade and Industry officials clarified to the Senate committee any violation by telcos entails a P3,000 fine, which senators found to be “very small for a giant telco.”

Era of sustainable rice farming

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he International Rice Research Institute (IRRI) has inked an agreement with multinational Bayer AG to develop and promote an efficient and sustainable riceproduction method that would allow farmers to earn more.

Under the agreement, Bayer will be participating in the direct seeded rice consortium (DSRC), which is being led by the IRRI, and seeks to make direct seeded rice (DSR) accessible to farmers in a bid to make the production of the staple in Asia “economically and ecologically” sustainable.

“The DSR Consortium is developing a comprehensive, science-based, agronomic package adapted for direct seeded rice production in Asia, making direct seeded rice accessible and widely available to rice farmers, thereby enhancing the economic and ecological sustainability of rice production in Asia,” the IRRI said in a news statement issued on Monday.

Simon-Thorsten Wiebusch, country group head for Southeast Asia, Crop Science at Bayer, said their participation in the DSRC is a welcome development as it is

aligned with the multinational’s initiative to support small-scale farmers.

“In line with our smallholder farming initiative, we are happy to join the DSRC, and contribute to the development and promotion of direct seeded rice production through various innovations, such as our SeedGrowth offering, mechanization and digital farming solutions, as well as linking up value-chain partners and service providers to the farmers who would have no access otherwise,” said Wiebusch, who also sits on the advisory board of the DSRC. Remy Bitoun, head of IRRI Tech Transfer, said the institute’s partnership with Bayer would provide the DSRC more resources to develop an efficient and effective rice-production method for farmers.

“To improve food security and sustainability, all stakeholders—public and private—must work together and share their expertise. Our new public-private partnership, the DSR Consortium, will contribute to improved resource management that will benefit rice farmers and the environment,” he said. Jasper Emmanuel Y. Arcalas

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By Christopher Lloyd Caliwan | Philippines News Agency

he Office of Solicitor General (OSG) on Monday filed a petition before the Supreme Court (SC), seeking to nullify the appointment of Chief Justice Maria Lourdes A. Sereno.

In a 34-page petition for quo warranto, Solicitor General Jose Calida petitioned the SC to declare Sereno’s appointment on August 24, 2012 as Chief Justice as void and oust her from the judiciary’s top post.

The petition emanated from a letter filed by suspended lawyer Eligio Mallari, urging Calida to initiate a quo warranto proceeding against the top magistrate.

On Februrary 21 Mallari, who called Sereno? a “de facto chief justice,” asked the OSG to initiate a quo warranto proceeding against her.

Under Rule 66 of the Rules of Court, a quo warranto proceeding is an action by the government against a person who unlawfully holds a public office or holds a position where he or she is not qualified.

Calida insisted that a quo warranto proceeding is a “proper remedy to question the validity of Sereno’s appointment.”

“Petition for quo warranto at the Supreme Court where you will be judged by your peers who know you and the Constitution better,” Calida said at a news conference.

He also said that his filing of a quo warranto proceeding against Sereno is “an act of kindness.”

“I don’t expect you to appreciate this but believe me, this is an act of kindness to a fellow lawyer,” he said.

“The Office of the Solicitor General will not allow you to undergo the indignity that the late Chief Justice Renato C. Corona suffered at the hands of politicians who unjustly convicted him. You do not deserve that,” Calida said.

Sereno will also be given a chance to answer the allegations against her, Calida added.

Baseless

Sereno’s camp, meanwhile, urged the SC to dismiss the quo warranto petition, noting that

it has no legal basis.

“The Supreme Court ought not to entertain the quo warranto petition for it has absolutely no basis in law and in the Constitution. The high tribunal should dismiss the petition outright on the basis that quo warranto is not a proper remedy. Under the 1987 Constitution, the Chief Justice may only be removed from office upon impeachment by the House of Representatives and conviction by the Senate, sitting as an impeachment court,” Sereno said in a news statement sent to reporters covering the Supreme Court.

“We wish to reiterate that this latest action by the Solicitor General is part and parcel of the grand plan to harass, malign and humiliate the Chief Justice to force her to resign because her detractors know that the impeachment case, which was built on lies, won’t stand a chance in the Senate,” the statement read.

Sereno also called the OSG’s move a “cruel act” toward the Filipino people, stressing that she is ready to face trial and disprove all allegations against her before the Senate, which is the only body or institution that can remove her from office via two-thirds vote of all its members.

The Chief Justice’s camp also said the instant action for quo warranto against her is devoid of basis, not to mention that the oneyear prescriptive period for filing such action has long prescribed pursuant to Section 11 of Rule 66 of the Rules of Court.

Economy

A4 Tuesday, March 6, 2018 • Editors: Vittorio V. Vitug and Max V. de Leon

DBM releases P24.5B for CCT beneficiaries T

he Department of Budget and Management (DBM) has reported the release of some P24.5 billion to fund the Conditional Cash Transfer (CCT) Program in line with the implementation of the Tax Reform for Acceleration and Inclusion law.

The DBM on Monday said a total of P24.5-billion obligation authority, including a P4.3-billion cash allocation, has been released by the agency to the Land Bank of the Philippines (LandBank) in line with the Tax Reform Cash Transfer Project (TRCT) of the Department of Social Welfare and Development (DSWD).

The P4.3-billion cash allocation shall be used to fund cash grants at P200 per beneficiary per month to the existing 1.805 million Pantawid Pamilyang Pilipino Program (4Ps) cash card beneficiaries.

The immediate release of the fund entitles 4Ps beneficiaries to receive the cash grants within the month, while the entire annual TRCT cash grant shall be provided one time per year to the intended beneficiaries.

The TRCT seeks to provide cash grants to poor households and individuals who may not benefit from the lower income-tax rates, but may be adversely affected by rising prices.

The mitigation measure will grant cash-transfer support to the bottom 50 percent of households or approximately 10 million households

identified by the DSWD based on the list of beneficiaries registered in the National Housing Targeting System for Poverty Reduction (NHTS-PR), or Listahan.

“The subsidy is intended to mitigate the temporary increases in prices owing to the implementation of the comprehensive tax-reform program,” the DBM said.

For the first year of the TRCT, funds in the amount of P24.49 billion have already been lodged to the LandBank, in accordance with the 2018 General Appropriations Act. The target dates for the distribution of the funds under the TRCT include: March 2018 for the 4Ps beneficiaries who already have a LandBank cash card estimated to be around 1.8 million beneficiaries; March 2018 for those who still do not have a LandBank cash card at around 2.6 million beneficiaries; April to May 2018 for social-pension beneficiaries with existing LandBank cash cards estimated at 400,000 beneficiaries; April to May 2018 for social-pension beneficiaries without LandBank cash cards at around 2.6 million beneficiaries; and August 2018 for NHTS-PR households at around 2.6 million.

For the second and third year of implementation of the TRCT, the unconditional cash grant will be raised to P300 per beneficiary per month, according to the DBM.

BusinessMirror

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DTI’s Lopez told: Don’t ‘encroach’ on DOLE’s job

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By Nelson S. Badilla | Correspondent

ne of the biggest labor groups in the country on Monday reminded the Department of Trade and Industry (DTI) that it has no business of “invading” the job of the Department of Labor and Employment (DOLE).

Lawyer Jose Sonny G. Matula, president of the Federation of Free Workers (FFW), told the BusinessMirror that the “DTI should not invade the domain of the DOLE [because] it has no expertise on labor standards and labor relations.”

Matula’s statement was FFW’s reaction on the “official position” of the DTI about the jobcontractualization issue that was published in the BusinessMirror on March 1.

Trade Secretary Ramon M. Lopez said he is also inclined to defend the interest of businessmen and that the DTI would probably block a proposed executive order (EO) that intends to end contractualization.

Lopez was furnished a copy of the Nagkaisa Labor Coalition’s proposed EO for the DTI for inputs.

He argued that “what we know is that legitimate labor contracting is allowed in the Labor Code. It is prohibited when it is undertaken to circumvent existing law, specifically workers’ right to security of tenure.”

“[T]he DTI has always been of the position that what is important is we encourage and attract investors so that our country can generate more jobs,” he said.

Reacting to the DTI chief’s position, Matula said the DTI “should focus itself on measures against rising inflation, rather than keeping cheap labor under the policy of precarious work arrangements like contractualization.”

Renato Magtubo, chairman of Partido Manggagawa (PM), agreed with FFW’s stand, adding that the “DTI should impose its weight against rising inflation rather than keeping the labor price low under the policy of contractualization.”

Magtubo, who is also the spokesman of the Nagkaisa, pointed out that his group has strongly turned down the DTI’s take on contractualization, thus, Lopez must stop asserting its intervention in the labor issue.

Matula, a veteran labor leader and labor laws professor, reminded Lopez that it is not only the FFW that is against the position of the DTI in the

contractualization, but the whole labor movement from moderate to left-leaning groups.

“The labor movement has repeatedly rejected this contractualization as [instrument] of enticing investors to continue putting up their businesses in the country since this is contrary to the guarantee to the right to security of tenure enshrine in the fundamental law. Direct hiring, not the new policy, but the fundamental principle under the law. This is the only way workers can actually enjoy their constitutional right to security of tenure,” Matula said.

He added the FFW long-held view and belief that “labor is not a commodity for sale through labor contractors. The rule should be, as its name denotes, manpower agencies and other service providers should merely be treated as agents of the principals. The principal is the employer.”

Matula said that this is the fundamental reason FFW and other labor groups have been pushing for an EO to rectify this anomaly and correct many years of injustice imposed upon millions of workers.

President Duterte has promised that he will release the EO by March 15.

But it appears that Duterte will follow the line of thinking of Lopez, as he already said few days ago that he could not force the businessmen on what to do with their workers.

According to Matula, “[w]ith all due respect, what the DTI wants is to continue to enslave our contractual workers or perpetuate the norm of contracting out almost all jobs in the guise of management’s exercise of their prerogative.”

Malaysian, Thai, US aviation firms eye management and modernization of CNIA

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wo major Malaysian companies have proposed to provide airport-management services needed to operate the Cagayan North International Airport efficiently and smoothly a few weeks before CNIA is scheduled to receive its first overseas commercial aircraft from Macau.

Secretary Raul L. Lambino, administrator and CEO of the Cagayan Economic Zone Authority, on Monday said the two companies, Iris Corp. Berhad (Iris) and Positive Paragon Sendirian Berhad (PPSB), signed recently a joint memorandum of understanding (MOU) with Ceza to undertake the project.

The two companies would set up the front-end hardware and equipment, install software, as well as work stations and passport and travel card readers and set up, install and commission E-gates, among other things.

Meanwhile, a consortium of locally registered and foreign-based firms has also submitted an unsolicited proposal for the development of CNIA into a state-of-the-art logistics aviation hub and a one-stop aviation center with interdependent revenue-generating assets to meet the demands of the aviation industry.

Armed with 100 years in aviation experience, the newly formed Cagayan Business Aviation Center offered to set up a fixed-base operator/aviation-service provider; maintenance, repair and

overhaul facility; airline crew-training center; and a general aviation/regional corporate jet charter services, interisland commuter airline services; and eventual entry to commercial flights.

The consortium is powered by the Subic Bay Business Aviation Center (formerly AIA International Flight Support and Services) in collaboration with the United States-based National Standard Finance and the Bangkok-based Mahanakon Partners Group. Co. Ltd. “This proposed high-tech airport facility will be the first of its kind in the country and will comprise of interdependent projects using stateof-the-art aerospace technology,” Lambino said.

He had earlier announced that CNIA in Lal-lo town in northern Cagayan has already cleared all hurdles required for its acquisition of a full aerodrome certificate from the Civil Aviation Authority of the Philippines to begin operating commercial flights for the heavier A320 and B-737 aircraft.

Following the inaugural flight from Macau, Lambino said, Cebu Pacific is expected to also launch its Manila-Lallo service shortly.

CNIA cuts the overland travel time to Santa Ana, headquarters of Ceza and host of Port Irene, to only 45 minutes by car, said Lambino, who sees the launch of the new airport as a

“pivotal development in our sustained efforts to open Ceza to East Asia and the North and South Pacific.”

“We have metaphorically moved mountains to reach this point in our incessant drive to improve Ceza,” Lambino added.

Lambino earlier stated in a speech before the Regional Development Council of Region 2 the severe inadequacy of infrastructure within the zone despite being in existence for more than two decades.

He had ordered a review of the medium-term development plan of Ceza to refocus efforts toward developing and building new infrastructure, saying, “This is the only way we at Ceza can move forward, and fast.”

The MOU between Ceza and Iris and PPSB was among several that Lambino signed in recent weeks, capping months of an intensive campaign promoting Ceza as the emerging hub for the transshipment of goods and produce in East and Southeast Asia, a gem for ecotourism and family recreation, and the zone for the development of financial technology solutions such as Bitcoin and other cryptocurrencies.

In recent weeks, Ceza also welcomed proposals that would modernize infrastructure in the zone strategically located along international shipping routes in the North Pacific, being at the northeastern tip of Cagayan.

Lawmaker: 9 of 18 NFA Council slots should go to Piñol, DA aides

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arty-list Rep. Cecil Chavez of Butil sought for a revamp of the National Food Authority Council (NFAC), the policy-making body of the National Food Authority (NFA), and proposed the inclusion of Agriculture Secretary Manuel F. Piñol and his key people in the critical policy-making body.

“The glaring, hard-to-fathom noninclusion of Secretary Piñol and his key people in the council is akin to excluding the Philippine National Police director general from the toplevel efforts to find the best policy on exterminating drugs and crime,” Chavez said.

In fact, she added, the agriculture secretary and his people, “are the best people to guide the NFA

Council into making the right and the most strategic decisions on when to import, on what volume to import and where to import.”

The NFAC recently approved the importation of 250,000 metric tons of rice, amid findings that there is no actual rice shortage and private traders have been manipulating the country’s rice supply for their own private gains .

Chavez said the best agricultural economists and the best agricultural statisticians are with the Department of Agriculture and that the DA is the ultimate source of data on rice production and supply.

“The DA, which is in charge of the production side, is the agency perfectly situated to provide the data

on the supply side, and those are the specific data that the NFA Council needs,” she added.

Chavez said that, historically, from the time of the agriculture department in the commonwealth period to the time of former President Gloria Macapagal-Arroyo, the DA had been on top of the NFAC, and the council used to be dependent on DA data and inputs on rice importation.

During the term of President Benigno S. Aquino III, the DA was “balkanized” to give way to two cosecretaries, and four agencies, including the NFA were placed under one of the secretaries. The NFA has yet to be returned to its mother agency, the DA.

www.businessmirror.com.ph

Banking&Finance BusinessMirror

Editor: Jun B. Vallecera • Tuesday, March 6, 2018 A5

Feb inflation seen hitting 4.1% as ‘sin’ product prices shoot up

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By Rea Cu

@ReaCuBM

he inflation rate for the month of February likely settled at 4.1 percent on the back of increased prices of “sin” products, according to the Department of Finance (DOF).

Based on the DOF’s latest economic bulletin on inflation, the country’s inflation level for February likely settled at 4.1 percent, higher than the previous month’s 4 percent and the 3.3 percent recorded in the same month last year.

“While the 4.1 percent forecast may seem to have breached the higher end of the inflation-target range, it is largely on account of the price increase of sin products. These are nonessential and are even harmful products, which we want the general public to steer away from for health

reasons. Of the 4.1 percent forecast, 0.4 percentage points are accounted for by sin products,” the DOF said.

Alcohol and tobacco products fall under the sin product classification.

The DOF sees inflation levels of sin products to reach 16.4 percent for February this year, higher than the 12.3 percent in the previous month and the recored 6 percent in February 2017.

“Food and nonfood commodities alike see their respective rate of price increase relatively unchanged, while those of sin

products may have likely accelerated. The latter may be explained partly by price increase due to sin tax hikes and partly by the appropriate price adjustments of Mighty Corp. following its paying the right amount of taxes,” it added.

Prices of food and nonalcoholic beverages is seen settling at 4.4 percent for February, lower than the 4.5 percent registered in January but higher than the recorded 4.1 percent year-on-year (YoY).

Inflation levels for nonfood items is seen settling at 3.1 percent for the month, the same level as the previous month but higher than the 2.5 percent YoY. Broken down, clothing and footwear may reach 2 percent, lower than the 2.8 percent recorded in the same month in 2017.

Housing , uti l ities and f uels may reach 3.3 percent, lower than the previous month’s 3.7 percent but higher than the 2.9 percent YoY; while furnishings and household equipment is seen reaching 2.1 percent, higher than the 2 percent in January but lower than the 2.3 percent YoY.

Health may register a 2.4-percent rate, which is lower than the 2.6 percent in January and February 2017; transportation may settle at 4.1 percent, higher than the 3.2 percent in the previous month, as well as the 2.8 percent in February 2017; while communication may remain at 0.4 percent for the month.

Recreation and culture is seen remaining at 1.4 percent; education may increase to 2.3 percent, from 2.2 percent in the previous month and 1.8 percent in the same month in 2017; and restaurants and miscellaneous services may remain at the 3.7-percent level for the month.

Meralco’s rate per killowatt hour may rise to P9.47 for the month, from P9 YoY, and P8.72 in January this year. Its generation charge per kWh may also rise to P4.65, from the P4.32 YoY. For Februar y diesel prices in the Nationa l Capita l Reg ion may sett le at P41.18 per liter, from P31.34 per liter recorded YoY, while gasoline prices may increase to P52.60 per liter, from P47.68 YoY.

BIR, BOC strengthen joint P campaign against smuggling

Moody’s maintains stable rating for RCBC’s EMTN

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n ter nat ional c red it watc her Moody’s Investors Service announced on Monday that it maintained a stable outlook on Rizal Commercial Banking Corp.’s (RCBC) Euro Medium-Term Note (EMTN) program amid an upsize.

Moody’s said it kept its “Baa2” rating of RCBC’s EMTN program after it was increased to $2 billion from $1 billion.

Moody’s has upgraded RCBC’s $1-billion EMTN program to “Baa3” from “Ba2” in May 2015. This rating was subsequently upgraded to “Baa2” from “Baa3” in November 2017.

On December 31, 2017, RCBC reported consolidated assets of P443.3 billion or approximately $8.87 billion.

In November 2017 Moody’s upgraded the bank’s foreign currency deposit ratings to “Baa2” from “Baa3,” on account of the assumption that RCBC will receive ample support from the local government in times of need.

“Moody’s expects the bank to maintain its capital buffers in line with other similarly rated peers in the Philippines by periodically accessing the equity markets, as it has done in the past,” the credit watcher said. Bianca Cuaresma

PNB Savings Bank’s net income up 50%

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he Department of Finance (DOF) announced on Monday that a memorandum of agreement (MOA) is being fine-tuned by the Bureaus of Internal Revenue (BIR) and Customs (BOC) to strengthen their joint campaign against smuggling.

The DOF said the two agencies are set to forge an agreement on information sharing and coordination, among other ways of cooperation, to strengthen their joint ​c ampaign against smuggling and beef up collections on excise taxes on imports.

In a recent DOF Executive Committee meeting, Revenue Commissioner Caesar R. Dulay said the bureau will also create a “strike team” to run after smugglers and counterfeiters of locally produced goods.

He added the BIR is currently meeting with the BOC to fine-tune the provisions of the MOA on information sharing, coordination and linkages, among other proposed measures. “[The BIR strike team would] act as

lead and point coordinator for all BIR enforcement activities on smuggled articles and locally manufactured counterfeit excisable products,” Dulay said.

The BIR-BOC agreement is an offshoot of Finance Secretary Carlos G. Dominguez III’s earlier directive to both agencies to strengthen their cooperation at the regional level by creating joint antismuggling task forces in Revenue and Customs districts outside Metro Manila.

Customs Commissioner Isidro S. Lapeña has complied with the order by issuing a memorandum to all district directors of the Customs bureau to coordinate with the regional offices of the BIR in forming joint anti-smuggling units.

Dominguez earlier said that, as a result of the “intensified and coordinated drive by the BIR and BOC against cigarette manufacturer Mighty Corp., the government was able to collect around P30 billion in taxes, which is the largest tax settlement ever in the country’s history.

He added the accomplishment enabled both the BIR and BOC to hit over 97 percent of their respective collection targets for 2017.

The BIR achieved 97.18 percent of its revenue goal of P1.829 trillion, collecting a total of P1.777 trillion in 2017, while the BOC collected P457.553 billion, against a revenue target of P467.896 billion, representing an accomplishment rate of 97.7 percent for the year.

Based on preliminary data, the country’s tax effort in 2017 hit 14.3 percent, which is the highest in the last 11 years, according to Dominguez.

In the past administration, the tax effort increased by an average of 0.3 percentage points per year as compared to 2017’s 0.6-percentage-point increase from the previous year, the highest rate of improvement since 2009, which the DOF chief said was largely a result of a more efficient tax collection, as the Tax Reform for Acceleration and Inclusion law​was not yet in effect last year. Rea Cu

NB Savings Bank posted a net income of P 457 million for the full year in 2017, a huge 50-percent hike from P305-million net income in 2016. Total resources expanded to P51.4 billion, up by 37 percent, from the previous year’s P37.6 total resources.

Loan portfolio closed 2017 at P43.61 billion, up by 43 percent, from the previous year’s P 30.59 billion, in which 83 percent is comprised of auto, housing, multipurpose, and small and medium enterprise loans, the thrust of the bank as the consumer lending arm of its parent bank, Philippine National Bank (PNB).

The bank’s net interest income increased by 39 percent year-on-year which stood at P 2.0 billion, while pretax profits improved by 55 percent to close at P 722.5 million. Return-on-equity stood at 4.49 percent higher than previous year.

The bank’s total capital base stood at P 11.640 billion. Capital adequacy ratio reached 24.55 percent and is well above the minimum required by the Bangko Sentral ng Pilipinas (BSP).

Total deposits reached P 37.29 billion, up by 54 percent from previous year’s deposit level. “Our current and savings account and time-deposit products continue to attract new customers and fresh funds given our competitive pricing versus

competing bank’s equivalent product lines, not to mention the unique value-added benefits that come with our products,” PNB Savings Bank President Jovencio Hernandez said.

“An example would be our Power Saver Account product, a tiered, high interest earning savings account that is bundled with free telemedicine services and life and accidental-death insurance. The additional services are available for Power Saver accounts with a minimum average daily balance [ADB] of P25,000. The free telemedicine services give customers instant access to Philippine-based licensed doctors for consultations, diagnosis and treatment of non-emergency related concerns. The free life and accidental-death insurance offers up to five times the account’s previous month’s ADB,” Hernandez added.

PNB Savings Bank continues to enhance its products and services to live up to its promise of providing smart banking solutions to its clientele. Some of the bank’s most recent smart products launched in the market are the PNB Savings Bank Smart Courier and Smart Multi-Purpose Loans Double Insurance Coverage.

The Smart Courier offers the convenience of doing your bank transactions from the comfort of your own home or office. It saves you trips to and from the bank.

Eternal Plans helps Filipinos 3 mantras in personal finance worth keeping meet basic needs–Tagle W

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uis Antonio G. Cardinal Tagle, archbishop of Manila, praised Eternal Plans for helping Filipinos meet their basic needs and face life’s challenges through its memorial life, education and pension plans.

In a message for the 37th anniversary of Eternal Plans, Tagle said the plan holders of Eternal Plans face life “with equanimity and confidence” because of its pre-need product offerings.

Tagle said that, since its establishment in 1981 by the late Ambassador Antonio L. Cabangon Chua, Eternal Plans has helped many Filipinos send their children to

school, prepare for retirement and provide dignified memorial service for departed loved ones.

Citing a biblical passage, Tagle said, “We certainly place our hope in God and, indeed, in faith, what we hope for is already certain [cf. Heb. 11:1]. But it is also important that we look ahead, plan and prepare for the future. Nasa Diyos ang awa, nasa tao ang gawa. [God helps those who help themselves].”

He encouraged Eternal Plans to “strive to carry out your mission and help our countrymen attain a brighter future for their families.”

Case clippings

By Justice S J Ranada Jr. SPECIFIC DENIAL–Conclusion of facts and law While it is true that material averments not specifically denied are deemed admitted, plaintiff’s conclusion that defendant judicially admitted that its right to foreclose bad prescribed is erroneous, because conclusions of fact and law in the complaint are not deemed admitted by the failure to make a specific denial, considering that only ultimate facts must be alleged in the pleading, and only material allegation of facts need to be specifically denied.

Mercene v. GSIS 10 Jan. 2018

GR 192971 Martires, J

hen was the last time you promised yourself to save, invest, pay bills on time, or shy away from impulsive buying? Was it just yesterday, last week, last month or in your list of New Year’s resolutions? Then again, a follow-up question would be, were you able to follow it? These questions may sound as only rhetorics to some but, unfortunately, if you had that notion in mind, you might want to start reflecting on your personal finances as early as today. I can’t blame those who answered no to the last question but, for those who said yes, amid a volatile, uncertain, complex, and ambiguous world, they deserve respect and commendation in the domain of personal finance.

A cluttered mind unarguably helps fudge your finances, which leads to financial tumble that is detrimental to your aspirations. Clearly, you would want to safeguard your dreams and make sure you achieve them. That is why something that would keep you always reminded and grounded is important. This is where mantras play a critical role, in a way that they also serve as the beacon to the hopeless.

Here are some of the few mantras worth keeping: n Live frugally. This is also known as living within your means. This sounds ordinary for most of us, but it is worth mentioning a million times. One of the mental models proliferating is that rich

Earl Pagatpat

personal finance people continue to be rich because they think and live their lives as if they are poor or broke. On the other hand, the poor remain poor because they think and live their lives as if they are rich.

Whether you are poor or rich, you need to have a mind-set of being thrifty because financial resources are scarce and time is finite. n Delay gratification. We are generally hardwired to have our needs and wants in an instant. There is nothing wrong with this, but one must be wary of his/her financial limits because negligence on this domain causes one to be financially inept or, worst, disabled. This is simply a matter of knowing your priorities and finding the right time to spoil yourself. Again, this is about striking a balance between your needs and wants according to your financial situation. I just want to highlight that being financially fit is not about depriving yourself of everything the world can offer, but it is more about knowing where you are right now financially to know if you have the ability to acquire what you want. If not, delay it for a while, then work hard to earn and own it.

n Prioritize settling your debts.

We are oftentimes advised that debt must be paid off as soon as possible, but the question is, which debt should be paid first? In this kind of scenario, relying on the children’s counting rhyme of “eeny, meeny, miny, moe” would definitely not work. Instead, a combination of sound practical judgment and taming your emotional flares are needed. The most important thing that one must ponder on is the interest rate embedded in each of these debts, together with the principal.

T he objective is to immediately identify which of the debts would potentially give you the biggest burden or has the potential to compound interest. These two should be analyzed simultaneously because a higher interest rate alone may not necessarily give you a much higher debt to be paid off, especially if there is a high disparity in the principal amount compared to the other debt.

These are some of the mantras you can adopt to straighten your financial life. As you go along, you would be able to come up with your own mantra, since this actually emanates from one’s personal experiences.

Earl Pagatpat is a registered financial planner of RFP Philippines. To learn more about personal financial planning, attend the 68th RFP program this March. To inquire, e-mail info@rfp.ph or text <name><email><RFP> at 0917-9689774.

A6

Tuesday, March 6, 2018 • Editor: Lyn Resurreccion

The World BusinessMirror

www.businessmirror.com.ph

Trump embracing potential for trade war

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ASHINGTON—President Donald J. Trump is embracing the potential for a trade war after announcing his intent to place tariffs on imported steel and aluminum, as he rebuffs allies who have pushed to be exempted from the stiff duties.

The protectionist policy will be made official in the next two weeks, White House officials said last Sunday, as the administration defended the decision from critics in Washington and overseas.

Trump appeared unbowed last Sunday, as he tweeted that American “Steel and Aluminum industries are dead. Sorry, it’s time for a change!”

Trump’s pronouncement last Thursday that he would impose tariffs of 25 percent and 10 percent, respectively, on imported steel and aluminum, roiled markets and rankled allies. While his rhetoric has been focused on China, the duties will also cover significant imports from Canada, Mexico, South Korea, Japan and the European Union.

Speaking on CNN’s State of the Union, White House trade adviser Peter Navarro said: “At this point in time there’s no country exclusions.”

The across-the-board action breaks with the recommendation of the Pentagon, which pushed for more targeted tariffs on metals imports from countries like China and warned that a wide-ranging move would jeopardize national security partnerships. But Commerce Secretary Wilbur Ross, whose agency oversaw reviews of the industries that recommended the tariffs, said last Sunday on ABC’s This Week that Trump is “talking about a fairly broad brush.”

Republican South Carolina Sen. Lindsey Graham said the sweeping action would let China “off the hook,” adding the tariffs would drive a wedge between the United States and its allies.

“China wins when we fight with Europe,” he said on CBS’s Face the Nation. “China wins when the American consumer has higher prices because of tariffs that don’t affect Chinese behavior.”

Trump has threatened to tax European cars if the EU boosts tariffs on American products in response to the president’s plan to increase duties on steel and aluminum.

British Prime Minister Theresa May raised her “deep concern” at the tariff announcement in a phone call with Trump last Sunday.

May’s office said she “raised our deep concern at the president’s forthcoming announcement on steel and aluminum tariffs, noting that multilateral action was the only way to resolve the problem of global overcapacity.”

But Ross rejected threats of retaliation from American allies as “pretty trivial” and not much more than a “rounding error.”

Few issues could blur the lines of partisanship in Trump-era Washington. Trade is one of them.

Labor unions and liberal Democrats are in the unusual position of applauding Trump’s approach, while Republicans and an array of business groups are warning of dire economic and political consequences if he goes ahead with the tariffs.

Trade politics often cut along regional, rather than ideological, lines, as politicians reflect the interests of the hometown industries and workers. But rarely does a debate open so wide a rift between a president and his party—leaving him almost exclusively with sup-

China targets robust growth as Xi bids to rule indefinitely B EIJING—China’s government pledged on Monday to deliver robust growth, pursue advanced technology and boost military spending while urging the public to embrace President Xi Jinping’s rule as its ceremonial legislature prepared for changes to allow him to stay in power indefinitely.

The plan to end constitutional limits on Xi’s term as president has overshadowed the meeting of the National People’s Congress, which usually is used to showcase economic initiatives and plans for social programs and other government work.

In a nearly two-hour speech to the legislature, Premier Li Keqiang did not mention the scrapping of term limits but emphasized the primacy of Xi and the ruling Communist Party he leads in all aspects of Chinese life.

“Resolutely safeguard General Secretary Xi Jinping’s core status and the authority of the party’s central committee and its centralized and unified leadership,” Li said in a speech to nearly 3,000 delegates to the ceremonial legislature in the Great Hall of the People.

The slide toward one-man rule under Xi, already China’s most dominant figure of recent decades, has fueled concern Beijing is eroding efforts to guard against the excesses of autocratic leadership and make economic regulation more stable and predictable.

The president’s office has few powers, but Xi’s posts as ruling party general secretary and chairman of the commission that controls the party’s military wing, the People’s Liberation Army, already have no term limit. By tradition since the early-1990s, one person has held all three posts at the same time.

“If it gets approved, you can describe his attempt to abolish term limits as really to make China medieval again, not to make China great again,” said Warren Sun, a historian of the Chinese Communist Party at Australia’s Monash University.

T he 64 -year-old X i has appointed himself to head bodies that oversee national security, finance, economic reform and other functions, effectively sidelining Li, the party’s No. 2 figure.

Chinese officials have defended the end of Xi’s term limits as necessary to ensure continuity as Beijing undertakes a sprawling long-range agenda aimed at making state industry competitive and productive, developing profitable high-tech industry, reducing poverty and cleaning up China’s battered environment.

In line with this agenda, Li, the premier, set this year’s growth target at around 6.5 percent, which would be among the world’s strongest if achieved.

It comes amid a marathon campaign to nurture self-sustaining growth based on domestic consumption instead of trade and investment and to rein in surging debt that prompted ratings agencies to cut Beijing’s government credit rating last year.

Li said the target would enable China to achieve “relatively full employment.”

Private-sector analysts have questioned whether Beijing can achieve such strong growth without infusions of bank lending and government spending, which would set back its reforms.

Last year’s growth came in at 6.9 percent, but that was supported by a boom in bank lending and real-estate sales that regulators are trying to rein in amid concern about debt that has soared to the equivalent of 270 percent of annual economic output—unusually high for a developing country.

Li promised progress on an array of politically challenging plans including the restructuring or bankruptcy of “zombie enterprises,” or money-losing but politically favored companies that are kept afloat by loans from government banks.

The premier said Beijing will speed up state-led development of integrated circuits, mobile communications, aircraft engines, electric cars and other technology.

China’s military spending, already the world’s second-highest behind the United States, will rise 8 percent to 1.1 trillion yuan ($173 billion) as Beijing prepares to launch its second aircraft carrier and develop stealth fighters and advanced missiles.

“We will stick to the Chinese path in strengthening our armed forces, advance all aspects of military training and war preparedness,” Li said. He added the military would “firmly and resolvedly safeguard national sovereignty, security and development interests.”

The move to consolidate even more power under Xi comes as foreign governments, already wary of China’s expanding influence abroad, are closely watching shifts toward greater authoritarianism.

Chinese investments abroad in technology and banking are under closer scrutiny while foreign companies and governments complain Beijing hampers access to its markets in violation of its free-trade commitments.

Xi’s ambitious “Belt and Road” initiative to link up Asia and Europe by building roads, ports and other infrastructure has raised concerns about Beijing’s strategic ambitions and debt burdens for host countries.

The move has been met with widespread concern among liberal intellectuals and political observers. Members of the ceremonial legislature, unsurprisingly, ex pressed suppor t for the scrapping of term limits.

“This is conducive to the continuation of the management of our country,” said delegate Li Xiuxiang, a professor at the Jiangxi University of Finance and Economics. “It can keep the system stable over the long-term and lay a good foundation for the system’s gradual reform.”

Legislators also are due to endorse the appointment of economic and other officials picked by the party. That is widely expected to include the promotion of Xi’s top economic adviser to a post overseeing reform. AP

port from his ideological opposites.

“Good, finally,” said Sen. Sherrod Brown, an Ohio Democrat and progressive as he cheered Trump’s move. Sen. Bob Casey of Pennsylvania, a Democrat who has called for Trump to resign, agreed.

“I urge the administration to follow through and to take aggressive measures to ensure our workers can compete on a level playing field,” Casey tweeted.

This moment of unusual alliance was long expected. As a candidate, Trump made his populist and protectionist positions on trade quite clear, at times hitting the same themes as one of the Democratic presidential candidates, Vermont Sen. Bernie Sanders.

“This wave of globalization has wiped out totally, totally our middle class,” Trump told voters in the hard-hit steel town of Monessen, Pennsylvania, during one of his campaign stops. “It doesn’t have to be this way.”

Trump’s criticism of trade agreements and China’s trade policies found support with white workingclass Americans whose wages had stagnated over the years. Victories in big steel-producing states such as Ohio, Pennsylvania and Indiana demonstrated that his tough trade talk had a receptive audience.

Both candidates in a March 13 House election in Pennsylvania have embraced the president’s

plans for tariffs. They addressed the topic last Saturday in a debate that aired on WTAE in Pittsburgh.

“For too long, China has been making cheap steel and they’ve been flooding the market with it.

It’s not fair and it’s not right. So I actually think this is long overdue,” Democratic candidate Conor Lamb said.

“Unfortunately, many of our competitors around the world have slanted the playing field, and their thumb has been on the scale, and I think President Trump is trying to even that scale back out,” said Republican candidate Rick Saccone.

But Trump’s GOP allies on Capitol Hill have little use for the tariff approach. They argue that other industries that rely on steel and aluminum products will suffer. The cost of new appliances, cars and buildings will rise if the president follows through, they warn, and other nations could retaliate. The end result could erode the president’s base of support with rural America and even the blue-collar workers the president says he trying to help.

“There is always retaliation, and typically a lot of these countries single out agriculture when they do that. So, we’re very concerned,” said Sen. John Thune, R-SD. Gov. Scott Walker, R-Wis., asked the administration to reconsider its stance. He said American compa-

nies could move their operations abroad and not face retaliatory tariffs.

“This scenario would lead to the exact opposite outcome of the administration’s stated objective, which is to protect American jobs,” Walker said.

The Business Roundtable’s Josh Bolten, a chief of staff for President George W. Bush, called on Trump to have “the courage” to step back from his campaign rhetoric on trade.

“Sometimes a president needs to, you need to stick to your principles but you also need to recognize in cases where stuff you said in the campaign isn’t right and ought to be drawn back,” he said on Fox News last Sunday. ‘’The president needs to have the courage to do that.”

Tim Phillips, president of the Koch Brothers-backed Americans for Prosperity, noted that Trump narrowly won in Iowa and Wisconsin, two heavily rural states that could suffer if countries impose retaliatory tariffs on American agricultural goods.

“It hurts the administration politically because trade wars, protectionism, they lead to higher prices for individual Americans,” Phillips said. “It’s basically a tax increase.”

The president wasn’t backing down, at least on Twitter, where he posted this message: “Trade wars are good and easy to win.” AP

Republicans in Congress look to keep a low profile

IN this January 21, 2018, file photo, people walk by the US Capitol on the second day of the federal shutdown as lawmakers negotiate behind closed doors in Washington. After last year’s big win on taxes, Republicans controlling Capitol Hill are opting for a scaled-back, controversyfree agenda. President Donald J. Trump’s trillion-dollar-plus plan to boost infrastructure has landed with a thud. Hopes in the House of taking on so-called welfare reform seem likely to fizzle in the Senate. Instead, the GOP-controlled Congress is looking ahead to a year of abbreviated workweeks and low-profile and small-bore initiatives. AP PHOTO/J. SCOTT APPLEWHITE

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A SH I NGT ON — A f te r last year’s successful drive to cut taxes, what does the majority party in Congress do for an encore? The answer for Republicans seems to be, “Not so much.”

For sure, Republicans in Washington feel good about the effect their overhaul of the nation’s tax code is having on the economy, and recent polling suggests it’s getting more popular as the midterm elections draw closer. But looking ahead to other potential legislation to boast about in hopes of boosting GOP chances of retaining control of the House and Senate, the agenda is pretty thin.

President Donald J. Trump’s trillion-dollar-plus plan to boost infrastructure has landed with a thud. Hopes in the House of taking on welfare reform seem likely to fizzle in the Senate. And issues like immigration and now even gun control invite internal GOP divisions at the height of primary season. Repealing and replacing former President Barack Obama’s health-care law is off the table.

Instead, the GOP-controlled Congress is looking ahead to a year of abbreviated workweeks and low-profile and small-bore

initiatives. The House is spending more and more time on the obscure and the arcane; the Senate chamber is being turned over for weeks at a time to routine nominations.

Instead of repealing “Obamacare,” lawmakers are promising bipartisan legislation to free smaller banks from stricter regulations passed in 2010, fund the fight against opioids, and implement the party’s promise for a huge military buildup.

To many Republicans, that’s plenty.

“We’re going to have the largest defense buildup since Ronald Reagan. Most Republicans, they’d consider that a pretty big accomplishment. We’re going to clearly do more on opioids than we’ve ever done,” said veteran Rep. Tom Cole, R-Okla. “They may be secondary issues to most people, but if you can pick off three or four big things like that I think you’ve got something to run on.”

Opioid funding and the Pentagon increases are on track to pass this month as part of a $1.3-trillion catchall spending bill, a follow-on measure to a long-sought bipartisan budget outline that passed in February. That omnibus

bill is one of the few legislative trains that’s guaranteed to leave the station this year.

But for now, the Capitol Hill agenda is remarkably light.

The Senate spent last week on a series of confirmation votes, continuing a pattern since Trump took office of devoting one out of every three weeks, on average, solely to voting on Trump nominees.

And at other times, Majority Leader Mitch McConnell, R-Ky., steers clear of controversial legislation and avoids Democratic filibusters. Every bill that passed the Senate last year, either advanced under filibuster-proof rules or with the support of Democrats. In other words, there wasn’t a single filibuster last year, simply because McConnell kept the floor free of anything that Democrats could block.

The result was that the Senate floor became, for weeks at a stretch, a legislative dead zone.

For its part, the House had a two-day workweek on noncontroversial legislation last week after GOP leaders canceled votes for Wednesday and Thursday, citing the decision to have Rev. Billy Graham lie in honor in the Capitol Rotunda. AP

The World BusinessMirror

www.businessmirror.com.ph

Tuesday, March 6, 2018 A7

Libya’s biggest oil field said to stop production

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IBYA’S Sharara oil field stopped pumping crude oil several days after output plunged at another of the Organization of Petroleum Exporting Countries (Opec) member’s biggest deposits.

The halt resulted from the closing of a pipeline from Sharara to the Zawiya refinery, according to a person with knowledge of the matter. The North African country’s largest field stopped production last Sunday, a second person with knowledge said.

Libya had been pumping 1.1 million barrels a day as of March 1, with Sharara contributing 300,000 of that.

The field is run by a joint venture between the National Oil Corp. and Repsol SA, Total SA, OMV AG and Statoil ASA.

Neither person gave details on the exact cause of the pipeline’s closure or on the likely duration of the production halt. They weren’t authorized to speak to news media and asked not to be identified. Production from Mellitah Oil & Gas BV, a venture with Italy’s Eni SpA that operates the El-Feel field, tumbled on March 1 to 25,000 barrels a day from 75,000 barrels a day, after a protest by security guards shut that deposit. Brent crude prices rose 0.4 percent to $64.62 a barrel at 9:04

Seoul envoy to raise nuclear disarmament in NoKor trip

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EOUL, South Korea—Special envoys for South Korean President Moon Jae-in traveled to North Korea on Monday to relay Moon’s hopes for North Korean nuclear disarmament and a permanent peace on the Korean Peninsula.

The 10-member delegation, led

by Moon’s national security director, Chung Eui-yong, is on a twoday trip that may include talks with leader Kim Jong Un. If that meeting is realized, Chung and others would become the first South Korean officials to meet Kim in person since he took power upon his dictator father’s death in late-2011.

Kim’s barrage of weapons tests over the last year has raised fears of war. But Moon is pressing what he sees as momentum created by North Korea’s participation in last month’s Pyeongchang Winter Olympics. Kim’s sister, Kim Yo Jong, led a high-level delegation south.

If North Korea shows a willingness to disarm, it could indicate a restart of dialogue between Pyongyang and Washington to defuse the North Korean nuclear standoff.

“I will certainly deliver President Moon’s firm resolve to achieve a denuclearization of the Korean Peninsula and genuine and permanent peace on the Korean Peninsula,” Chung said before his departure. He said he’ll push for “in-depth” talks to find ways to help arrange the restart of dialogue between Pyongyang and Washington.

Chung and other envoys left for Pyongyang from a military airport near Seoul later Monday. The delegation includes intelligence chief Suh Hoon and Vice Unification Minister

Chun Hae-sung. The presidential Blue House said the high-profile delegation is to reciprocate the trip by Kim Yo Jong, who became the first member of the North’s ruling Kim family to come to South Korea since the end of the 1950-1953 Korean War. Kim Yo Jong and other senior North Korean officials came to the start and close of the Olympics, during which they met Moon and conveyed Kim Jong Un’s invitation to visit Pyongyang and expressed their willingness to hold talks with the United States.

After its Pyongyang trip, Chung’s delegation is to fly to the United States to brief officials about the outcome of its talks with North Korean officials.

North Korea has repeatedly said it won’t put its nuclear program on a negotiating table, while the United States has made it clear that it doesn’t want talks for the sake of talks and said all options, including military measures, are on the table.

President Donald J. Trump said talks with North Korea will happen only “under the right conditions.”

Moon has yet to accept Kim’s invitation to visit Pyongyang for what would be the third inter-Korean summit talks. The past two summit talks, one in 2000 and the other in 2007, were held between Kim’s late father Kim Jong Il and two liberal South Korean presidents.

Some experts said the North’s outreach during the Olympics was an attempt to use improved ties with South Korea as a way to break out of diplomatic isolation and weaken US-led international sanctions and pressure on the country. AP

Amid China M&A drive, EU rushes for investment-screening agreement

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HE European Union may beef up a plan to screen foreign investments as China’s pursuit of acquisitions abroad fosters political unease in the bloc, according to a key EU lawmaker.

Franck Proust, a French member of the European Parliament, said the assembly and EU governments may reach an agreement by year-end on the first bloc-wide rules meant to prevent foreign direct investments from threatening national security.

Proust is leading the EU Parliament’s deliberations over an investment-screening law proposed last September by the European Commission, the 28-nation bloc’s regulatory arm. The draft legislation needs more teeth to ensure Europe keeps strategic industries in its own hands, he said.

“It is timid,” Proust, who belongs to the Christian Democrats, the EU Parliament’s largest group, said in a March

a.m. in Dubai.

Libya, a member of the Opec, has struggled to boost oil production, amid the lingering effects of civil strife that erupted earlier in the decade. Output has risen from 370,000 barrels a day two years ago, though it remains well below the 1.8 million barrels a day Libya pumped before the ouster and killing of former leader Muammar Qaddafi. Major oil fields, including Sharara and El-Feel, have experienced sporadic disruptions before, occasionally setting back the revival.

Crude loadings at Mellitah, the Mediterranean export terminal for El-Feel, will be “modified” after force majeure was declared for deliveries from the field on February 23, the state-run National Oil Corp. said in a document obtained by Bloomberg. Force majeure is a legal status protecting a party from liability if it can’t fulfill a contract for reasons beyond its control. Bloomberg News

1 interview in his 13th-floor office in Brussels. “We want to be more ambitious and go very fast in the approval process.”

Concerns are mounting across the western world over national security risks tied to foreign investment, particularly by China. Last year, US President Donald J. Trump blocked a Chinese-backed investor from buying Lattice Semiconductor Corp. as a result of national-security worries and Germany moved to shield cutting-edge technologies after a bid by China’s Midea Group Co. for robot maker Kuka AG prompted an outcry.

This trans-Atlantic view contrasts with EU displeasure over Trump’s protectionist stance on trade, including a controversial plan to impose tariffs on foreign steel and aluminum, a position that has aligned Europe with China and highlighted global geopolitical

crosscurrents. Bloomberg News

China defense spending grows as Xi seeks ‘world class’ force

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HINA said defense spending would increase at the quickest pace in three years, as President Xi Jinping pursues a “world class” military capable of projecting force further from the country’s coasts.

The central government’s military outlays are expected to rise 8.1 percent to 1.11 trillion yuan ($175 billion) this year, the Chinese Ministry of Finance said on Monday in its annual report to the national legislative session in Beijing. Last year’s budget called for an increase of 7.1 percent, the slowest pace since at least 1991.

The spending figure is one of the few pieces of official data available as the US and Asian neighbors seek to gauge the development of the 2 million-member People’s Liberation Army (PLA). While the figure equals about one-quarter of US outlays, the Stockholm International Peace Research Institute estimates that China’s actual spending is about 55 percent more than officially stated.

Vice Foreign Minister Zhang Yesui, a spokesman for the National People’s Congress, said at a briefing

last Sunday that China’s defense spending was proportionate to the size of its economy and budget. The country’s military outlays were equal to about 1.9 percent of GDP in 2016, according to Sipri, compared with about 3.3 percent for the US. “China is committed to a path of peaceful development and China pursues a defense policy that is defensive in nature,” Zhang said.

“China’s development will not pose a threat to other countries.”

Besides approving the government’s budget, the National People’s Congress was also expected to appoint Xi to a second term as president and repeal constitutional term limits requiring him to step down in 2023.

The amendment may give Xi more time to advance a pledge in October to complete China’s restoration as a global power by the mid-century mark, including the most significant military overhaul in six decades.

“China is continuing its sustained effort to increase the funding for the PLA—and a good part of that increase will go into efforts to improve China’s nuclear forces and

projection capabilities,” said Tim Huxley, executive director of the International Institute for Strategic Studies-Asia in Singapore. “We are seeing consistent long-term Chinese investment in the development of military technology, which will increasingly rival or better those of the US and Western countries.”

The Trump administration has expressed concern about China’s growing military and economic influence, calling the country a “revisionist power” intent on disrupting the current global order. A US defense strategy document published in January said China “seeks Indo-Pacific regional hegemony in the near term and displacement of the United States to achieve global preeminence in the future.”

Xi has been carrying out a sweeping military overhaul to create a US-style joint command structure and establish a force that can “fight and win wars.” Since 2015 Xi has cut 300,000 troops, arrested scores of generals for corruption and created a new Rocket Force to manage China’s missiles and Strategic Support Force

to oversee cyber operations.

As Xi saves money by trimming troops, he’s extending China’s military reach, including launching the country’s first domestically built aircraft carrier in April. Last year the PLA established its first overseas military base near the US’s Camp Lemonnier naval facility in the tiny West African nation of Djibouti, strategically located near some of China’s top oil sources.

Since 2000 China’s seven biggest naval shipyards have produced more submarines, destroyers, frigates and corvettes than the combined output of India, Japan and South Korea—all of which have ramped up production —according to IISS’s latest annual report on the global military balance.

Premier Li Keqiang said in his opening address to the National People’s Congress that China had “basically completed” its push to reduce the PLA’s ranks. “Our people’s armed forces have achieved a remodeling of their political ecosystem, of the way they are organized, of the structure of their forces and of their conduct and image,” he said. Bloomberg News

Tencent CEO urges ID link for HK and Chinese citizens

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ENCENT Holdings Ltd. Chairman Ma Huateng called on the Chinese government to introduce an ID system that would link multiple sets of travel documents with a mobile phone as part of a plan to boost regional trade between Hong Kong and the mainland.

China’s second-richest man said new technology systems and laws could let Hong Kong residents make electronic payments and cross the border more easily. Ma was speaking at a news conference in Beijing before the country’s legislative council convenes in the capital to set the year’s agenda. He was joined by fellow tech billionaires, such as Baidu Inc. founder Robin Li, who expressed a willingness to list their companies’ shares in China.

“It’s still very complicated and we’d need to make it work with the customs systems but from a technology point of view we can do it,” Ma said. “We have been talking to the chief executive in Hong Kong for quite some time about a number of these issues, including the electronic ID.” Tencent, whose company is best known for the social-media phenomenon WeChat, is headquartered in Shenzhen, just over the border from Hong Kong. While championing greater technology innovation and prosperity, the plan is also a lightning rod in Hong Kong, a selfgoverning city that’s becoming increasingly wary of political meddling from Beijing.

Ma has advocated the integration of the prosperous Pearl River

Delta region, saying Hong Kong, Macau and Guangdong province can be more like the multi-city San Francisco Bay Area technology hub in the US if it gets easier to move around. Hong Kong and Macau have retained their own immigration policies since the British and Portuguese handovers in 1997 and 1999, respectively, and have busy border crossings with the mainland.

Ma suggested last June that Hong Kong and Chinese immigration and customs officials could share locations. Critics responded by saying the idea violated the “ one-country, two-systems” framework.

The billionaire said some Hong Kong citizens fear an excessive flood of talent from mainland China, while other difficulties include standardizing tax benefits.

He said a worker-swap system, where, for example, companies could only hire a tech worker if a local tech worker went abroad, could mitigate those concerns.

He also proposes tax benefits to attract high-end talent to companies in two Pearl River Delta areas—Qianhai and Hengqin.

“It’s a little bit difficult to solve these problems for the time being,” he said. “If we were to look at tax incentives, questions would be asked: ‘Why do only Guangdong people get this, why not others?’”

“And if migration from abroad increases too much, will that pressure the job market in Hong Kong? We’re thinking about these issues.”

Ma also proposed policies to enhance security for online financial

services. Companies should work more closely with regulators to crack down on illegal activities, he said last Saturday.

He also advocated mechanisms that would protect underage people on the Internet and use games to teach important life lessons.

Tencent has been criticized by state media for encouraging gaming addiction.

Speaking on the sidelines of the Chinese People’s Political Consultative Conference, Baidu’s

Li and Sogou Inc. CEO Wang Xiaochuan said they wanted to pursue Chinese listings. Beijing officials are said to be anxious to have the country’s largest corporations— particularly in tech—publicly traded on mainland exchanges.

A number of major companies are expected to float this year, including Xiaomi Corp. and Tencent’s music division.

“We’ve always had a dream to be listed back in China,” Li said. “As soon as we can list we will.” Bloomberg News

A8

The Regions

Tuesday, March 6, 2018 • Editor: Efleda P. Campos

BusinessMirror

www.businessmirror.com.ph

cases slapped on LMWD DENR exec clears Dacon Group Criminal officials for RTC decision defiance of Vinta deaths in Zambo Norte T

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By Jonathan L. Mayuga

@jonlmayuga

HE Dacon Group of Cos. and its subsidiaries, which operate treeplantations in Sibuco, Zamboanga del Norte, are not liable for the flooding at the height of Typhoon Vinta that resulted in deaths of more than two dozen people in the area in December last year, the country’s top forestry official said.

Director Nonito M. Tamayo, chief of the Forest Management Bureau of the Department of Environment and Natural Resources, said the investigation conducted by a DENR review team ruled out that the flooding was caused by the operation of the Dacon Group’s South Davao Development Co. Inc. (Sodaco) and the Sirawai Plywood and Lumber Corp. (SPLC).

The operations of Sodaco and

SPLC were ordered stopped by the DENR in January.

The deaths caused by the flooding in the area eventually triggered a nationwide review of 89 Industrial Forest Management Agreements (Ifma) by the DENR. Tamayo, in a telephone interview, said that based on the assessment of the review team, the flooding that killed more than two dozen

people was caused by the degradation of the forests in the surrounding areas that are far from the Ifma areas of the Dacon Group.

“Based on our assessment, the flood that caused the deaths in the area came from another watershed and river system, and not from the area covered by the Ifmas,” he said.

“It is impossible for floodwater from the Ifma areas to cross ridges and cause the flooding in the area,” he explained.

“Definitely, the flooding came from another watershed and other river systems,” he stressed.

Tamayo said, if ever, the Sodaco and SPLC can be held liable, technically, for clearing the vast area for the establishment, not of tree plantation but for the establishment of palm-oil plantation. He said around 10 percent of Sodaco and SPLC are planted to oil palm, which is a violation of the Ifma terms and conditions of the agreement.

“Technically, it’s conversion because, under the Ifma, they are allowed to do clearing for tree plantation. Palm oil is not a tree,” he said.

However, he noted that, upon inspection, they also confirmed that the Ifma holders are also planting rubber trees and other industrial tree-species.

He said its manner of preparing sites for planting tree seedlings should be improved.

A stop order was issued by DENR Regional Director Felix S. Mirasol Jr. against the Dacon Group upon the instruction of President Duterte during a Cabinet meeting on January 5.

This came after Agriculture Secretary Emmanuel F. Piñol showed Duterte a video footage of the deforested portion of the Zamboanga mountain range to the President.

The massive deforestation in the area is being blamed for the flash floods and mudslides that killed more than two dozen people last December.

Cimatu to hold nationwide E-NGP summit in Kalibo, Aklan

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NVIRONMENT Secretary Roy A. Cimatu will hold a nationwide Enhanced-National Greening Program (E-NGP) Summit in Kalibo, Aklan, on Tuesday to address alleged irregularities in the implementation of the

massive reforestation program.

The Department of Environment and Natura l Resources (DENR) is the lead implementing agency of the NGP, the flagship reforestation program of the Aquino administration, which

was adopted by the Duterte administration.

Pursuant to Executive Order (EO) 26 signed by former President Benigno S. Aquino III on February 24, 2011, it aims to reforest 1.5 million hectares between 2011

and 2016. Before the tail end of the program’s implementation, Aquino signed EO 193 expanding the NGP up to 2028 to reforest the remaining 7.1 million hectares of open, degraded and denuded forest. Jonathan L. Mayuga

HE board of directors (BOD) of the Leyte Metropolitan Water District (LMWD) appointed by the Leyte provincial government filed criminal charges before the city prosecutor’s office against the officers appointed by Tacloban City Mayor Cristina Romualdez.

The provincial government-appointed LMWD-BOD said they were forced to continue the legal battle after the Romualdez-appointed General Manager Pastor Homeres and four board members to the LMWD vehemently defied the decision of the Regional Trial Court (RTC) in Tacloban City issued on February 2.

The groups’ court battle was further aggravated by the Metro Manilabased Local Water Utilities Administration (LWUA) decision that recognized the appointment of Homeres and his board members.

A fact-checking at the LWUA, the BusinessMirror learned LWUA’s decision was approved and signed by the agency’s administrator, Jeci Lapus, and was released on February 20.

The provincial government-appointed LMWD Board said they were extremely surprised and alarmed with Lapus’s decision since this was different from LWUA’s previous decision.

LWUA has recognized the appointees of the provincial government with respect to the judgement of the RTC in Tacloban City.

LWUA leadership had already issued a “confirmation” on the LMWD board appointed by the provincial government, wherein it strongly cited the “fixed term” provision stipulated

in the LMWD Constitution and bylaws. The aggrieved party asserted the LWUA should have stood by its previous decision and maintain its recognition of the ruling of the RTC in Tacloban City instead of favoring the appointees of Romualdez.

The BusinessMirror published decision of the the RTC in Tacloban City, penned by Judge Leonito S. Sabandal, which stated that the “respondents [referring to the LMWD Board appointed by the provincial government] ought to be respected in their status as incumbent members of the board of directors of the LMWD which was the prevailing status at the time this petition was filed up until January 17, 2018.”

Another salient point of Sabandal’s ruling was “the fact, therefore, remains that respondents stay as the incumbent board of directors of LMWD, and no amount of support or force can change that, lest we promote a society where the rule of men prevails over the rule of law.”

The group opposed to Homeres strongly argued LWUA’s support to Romualdez’s men based on the Supreme Court’s (SC) decision on Rama v. Moises case (GR 197146) and in accordance with the mandate of LWUA under Letter of Instructions 744 issued on September 28, 1978, was without merit at all.

The aggrieved LMWD board reiterated and emphasized that the legal arguments of their lawyers who stated that “LWUA misinterpreted the said SC decision to favor the illegally appointed LMWD-BOD.” Nelson S. Badilla

www.businessmirror.com.ph

Global Eye BusinessMirror

Editor: Angel R. Calso • Tuesday, March 6, 2018 A9

China turns fiscal screws while maintaining 6.5-percent red line on gross domestic product

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hina stepped up its push to curb financial risk, cutting its budget-deficit target for the first time since 2012, and setting a growth goal of around 6.5 percent that omitted last year’s aim for a faster pace if possible.

The deficit target—released on Monday as Premier Li Keqiang delivered his annual report to the National People’s Congress in Beijing—was lowered to 2.6 percent of GDP, from 3 percent in the past two years. The 6.5-percent goal is consistent with President Xi Jinping’s promise to deliver a “moderately prosperous” society by 2020.

Policy-makers dropped a target for M2 money-supply growth, saying it’s expected to expand at similar pace to last year. Authorities reiterated prior language, saying prudent monetary policy will remain neutral this year and that they’ll ensure liquidity at a reasonable and stable level.

Xi has ratcheted up his drive to

curb debt risk, pollution and poverty at a time when the world’s secondlargest economy is on a long-term growth slowdown. His efforts to rein in spending contrast with a historic expansion of United States borrowing under Donald J. Trump during a period of economic expansion.

The 2018 targets “suggest slower growth and a fiscal drag,” said Callum Henderson, a managing director for Asia Pacific at Eurasia Group in Singapore. “This makes sense for China in the context of the new focus on financial de-risking, poverty alleviation and environmental cleanup, but is less good news at the margin for those economies that have high export exposure to China.”

Growth handily surpassed 2017’s

target with a 6.9-percent expansion that was the first acceleration since 2010. Economists forecast a moderation to 6.5 percent this year, amid the ongoing deleveraging drive and trade tensions with the Trump administration and a further deceleration to 6.2 percent in 2019.

What our economists say: “Li’s plan for the year is consistent with a moderate slowdown in real growth,” Tom Orlik, chief Asia economist at Bloomberg in Beijing, wrote in a note. “With off-balance sheet borrowing by local governments already slowing, the prospect of a smaller budget deficit means China faces a substantial fiscal drag. Nor will monetary policy provide much support—with Li’s report flagging M2 growth steady from 2017.”

“We will improve the transmission mechanism of monetary policy, make better use of differentiated reserve ratio and credit policies, and encourage more funds to flow toward small and micro businesses, agriculture, rural areas, and rural residents, and poor areas, and to better serve the real economy,” Li said in his report.

Spending to curb pollution will rise 19 percent as authorities strive

to make greater progress on one of their key objectives, Li added. Authorities aim to cut sulfur dioxide and nitrogen oxide emissions by 3 percent and keep reducing smog in key areas. Days with heavy air pollution in key cities have fallen 50 percent over the past five years, according to the work report.

The lower fiscal budget-deficit ratio goal should be seen in the context of the government’s awareness of the risk to systemic stability amid the deleveraging drive, said Pauline Loong, managing director at research firm Asia-Analytica in Hong Kong. “The work report this year is focused throughout on risk management.”

Frenemies: Opec finds US shale oil output an intractable problem

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By Javier Blas | Bloomberg

N front of the Petroleum Club of Midland, Texas—capital of the booming Permian shale region—an electronic display flashes two crucial pieces of information: the oil price and the number of drilling rigs.

For the past year, both figures have been climbing as oil-production cuts by the Organization of Petroleum Exporting Countries (Opec) led to higher prices, spurring added drilling activity in the United States.

But the rise in the latter inevitably threatens the former. With the number of rigs up almost a third over the last year, US production has surged above 10-million barrels a day, surpassing the all-time high set in 1970. That, in turn, puts downward pressure on crude prices, disrupting Opec’s plans. And a lot more shale oil is coming, both in 2018 and beyond, executives and traders said.

“At current prices, the market is incentivizing US shale companies to produce more,” said David Garza, a veteran oil executive who runs the Houston office of energy trading house Gunvor Group Ltd. Opec has been struggling with US shale for almost a decade now. For the first few years, it downplayed the production as a mere blip. Then, in 2014, with the market oversupplied, it decided to fight head-on, opening the spigots and sending oil prices to below $30 a barrel in a war of attrition.

After a two-year pump-at-will period, Opec blinked first and cut production in 2016 in an effort to revive prices.

“Shale oil, I don’t know how we are going to live together,” former Opec Secretary-General Abdalla Salem El-Badri told US oilmen in 2016.

After downplaying and then attacking, Opec has spent the last year making nice with its US shale adversaries, in an effort to understand the magnitude of the problem and, perhaps, convince the rival producers to show restraint. But despite dinner invitations and behind-closeddoors conversations, shale continues to increase output and grab market share.

Rising global oil demand has so far absorbed the extra US crude barrels, limiting the impact on prices. But for the cartel, shale remains as intractable as in the past.

“Opec is struggling to understand shale,” said Daniel Yergin, the oil historian and vice chairman of consultant IHS Markit Ltd. In part, Opec created its own nemesis.

Growth will be supported by 800 billion yuan of tax cuts for enterprises and individuals, while use of special purpose bonds will prioritize “supporting ongoing local projects to see them make steady progress,” the Finance Ministry said.

Still, the augmented fiscal deficit, which includes local government financing vehicles and other off-balance-sheet activities, will remain expansionary at about 10 percent of GDP this year, estimates Liu Li-gang, chief China economist at Citigroup Inc. in Hong Kong.

That’s down from the International Monetary Fund’s estimate of 12.6 percent last year. “ T he recent pace of fiscal

Tech firms question Hong Kong strategy to attract next Alibaba

By Lulu Yilun Chen & Benjamin Robertson Bloomberg

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The silhouette of an electric oil pump jack is seen near a flare at night in the oil fields surrounding Midland, Texas. Bloomberg

After it flooded the market in 2014, oil prices crashed, forcing shale producers to reshape themselves into fitter, leaner and faster versions that can thrive with oil at $50 a barrel. As oil prices recovered, so did drilling.

A year ago, Mohammad Barkindo, the current Opec secretary-general, invited his shale rivals for dinner in Houston during the annual CERAWeek industry conference. It was a first-of-its-kind event and both sides exchanged pleasantries.

But if anyone expected that shale would help the cartel, it’s now clear that United States oil barons are fine with remaining free riders as Opec seeks to instill market discipline. Since the salad-and-chicken dinner last March, US output has risen roughly 1.1 million barrels a day—the equivalent of Opec member Libya.

Barkindo plans to meet his shale frenemies again for dinner during CERAWeek, which beings Monday and gathers thousands of oil executives, traders, bankers and investors in Houston. “One of the lessons learned from this oil-price cycle is that as producers we are all in the same boat,” he said in an interview.

Others inside Opec are sounding exasperated as the resurgence in shale output could force the cartel to prolong its output cuts beyond the end of 2018. Suhail Al Mazrouei, the United Arab Emirates oil minister, believes shale producers should show gratitude. “If you are a shale-oil producer, who brought you back? It was Opec,” he said at a recent industry conference in London. “Without Opec there’d

be chaos in the market.”

In Houston it’s unlikely shale producers will bow to Opec. Instead, more discipline may come from pressure brought by company shareholders. Investors, tired of losses, are demanding shale companies focus on returns, rather than just growth. Moreover, the boom is hitting natural limits: drilling costs are rising, pipeline capacity is limited and workers are more expensive. “Now hiring” signs abound in Midland as the state sees its unemployment rate dip back below the national average. And yet, with oil trading about $10 higher than the average of 2017 the risk is still of more shale growth, rather than less. If US government forecasts prove right, the industry will add another million barrels a day of extra oil production this year.

Top shale producers have told investors they expect double-digit production increases in 2018. EOG Resources Inc., a top Permian operator, said it would increase output 18 percent this year, after a 20-percent increase in 2017. Pioneer Natural Resources, another top shale producer, plans to lift Permian oil output by 19 percent to 24 percent this year, after a 26-percent increase in 2017.

Anecdotal evidence suggests privately owned operators, which don’t disclose their targets, plan 20-percent to 30percent increases this year.

“US shale production is going to continue growing strongly,” said Mike Loya, the Houston head of Vitol Group, the world’s top independent oil trader.

stimulus is unsustainable and unnecessary,” said Stephen Jen, CEO of Eurizon SLJ Capital Ltd. in London.

“A curtailment in the official fiscal and growth target makes sense.”

Other key economic objectives included: n Retail sales growth of about 10 percent. n Consumer prices will rise about 3 percent, the same as last year’s ceiling. n Creation of 11 million new urban jobs, the same as last year. n Yuan exchange rate to remain stable at an equilibrium level.

The report also said that an increase in the thresholds for personal income taxes was planned.

Other 2018 objectives included: n Cut energy use per unit of GDP by more than 3 percent, versus 3.4percent goal in 2017. n Steadily push forward legislation for a property tax. n Keep registered urban unemployment rate under 4.5 percent, unchanged from 2017. n Cut about 30 million tons of steel capacity, compared with 50-million ton goal last year. n Defense spending is expected to rise 8.1 percent, the quickest pace in three years. Bloomberg News

echnology companies and service providers are questioning key parts of Hong Kong’s plan to allow dual-class shares, just as firms, including Xiaomi Corp. and Tencent Music Entertainment Group, are considering going public.

Hong Kong Exchanges and Clearing (HKEX) Ltd. wants to change its rules so that company founders can stay in control after their firms list, but the proposals may cause trouble for China’s tech titans, who use an unusual type of corporate structure that restricts foreign ownership of their firms. Representatives for the companies are lobbying for HKEX and the Securities and Futures Commission to clear up the issue, they said.

The regulators’ response will play a big role in whether businesses, such as Xiaomi, that use the so-called variable interest entity structures choose to list in Hong Kong. HKEX is seeking to compete head-on with markets in New York for coveted listings, after it saw Alibaba Group Holding Ltd., another VIE, go public in the United States.

Alibaba is now the world’s eighth-biggest company by market value.

Smartphone-maker Xiaomi is laying the groundwork for a dual-class-structure listing in Hong Kong this year while also being open to the idea of a secondary listing on the mainland, but no decision has been made, according to people familiar with the matter. Xiaomi declined to comment. Tencent Music Entertainment, which uses the VIE structure, is also considering whether to list in the former British colony. Conditions in HKEX’s proposal would see the super-voting rights of founders’ shares expire in circumstances including stock transfer and death. That could run up against the mainland’s draft laws that cover VIE structures, said the people. China’s Ministry of Commerce proposed in 2015 that companies with such setups need to ensure that Chinese investors hold control of the company or ask for a State Council waiver.

The potential rule clash could mean that, for example, an Internet company would lose its Internet Content Provider license in the world’s most populous country, said Will Cai, a capital markets partner at Skadden, Arps, Slate, Meagher & Flom Llp..

An HKEX spokesman said the bourse sees supervoting rights and China’s foreign ownership rules as separate issues that aren’t in conflict. The former British colony’s ban on selling shares with different classes played a role in Chinese companies that now have a market value of more than $740 billion, holding their initial public offerings in New York, according to data compiled by Bloomberg.

“There are companies listed on the exchange with mechanisms to comply with the draft foreign investment law,” she said. “For example, mechanisms to ensure that the majority of the board of its controlling shareholder is made up of Chinese nationals.”

Pushing back

Industry players are also lobbying for other changes to HKEX’s consultation paper, which was published on February 23. One issue is a clause that would end a dual-class structure if there are changes to class rights or the articles of a company, the people said. The proposal would mean that special-voting rights holders with less than a third of total issued capital could have their rights removed by remaining shareholders, according to a submission to the regulators seen by Bloomberg News.

The HKEX spokesman said that under its rules, an effort to change or remove the rights attached to an existing class of shares requires the approval of the relevant majority of holders of that class. The exchange interprets that this would also apply to super-voting rights shares, she said.

HKEX’s dual-class proposal is less flexible than the current US rules, said Bonnie Chan, a Hong Kong-based partner at Davis Polk & Wardwell Llp. Dozens of Chinese companies, including Alibaba and Baidu Inc., have chosen to list on the New York Stock Exchange and Nasdaq Stock Market in part because they permit dual-class shares. Hong Kong’s consultation period ends on March 23.

IN this file photo, pedestrians cross a street in front of the HSBC Holdings Plc. headquarters in Hong Kong, China. Hong Kong's work force will shrink to 3.49 million in 2029, from a projected 3.58 million in 2020, according to a government report. Bloomberg

A10 Tuesday, March 6, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

www.businessmirror.com.ph

editorial

Foreign restrictions

L

ast Tuesday members of President Duterte’s Charter change (Cha-cha) consultative committee (Con-com) voted in favor of a presidential form of federal government, the same system followed in the United States.

The federal-presidential system adopts the current setup of a national government with three branches—Executive, Legislative and Judiciary—but with the country divided into federal states having their own legislature and local governments.

The President’s Con-com said they will next focus on Charter amendments concerning the economy using inputs from business chambers and advocacy groups.

The Joint Foreign Chambers (JFC) of the Philippines, the Makati Business Club (MBC), the Financial Executives Institute of the Philippines (Finex) and the Management Association of the Philippines (MAP) have already submitted their position papers to the committee.

Finex, MBC and MAP said in their joint statement that there is a need to amend the Constitution to make it “more adaptable and responsive to current social and economic realities.”

“We believe this is a necessary action in helping us realize the aspiration of a more inclusive and sustainable growth,” the statement read.

The group called for easing foreign-investment restrictions, as this “may also be critical” in meeting their commitments to the Asean economic community and strengthening trade ties with other countries.

“The Philippines has enjoyed enhanced growth prospects and is on the radar screen of the international investment community—and these will be further improved by higher foreign investments coupled with improved environment in doing business in the country. It will be unfortunate if the Philippines fails to take advantage of this golden opportunity and realize the potentials that a liberalized trade and investment regime will bring,” the statement read.

In its statement, the JFC said “restrictions on foreign investment make the economy less competitive by imposing constraints to growth that result in lower investments, fewer jobs, poor infrastructure and noninclusive development.”

Foreign chambers of commerce and other big business interests have been clamoring for Cha-cha to remove foreign-investment restrictions for the longest time. There is really nothing new in these noises.

They have been very vocal in criticizing restrictions on foreign ownership of land and other nationality requirements in public utilities, including those on electricity, water, telecommunications, public transportation and other sectors, such as banking and advertising. Their premise has always been that lifting foreign ownership or nationality restrictions (as others prefer to call them) would lure more investors into the country, but is it really just these restrictions in our Constitution that impede the influx of foreign investments?

There have been other complaints for sure, like the lack of infrastructure, the high cost of electricity, corruption, the flip-flopping state policies and other problems.

Corruption has been a major issue in partnership agreements between local and foreign entities. More than a few foreign companies have tried to bend the rules by getting dummies in order to get a sweetheart deal from the government.

Is the system to blame? Are the nationality restrictions at fault? Or is it the greed and corruption of those involved?

Some say that corruption can be avoided if our Constitution is more open to foreign investors, if there were no nationality restrictions to begin with, because then there would be no need to circumvent the law through dummies.

Maybe, and maybe not.

There will always be investors, be they foreign or local, who will skirt laws and government regulations in order to do business. The bottom line is, we also do not want the wrong kind of investors here in the country.

If they cannot follow our laws, should we change our laws to accommodate them?

Or should we first try to eliminate graft and corruption and the unscrupulous government officials who favor under-the-table deals? There are many who believe that economic reforms need not require changes in the Constitution.

True, our total foreign direct investments are still measly compared to our neighbors in the region. We need more investment vehicles for more foreign investments to flow in for sure. However, let us not put all the blame on the limits of foreign ownership and the 1987 Constitution.

The Philippines has enjoyed strong economic growth even without Cha-cha. Many foreign investors still see the Philippines as a good country to invest in despite our so-called nationality requirements.

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OFW deployment ban a timely move Manny B. Villar

THE Entrepreneur Continued from A1

K

uwaiti police were out to serve an eviction order in an apartment in Al-Shaab, Kuwait, when they discovered the body of 29-year-old Joanna Demafelis, a household worker, inside a freezer. Her body bore torture marks, an indication that she was strangled to death.

Two days after the discovery of Demafelis’s body, the President ordered a ban on the deployment of overseas Filipino workers to Kuwait.

The Middle Eastern country hosts about 250,000 OFWs, of which 75 percent are domestic workers.

Directing himself at Kuwait and other host governments, the President stressed he was not asking for special treatment for OFWs, but respect for their dignity and basic human rights.

Demafelis’s employers, Mona Hassoun and Nader Essam Assaf, were recently arrested in Syria and Lebanon as the prime suspects in Demafelis’s death, but the Department of Labor and Employment (DOLE) said the ban on OFW deployment to

Kuwait would remain. At the same time, President Duterte said the deployment ban would extend to other countries where OFWs are abused.

The DOLE said it was considering a ban on the deployment of OFWs to Saudi Arabia because of reports of abuses committed on Filipino workers in that country.

Reports quoted Labor Secretary Silvestre H. Bello III as saying Filipino household workers in Saudi Arabia were even illegally traded to other employers through “auctions.”

Saudi Arabia, the top destination for OFWs, hosts an estimated 2 million OFWs. The President acknowledges that the jobs provided by other countries to Filipinos contribute

Looking at the ‘losers’ John Mangun

OUTSIDE THE BOX

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hey carried their pathetic signs with equally pathetic messages. Looking at them, one could feel some sympathy, but at least a few should have seen it coming.

Back then, in the 1930s, the signs read: “$100 will buy this car. Must have cash. Lost all on the stock market.” Now we see posts on Facebook: “They said to put money in here, so I’m in now. Wow, it won’t go up.

Return my money!”

Human nature is relatively simple and incredibly powerful. All the books from the famous 1937 Think and Grow Rich to the latest self-help book on the shelf repeat the truth that attitude determines success or failure. And the one dominant trait of the successful person is confidence.

That is the firm belief—that success is probable, if not inevitable.

Virtually every economic condition is determined by the public’s

level of confidence. We talk about all the reasons a nation’s economy goes into hyperinflation. Yet, in all of the examples, it came down to the public’s confidence in the government, and that was manifested in their confidence in the future value of the currency. If you look at US consumer confidence measured from 1952, consumer confidence in the future peaked before economic growth did, and bottomed out before the economy started up again.

People lose faith in the future, and then external conditions reflect that lack of faith. The same is true for stock prices. Granted, there may be concrete reasons people begin to lose their confidence. However, we

significantly to the Philippine economy, through the remittances they send to their families.

According to the Bangko Sentral ng Pilipinas, cash remittances last December alone rose by 7.1 percent to $2.74 billion. This brought the full-year cash remittances to $28.1 billion, 4.3 percent higher than the $26.9 billion in 2016 and faster than the pace earlier expected by the government at 4 percent.

The OFW remittances kept the Philippine economy afloat during previous global crises, which sent other countries to recession. Today, these remittances remain as a major force in driving economic growth, aside from the comforts enjoyed by the families of OFWs. Nevertheless, I agree with the President’s position that such benefits should not come at the cost of the lives of the OFWs. In a speech before a group of Filipino-Chinese businessmen last February 19, the President said he was prepared to accept the difficulties that the ban on OFW deployment would bring on workers aspiring to work abroad, but he would not allow Filipinos to be abused and treated inhumanely.

I believe the President did right in imposing the ban on OFW deployment. Actually, I feel it should have been done long before the Demafelis case, because so many OFWs have

also have the ability to ignore any sort of “bad news” if we decide that it is not important enough to shake our confidence.

We can see this is the price movement of the shares of individual companies. While it is more fun to focus on the winners, we learn more from looking at the losers.

Three of the top 5 losing issues in 2018 are DoubleDragon Properties Corp. (DD), Primex Corp. (PRMX) and Xurpas Inc. (X). Each of these issues was a rising star at some time in the past two years. Yet, their dismal performance in the first two months of 2018 was a continuation of a declining trend. What caused the confidence to flee followed by the price decrease?

DD was the corporate wedding of the century and the offspring— or the stock—was supposed to be rich, beautiful and smart. While the financial numbers have been good, it seems as if their flagship CityMalls were not exciting enough to manifest in a higher stock price. Maybe more balloons at the grand openings might have helped.

PRMX is a conservative, familyowned and -operated company that is the best example of “good company;

died and been subjected to cruel treatment by foreign employers for many years.

The government should look not just at the labor laws of host governments but also at the culture and practices in countries, because there may be some that treat and consider female workers more as slaves rather than employees.

When it comes to compensation, I don’t believe the amount received by household workers are worth the expense they incur in getting the job or the risk and lack of freedom they face inside their foreign employers’ houses, which are hidden from authorities.

There are an estimated 11 million migrant Filipinos throughout the world, the majority of whom are OFWs, and millions are in the Middle East. They have served their home country well, so we call them heroes.

It is time to demand that, as President Duterte said, they be treated with respect and dignity.

With the Philippine economy sustaining robust growth and spreading development to the countryside, I feel we are getting closer and closer to my personal dream: that the day will come when Filipinos will no longer have to leave their families to find a job far from home.

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

bad stock.” Holding virtually no debt and with steady earnings growth, what is there not to like? But, if the stock was a child of the company, people left the five-star debut early to see an old Kris Aquino movie because the debutante is so boring. So is the stock.

Sometimes, you can be a victim of your own description. X said that it is a “consumer-technology company” and “content provider.” That must mean the Filipino version of Facebook or maybe Google. Here again, X is a solid tech company that is positioning itself for the future, not to raise a lot of money to build a high-tech office.

Each of these companies probably deserves a higher stock price than it currently has. But investors’ expectations were not met one way or another, and that has caused a drop in confidence and, therefore, a fall in stock price. Perhaps they should have included “Blockchain” in their corporate name.

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

Opinion BusinessMirror

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Is China destined to dominate technology?

FDA reforms scaring some insiders?

Ernesto M. Hilario

ABOUT TOWN

Christopher Balding

BLOOMBERG VIEW

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he digital world relies on data, and no one produces more of it than China’s 1.4 billion Internet users. The vast wealth of information these users emit has helped Chinese tech companies become some of the world’s best, and led to speculation that China will inevitably dominate future technologies, such as artificial intelligence. But this is almost certainly mistaken. Data, it turns out, isn’t destiny.

Even in the digital age, data may have a declining utility. Tech companies already have millions of users. To believe that China will have a significant advantage due to its population size requires us to believe that each additional user adds as much to an informational ecosystem as the first one. If that were true, then India— with nearly as many Internet users as China—should be just as likely to be the next world leader.

In reality, a data set’s usefulness can face diminishing returns to scale. Twitter Inc., with some 300 million active monthly users, faces nearly no data disadvantage against WeChat, with 1 billion users. Although a larger sample size will generally include more significant correlations, the probability of finding statistical significance at 1 billion users but not 300 million is effectively zero. Plus, larger populations tend to be more susceptible to false positives.

Tech companies, moreover, don’t crunch data in simplistic ways. They commonly use a technique called clustering, for instance, in which users are lumped together based on their commonalities. Rather than relying on blunt-force statistics, clustering separates people into refined groups that can be more precisely targeted. This leads to more efficiency and better results. Often, the sophistication of the clustering model is more important than the size of the data set.

Perhaps most important, humans still matter. A huge data set isn’t worth much without skilled workers to distill it and extract insights. Dating sites are continually updating their algorithms to account for what people say they want in a partner, for instance. But it turns out that what they don’t say can be just as important, if not more so. Algorithms are poorly suited for understanding such behavior. Past a certain point, more data is useless without people who can make sense of it. In this world, China faces some steep challenges.

One is attracting talent. Although China has a burgeoning tech scene, high-level data scientists are in short supply. The Communist Party has been struggling to lure tech workers from abroad, despite offering generous incentives. This is largely due to China’s Internet restrictions: In ad-

Google and Facebook Inc., with much more international experience, have proven adept at understanding a global audience and picking up on diverse sociocultural norms. Extracting ever more data from local users won’t help Chinese companies compete at that level.

Data is the lifeblood of the digital world. But learning how to use it requires human talent, insight and creativity. In that race, China’s tech giants still have a ways to go. dition to blocking popular sites such as YouTube, the government also prevents access to software libraries like Github and academic sites like Google Scholar. Given a choice, top technologists will look elsewhere.

Another concern is privacy.

Because China’s privacy laws aren’t strictly enforced, tech companies can monitor their users intensively, offering them an advantage in everything from optimizing ads to assessing credit risk. As one executive put it, these companies “know where you’ve traveled, what movies you saw, what restaurants you ate at.” This intense surveillance may be a growing liability, however. A significant consumer backlash is building in China, driven partly by ubiquitous fraud and identity theft. And Chinese tech companies are running into stiff resistance when trying to expand into more privacyconscious markets overseas.

This raises a final concern. Chinese tech firms are largely confined to China, where they’re protected from competition. This gives them a dominant market position and other advantages. But a platform that censors searches for Winnie the Pooh simply isn’t going to be competitive overseas. Google and Facebook Inc., with much more international experience, have proven adept at understanding a global audience and picking up on diverse sociocultural norms. Extracting ever more data from local users won’t help Chinese companies compete at that level.

Data is the lifeblood of the digital world. But learning how to use it requires human talent, insight and creativity. In that race, China’s tech giants still have a ways to go.

Bacoor wants Strike back as mayor MAIL

I am one of the thousands of residents of Bacoor City in Cavite who are urging Rep. Strike B. Revilla of the Second District of Cavite to return as the city’s chief executive.

Many Bacoor citizens representing the labor sector, senior citizens organization and the youth sector want him back to continue his task of improving the lives of poor residents and to help modernize the city to be

able to respond to the challenges of the 21st century. To prove our support for him, we asked him to run again for mayor in the next local elections during his birthday celebration last Friday, but all we got as answer was a smile from him.

Strike is a three-term mayor of the city and recognized as the champion of the poor, responsible for turning the city around to become a premier Philippine city. He built world-class school buildings, hospitals, government offices, a new city hall building and plenty of covered sports facilities all over Bacoor City.

To cement his legacy, we want Rep. Strike to return and lead Bacoor City once more.

Fe de la Cruz Senior Citizens Group Barangay Alima, Bacoor, Cavite

Tuesday, March 6, 2018 A11

I

F the new director general of the Food and Drug Administration (FDA) wants to pursue the reforms she has initiated in the agency, she better learn to watch her back.

It looks like some big business interests are not happy that these reforms are loosening their stranglehold on the FDA, and their lackeys inside the agency are reportedly plotting a demolition job against her.

Word is going around that some powerful interests in the pharmaceutical sector are looking for “media allies.” This is reportedly in connection with an orchestrated move to get current FDA Director General Nela Charade Puno out of her post.

Puno should not take this lightly.

The reforms at the FDA have apparently hurt the “underground economy” involving some insiders and have adversely impacted the even bigger economic interests of some industry giants.

Reports say a move by Puno to prohibit direct transactions between FDA officials and employees with external parties has triggered a silent howl. It appears Puno has required industry players and those applying for FDA permits and certificates to

course their requirements through a central receiving desk. It is that desk which fans out the documents received from external parties to the proper department within the FDA. Puno should realize that she has just jeopardized a “major industry” in government offices called “facilitation.”

It is a fact that the so-called facilitation fees in many frontline government offices bring in bigger revenue to “facilitators” compared to what they officially receive by way of government wages.

It appears this is the very same FDA policy which placed a senior FDA official in hot water.

This FDA official reportedly violated the rule and directly received a computer device that contains electronic information from a courier of a major international business interest. The said official publicly admitted the act and insinuated that the intended final recipient of that fatal USB was Health Secretary Francisco

T. Duque III himself.

Duque sacked the official a few days after that incident.

Another move that has reportedly roused the ire of some FDA officials against their director general was the latter’s move to form a Task Force to audit the certificate of product registration (CPR) issued for the dengue vaccine, Dengvaxia, during the past administration.

Puno’s Task Force has reportedly made some key FDA officials nervous since a number of them may have played crucial roles in the approval of that CPR. Puno created that Task Force in the wake of her own assessment and declaration before the Senate Blue Ribbon Committee that the process of approving the CPR for Dengvaxia had been “hasty.” Puno should expect that those who were part of what she claims to be a hasty approval process should now want her out and get even with her.

There are concerns that the oust-Puno move is actually being backed—financially and morally— by big business interests.

This is not surprising. We were told that Puno had been rather “unaccommodating” when it came to big business interests. Her campaign against counterfeit food and health products also earned for Puno the ire of these companies.

We recall that one particular big company had already mobilized its media mouthpiece—a foreigner who has always kibitzed on local issues—

Why Putin is rattling his superweapons Leonid Bershidsky

BLOOMBERG

R

ussian President Vladimir Putin’s surprise dissertation on Russia’s new strategic weaponry, attached to Thursday’s state of the nation address, mixed some well-known technological advances with a few genuine revelations. But the technical specifics are perhaps less important than the message Putin sent to the United States: The cost of a conventional war remains far too high.

Putin’s big point was that Russian nukes have myriad ways to penetrate US missile shields, and will have many more before too long. The nuclear-capable hardware the Russian leader advertised with computer-generated videos can be ranged from the well-known and combat-ready to the iffy.

The RS-28 Sarmat intercontinental ballistic missile probably has the ability to bypass existing US antimissile defense systems—if only because they aren’t dense enough. The Avangard hypersonic boost glide vehicle, known to experts as Object 4202, is designed to avoid shields by flying in the upper reaches of earth’s atmosphere at a supersonic speed. It can fly at Mach 20, “moving toward the target like a meteorite, a burning ball, a ball of fire,” Putin marveled. Both are ready or near ready to deploy.

Further behind is the underwater drone Putin described, known as the Status 6 strategic nuclear torpedo, which would be much harder to track than submarines. It’s not news

to Americans, though: It even got a mention in the recently published US Nuclear Posture Review. “Typically the US doesn’t declassify anything to complain about it until it’s already deployed,” says Michael Kofman, a military analyst who is a fellow at the Kennan Institute in Washington, D.C. Putin’s unveiled three other weapons for the first time. The Kinzhal (Dagger), an air-launched missile constructively similar to the groundlaunched Iskander; a ground-based laser weapon; and a low-flying, nuclearpowered cruise missile that can supposedly dodge both hills and missile defense systems. That inspired some disbelief—a nuclear engine is heavy and difficult to fit in a missile. Of the three, only the Kinzhal appears to be close to being commissioned.

According to Kofman, Putin failed to mention two new weapons that had earlier created some buzz in the expert community: the Tsirkon antiship supersonic missile and the RS-26 Rubezh ICBM. “This is the concerning

story: Russian weapons will disappear from the news for a long time which suggests that they’re making progress,” Kofman says.

Putin’s boast about the many young scientists leaving behind Soviet designs while building next-generation technology was only partly true. There’s nothing particularly new about an ICBM such as Sarmat, and nuclearpowered missiles and torpedoes were in development both in the Soviet Union and in the United States in the 1950s and 1960s. Back then, however, the technology was prohibitively costly.

Putin is right that only relatively recent technological advances made them, as well as hypersonic missiles, feasible.

Experts can argue about whether Putin oversold the new weapons’ supposed invulnerability to US missile defense systems, especially those that, like the weapons themselves, may still be in development. US officials have already claimed that the country was fully prepared for whatever Putin could throw at it. The problem with these arguments is that they bring alive the terrifying reality of a nuclear war between the United States and Russia; they provide symmetry to Putin’s thinly veiled threats.

The nature of those threats, meanwhile, is more important than the credibility of Putin’s claims about the power of his superweapons. It would be wrong to read this part of Putin’s state of the nation address as electioneering ahead of Russia’s March 18 presidential ballot. Putin’s “victory” in the fake election is in no doubt, so he doesn’t really need a nuclear argument for Russians.

Besides, he has long been more interested in foreign policy than in domestic matters. His message is aimed squarely

CEOs lead where politicians won’t

M

ore than a few large US companies have moved on guns in recent weeks.

Dick’s Sporting Goods said it will no longer sell semiautomatic rifles.

Wal-Mart and Fred Meyer stores won’t sell guns to anyone under 21.

Delta, United and assorted car-rental companies are ending discount and sponsorship programs with the National Rifle Association (NRA), which continues to oppose basic gun-safety measures.

Yet, the only gun-safety bill Republican leaders seem willing to consider is one that would make government agencies submit records to the background-check system—something they should

already be doing.

Why are CEOs and members of Congress responding so differently?

Business leaders are sensitive to changes in the market because they don’t like losing customers.

When consumer preferences and opinions change, companies adjust.

Polls show that a clear majority of Americans and gun owners support the kinds of changes the companies have made. In this case, good policy is good business.

Political leaders, oddly enough, are sometimes more sensitive to a narrower slice of opinion. On guns, they often discount the view of most of their constituents and pay closer attention to the people who vote in

primaries—a fraction of the general electorate, holding more extreme views. As a result, groups like the NRA can take politicians hostage by threatening to block their reelection.

President Donald J. Trump is aware of this dynamic. In a White House meeting this week, he called out members of his own party for being NRA toadies: “They have great power over you people,” Trump told them. He’s right.

Initially, Trump pushed Republicans to “come up with a strong, strong bill, and really strong on background checks.” He said the bipartisan bill to expand background checks to nearly all gun purchases, which didn’t make

to question the wide coverage of the FDA’s regulatory powers.

This same foreigner who had always championed big business interests here now appears to be leading a multi million public relations blitz in defense of a beleaguered and controversial pharmaceutical product and to undermine the accomplishments of FDA under Puno.

In fairness to Puno, her reforms at the FDA appear to have gotten the backing of Duque.

Duque’s support is crucial to these reforms. By her lonesome, we doubt if Puno can withstand a well-funded campaign against her by the vested interests that her reforms have disadvantaged.

Duque’s move to back these reforms are already paying off.

For one, we heard that the FDA has gotten an ISO certification recently.

This means its processes conform to global standards of transparency, efficiency and sound management.

If we correctly recall, these have also been the same standards Duque had advocated for the government sector when he was the chairman of the Civil Service Commission.

It will be interesting to watch how this alleged big business-backed PR efforts against the FDA head would prosper.

It may have gotten the support of some disgruntled FDA insiders.

We doubt if that move will get public support.

E-mail: ernhil@yahoo.com.

at the US, which, in its recent doctrinal documents, has revived the idea of superpower competition. Says Kofman: The United States said across the board that we’re going to take back dominance, and negotiate only from a position of strength. [Defense Secretary James] Mattis threw down the gauntlet, and Putin picked it up saying, Thank you, I accept your challenge, here is my message back to you after reading your National Defense Strategy and Nuclear Posture Review.

Putin and his generals know well that they cannot win a conventional war against the US. The Russian military, of course, wouldn’t be as easy to defeat as a handful of Russian mercenaries were last month at Deir-ez-Zor, but it would still be an unequal battle: Experience, superior equipment and numerical strength are all on the US side. So Putin is stressing the increasing quality of his nuclear deterrent.

Putin is showing his teeth from a position of weakness, seeking to make the US understand that its strength is irrelevant in dealing with him. It’s unlikely, however, that the US will read his message as he intends: It will want to keep its position of strength and more likely engage in a new arms race than sit down to talk about arms control and some accompanying deal to divide up spheres of influence. The new weapons are Putin’s gift to Western generals: They will show them during budget discussions, as Sir Nicholas Carter, chief of the United Kingdom General Staff, did with a boastful 2013 Russian video earlier this year. They’ll get more money for a war Putin doesn’t intend to fight—and his plea to be accepted as an equal, reiterated in the state of the nation speech, will likely be ignored again.

it through the Senate, should also raise the age for purchasing a semiautomatic rifle to 21. But the White House is already showing signs of retreat, a familiar pattern for a president who routinely flip-flops on major policy issues.

Voters need to take matters into their own hands. They should call their legislators and demand they support universal background checks and other steps to keep guns away from dangerous people. And if their elected officials refuse, voters should vow to take their business elsewhere. That’s how it works for consumers—and it can work that way for voters, too, if they exert themselves. Bloomberg View

2nd Front Page BusinessMirror

A12 Tuesday, March 6, 2018

Boracay stakeholders protest ‘violators’ tag A

By Ma. Stella F. Arnaldo

@akosistellaBM Special to the BusinessMirror

FEW stakeholders on the popular island resort of Boracay are protesting their naming as alleged violators of environmental and easement laws.

In a text massage, Isidro A. Consunji, chairman of the board of leading property developer DMCI, said: “As far as I know, we have all permits.” In last Friday’s Senate hearing, DMCI’s resort-cum-leisure homes Alta Vista de Boracay was declared by the Department of En-

Senators. . .

vironment and Natural Resources (DENR) as having constructed their structures on forestland, which is supposed to be protected from any construction under the law. (See, “DENR chief wants to keep Boracay open,” in the BusinessMirror, March 4, 2018.)

A spokesman also said the company is “studying the exact allegations [against them] so they can reply directly to these.”

For his part, Juan Elizalde, owner of D’Mall, a well-known spot for recreation, dining and retail on Station 2, told the BusinessMirror they were “issued an ECC [environmental compliance certificate] by the DENREnv i ron ment a l M a n a gement Bureau, Region 8, Iloilo City, on November 16, 2004, and has always complied with all government permitting requirements relative to its business.”

The integrated retail-dining area was named by the DENR during the Senate hearing as having been built allegedly on wetlands, also a protected area.

Based on old maps of Boracay, Cimatu noted that the island actually had nine wetlands but now only four remain, as structures have been illegally built on most of them.

Some stakeholders also blame D’Mall for causing the f loods in the area, because they said it was a natural “catch basin.”

But Elizalde explained: “There was a creek running through the property. The engineers built a box culvert to channel the creek through the property. It was only when other structures were built around D’Mall that the flooding began.” He added that the D’Mall has always been compliant with the easement regulations and the solid waste management law.

See “Boracay,” A2

Continued from A1

The Speaker and his rare ally from the opposition, Rep. Edcel C. Lagman of the First District of Albay, are authors of separate bills, now consolidated, seeking either divorce or dissolution of marriage.

Senate’s mood

For all of Alvarez’s confidence in getting his supermajority to approve the consolidated measure in the House, however, the outlook is totally different in the Senate.

Several senators, responding to an informal survey by the BusinessMirror, indicated strong opposition to the divorce bill, offering instead to review existing processes for civil annulment of marriages on the rocks.

Senate Minority Leader Franklin M. Drilon, in a text message, replied “NO” in all caps when asked if he will vote in favor of the divorce bill.

Drilon shared the view that the nation is better off reforming current laws on civil annulment. “I believe we can reform our laws on civil annulment to make it less tedious and less expensive.”

Explaining his strong opposition to passing a divorce law, the Senate Minority Leader invoked the Philippine Constitution, which, Drilon said, “imposes on the State the duty to protect and uphold the sanctity of marriage.”

Sen. Emmanuel Joel J. Villanueva also categorically rejected the matter, telling the BusinessMirror: “I am against divorce. I think it undermines the sanctity of marriage. Couples should seriously reflect on the seriousness of marriage before entering into one.”Still, Villanueva, son of Jesus is Lord Movement leader Bro. Eddie Villanueva, acknowledged this: “The reality, though, is that not all marriages will be successful,” and offered this option instead: “I support the simplification of our annulment laws to make it effective and accessible to the poor.”

Sen. Paolo Benigno A. Aquino IV pointed out that currently, there is no bill filed in the Senate regarding divorce, “and we are not inclined to file one.” Like his peers, he supported curing instead the existing setup on annulments. “In the past, I have stated that we can make the current legal processes more affordable and accessible to our people.” Aquino has an additional option for couples separating: “We are also studying a measure where a successful church annulment will also mean a civil annulment.”

Sen. Francis G. Escudero, whose first marriage was annulled, and who has since wedded actress Heart Evangelista, said he favors “making the existing process of annulment under the Civil and Family Code more accessible and affordable instead of passing a new law on divorce.”

Sotto, who has traditionally taken a conservative stance on issues where the Catholic Church has a strong position, called the notion of passing a divorce bill “malabo [dim].”

He said he sees a greater chance “for relaxing or loosening the grounds for annulment.” He thinks Speaker Alvarez’s so-called dissolution of marriage bill might stand a better chance, describing the Lagman bill filed by Lagman as “confrontational.”

Sotto has been married for nearly 50 years to the same woman, singer-actress Helen Gamboa, a length considered rare for showbusiness couples.

www.businessmirror.com.ph

Hike in PCC M&A threshold to spur graduation of SMEs Continued from A1

Person and P2 billion for the Size of Transaction.

This is the first time that the PCC recalibrated the thresholds since the Philippine Competition Act was enacted with the P1-billion default threshold.

The thresholds are used to determine if a transaction triggers premerger requirements to the PCC. Under Section 3 of the implementing rules and regulations, parties to a transaction must notify the commission if they reach thresholds relative to two areas: Size of Person and Size of Transaction.

The Size of Person refers to the value of assets or revenues of the Ultimate Parent Entity of at least one of the parties, while Size of Transaction refers to the value of assets or revenues of the acquired entity.

In February 2017, the PCC initiated a preliminary review of the threshold, but concluded that “there is a sound basis to maintain the P1-billion threshold.”

The agency received comments that its threshold was too low and that it could mean additional delays for companies engaged in M& A transactions while, at t he same,“overburdening” t he competition agency.

The PCC said it finds it “reasonable to increase the initial threshold provided by the Philippine Com-

petition Act and its implementing rules and regulations.”

“The adjustment stems from various considerations, including the size of actual notifications to date, the country’s economic growth, overall inflation and efficient use of the commission’s limited resources,” PCC Chairman Arsenio M. Balisacan said in a statement.

The memorandum circular also establishes the automatic adjustment of the threshold every year beginning March 1, 2019, based on the official estimate of the nominal GDP growth of the previous calendar year rounded up to the nearest hundred millions.

“The annual adjustment based on nominal GDP growth ensures that the thresholds maintain their real value over time and relative to the size of the economy,” he added.

The PCC said it will continue conducting regular monitoring of the M&A notifications and will revisit the threshold level periodically to make sure it is responsive to changes in the markets and the economy.

“Adjusting the thresholds requires a delicate balance to make sure that it’s not too low as to create an undue burden on business, and that it’s not too high that transactions with potential anticompetitive effects in the market evade the scope of antitrust reviews,” Balisacan said.

See “Hike,” A2

DO YOU KNOW WHERE YOUr DATA IS? Continued from a1

RED DAY AT SC Supreme Court justices join Monday’s flag-raising ceremony, with several court employees wearing red shirts to show they support the call for Chief Justice Maria Lourdes Sereno to go on leave. NONIE REYES Sen. Sherwin T. Gatchalian, who remains a bachelor at 43, has an open mind about the divorce bill, but points out that, “I don’t agree with the drive-through process kasi mabigat na usapan yan [because that’s a serious matter].” He added that, at least for him, “I want to maintain the sanctity of marriage.”

Still, Gatchalian added, “The bottom line is that, [whether it’s] divorce or annulment, you still need to go through the court process to determine the basis,”and, therefore, does not see the “vendo” or “drive-through” type of “quickie divorces” ever being approved by Philippine lawmakers. He wants, “at the same time, [to] include drug use and violence as grounds”for divorce or annulment.

In layman’s terms, divorce recognizes there was a marriage, but the State is ending it for various reasons. Annulment is premised on the fact there was never a marriage because of some congenital flaw.

Gatchalian echoed what his peers deem the bottom line in this current review of marriage and its dissolution: whatever it is, he stressed, “we also need to simplify the procedures.”

For Sen. Cynthia A. Villar, she also foresees an uphill battle for passing the divorce bill in the Senate. Villar acknowledges it is going to be a tough task getting wide public support for it, “because the Philippines is 90-percent Catholic.”

Sen. Gregorio B. Honasan II underscored the “need to have an informed debate” on any divorce bill, stressing that, “It can’t be rushed. Are we prepared to debate it intelligently? Even if we are liberal-minded, will it enhance integrity of the basic unit, the family?”

Sen. Panfilo M. Lacson Sr. took a more dismissive attitude to the debate, pointing out the obvious: “Malabo ‘yan, wala pa ngang divorce bill dito.” The chairman of the Senate’s Family Relations Committee, Sen. Ana Theresia Hontiveros-Baraquel, has yet to signal whether she will take the initiative to file the Senate version of the bill championed by Alvarez and Lagman in the House. Hontiveros is a member of the Akbayan party-list but is identified mainly

with the Liberals in the minority, though, Drilon has indicated that any talk of a divorce bill, or related measures, in the Senate will not be easily dictated by partisan lines.

The mood in the Senate was summed up

by Sen. Juan Edgardo M. Angara. He told he BusinessMirror: “Most would like to see annulment made easier for poor couples than under the current setup requiring psychological incapacity under the Family Code, since this entails cost and is not readily available to the poorer sectors who cannot spend for lawyers and psychologists.”

Angara added: “Having said that, many are also wary of a no-fault divorce type of law where couples can just separate because they wake up one day and decide they don’t want to be married. This might cheapen the institution of marriage and detract from its sanctity. Any divorce bill has to address these concerns to have any chance of passing.”

House measure

The House committee on population and family relations had approved last February 21 the proposed bill titled, “An Act Providing for Absolute Divorce and Dissolution of Marriage.” The overwhelming vote for it was mixed, with those in favor coming from the majority, minority and opposition blocs much to the delight of Alvarez, who noted how even the left-leaning Makabayan bloc that had always tangled with the majority on political issues voted for the measure.

Lagman, whose opposition bloc is called “Magnificent 7,” led the drafting of the consolidated measure of five bills seeking either divorce or dissolution of marriage. One of the few most outspoken opposers of the bill was Senior Deputy Minority Leader Lito Atienza of the Buhay party-list.

Initially, the bill’s title only mentioned “divorce.” However, Alvarez was reported to have deliberately sought the inclusion of the phrase “dissolution of marriage” to make the bill more palatable to the public.

The consolidated bill ticked off these guiding principles:

■ Absolute divorce is judicially decreed after the fact of an irremediably broken marital union or a marriage vitiated from the start; ■The State proceedings for the grant of absolute divorce must be affordable and inexpensive; ■ Concerned spouses may either file for absolute divorce under the proposed law, or seek legal separation, annulment of marriage, or nullification of marriage under pertinent provisions of the Family Code of the Philippines.

The latter provisions are not repealed; ■ A six-month cooling-off period must be observed after the filing of a petition for absolute divorce, as concerned spouses make a final attempt at reconciling; and ■ A divorce decree shall include provisions for the care and custody of children, protection of their legitimate termination and liquidation of the conjugal partnership of gains or the absolute community and alimony for the innocent spouse; The consolidated House bill listed these grounds for an absolute divorce: ■ When the spouses have been separated in fact for at least five years at the time the petition for absolute divorce is filed; ■ It carried over the existing grounds for legal separation under Article 55 of the Family Code of the Philippines; ■ It also carried over the existing grounds for annulment of marriage under Article 45 of the Family Code of the Philippines; ■ One of the spouses has undergone sexual reassignment surgery; ■ Psychological incapacity of either spouse; and ■ Irreconcilable marital differences and conflicts, resulting in the total breakdown of the marriage.

Lagman was reported to have promised an inexpensive, efficient divorce process. Indigent litigants petitioners may file their petitions without paying filing fees and other cost of litigation.

The court will appoint counsel-de-officio for indigents, and assign social workers and psychologists to help them in the proceedings.

Now you will hopefully understand how important the role of compliance officers and data protection officers is; you can add ethical hackers to the list of jobs.

Remember, I suggested two weeks ago to hire ethical hackers for a number of reasons.

Modern data-security risk is really about vendor-risk management. You are aware that your organization gathers a huge pile of data and hands it to a third party for storage or processing. That creates the legal obligation for your organization to assure that the third party can adhere to whatever compliance obligations you have for collecting that data in the first place (assuming that you have proper data security and data privacy protection in place).

The EU’s General Data Protection Regulation (GDPR), which takes effect in May as mentioned above, is a great lens through which to understand the issue. The GDPR defines a data controller as the entity that decides what data will be collected, how it will be processed and how and where it will be stored.

The data processor is the entity that actually carries out the processing, very often offshore as we in the Philippines know very well.

Article 28 in the GDPR says that data controllers shall only use data processors with sufficient policies and procedures to fulfill the GDPR’s privacy rights where data about them is stored. And, since one right under the GDPR is the “right of portability,” allowing consumers to decide where data about them is stored, this is where fears about the cloud enter the picture, too.

The simplistic response is to view this GDPR compliance as an IT issue. For example, your Chief Information Security Officer might argue with vendors to map where all personally identifiable information

is stored, and then direct personally identifiable information to be moved to GDPR compliant locations as necessary.

But that’s only the first step. (In fact, this step assumes your organization already knows all its technology vendors and sensitive data, which is a big assumption to make).

Your organization will still need to ensure that it remains compliant over time. That’s going to require evaluation of vendors, drafting of contract language to enforce the obligations of the privacy laws and monitoring to ensure they fulfill their duties to you and your organization.

If you in the Philippines are dealing with the EU, you will have to be definitely ready by 25 May. But, even if you are not dealing with the European Unions, you will have to comply with the rules set by the Philippine Privacy Commission and similar authorities in many parts of the world now!

Let me add that the cloud itself needs not to be feared. For example, you can store the personal information of people outside the Philippines or Europe or the US or Australia; you simply need to get the consent of the owner of the information first, giving them an option to revoke the consent and their data back home.

As you can see, this is going to require plenty of cooperation between the compliance and IT departments. It will require due diligence of vendors, policy management, monitoring, escalation procedures for violations that do occur and lots of documentation to prove your organization has done the necessary work to keep data safe in the most cost-effective way.

Comments are welcome. And if you need assistance, you can contact me under Schumacher@eitsc.com