Businessmirror march 13, 2017

SACERDOTAL FELLOWS Priest friends of Ambassador Antonio L. Cabangon Chua celebrated the Holy Mass on the first anniversary of his death last Saturday, March 11. Fathers Rufino C. Sescon (left) and Rey Adalid (second from left) led the concelebrated Mass. With them are Mrs. Bienvenida Cabangon and daughter Cecille Cabangon, and D. Edgard A. Cabangon (right). alysa salen

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Monday, March 13, 2017 Vol. 12 No. 152

‘Tax-reform package faces rough sailing in Congress’

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By Jovee Marie N. dela Cruz

@joveemarie

nlike the death-penalty bill, the chairman of the House Committee on Ways and Means on Sunday admitted it would be difficult for lawmakers to pass the Comprehensive Tax Reform Package (CTRP) in the 17th Congress. In a radio interview, PDP-Laban Rep. Dakila Carlo E. Cua of Quirino, the panel chairman, said the issues of lawmakers on tax reform are “more complicated” than their misgivings on death-penalty bill.

“It will be hard for us to pass the tax-reform package. I can’t say now how hard it is, but it will still be hard,” Cua said. “It is not simple to pass it like what we did in the death-penalty bill, where our de-

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The number of Filipino taxpayers who are expected to benefit from the proposed CTRP cision focuses on one issue only. With the CTRP, there are so many big and little issues that we need to consider carefully,” he added. However, Cua said the Ways and Means Committee will still do its “best effort” to approve the CTRP on Tuesday.

By Ma. Stella F. Arnaldo

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@akosistellaBM Special to the BusinessMirror

N archipelago of over 7,600 islands, the Philippines is home to some of the best beaches in the world—we’re biased, of course—and the most pristine, } deepest azure waters that host a myriad of colorful marine life. Aside from the beaches and diving spots, the Philippines also boasts of rugged mountainous terrain that is a joy for climbers to scale and conquer. In the cities and other urban sprawls, there are shopping malls, museums, heritage churches, entertainment clubs, recreational spots and other manmade attractions that are thronged with foreign and domestic travelers. All these, along with a steady marketing program designed to portray the Philippines as a “fun” destination, add up to a significant improvement in the country’s foreign visitor arrivals in the last six years. From just 3.52 million foreign tourists in 2010, arrivals in 2016 were just shy of the Department of Tourism’s (DOT) 6-million target, the difference owing to a marked slowdown in Chinese tourists due to the diplomatic tension between Manila and Beijing. Continued on A2

PESO exchange rates n US 50.3770

In this March 8 photo, a man walks toward Pulacan Falls, one of the natural tourism locations in Zamboanga del Sur. The 30-foot waterfall is quite accessible to both local and foreign tourists, as it is on the side of a sloping highway to and from Pagadian City, about 12 kilometers away. NONIE REYES

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Changing the rules of the concession game PPP Lead Alberto C. Agra Conclusion

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ill the next administration respect the public-private partnership (PPP) arrangements entered into by the previous one, continue the concession franchise under the original parameters, or will it alter the tariff mechanism, cancel the contract or change the interpretation of provisions of PPP contracts? Not being certain about the answers to these questions raises fears about the sustainability and integrity of PPP and concession contracts. Every time a new president, governor, mayor, general manager or administrator assumes his or her position, the anxiety escalates. This is successor risk.

See “Tax-reform,” A2

Favorite, new locations boost PHL tourism vista

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Continued on A15

POPCOM’S TIP TO DRUG FIRMS: REPOSITION CONTRACEPTIVES By Cai U. Ordinario

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harmaceutical firms could seek the permission of t he Food and Drug Administration (FDA) to reclassify contraceptives, so they can continue selling the product in the countr y, according to the Commission on Population (Popcom). Popcom Executive Director Juan A. Perez III told the BusinessMirror pharmaceutical firms can reposition the contraceptives as “noncontraceptive medication”. Some contraceptive medicines, which contain hormones, are used to treat select dermatological and reproductive conditions. “Another way for pharmaceutical firms to provide hormones for noncontraceptive indications would be to reposition their product and drop their use as contraceptives,” Perez said. He said, however, this would require approval from the FDA.

1,100 The number of maternal deaths recorded between June 2016 and March 2017

Should the firms decide to do this, they will be required to make a proposal to the FDA. “Contraceptive hormones are also used for dermatologic conditions, so they may also have to be repositioned and ask for FDA approval,” he added. Perez said another way is for women who require these hormones to seek exemptions from the FDA. He said the FDA has granted similar requests for exemptions in the past. Perez added an example is the FDA’s grant of the request to import hypoallergenic milks for newborns or infants.

See “Popcom’s tip,” A2

n japan 0.4384 n UK 61.3038 n HK 6.4883 n CHINA 7.2936 n singapore 35.4943 n australia 38.8180 n EU 53.3190 n SAUDI arabia 13.4368

Source: BSP (10 March 2017 )

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News Favorite, new locations boost PHL tourism vista BusinessMirror

A2 Monday, March 13, 2017

A2Continued Monday,from February 13, 2017 A1

Philippines, echoed the slogan’s success in promoting Philippine destinations. No stranger to frequent travels abroad for work and holiday, she and her friends started ticking off a list of local destinations to go to “after seeing all those ‘more fun’ memes.” “Parang everyone had a renewed consciousness about the beautiful destinations and activities our own country had to offer,” Policarpio said. Since the “more fun” campaign was launched in the 2011, Policarpio, her friends and her family have traveled to Cebu, Dumaguete, Bohol, Bacolod, Davao and Coron in Palawan. They have made annual visits to Baguio and Boracay, the latter, famous the world over for its remarkable powdery white-sand beach. Some of the destinations she mentioned, such as Boracay, Bohol, Cebu and Davao, are on the DOT’s list of top Philippine destinations. The others include Banaue, in

BusinessMirror the province of Ifugao, where the Banaue Rice Terraces is located, and which has been declared a National Cultural Treasure by the Philippine government; Manila, the Philippines’s capital and the country’s heart and soul, which offers travelers an exciting blend of Oriental and Western attractions, from thrilling jeepney rides to a pulsating night life, which is the envy of many Southeast Asian cities; and Vigan, Ilocos Sur, decreed a World Heritage Site by the United Nations Educational, Scientific and Cultural Organization (Unesco), for being the best-preserved example of a planned Spanish colonial town in Asia.

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visited destination by foreign and local tourists with arrivals hitting some 2.06 million. The province is most well known for the Our Lady of Peñafrancia fiesta every September, where the miraculous image is paraded in a procession, attracting devotees all over the country. It is also home to Lake Buhi, where the smallest, commercially harvested fish, the Sinarapan, thrives. The province,from however, continued A1 acquired a hipster vibe, now dubbed “CamSur”, when a wakeboarding complex was constructed by the local government, attracting quite a substantial number of millennials. Subic Bay in Zambales is also a popular destination, with 1.46 million in visitor arrivals in 2015. Its proximity to Manila, along with its ecotourism offerings and its good-sized number of hotels and recreational facilities, make it a consistent choice for government agencies and private firms seeking an out-of-town venue for conferences, meetings, team-building

www.businessmirror.com.ph seminars and the like. A former US Naval Base, Subic is also a frequent stopover for American military troops during their restand-recreation periods.

The quick brown fox jumps over the lazy dog

Domestic tourists were another story. During the five-year period to 2015 (data for 2016 is not yet available), domestic travelers increased from some 28 million in 2010 to about 67.82 million in 2015, or a jump of nearly 142 percent. Most travel industry stalwarts attribute this to the DOT’s successful “It’s More Fun in the Philippines” brand campaign that encouraged participation from the Filipinos themselves. Many of them, just getting the hang of Facebook and Twitter, while discovering other social-media platforms, were the most eager to share the different memes depicting the good times that can be had when traveling to different points in the Philippines.

Of memes

ANNA Karenina Policarpio, chief operating officer of Dale Carnegie in the

Tax-reform. . . Continued from A1

“I expect the bill will be approved at least at the committee level on Tuesday, during our last hearing before Congress goes on break on March 15,” he said. Under the Duterte administration’s CTRP, those earning P250,000 and below would be exempted from personal income tax. However, the proposal also includes the imposition of excise tax on fuel as a compensatory measure for the foregone revenues from the lowering of income tax. The Department of Finance (DOF) had proposed a staggered increase of P6 per liter of diesel, kerosene and LPG to be imposed within a three-

year period. The bill also includes the relaxation of the Bank Secrecy Act, imposition of excise taxes on automobiles and taxing Philippine Charity Sweepstakes numbers’ game and lotto winnings. The tax-reform package involves foregone revenue of around P200 billion but, at the same time, will generate around P206.8 billion for the government in the first full year of its implementation. Earlier, Party-list Rep. Antonio Tinio of Act Teacher, a member of the panel, said he will vote against the passage of the tax-reform bill if the committee will retain “inflationary provisions” in the package. Tinio said the proposed offsetting measures, which will be shouldered by low-income earners and

Surprising spots

A peek into more data from the DOT, however, indicates other surprising tourism hot spots in the country. In 2015 a partial report from the government tourism agency put Camarines Sur on the top of the country’s most

poor families, should be discussed separately by the lower chamber. According to the lawmaker, there is no opposition to the income-tax reform, unlike the other tax reforms, such as imposing excise taxes on fuel. “The lowering of income tax might not push through if other tax measures will not be approved,” he said. Tinio said the proposal to lower personal income taxes should be “unbundled” from the CTRP. Deputy Speaker and Liberal Party Rep. Romero S. Quimbo of Marikina City agreed that it will be difficult for Congress to pass the tax-reform package as a whole or without amendments. Citing the DOF, Cua said some 4.66 million taxpayers, or more

than double the current figure of 1.8 million, will no longer pay their personal income tax under the government’s “highly progressive” CTRP. He said offsetting measures primarily targets rich consumers and taxpayers so the government can still raise enough money for the infrastructure programs under the Duterte administration. Last week the House of Representatives approved the death-penalty bill on third and final reading after lawmakers limited it to drugrelated heinous crimes. Prior to its passage by the lower chamber, Speaker Panteleon D. Alvarez had warned House leaders that they would be removed from their post if they voted against the passage of the death-penalty bill.

Perfect cone

THE province of Albay is another destination that is a magnet for visitors, mainly due to Mount Mayon, a still-active volcano that erupts every few years. Its nearly perfect cone and gently sloping slides is a breathtaking site to behold, rivaling that of Mount Fuji in Japan. Albay is also favored by tourists because of the Cagsawa Ruins, remnants of an old church buried in lava from Mayon’s eruption in the 1814. The province also offers heritage churches and tunnels constructed by the Japanese during World War II in Ligñon Hill. One can also ride an all-terrain vehicle and go off-roading or above roads via a zipline in many areas around Mount Mayon’s safety perimeter. To be continued

Popcom’s tip. . .

Continued from A1

However, Perez said, this may prove costly for women to bring in these medications individually. “Those with attendant conditions will be adversely affected since the contraceptives cannot come into the country without a CPR,” Perez said. Popcom data showed that between March and June 2017, the CPRs of seven modern contraceptives will expire. On April 13 the CPR of Denise will expire while in May 2017, the CPRs of Minipil, Liza, Lizonya and Cybelle will expire. The list includes the cheapest contraceptive pill being distributed by the government to poor women for free, which will expire on June 14. The cheapest contraceptive pill, which costs P43.81 for a month’s consumption,

is the Trust Pill or its generic name Levonorgestrel + Ethinylestradiol: Ferous Fumarate. Further, the CPR of the injectible Medroxyprogesterone Acetate will also expire on June 14. On Thursday the Popcom said the expiration of permits issued for modern contraceptives could lead to at least a thousand mothers dying every year by 2022. Perez said that, with the lapse in the CPR of Implanon, a popular implant that is being distributed for free by the government, there would have already been 500,000 unintended births and 1,100 maternal deaths between June 2016 and March 2017. He said, on average, with the absence of more modern contraceptives, they expect that there could be an average of 800 to 1,000 maternal deaths every year.

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Pagcor chief defends ₧234-M advance to casino operator

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HE chairman of the Philippine Amusement and Gaming Corp. (Pagcor), Andrea D. Domingo, has upheld the legality of the P234-million advance rental fees paid to the company behind the P1.5-billion Army Navy Club casino in Manila. Domingo said there was a precedent by Pagcor in which it paid a 36-month deposit to another private company, the Gatchalian-owned Acesite (Phils.) Hotel Corp., which owns the space at the Manila Pavilion Hotel where the government gaming agency is operating a casino. “To anybody looking into the contracts, we find that, in Acesite, there was a 36-month deposit that was paid for one portion of the leased premises…. And the total paid in advance to Acesite, which owns Pavilion that is where we are now, is P402 million,” the Pagcor chief

said at a hearing conducted by the House of Representatives’s Committee on Good Government and Accountability, which is investigating the Army Navy Club lease contract between Pagcor and Vanderwood Management Corp. Pagcor, during the time of former Chairman Cristino L. Naguiat Jr., entered into a 15-year contract of lease with Vanderwood for the construction of a “fully fitted” casino and gaming facility at the Army Navy Club property inside the Museo Pambata Complex on Roxas Boulevard, Manila. Lawmakers have questioned Pagcor’s move to pay Vanderwood P234 million in advance rental payment, even as the gaming facility has yet to be constructed at the site. Under the contract, Pagcor would pay Vanderwood P13 million in rent every month.

Editor: Dionisio L. Pelayo • Monday, March 13, 2017 A3

Govt, CPP agree to resume peace talks

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By Marvyn N. Benaning | Correspondent

HE stalled peace negotiations between the National Democratic Front and the government will resume in April, Presidential Adviser on the Peace Process Jesus G. Dureza announced last Sunday. “I am pleased to announce that the peace negotiations between the government and the Communist Party of the Philippines-New People’s Army-National Democratic Front [CPP-NPA- NDF], which broke down weeks ago, are now back on track.” Dureza said. The talks bogged down after President Duterte ordered the government panel talking with the NDF to return to Manila af-

ter he declared the peace negotiations over and scrapped the Joint Agreement on Safety and Immunity Guarantees (Jasig) signed by both parties. The police also arrested an NDF consultant in Davao City right after Duterte’s order on the termination of the talks. Duterte was miffed when the NPA announced the lifting of its unilateral cease-fire on February

1, which would take effect on February 10, claiming that the President had failed to rein in his troops that have occupied 500 villages, where the guerrillas were operating, and his failure to release more than 400 activists held in various detention facilities. Late last week Duterte also ordered the Armed Forces and the National Police to use all of their offensive assets to “flatten the hills” and operate against the NPA. Despite the tough rhetoric during the wake of the policemen killed in an ambush in Bansalan, Davao del Norte, last week, Dureza met with NDF representatives in backchannel talks abroad to agree on the resumption of negotiations. The government and the NDF are set to meet for another round of talks in Norway next month. Dureza said both parties also discussed the possibility of restoring their unilateral cease-fires. “At the same time, the unilateral [government] cease-fire that was

also earlier terminated is deemed restored and reinstated, but will be made effective only as soon as the respective forces of both sides are duly informed but definitely before the next round of talks in April 2017,” he announced. Dureza added, “The unilateral cease-fire is a prelude to an interim bilateral cease-fire that needs further meetings between the two sides to determine and agree on rules, guidelines and mechanisms.” He added, “ The parties are expected to start discussions on the bilateral cease-fire during the planned resumption of the negotiations during the first week of April this year.” Moreover, Dureza said, “the effectivity of the Jasig that was also ordered terminated by the President has been restored to enable the NDF consultants and their staff, who were in jail or otherwise constrained, to physically surface and join in the peace work.”

Economy

A4 Monday, March 13, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

DOE urges investors to put up merchant power plants

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China to fund 3 PHL infra projects

By Lenie Lectura @llectura

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he Department of Energy (DOE) said it is keen on attracting investors who will set up merchant power plants or those that will serve spot electricity markets. Energy Secretary Alfonso G. Cusi said many power firms, both local and foreign, are interested in investing in the Philippine power-generation sector. Cusi said he urged them to do this without entering into bilateral contracts with distribution utility (DU) firms and electric cooperatives (ECs) to sell the output of the power facility. “There are many who have expressed intention, but what I’m asking from all investors is to put up merchant power plants. I want to have merchant power plants so that there would be less PSA [power-supply agreement] and more of selling and buying power in the spot market,” Cusi said. PSAs are long-term contracts between a power producer and the DU or an EC. A DU sources its power requirements from either the Wholesale Electricity Spot Market (WESM), the country’s trading floor for electricity, or via bilateral contracts. The DUs and the ECs are responsible for distributing electricity to the households, business establishments and others. If the DOE chief would have its way, he wants a DU or an EC to source only 20 percent to 30 percent of their power requirements from PSAs from the current 90 percent. “For the new power plants that will come in, we are encouraging them to put up merchant power plants so as to discourage PSAs, no bilateral contract. All you have to do is sell or buy at the spot market,” Cusi said. With a PSA, the power producer is assured that its power projects will make a profit and thus easier to secure bank loans. Otherwise, the power firms would have difficulty in financing their capitalintensive projects.

The New Centennial Water Source Project (NCWS)-Kaliwa Dam Project aims to increase Metro Manila’s raw-water supply to meet future potable-water demand and as a redundant water source. Its construction will be funded by a loan from the Chinese government. PPP.gov.ph

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By Cai U. Ordinario

@cuo_bm

hina will extend a total of P172.42 billion in loans to the Philippine government to bankroll three key infrastructure projects this year, according to the National Economic and Development Authority (Neda). Neda Secretary Ernesto M. Pernia recently told reporters the amount would be used for the construction of a railway, a bulk-water facility and irrigation facilities. “What we kept on stressing

is that we need to deliver that, so there should be substantial progress this year,” Pernia said. The bulk of the loans will go to the P151-billion-worth NorthSouth Railway Project (NSRP) to be

Millennials a rising consumer group seen to reshape food market in 2017

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ill e nnials — t h o s e born between 1981 and 1999 —are an emerging global force, whose tastes and preferences are dramatically transforming the food market, according to a new study. This is a development that provides opportunities for Filipino exporters that can adapt to this generation’s eating habits. “Millennials are undoubtedly different from older generations in their relationship with food,” said the authors of the study, titled “The Future of Food: Are You Ready for the Millennials?” published by global consumer intelligence firm Maru/Matchbox. “They are more likely to ‘love cooking’ and expect to cook at home more in the future. They are also seeking greater levels of transparency in the brands and products they buy, and expect ingredients, flavor profiles and features that, in the past, had been considered premium.” More important, “they are also willing to pay more for products that meet these needs.” The study predicts that a focus on food will only intensify in 2017 for millennials, who tend to love cooking more than those who are over 35 years old. They also consider themselves “experts in the kitchen,” with half of all millennials planning to cook at home more often in 2017, whereas only one in four boomers are expecting to do more home cooking. Millennials are also sharing

their love of food with others, advocating for products by posting about them on social media. “That’s free advertising and an influential endorsement for those brands that are favored by millennials,” the report said. “Not only do millennials contribute to the market directly, but they also contribute as vocal consumers and early adopters to inf luence the purchases of others. They are also changing the means and speed by which marketplace information is exchanged. Millennials add content through constant connectedness and the popularity of social media.” Another significant attribute of millennials is that they are more likely to expect features and benefits that have traditionally been seen as premium. “Features like sustainable and local sourcing, organic and GMO-free are table stakes for millennials, as premium becomes the new normal,” the report said. “Their willingness to pay more for organic, sustainably sourced and natural products indicates there is not only a need to develop products with these features, but that there is money in it, too.” The rapid rise in the premium end of the consumer food market, millennials’ growing trust in smaller brands, and their interest and aptitude in online shopping and e-commerce present opportunities for small manufacturers, the study said.

“Small brands have been gobbling up share in the premium space, in part, because millennials are more likely to trust them to deliver features like natural, sustainably sourced and no artificial ingredients.” In addition, millennials’ interest in online shopping not only opens the door to unlimited brand choice, but also erases barriers to distribution for smaller brands. “This interest in purchasing food online is in keeping with the trend toward e-commerce consuming an increasing share of all retail purchases. In 2015 online e-commerce accounted for 7 percent of all retail sales. It is expected that will nearly double to 13 percent by 2020. The impact on the market for food could be profound,” the study noted. Companies need to be agile in the way they rethink and reposition their offer to cater to this demanding cohort, the study advised. They have to incorporate insights related to millennials in new product development and marketing strategies, and “ be nimble and efficient in how they identify whitespace, innovate, renovate and extend brands in an increasingly premium market.” Under the Philippine Export Development Plan, among the government’s key goals over the next few years is helping local exporters reach new overseas destinations by innovating products and diversifying beyond traditional markets. Philexport News & Features

implemented by the Department of Transportation. The NSRP involves the construction of a 581-kilometer standardgauge long-haul railway from Manila to Legazpi City in Albay province. The line will also have an extension to Matnog in Sorsogon. Apart from the NSRP, Chinese loans will also fund the P18.724billion New Centennial Water Source-Kaliwa Dam Project of the Metropolitan Waterworks and Sewerage System and the P2.696-billion Chico River Pump Irrigation Project of the National Irrigation Administration. The Kaliwa Dam project involves the construction of a dam and conveyance tunnel to provide 600 million liters of raw water

PERNIA: “What we kept on stressing is that we need to deliver that, so there should be substantial progress this year.”

for Metro Manila and parts of Cavite and Rizal. The Chico River Pump Irrigation Project aims to irrigate 8,700 hectares and benefit some 4,350 farmers. It will serve 21 barangays in Tuao and Piat in Cagayan and Pinukpuk in Kalinga. Apart from the loans, Pernia

said China will finance the feasibility study for nine projects costing P53.17 billion. Neda documents provided by Pernia showed the amount is just an estimate, as five of the nine projects still do not have cost estimates. These five projects are the Davao City Expressway project; Ambal-Sumuay Sub-Basin of the Mind anao R iver Basin Flood Control and R iver Protection Project; Dinagat (Leyte)-Surigao Link Bridge; Luzon-Samar Link Bridge; and the Agus 3 Hydroelectroc Plant. Of the four projects that have cost estimates, the project that accounts for the lion’s share is the North Luzon Expressway East Project, formerly the Junction Abbag-Nagtipunan-A.Castañeda/ Nagtipunan-Digdig Road Project, which costs P23.63 billion. This was followed by the PanayGuimaras-Negros Island Bridges, worth P22.544 billion; the PasacaoBalatan Tourism Coastal Development Program, P4.74 billion; and the Camarines Sur Exprressway Project, P2.251 billion. Last year Pernia said the Investment Coordination Committee (ICC) Cabinet Committee (Cabcom) will be assigned to screen Chinese companies wanting to undertake publicly funded projects. Screening companies undertaking government projects is not part of the current functions of the ICC Cabcom. It is only tasked to evaluate publicly funded projects costing P5 billion and up. Pernia said Beijing will also create or assign its own group to act as the first level of screening for Chinese companies wanting to participate in Philippine projects. The Chinese firms will be assessed based on certain qualifications, including their track record in undertaking projects and financial capability to complete a project. The ICC Cabcom will screen Chinese companies only. Pernia said this is because the country does not have any “sour experience” with contractors of other nationalities.

House panel wants to consolidate bills on PPP By Jovee Marie N. dela Cruz @joveemarie

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O support the Duterte administration’s infrastructure projects, the House Committee on Public Works and Highways has decided to create a technical working group (TWG) to consolidate all the bills seeking to institutionalize and strengthen the Public-Private Partnership (PPP) Program. In a statement, Laban ng Demokratikong Pilipino Rep. Celso L. Lobregat of Zambonga, the panel chairman, said the next six years would be the “Golden Age” of public infrastructure, which will only become possible with the passage of legislation on the PPP. Lobregrat said the TWG seeks to harmonize House Bills (HB) 163, 348, 1346 and 1944, which all seek to institutionalize and strengthen the PPP; HB 778, creating the PPP Authority; HB 1944, authorizing PPPs; and HB 2727, encouraging more PPP projects and creating the PPP Guaranty Fund. Liberal Party (LP) Rep. Feliciano O. Belmonte Jr. of Quezon City, who authored HB 163, said his bill seeks to encourage and strengthen private- sector participation in government infrastructure projects. Belmonte added the landmark build-operate-transfer (BOT) law, which was amended by Republic Act 7718 in 1994, has paved the way for a “significant increase” in private investment in infrastructure projects. However, he said there’s still need to further amend the law to make it more responsive to the current economic environment.

lobregat

BELMONTE

Deputy Speaker and LP Rep. Romero S. Quimbo of Marikina, author of HB 348, said his proposal eyes measures to strengthen the PPP, such as prohibiting the issuance by courts of temporary restraining orders and preliminary mandatory injunction against all PPP projects, except the Supreme Court, but with a validity period of only six months; prohibiting regulatory bodies from entering into any PPP contract that they regulate; and requiring public disclosure of PPP contracts. Quimbo also proposed the expansion of the PPP coverage by including joint-venture and operation and maintenance contracts; removal of the 50-percent cap on government participation, except for joint-venture projects; and increase in the threshold amount of PPP projects to be approved by the approving bodies. National Unity Party Rep. Romeo Acop of Antipolo City, who authored HB 1346, said his proposal wants to strengthen the PPP by addressing various issues relating to

QUIMBO

the legal framework of the law on instituting ample protection to the investments infused by the private sector and on the responsibilities of the participating institutions involved in the project cycle. He noted the program’s momentum has slowed because of the legal and procedural problems in the implementation of the projects, as well as corruption and abuse of discretion on the part of public officials of concerned agencies involved in the transactions. HB 778, authored by Nationalist People’s Coalition Rep. Joey S. Salceda of Albay, seeks to establish PPP Authority, which will serve as the policy-making body of the government for BOT, private-sector participation, or PPP projects. Under Salceda’s proposal all national and local projects must be submitted to the BOT Authority or PPP Authority for approval, except those that require national government guarantee or undertaking, in which case the project shall be recommended by the BOT Board to the President for approval.

AseanMonday

A6 Monday, March 13, 2017 • Editor: Max V. de Leon

BusinessMirror

WB works with Myanmar govt to modernize banking system

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yanmar is embarking on the first comprehensive audit of state-owned banks in decades, part of a push to modernize the financial system and tackle risks to the nation’s rapid economic growth. The World Bank is working with Aung San Suu Kyi’s government on the project and the results will help to clarify options for restructuring the sector, according to Nagavalli Annamalai, a lead counsel at the multilateral lender who’s specialized in banking sector development for almost two decades. “These banks are undercapitalized,” Washington, D.C.-based Annamalai said in an interview on March 1. “So we need to come up with a realistic plan for restructuring, which may include recapitalization that doesn’t put too much strain on the fiscal side of the government.” Overhauling Myanmar’s four state banks, which have assets equivalent to about a fifth of the country’s $63-billion GDP, is a key task for Suu Kyi as she seeks to expand the financial sector. Without reforms, the government lenders could spiral into a “dire” state as rapidly growing private-sector banks snare a bigger share of deposits and lending, the World Bank said in a recent report.

“What we don’t want is one day we wake up and they say, among other things, there’s a large shortfall in capital,” Annamalai said. “We don’t want to face a situation where the stability of the entire financial system is affected by these state-owned banks.”

Opening up

State lenders dominated the banking system for half a century until Myanmar began democratic reforms in 2011 and started opening up the economy. Australia & New Zealand Banking Group Ltd. and Industrial & Commercial Bank of China Ltd. are among 13 foreign banks to have won licenses since 2014. There are some two dozen domestic private-sector banks. The largest government-run lender is the Myanma Agriculture and Development Bank, which traces its roots back to the 1950s and provides credit to more than 2 million farmers in the largely agrarian Southeast Asian nation. The other

three are the Myanma Economic Bank, the Myanma Foreign Trade Bank and the Myanma Investment and Commercial Bank. Assets at private-sector banks climbed 27 percent to 23.3 trillion kyat ($17.2 billion) at the end of June 2016 from the same month a year earlier, according to data collated by the World Bank. In contrast, they slid 14 percent to 16.5 trillion kyat at state-owned lenders in the same period. One caveat for analyzing the nation’s banking sector is the quality of government figures, including a nonperforming loan ratio of about 3.6 percent and a claimed capital adequacy ratio of 19 percent in June 2016. Indicators of the industry’s soundness as currently reported don’t accurately reflect systemic risks, the World Bank

Malaysia hopes for talks with North Korea in ‘next few days’

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UALA LUMPUR, Malaysia—Malaysia’s foreign minister said last Saturday the government hopes to begin formal talks with North Korea in the “next few days” on solving a diplomatic dispute that has seen the two countries bar each other’s citizens from leaving. The dispute stems from the mysterious poisoning death of the estranged half brother of North Korean leader Kim Jong Un on February 13 at Kuala Lumpur’s airport. Malaysia says Kim Jong Nam died after two women smeared his face with the banned VX nerve agent, but North Korea—which is widely suspected to be behind the attack—rejects the findings. Relations have steadily deteriorated, with each country expelling the other’s ambassador. Last Tuesday North Korea blocked all Malaysians from leaving the country until a “fair settlement” of the case was reached. Malaysia then barred North Koreans from exiting its soil. Malaysian Foreign Minister Anifah Aman said last Saturday communication was ongoing with the North Korean Embassy in Kuala Lumpur and that both sides were ready for formal talks. He said many countries offered to help, but “we don’t need a third party’s help for the time being and hopefully will never need them.” “We are ready...they [also] want to start talking. We hope [to begin] in the next few days,” Anifah told reporters after meeting with the families of the nine Malaysians still stranded in North Korea. “The safety of our people is our paramount concern and we are doing everything possible.” He said the nine Malaysians— three embassy workers and their family members—were safe and allowed to move freely. About 1,000 North Koreans are

Flowers are left at the main gate of the North Korean Embassy in Kuala Lumpur, Malaysia, on March 11. Malaysian police last Friday formally identified Kim Jong Nam as the victim of a fatal nerve agent attack at Kuala Lumpur’s airport, an expected, but significant, development in a case that has broken down the once-warm ties between North Korea and Malaysia. AP

believed to be in Malaysia. Anifah said the return of Kim’s body would be part of the talks’ agenda. “We don’t want to keep the body more than what is necessary,” he said. “Eventually, we have to surrender the body to someone, whether to the government or next-of-kin.” North Korea has demanded the body back from Day One and objected to Malaysia’s autopsy. Pyongyang also has refused to acknowledge that Kim Jong Nam was the victim and has referred to him as Kim Chol, the name on the passport Kim was carrying when he was attacked in a crowded airport terminal. Last Friday Malaysian police confirmed that Kim Chol and Kim Jong Nam was the same person, but refused to say how they identified Kim. Malaysian authorities have asked for Kim’s immediate family to provide DNA samples to identify the body, but nobody has come forward. Malaysia’s prime minister has said they may be too scared. Although Malaysia has never

directly accused North Korea of being behind the attack, many speculate that Pyongyang must have orchestrated it. Experts say the VX nerve agent used to kill Kim was almost certainly produced in a sophisticated state weapons laboratory, and North Korea is widely believed to possess large quantities of chemical weapons. Four of the seven North Korean suspects being sought by Malaysia are believed to have left the country the day Kim was killed. The police say the other three suspects, including a North Korean diplomat, are believed to be in hiding at the North Korean Embassy in Kuala Lumpur. The attack was caught on surveillance video that shows two women going up to Kim and apparently smearing something on his face. He was dead within 20 minutes, authorities say. Two women—one Indonesian, one Vietnamese—have been charged with murder but say they were duped into thinking they were playing a harmless prank. AP

said in its Myanmar Economic Monitor last December.

Outdated

The Ministry of Planning and Finance didn’t immediately respond with comment following e-mails inquiring about the quality of banking data and plans for state-run lenders. Challenges at state-owned banks include poor information-technology infrastructure and outdated accounting practices, as well as a lack of clarity in such things as classification of assets and provisioning for bad loans, according to Annamalai. Nonexistent risk-management systems and weak boards are other difficulties, she said. Suu Kyi’s National League for Democracy party in November 2015 won the country’s first open

elections since 1990. She’s trying to widen financial inclusion and spur investment in the still cash-based emerging economy. That entails boosting trust in the financial sector, in a nation where memories of a damaging crisis in 2003 linger. A repeat meltdown would imperil Myanmar’s fast GDP expansion, which at 8.1 percent last year was Asia’s quickest, based on International Monetary Fund estimates. The restructuring of state banks, possibly by eventually offering stakes in them to international investors, is one of the biggest immediate issues for Myanmar’s economicreform agenda, said Sean Turnell, an associate professor in the economics department at Macquarie University and a special adviser to State Counsellor Suu Kyi’s government. “We’re not quite sure what state they’re in at the moment,” Turnell said. “So the first task is to do a good, proper audit of them, which basically hasn’t been done for decades. Up until now there’s been a complete lack of transparency.” The assessment of the state lenders may be completed by midyear, Annamalai said. The entire restructuring process could take at least three to five years to complete but is a crucial task that has to be undertaken, she added. “The banking system is the key driver for development,” Annamalai said. Bloomberg News

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Singapore property stocks soar as govt eases curbs

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ingapo r e d e v e l o p e r stocks soared as authorities eased some property-market curbs, with analysts saying the changes will buoy shares that have been weighed down by a three-year losing streak for house prices. Authorities will adjust a framework that limits the amount that home buyers can borrow from March 11, and shorten the time that owners must hold a property to be exempt from a stamp duty on sale, according to a Friday statement. City Developments Ltd., CapitaLand Ltd. and UOL Group Ltd. led gains on the Straits Times Index, surging at least 3.6 percent, while an index of 44 Singapore real-estate companies rallied to the highest since July 2015. “The stealth move should lead to a scramble to rerate property developers back to book value on optimism property prices have bottomed and will start to rise from here,” said Alan Richardson, a Hong Kong-based investment manager at Samsung Asset Management Co. Sentiment is positive and has taken the market by surprise after Singapore’s budget speech last month didn’t mention property easing measures, he added. The measures are an “incremental positive” amid an abundance of real estate supply coming on, coupled with a weak demand outlook, Joshua Crabb, head of Asian equities at a unit of Old Mutual Plc. said. “The question is whether the fundamentals are improving or it’s too cheap rather than just the incremental positive which is now announced and known,” he added. Bloomberg News

Asean, EU agree to resume free-trade negotiations

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outheast Asian economies and the European Union (EU) agreed last Friday to work toward resuming stalled free-trade agreement (FTA) talks and counter a trend toward protectionism. In a joint statement, economic ministers of the 10-member Association of Southeast Asian Nations and European Trade Commissioner Cecilia Malmstrom said the global economic outlook has improved. But they expressed caution over uncertainties arising from “growing protectionist and inward-looking policy stances” that often blame trade for the loss of jobs because of automation and industrialization. “We do see tendencies of protectionism and antiglobalization across the world,” Malmstrom told reporters after a meeting last Friday of economic ministers from both regions. “Closing borders and building walls, raising tariffs—that will not be a solution, but will rather reinforce the problems.” The challenge for leaders is to make a strong case for open, fair and free trade and to ensure it is efficient, benefits small businesses and increases investment and jobs. Philippine Trade Secretary Ramon M. Lopez said statements from some world leaders, who he did not name, have added to uncertainty. Negotiations on an EU-Asean FTA

VietnamESE Minister of Industry and Trade Tran Tuan Anh (from left), Philippine Trade Secretary and Chairman of the Asean Economic Ministers (AEM) Meeting Ramon M. Lopez, Commissioner for Trade, European Union Cecilia Malmstrom and Asean Secretary-General Le Luong Minh link arms following a news conference during the ongoing 15th Asean Economic Ministers-European Union Trade Consultations last Friday in Pasay City. In their statement, the AEM-EU meeting said they “discussed various projects on trade facilitation, intellectual-property rights, air transportation, and statistics and integration monitoring”. AP

were launched in 2007 but were suspended in 2009 due to differences over ambitions for the plan. The vast gap between affluent EU nations and developing countries in Southeast Asia also complicated the talks. The EU then started bilateral trade negotiations with individual Asean members. It has FTAs with Vietnam and Singapore and is still negotiating

agreements with Thailand, Malaysia, Indonesia and the Philippines. Other Asean members are Myanmar, Cambodia, Lao PDR and Brunei Darussalam. Two-way trade between the two regions stood at €208 billion ($220.5 billion) in 2016. The EU was the largest external source of foreign direct investment into Asean in 2015, at €23.3 billion ($24.7 billion). AP

Teen seeking US asylum fears return to Singapore

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HICAGO—A teenage blogger awaiting a Chicago immigration judge’s ruling on his asylum request to stay in the United States said last Friday he’s afraid of returning home to Singapore, where he was jailed after posting scathing blog posts about the government. Amos Yee, 18, has been detained in the US since mid-December, when he was taken into custody at O’Hare International Airport. His closed-door immigration proceedings unfolded in a Chicago courtroom last Tuesday, with a judge saying he’ll decide within weeks. “I’m most definitely fearful now that the Singapore government knows I am trying to escape to another country so I can continue to criticize them freely,” Yee told The

Associated Press by phone from a Wisconsin detention center. “I’m really worried.” Yee, an atheist, was jailed twice in Singapore on charges including hurting the religious feelings of Muslims and Christians. However, many of his posts on YouTube, a blog and social media berate Singapore’s government. He caused a stir in 2015 as the city-state was mourning the death of its first prime minister and he posted an explicative-laden and, at times, crude video about Prime Minister Lee Kuan Yew just after his death. Such open criticism of political leaders is frowned upon in Singapore. Yee’s case has drawn a lot of attention because he was imprisoned at age 16 alongside adults. Experts say the case, which is being watched

closely abroad, raises questions about free speech and censorship, particularly online. Singapore’s embassy in Washington didn’t immediately respond to requests seeking comment. Yee said being jailed in Singapore was traumatizing and left him with suicidal thoughts. He believes he’ll be targeted again if he returns. He had been planning on seeking asylum in the US for weeks and had lined up a place to stay in Illinois. Singapore nationals don’t need a visa to visit the US, but Yee was taken into custody after immigration agents questioned him at O’Hare and he revealed his plans. Yee has been outspoken from a young age and friends praise his intellect. He began blogging at age 12 and won a local filmmaking prize at age 13. AP

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The World BusinessMirror

Monday, March 13, 2017

www.businessmirror.com.ph • Editor: Lyn Resurreccion

Trump promotes jobs data as sign of his success run afoul of a federal rule barring executive branch employees from publicly commenting on economic indicators in the first hour after the numbers are published.

One-hour rule

Obama’s presidency and were greeted as a positive signal by investors, sending US stocks up modestly at the session’s opening. The uptick faded, though, and the benchmark Standard and Poor’s 500 index was up less than 0.1 percent at 12:54 p.m. New York time. That was enough to reverse the prior skepticism Trump has shown for official federal employment data.

The rule, which was published in the Federal Register in 1985, says “employees of the Executive branch shall not comment publicly on the data until at least one hour after the official release time.” The White House gets the number before the release. It’s unclear whether Trump’s retweet of Drudge would be considered a comment, but his predecessors observed the rule. Spicer, at his daily White House briefing, dismissed any concern about potentially violating the rule, which he claimed was instituted to avoid affecting financial markets. He said his and Trump’s tweets simply highlighted good news for the economy that already was being widely reported. “I don’t think that’s exactly a market disruption,” Spicer said. “I apologize if we were a little excited” about so many Americans getting work. Jason Furman, chairman of the Council of Economic Advisers during the Obama administration, said previous administrations from both parties abided by the one-hour rule. Obama occasionally changed his schedule to comply with it, he said. “We would even inconvenience ourselves in the Obama administration,” he said in an e-mail. “There were times that the president’s schedule was shifted, including [small] delays to flights taking off because he had to wait until 9:30 a.m. to comment on the data.”

‘Phony numbers’

Priming supporters

Job seekers look at their respective computer screens during a résumé-writing class at the Texas Workforce Solutions office in Dallas on March 10. AP/LM Otero

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resident Donald J. Trump seized on the first federal jobs report of his presidency to promote a narrative of an invigorated economy that may strengthen his political position, as he begins the drive to win passage of legislative priorities, including an Obamacare replacement and a tax overhaul. The president and his staff exalted in a 235,000 net increase in US jobs during February, even making light of doubts Trump previously cast on government data showing employment improvements under President Barack Obama. “He said to quote him very clearly,” White House Press Secretary Sean Spicer said Trump had told him, “They may have been phony in the past, but it’s very real now.” “GREAT AGAIN: +235,000,”

Trump posted on his Twitter account in a retweet of a Drudge Report headline last Friday minutes after the Bureau of Labor Statistics released payrolls data. Gary Cohn, the former Goldman Sachs Group Inc. president who’s now director of the National Economic Council, used the report as validation of Trump’s approach to bolstering the economy, which has included bringing in corporate executives to the White House to press them for

hiring commitments and publicly scolding companies over plans to move production abroad. “We’ve had many big announcements from CEOs,” Cohn said, basking in the “sunny” jobs numbers amid gray skies and rain in Washington. “Remember, those jobs are not in these numbers. Those jobs will come in the future—they’ll come three, six, 12 months from now. So we think there’s enormous demand for American workers built into the system.” Spicer said the jobs report, in which the unemployment rate declined to 4.7 percent, was “great news”. “Not a bad way to start day 50 of this Administration,” Spicer tweeted at 8:57 a.m.

Comparing numbers

The payroll increase in February was actually slightly lower than the same month the two prior years—jobs increased by 237,000 in February 2016 and by 238,000 in February 2015. Yet, the numbers were an improvement on 187,000 monthly average during the final year of

After the New Hampshire presidential primary last year, Trump said, “Don’t believe those phony numbers when you hear 4.9-[percent] and 5-percent unemployment. The number’s probably 28, 29, as high as 35. In fact, I even heard recently 42 percent.” With the release of the jobs data in October 2012, just ahead of Obama’s reelection, Trump said: “I don’t believe the number and neither do any of the other people that have intelligence.” With his tweet minutes after the data was released and before markets opened, Spicer may have

Trump primed his supporters for a strong jobs report this week with a series of tweets that have highlighted positive economic indicators and a private payrolls survey. Trump also released a video praising Exxon Mobil Corp. for announcing a $20-billion building spree that would create 45,000 jobs along the Gulf Coast. While the announcement dates back to plans the company was making as early as 2013, Trump took credit, saying it was a sign his policies were already working. “I said we’re bringing back jobs,” he said in the March 6 video. “This is one big example of it.” Bloomberg News

US attorney in New York on Twitter: ‘I was fired’

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EW YORK—The call to Preet Bharara’s office from President Donald J. Trump’s assistant came last Thursday. Would Bharara, the US attorney in Manhattan, please call back? He did not. The following day, Bharara was one of 46 US attorneys appointed by President Barack Obama asked to resign—and to immediately clean out their offices. The request took many in his office by surprise because, in a meeting last November, Bharara was asked by the then-president-elect to stay on. Bharara refused to resign. Last Saturday he announced on Twitter that he had been fired. It was unclear whether the president’s call last Thursday was an effort to explain his change of heart about keeping Bharara or to discuss another matter. The White House would last comment last Saturday. However, there are protocols governing a president’s direct contact with federal prosecutors. According to two people with knowledge of the events who were not authorized to discuss sensitive conversations publicly, Bharara notified an adviser to the attorney general, Jeff Sessions, that the president had tried to contact him and that he would not respond because of those protocols. Bharara then called Trump’s assistant back to say he could not speak with the president, citing the protocols.

The number of US attorneys appointed by President Barack Obama who were asked to resign

Preet Bharara, the US Attorney for the Southern District of New York, at a news conference in Manhattan on September 21, 2016. Bharara, who was asked by Donald J. Trump to remain in his post shortly after the election, was fired on March 11 after he refused an order to submit his resignation along with 45 other federal prosecutor holdovers from the Obama administration. Bryan R. Smith/The New York Times

Bharara was a highly public prosecutor who relished the spotlight throughout more than seven years in office. He pursued several highprofile cases involving Wall Street, and he was in the midst of investigating fund-raising by Bill de Blasio, the mayor of New York, and preparing to try former top aides to the governor of New York, Andrew Cuomo, who are both Democrats. It was not immediately clear how his departure would affect those cases and others that were pending. Bharara stayed quiet until Saturday afternoon. Then, on his personal Twitter account, which he set up eight days ago, he wrote: “I did not resign. Moments ago I was fired.” Peter Carr, a Justice Department spokesman, declined to character-

ize Bharara’s departure that way, saying only, “I can confirm that Mr. Bharara is no longer the US attorney for the Southern District of New York [SDNY].” Bharara, referring to the Southern District of New York, said, “Being the US Attorney in SDNY will forever be the greatest honor of my professional life.” All presidents choose their own appointees for US attorney positions and almost always ask those from their predecessors to leave. But the process under Trump was unusually abrupt, and it was yet another rocky encounter between the Trump administration and the nation’s lawenforcement apparatus. Bharara’s job had appeared to be secure. Last November he met at

Trump Tower with the presidentelect and several of his advisers, including Trump’s son-in-law Jared Kushner and his chief strategist Stephen K. Bannon, according to two people briefed on that discussion who requested anonymity. At the meeting, according to those briefed, Trump asked Bharara to remain in the job, which Bharara relayed to reporters and television cameras in the Trump Tower lobby. Then came the order to resign on Friday, creating what was described as a feeling of whiplash in the prosecutor’s Manhattan office. One person familiar with the views of current prosecutors described an oddly subdued reaction mixed with anxiety as the events unfolded. “You have a sense of how it’s going to end, and it’s not going to end well,” the person said.

But Bharara, unlike his fellow US attorneys, publicly refused to leave. He gave no statement citing a policy or legal issue affecting his decision to refuse the resignation order. It was unclear how many of the 46 holdovers had submitted resignations. Bharara’s colleague Robert L. Capers, the US attorney in Brooklyn, announced his resignation on Friday afternoon. Two White House officials, speaking on condition of anonymity to avoid offending the president, said the promise to keep Bharara on was a product of a chaotic transition process and Trump’s desire at the time to try to work with Sen. Chuck Schumer, Democrat-New York, with whom Bharara is close. The relationship between Trump and Schumer, the Senate minority leader, has since soured. It was Dana Boente, the acting deputy attorney general, who called Bharara on Saturday. According to a Justice Department official, Boente told Bharara that he was one of the 46 US attorneys being told to resign. Bharara, the official said, replied that that was in conflict with Trump’s asking him to stay on. Boente reiterated that Bharara was being asked to resign, and Bharara said that he was interpreting that as being fired. Boente then said again that the department was asking him to step down, according to the o fficial. New York times News Service

Modi’s party wins big in India’s largest state

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EW DELHI—Prime Minister Narendra Modi led his party to a landslide victory in India’s largest state last Saturday, consolidating his power and putting him in a strong position to win reelection in 2019. The scale of the victory in Uttar Pradesh’s legislative elections was all the more stunning because it followed Modi’s politically risky decision to eliminate most of India’s cash. The vote was seen as a referendum on the prime minister, who campaigned vigorously in recent days in Uttar Pradesh, which, with a population of more than 200 million, would be the world’s sixth-largest country if it were independent. “This is a stupendous achievement,” said Ashok Malik, a fellow with the Observer Research Foundation, based in New Delhi. “Here you had a prime minister making himself the face of the election in the absence of a local leader and stitching together a coalition across the state.” The margin of victory in Uttar Pradesh was the largest seen by any party in more than 30 years. It gives Modi a significant advantage in the national elections in 2019, which in turn would bring him closer to his long-term goal of becoming a leader of historic significance, steering India away from its more socialist, secular past. Modi’s Bharatiya Janata Party, commonly called the BJP, also won at least one of four other state elections in which ballots were being counted last Saturday. The weakening India National Congress party, which once dominated the nation’s politics, won in Punjab, a powerful farming state, and remained in contention in two smaller states, showing that it was still a factor nationally, though less so than in years past. The Aam Aadmi Party, born of the anticorruption movement that has arises in India in recent years, failed to win any state, suggesting that it was not yet ready to take over from the Congress party as the main opposition to Modi. Modi said on Twitter his party’s victories were “humbling and overwhelming”. In Uttar Pradesh the Election Commission of India said the BJP had won or was leading in voting for 308 of the 403 seats in the state legislature, decimating the last-minute anti-Modi coalition cobbled together by Congress and the local governing party, the Samajwadi Party. By Saturday afternoon, that coalition had garnered only 57 seats. The coalition had appeared to be gaining steam after it was formed early this year, led by the dynamic, relatively young leader of the Samajwadi Party, Akhilesh Yadav, 43, whose father founded the party and presided over it for decades. That party and the Bahujan Samaj Party (BSP), commonly known as the BSP, have taken turns governing Uttar Pradesh in recent decades, in each case putting together coalitions that consisted mainly of the party leader’s caste group along with Muslims. But on Saturday afternoon, the BSP, led by Kumari Mayawati, a leader of the Dalit caste, won or was leading in only 20 seats, the election commission said. The scale of the BJP’s victory suggested that it had bridged such caste allegiances, some experts said, although it had yet to cross religious lines to attract large numbers of Muslims. While Modi has largely steered clear of divisive language on religion as prime minister, his party has a Hindu nationalist philosophy, and he was accused of complicity in anti-Muslim violence as the leader of his home state of Gujarat.New York Times News Service

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GOP advances risky strategy on health care

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ASHINGTON—President Donald J. Trump and House Republicans are pressing forward with a high-risk strategy to repeal and replace the Affordable Care Act (ACA), disregarding the views of medical professionals and potentially imperiling the party’s political future in conservative states, where many voters stand to lose their health care. The effort could cause upheaval in a roiled insurance market next year, as Republicans face voters for the first time with Trump in the White House—though that turmoil would happen only if the plans manage to clear a divided Senate. Trump is showing only a tenuous grasp of the legislative process and mercurial leadership in rounding up support. But Republicans who spent seven years promising to scrap President Barack Obama’s signature domestic achievement say their strategy is worth the risk. “If you ask someone to give up something, there will be resentment,” said Rep. Michael C. Burgess, Republican-Texas, and chairman of the Energy and Commerce subcommittee on health. But, he added, “If that claims my congressional career, so be it. It will be worth it to me to have effected this change.” The risks mounted steadily this past week. The insurance and healthcare industry cited likely damage to medical coverage for millions of Americans. Conservatives fought the bill on the grounds that it did too little to reduce subsidies. And House leaders moved forward even though the influential Congressional Budget

Office has yet to assess the costs or effectiveness of the plan. Ultimately, Republicans are counting on Democrats to step in and help repair what even Republicans anticipate as upheaval if a repeal measure is passed without a broad remake of US health care. Republican leaders have made no effort to hide the strategy. House Speaker Paul Ryan spoke at length this past week about a three-stage effort: First, with only Republican votes, repeal major parts of the health law and put in place some new provisions. Second, let Health and Human Services Secretary Tom Price use regulatory powers to try to stabilize insurance markets. Third, pressure Democrats to help with a series of bills to complete the replacement and change the health-care system more to the liking of conservatives. But that bet carries enormous peril for consumers and insurers— and congressional Republicans and the Trump administration. Democrats, eyeing potential turmoil in the run-up to the 2018 midterm elections, have little political reason to cooperate. “One thing is clear,” said the House Democratic whip, Rep. Steny

Vice President Mike Pence greets attendees at Harshaw Trane’s facility in Louisville, Kentucky, on March 11. The Trump administration and House Republicans are pushing forward with plans to repeal and replace the Affordable Care Act. Here, Pence said “the Obamacare nightmare is about to end.” Aaron Borton/The New York Times

Hoyer of Maryland. “House Republicans are going to have to find the votes on their own to dismantle the protections incorporated in the Affordable Care Act that the American people now have.” A growing chorus of Republican policy experts and senators are pleading to slow the process down— or risk a political blood bath. But Republican leaders and Trump appear to be laying the groundwork for blaming the law they are annulling for the fallout likely to come in the repeal’s wake. Trump asserted last Friday that 2017 would be “a disaster” for the health law. “That’s the year it was meant to explode, because Obama won’t be here,” he said, adding that “as

bad as it is now, it’ll get even worse.” Last Saturday he wrote on Twitter: “ObamaCare is imploding and will only get worse. Republicans coming together to get job done!” Vice President Mike Pence traveled to Louisville, Kentucky, last Saturday to assure residents that “the Obamacare nightmare is about to end.” What is clear is that 2018—a year that Republicans say will be messy— will loom large for them as they move toward a vote on the measure. But Republicans say that gives them nearly a year of time, since people will experience few changes with their health care in 2017. Under the proposed House legislation, individuals would no longer be subject to a penalty if they go

without health insurance, a politically popular change that would be retroactive to 2016. But they would still enjoy the protections of the ACA: Insurers would have to offer a suite of essential health benefits, could not deny them coverage because of preexisting conditions and could not impose annual or lifetime caps on coverage. Insurers would be free to raise their premiums to meet these requirements, but because current policies are locked in for the year, voters would not see the effects until 2018. If young, healthy Americans flee the market, freed from the mandate, premiums could soar next year. Insurers say this is a recipe for havoc. Eliminating the penalties

Trump travel ban may deter foreign tourists from US

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resident Donald J. Trump’s immigration stance has begun to discourage foreign visits to major US cities, threatening to cost billions of dollars and thousands of jobs. New York, the nation’s most visited city by people overseas, predicts such trips will drop more than 2 percent this year to 12.4 million, the first decline after eight consecutive annual increases. Los Angeles and Miami may also experience decreases. Trump’s January 27 ban on travelers from seven mostly Muslim nations, though halted in court, is taking its toll. The order, which caused chaos at airports, has sparked protests globally. High-profile customs ordeals, including the detention of Australian children’s author Mem Fox at Los Angeles International Airport and the interrogation of boxer Muhammad Ali’s son in Fort Lauderdale, Florida, are beginning to worry travel industry and city representatives. “It’s the president’s ‘America First’ rhetoric, the trade protectionism, the Mexican wall,” said Adam Sacks, president of Tourism Economics in Wayne, Pennsylvania, which analyzes data to predict and measure travel activity for clients in government and private industry.

Lost revenue

Trump last Monday issued revised travel restrictions that exempts Iraq from the ban and gives more specifics about who is covered. The new order will likely trigger a fresh round of legal objections. International visitors spent about $250 billion in the US last year, Sacks said. The US will have about 4.3 million fewer foreign visitors this year, thanks to Trump, which translates into $7.4 billion of lost revenue, according to his firm. Sacks’s analysis included data from ForwardKeys.com, which reported that bookings to the US from Western Europe decreased 14 percent from January 28 to February 4, compared with last year.

4.3M

From the Middle East, bookings were down 38 percent. In a statement, ForwardKeys CEO Olivier Jager said his company sent its information by e-mail to the White House press office on March 3, prior to Trump issuing the revised ban. In New York, which attracts almost 30 percent of the nation’s foreign tourists, officials still expect an overall record of 61.7 million visitors, 1 million more than in 2016, due to rising domestic tourism. Though international travelers amount to 20 percent of all city visitors, they account for about half the total that tourists spend. Officials say 300,000 fewer international travelers will cost the city economy about $900 million. “The last time we dealt with something like this was after the Iraq war and the financial crisis and worldwide recession,” said Christopher Heywood, global communications director for NYC and Co., New York’s marketing agency. The office plans a $3-million advertising campaign in western Europe and Mexico this year, he said.

‘Direct result’

Los Angeles could lose about 800,000 international visitors and $736 million in spending over the next three years “as a direct result” of Trump’s orders, most due to reduced travel by Mexican nationals, said Ernest Wooden, president of the Los Angeles Tourism and Convention Board, which based its estimate on research provided by Sacks’s Tourism Economics.

Washington State Attorney General Bob Ferguson speaks at a news conference about the state’s response to President Donald J. Trump’s revised travel ban on March 9 in Seattle. Legal challenges against Trump’s revised travel ban mounted last Thursday as Washington state said it would renew its request to block the executive order. It came a day after Hawaii launched its own lawsuit, and Ferguson said both Oregon and New York had asked to join his state’s legal action. AP/Elaine Thompson

For Miami, which is second to New York in overseas visitors to US cities, flight searches from the UK “have fallen off a cliff”, down 52 percent from last year, according to a February 27 report by Kayak. co.uk, an online booking agent. Hopper.com, a mobile application that expedites bargain airfare searches, analyzed flight searches from foreign countries to the US for the three weeks prior to Trump’s January 20 inauguration through February 22. Demand was weakest on the Friday Trump signed his executive order, down 17 percent when compared with former President Barack Obama’s final two weeks in office. “We’ve seen larger declines in flightsearch demand corresponding to dates when the executive order has dominated the news cycle,” said Patrick Surry, the company’s chief data scientist. The US travel industry already faced challenges, with the impact of a strong US

dollar and weakness in several western European economies, said Sacks of Tourism Economics. The dollar is at a 15-year high versus major currencies, including the euro, and against the British pound, it has risen to levels last seen in the 1980s. Trump, a billionaire whose family’s investments include at least 11 hotels, should understand the risks to the US economy if foreign tourists spend their billions of dollars elsewhere, said Jonathan Grella, director of public affairs at the US Travel Association. “This president is a hotelier, as well as a marketing and development specialist, so we would hope we can find some common ground,” Grella said. “Reputational fallout is a very real thing in the travel industry.” Commerce Department Spokesman Tim Truman said he couldn’t comment on the travel industry’s worries until May, when the federal government receives data on January’s international arrivals. Bloomberg News

New York Times News Service

Merkel to warn Trump: US tax changes may spark retaliation

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The foreign visitors to the US will be fewer by this number this year, which translates into $7.4 billion of lost revenue

used to enforce the mandate that most Americans have insurance “would add to short-term instability in the market,” said Marilyn B. Tavenner, chief executive of America’s Health Insurance Plans, a lobby for insurers. Instead of the current tax penalty for failing to secure coverage, the bill would introduce a penalty for purchasing insurance after letting coverage lapse: To encourage people to maintain “continuous coverage”, insurers would impose a 30-percent surcharge on premiums for people without coverage for 63 days or more. But that provision would not take effect until 2019—again leaving 2018 unprotected. All of that has created immense uncertainty for insurers, which have until June 21 to notify the government if they intend to participate in the federal insurance marketplace next year. “The current uncertainty makes it difficult to assess what our product offerings for 2018 might be,” said Roy D. Vaughn, a senior vice president of BlueCross BlueShield of Tennessee, which lost more than $400 million in the federal insurance exchange in the past three years. “All options are on the table for 2018.” For all those worries, the Republicans’ repeal campaign did gain momentum this past week as two House committees approved the legislation, with the full House expected to take it up later this month. Trump praised the legislation, even as it was harshly criticized by doctors, hospitals, insurers and state officials, who said it could increase the number of uninsured and destabilize insurance markets. The Congressional Budget Office is expected to render its verdict on the legislation this week, with an estimate of the bill’s costs and its effect on coverage, and Republicans are bracing for bad news.

erman Chancellor Angela Merkel will warn US President Donald J. Trump that a proposed tax overhaul could spark retaliatory measures, including higher tariffs for American companies, according to Der Spiegel magazine. The German government is reviewing its responses to a border-adjustment tax, which would only tax US corporations’ imports and not their exports. Documents for Merkel’s upcoming meeting with Trump cited by Spiegel label the measure a “protective tariff” and say it violates World Trade Organization rules. Responses from Europe’s largest economy could include incrementally higher duties on imports from America and allowing German companies to make their US import tax deductible, thus compensating their competitive disadvantage, according to the report. Eventually, Germany could also lower corporate taxes and social contributions, making itself more attractive to international companies. Trade is high on the agenda as Merkel flies to the US for her first meeting with Trump last Tuesday. The chancellor said last Thursday she’ll fight to preserve free trade and a strong Europe, calling on the European Union to pursue trade agreements with other countries in response to Trump’s protectionist rhetoric. For Merkel, defending Germany’s export-based economic model is key as she seeks to boost her party’s poll numbers and win a fourth term in September. The country had a record trade surplus of more than 8 percent of GDP in 2016, while the US trade deficit widened in January to the most since March 2012. While House Republicans have proposed the border-adjustment tax, Trump has still to explicitly endorse the idea as part of his plan to put America first and boost domestic production. American Treasury Secretary Steven Mnuchin is said to plan to use his debut at a Group of 20 meeting in Germany next week to drive home the message that the US won’t tolerate countries that use currency devaluation to gain an edge in trade. Bloomberg News

A10 Monday, March 13, 2017

The World BusinessMirror

Ouster of S. Korean president could return liberals to power

Protesters with portraits of impeached President Park Geun-hye march toward the presidential house during a candle-light vigil calling for her arrest in Seoul, South Korea, last Saturday. South Korean police braced for more violence between opponents and supporters of ousted Park, who was stripped of her powers by the Constitutional Court over a corruption scandal that has plunged the country into a political turmoil. AP/Ahn Young-joon

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EOUL, South Korea—The foes of South Korea’s likely new leaders have called them blindly naÏve, closet North Korea followers and antiAmerican—an unsettling accusation in a country where the alliance with Washington has been the military bedrock for seven decades.

Now, after being out of power for almost 10 years, the South Korean liberal opposition is on the verge of retaking the presidency with the historic court ruling last Friday that ousted its conservative enemy, President Park Geun-hye, who had been impeached in a corruption scandal. Their presidential hopeful, Moon Jae-in, wants a profound change in the country’s tense relations with North Korea, pushing outreach and dialogue. He also is

deeply skeptical of the hawkish stance embraced by the conservatives and South Korea’s most important defender, the United States. Moon and his liberal partners are especially worried about a new antimissile shield the Americans are installing in South Korea, citing China’s fury over it and warning of a standoff reminiscent of the Cuban missile crisis. Much has changed since South Korea’s liberals were running the

Twin blasts kill 40 in Syria’s capital

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EIRUT—Twin blasts last Saturday near holy shrines frequented by Shiites in the Syrian capital Damascus killed at least 40 people and wounded over a hundred, most of them Iraqis, according to Syrian and Iraqi officials. There was no immediate claim of responsibility for the attacks. Islamic State (IS) militants have carried out similar attacks before against Shiite shrines in the Syrian capital and elsewhere. Extremist Sunni groups, such as IS, view Shiites as apostates and consider shrines a form of idolatry. Syrian State TV aired footage from the scene showing bloodsoaked streets and several damaged buses in a parking lot, apparently where the explosions went off near Bab al-Saghir cemetery. The cemetery is one of Damascus’s most ancient and is where several prominent religious figures are buried. Interior Minister Mohammed al-Shaar visited the wounded in local hospitals. He said 40 were killed and 120 were wounded. He said the attacks targeted civilians, including Arab visitors, who were touring area’s shrines. Iraq’s Foreign Ministry said in a statement at least 40 Iraqis were killed and 120 wounded. Ministry Spokesman Ahmed Jamal said buses carrying Iraqi pilgrims to the

shrines were targeted. He said a crisis response team has been formed to expedite the identification and transport of the killed and wounded. “The ministry calls on the international community to condemn this heinous terrorist crime that targeted civilian Iraqi visitors to the holy shrines. It also urges a firm and decisive stand against the takfiri groups responsible for them,” Jamal said in a statement. Takfiri is an Arabic derogatory term referring to extremist Sunni Muslims—such as members of the IS group—who accuse other Muslims of being infidels. Iraqi, Iranian and other Asian Shiites often visit shrines in Syria. United Nations Resident and Humanitarian Coordinator for Syria Ali al-Za’tari condemned the attacks, saying “targeting civilians is a terrorist act, condemned and rejected by anyone who has a conscience in this world.” Lebanon’s Hezbollah group also condemned the attacks, saying they stem from a “takfiri ideology that uses religion as a cover to stab religion and believers everywhere.” There were conflicting reports about what caused the explosions. State news agency Sana said the blasts were caused by bombs placed near the cemetery and that at least 33 were killed and more than a hundred wounded. AP

country. The North not only has amassed nuclear weapons but claims it can fit them atop missiles. It has successfully launched missiles that could hit Japan, and could soon perfect models that could reach the US. North Korea now has an unpredictable, 33-year-old leader, Kim Jong Un, who styles himself in the godlike image of his grandfather, the hermetic country’s communist revolutionary founder. He appears even more obsessed with nuclear weapons than his father and predecessor, Kim Jong Il, and has threatened South Korea and its allies with preemptive nuclear attack. The challenges for Moon and his liberal partners as they push to reclaim power in elections now scheduled for May will be how to engage with a far more dangerous North Korea, maintain close ties with the US and repair relations with China, which increasingly mistrusts the US military’s intentions. Moon has called himself “America’s friend,” grateful that the US

protected South Korea from communism and supported its economic growth and democratization. The alliance with Washington is “a pillar of our diplomacy”, he said in an interview on the eve of Park’s courtordered ouster. But he also said South Korea should learn to “say ‘No’ to the Americans”. Moon’s ascent could seriously complicate the US rush this past week to deploy the new advanced missile-defense system, known as Terminal High-Altitude Area Defense (Thaad) in the South. He and his liberal associates have questioned the deployment, calling it an unnecessary escalation of tensions on the Korean Peninsula. The missile system would put sophisticated US weaponry on China’s doorstep and has infuriated the Chinese so much they are boycotting South Korean brands and may now be less willing to use economic leverage to rein in the North. Park’s government considered Thaad a centerpiece in defending against the growing North Korean missile threat. But Moon vowed to review the deployment if elected. “I cannot understand why there should be such a hurry with this,” he said. “I suspect that they are trying to make it a fait accompli, make it a political issue to be used in the election.” As of Friday, the Trump administration had said nothing publicly about Park’s removal and its implications for South Korea’s relations with the US. But Trump’s United Nations envoy, Nikki R. Haley, made clear this week she sees no point in dialogue with North Korea’s leader, whom she described as “not rational”, and that the Thaad deployment was not directed at China. Moon said he abhorred “the ruthless dictatorial regime of North Korea.” But he also said sanctions that the US had enforced with the conservatives in South Korea for a decade had failed to stop North Korea’s nuclear weapons program, so it was time to try something less confrontational. “We must embrace the North Korean people as part of the Korean nation, and to do that, whether we like it or not, we must recognize Kim Jong Un as their ruler and as our dialogue partner,” Moon said. New York Times News Service

news@businessmirror.com.ph

Turkey-Dutch relations dip after Turkish visits banned

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OTTERDAM, the Netherlands—The escalating dispute between Turkey and the Netherlands spilled over into Sunday, with a Turkish minister unable to enter her consulate after the Dutch had already blocked a visit by the foreign minister, prompting President Recep Tayyip Erdogan to call the Dutch “Nazi remnants”. Turkish Foreign Minister Mevlut Cavusoglu was barred from landing in the Netherlands last Saturday and Turkish officials then closed off the Dutch Embassy and called its ambassador no longer welcome, sinking relations even deeper in the diplomatic standoff over plans by Turkish officials to address political rallies in Europe. About 1,000 pro-Turkish protesters gathered outside their country’s consulate in Rotterdam after Family and Social Policies Minister Fatma Betul Sayan Kaya was prevented from entering it after traveling to the Netherlands from Germany. She insisted the “Netherlands is violating all international laws, conventions and human rights by not letting me enter”. Early last Sunday, NOS network showed pictures of a woman, protesting, being taken to another car, amid media reports the minister was being taken back to Germany. Turkey’s state-run news agency later said the minister had left the consulate area, escorted by the police. The mayor of Rotterdam issued an emergency order late Saturday in an attempt to contain a pro-Turkish demonstration, which has turned into a flashpoint of the quickly deteriorating relations. Mayor Ahmed Aboutaleb said he needed special powers to assure security throughout the center of the city fearing that more people would join the demonstration and there was “serious concern” that riots might ensue. The Dutch first withdrew the landing rights of the foreign minister because of objections to his intention to attend a rally in Rotterdam for a Turkish referendum on constitutional reforms to expand presidential powers, which the Dutch see as a step backward from democracy. Erdogan told a rally in Istanbul that the Dutch “do not know politics or international diplomacy”. He compared them to “Nazi remnants, they are fascists”. Dutch Prime Minister Mark Rutte called it “a crazy remark, of course. But I understand they are angry but

1,000 The estimated number of pro-Turkish protesters who gathered outside their country’s consulate in Rotterdam after Family and SocialPolicies Minister Fatma Betul Sayan Kaya was prevented from entering it

this is, of course, way out of line.” Erdogan had earlier this month already compared German policies to “Nazi practices”, after German municipalities canceled several campaign events by Turkish officials last weekend. He told a rally in Istanbul kAR Saturday: “You can stop our foreign minister’s plane all you want, let’s see how your [diplomatic] planes will come to Turkey from now on.” Cavusoglu also referred to possible sanctions, and Rutte said consultations under such threats were impossible, forcing him to bar the visit. The government said it withdrew the permission because of “risks to public order and security”, causing Cavusoglu to say: “So is the foreign minister of the Turkish republic a terrorist?” In the evening, a Turkish foreign ministry official who spoke on customary anonymity said the Dutch Embassy in Ankara and its consulate in Istanbul were closed off because of security reasons. The official said entries and exits were closed to the two locations. Similar precautions were taken at the Dutch chargé d’ffaires’ house and the ambassador’s residence. The Turkish foreign ministry also said it doesn’t want to see the Dutch ambassador, who is out of the country, return to his post for some time because of the increasingly divisive dispute with the Netherlands. Cavusoglu said he arrived in Metz, France, late Saturday, where he was expected to address crowds last Sunday. Turkish officials have been campaigning in various European cities before the April 16 referendum. Around 100 people marched in Istanbul last Saturday afternoon to protest the Dutch decision, with demonstrators placing a black wreath in front of the Dutch Consulate amid a heavy police presence. AP

Tepco marks 6th year of Japan’s quake, tsunami with silence

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okyo Electric Power Co. (Tepco) broadcast live on its web site a memorial of the 9-magnitude earthquake and resulting tsunami that devastated northern Japan six years ago and wrecked its Fukushima reactor in one of the worst atomic disasters in history. Company President Naomi Hirose bowed his head for a moment of silence at 2.46 p.m., the time the disaster struck, before a group of about 700 employees gathered at the company’s new administration building that opened last year on the site of its crippled power station in Fukushima. Hirose apologized to the people affected by the accident and praised his staff for the progress made in the last year. Tepco has been battling to clean up the site of the disaster, a process Hirose said would take 30 to 40 years to complete. The cost of that decommissioning may be ¥8 trillion ($69.7 billion), according to the Ministry of Economy, Trade and Industry. The tsunami knocked out power to cooling systems and led to three reactor-core meltdowns. The 2011 disaster claimed 15,893 lives and 2,553 people remain missing, the National Police Agency said on March 10. Japan’s Reconstruction Agency

Bereaved family members pray for their loved ones who fell victim to the 2011 massive earthquake and tsunami at the site of the Unosumai disaster-prevention center, as heavy machinery for the ongoing work to raise the ground level of the area are seen in the background in Kamaishi, Iwate Prefecture, Japan, on March 11. Japan marked the sixth anniversary of the 2011 disaster in which more than 18,000 people died or went missing in northeastern Japan. Takaki Yajima/Kyodo News via AP

said 123,168 people still remained evacuated as of February 28. Prince Akishino and Prime Minister Shinzo Abe spoke at a ceremony at the National Theater of Japan in Tokyo, after also observing a

minute’s silence. “My heart hurts deeply, especially when I think of the health of victims who age every year as their lives under evacuation become long term and those who still can’t return to their

homes because of high radiation,” Prince Akishino said. “It is the wish of us all that the day comes when each and every person in a difficult situation can get back their peaceful lives.” Bloomberg News

Agriculture/Commodities BusinessMirror

news@businessmirror.com.ph

Editor: Jennifer A. Ng • Monday, March 13, 2017 A11

PHL rice inventory down 22% in February Lawmaker wants House to prioritize free irrigation bill By Jovee Marie N. dela Cruz @joveemarie

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File photo

By Jasper Emmanuel Y. Arcalas

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@jearcalas

he country’s rice inventory in February declined by nearly 22 percent to 2.3 million metric tons (MMT), from 2.94 MMT recorded a year ago, according to the latest data from the Philippine Statistics Authority (PSA). Data from the PSA showed that total rice inventory as of February 1 was also 16.95 percent lower than the 2.77 MMT posted in January. Despite the decline in stocks, the PSA said the total rice inventory is sufficient to meet the riceconsumption requirement of Filipinos for 68 days. “Stoc k s in t he households would be good for 34 days, those in commercial warehouses for 20 days, and those in NFA [National Food Authority] depositories for

14 days,” the PSA said in its monthly report, titled “Rice and Corn Stocks Inventory February 2017“, published over the weekend. Of the rice inventory as of February 1, the PSA said 49.87 percent were with the households, 29.87 percent were in commercial warehouses, while 20.26 percent were in NFA depositories. Almost 79 percent of NFA stocks consisted of imported rice. PSA data showed that NFA stocks during the period reached

465,260 MT, while commercial warehouses accounted for 685,960 MT. Households accounted for 1.145 MMT. “Year-on-year, rice stocks in the households increased by 13.98 percent,” the PSA said in the report. “However, stocks in commercial warehouses and in NFA depositories decreased by 27.21 percent and 53.28 percent, respectively,” it added. On a monthly basis, rice stocks in all sectors were lower compared with their levels in January. The PSA said stocks in the households dropped by 9.81 percent, in commercial warehouses by 27.65 percent, and in NFA depositories by 15.01 percent. The government periodically monitors rice inventory to determine whether it would need to import the staple to boost local stocks. During the same period, PSA data showed that total corn-stock inventory expanded by 41.04 percent to 439,570 MT, from last year’s record of 311,670 MT. The corn-stock inventory as of Febru-

ary 1 was also 15.03 percent higher compared to January’s level of 382,130 MT. The PSA said the bulk of cornstock inventory in February, or 64.86 percent, was in commercial warehouses, while households accounted for 34.6 percent. NFA depositories accounted for only 0.54 percent. Corn inventory in commercial warehouses reached 285,090 MT, 152,100 MT in households, while corn in NFA warehouses reached only 2,380 MT. “Corn stocks in all sectors grew compared with their levels the previous year. Stocks in the households increased by 90.88 percent, in commercial warehouses by 23.13 percent and in NFA depositories by 428.67 percent,” the PSA said. “Compared with the previous month, corn stocks in commercial warehouses and in NFA depositories increased by 38.54 percent and 84.56 percent, respectively. Stocks in the households dropped by 13.12 percent,” the PSA added.

Veggie, root-crop production up in Q4–PSA report

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he production of major vegetables and root crops, such as cassava and eggplant, expanded in the fourth quarter of 2016 due to favorable weather, according to the latest report of the Philippine Statistics Authority (PSA). In its quarterly report, titled “Major Vegetables and Root crops Quarterly Bulletin”, the PSA said cassava production during the October-to-December period grew 2.3 percent to 776,200 metric tons (MT), from 758,882 MT recorded in the same period in 2015. “This could be attributed to the increase in area harvested in Zamboanga del Sur and Bukidnon due to increased demand for feeds and other industrial uses,” the PSA said in the report published over the weekend. “Bigger sizes of tubers [were also] harvested in Agusan del Sur due to sufficient soil moisture during tuber formation,” it added. The PSA said the Autonomous Region in Muslim Mindanao (ARMM) was the top producer of cassava during the period, with

output reaching 424,940 MT, which accounted for 54.7 percent of the total production. This is slightly higher than the 423,645 MT produced in 2015. “The other major [cassava] producers were Northern Mindanao, which contributed 14.3 percent [of total], and Cagayan Valley with 8.3 percent,” the PSA said. In the fourth quarter, eggplant output increased 2 percent to 23,480 MT, from 23,020 MT output recorded in the same period in 2015, according to the PSA. The PSA said the output increase could be attributed to expansion of hectarage and availability of planting materials. “This could be attributed [to] increase in area planted in Agusan del Sur due to sufficient rains during planting time and availability of seeds from the Department of Agriculture (DA) through the local government unit (LGU) in Surigao del Sur,” the PSA said. “More fruits [were also] harvested in Cebu due to sufficient soil moisture,” the PSA added. Calabarzon was the top egg-

plant-producing region, accounting for almost 20 percent of the total output in the period, the PSA said. However, the region’s output declined by 1.4 percent during the October-to-December period to 4,595 MT from 4,660 MT recorded in 2015. On an annual basis, data from the PSA also showed that the production of sweet potato and tomato expanded in the fourth quarter of 2016 by 4.7 percent and 4.1 percent. “In October to December 2016, production of sweet potato was estimated at 127,850 MT, 4.7 percent higher than last year’s 122,170 MT,” the PSA said. “The increase could be traced to the increase in area harvested in Agusan del Sur due to adequate rainfall during planting time and bigger sizes of tubers harvested in Agusan del Sur and Cebu due to sufficient soil moisture during tuber formation,” the PSA added. PSA data also showed that tomato output reached 28,350 MT, 4.1 percent higher than the 27,220 MT recorded in 2015. The agency said

farmers were encouraged to plant more tomato due to high prices and “adequate fertilizer support” from their LGUs. Typhoon Lawin (international code name Haima), which hit the Philippines last October, reduced the output of mongo, cabbage and onion in the fourth quarter, according to the PSA. “The October to December 2016 production of mungbean slightly dropped by 0.3 percent, from 3,130 MT in 2015 to 3,120 MT in the fourth quarter,” the PSA said. “This could be attributed to the decrease in area planted in Sulu due to peace and order situation; and in Agusan del Sur due to lesser rains during planting time and shifting of some areas to cassava production in Basilan due to changing weather condition,” it added. On a yearly basis cabbage and onion production dropped by 3.3 percent and 4.9 percent, respectively. The PSA said cabbage production reached 50,410 MT, while onion production amounted to 9,137 MT during the period. Jasper Emmanuel Y. Arcalas

member of the House Committee on Food and Agriculture on Sunday asked the leadership of the lower chamber to include the measure providing free irrigation to farmers, especially rice growers, in its priority bills. Camarines Sur Rep. Luis Raymund F. Villafuerte Jr. made the statement after the committee endorsed for plenary approval the substitute bill to 29 measures seeking to strengthen assistance to farmers, agrarian-reform farmers, and indigenous cultural communities by providing them with free irrigation. Villafuerte, one of the authors of the bill, said the measure seeks to raise rural incomes and help the Duterte administration meet its target of “emancipating at least 6 million Filipinos from generational poverty”. “One surefire way to do so is by dramatically raising farmers’ incomes by restructuring their accumulated debts from irrigation service fees (ISFs) and providing them with free irrigation from hereon,” he said. “Providing free irrigation— a most vital input for growers of palay and other crops—has now become even more urgent with Malacañang now keen on lifting the QR [quantitative restrictions] on rice this year. Irrigation is crucial most especially to our rice farmers because palay is such a waterintensive crop,” Villafuerte added. He said the bill aims to streamline

the government’s irrigation-development program and carry out its mandate of irrigating all irrigable farmlands within four years. The substitute bill also seeks to amend Section 2, Paragraph (c) of Republic Act (RA) 3601; Section 1, Paragraph (b) of Presidential Decree (PD) 552; Section 1, Paragraph (b) of PD 1702; and Section 35 of RA 8435 to allow the provision of free irrigation. The bill also provides that all unpaid irrigation service fees, back accounts and the corresponding penalties due from a farmer, agrarianreform farmer and member of the indigenous cultural communities, including their irrigators’ associations or farmers’ cooperatives, will be condoned by the government.

Land swapping

Negros Occidental Rep. Arnolfo Teves Jr., a member of the House Committee on Agrarian Reform, has pushed for the inclusion of “land swapping” as a mode of acquisition of agricultural land under the proposed land-reform program. In a separate statement, Teves said land swapping will be “more advantageous” to beneficiaries of the land-reform program. Under the proposal, landowners will be granted the option to offer to the farmer-beneficiary another tract of agricultural land in exchange for that which is being subjected to land-reform proceedings. Teves said the land to be swapped should be bigger in size than the land that would be covered by the land-reform program.

Eskimo village aims to serve up reindeer meat far and wide

This November 16, 2015, photo provided by Dale Smith shows part of an old slaughterhouse in Mekoryuk, Alaska, that has since been demolished. The building is being replaced with a new slaughterhouse, as part of a federally funded endeavor to expand the tribal government’s commercial reindeer subsidiary with the herd that was introduced a century ago. Dale Smith via AP

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NCHORAGE, Alaska—A remote Eskimo village on a tundra-covered island in western Alaska is hoping to counter its steep unemployment rate and achieve greater self-sufficiency through one of its few resources: reindeer meat. Mekoryuk’s tribal government is expanding its commercial reindeer venture with a herd introduced a century ago to Nunivak Island, 40 miles off the coast in the Bering Sea. The endeavor includes plans to build a new slaughterhouse with $1.8 million in federal grants and offer reindeer steaks and roasts for sale in urban parts of Alaska, such as Anchorage, and ultimately the lower 48. The Cup’ig Eskimo community of 200 had a similar operation in the past, with a regulated slaughterhouse that allowed it to sell reindeer meat to a broad market that included high-end Denver restaurants. “The idea behind this was to try to reestablish that market and the whole process here,” said Dale Smith, the tribe’s operations director. The earlier operation went downhill after the villager who was considered its driving force died in a 1996 helicopter crash while surveying the island’s farranging reindeer. The slaughterhouse

fell into disrepair, eventually forcing locals to do their slaughtering out on the tundra and limiting where the meat could be sold. Reindeer meat is lean and high in essential fatty acids, and it’s considered by some to be superior in taste to its wild migrating cousin, the caribou. The tribe’s reindeer are among several major herds in greater western Alaska, including the Seward Peninsula, a region farther north that’s home to an estimated 10,000 animals. The herd on Nunivak, which is slightly bigger than Rhode Island, is estimated at up to 2,500 animals. It is the largest source of reindeer meat sold commercially in the state, said ecologist Greg Finstad, manager of the University of Alaska Fairbanks reindeer research program. Construction of the new slaughterhouse is slated to begin by summer in the effort funded by grants from the federal Economic Development Administration. A regional nonprofit, the Coastal Villages Region Fund, is footing some of the cost of four new snowmobiles for herding the animals. The slaughterhouse is expected to meet rigorous inspection standards, Finstad said. This will allow residents to greatly expand their market, selling to restaurants and sausage companies. AP

Green Monday BusinessMirror

A12 Monday, March 13, 2017

www.businessmirror.com.ph • Editor: Lyn Resurreccion

Director Theresa Mundita S. Lim (left) of the Department of Environment and Natural Resources’s Biodiversity Management Bureau and Oceana’s Andy Sharpless (second from left) join stakeholders in painting a mural using the walls of San Juan Elementary School as canvass to heighten awareness about the importance of ocean-biodiversity conservation.

A mangrove area in Barangay San Juan on Sipaway Island in San Carlos City, Negros Province, protects the coastal communities, including the San Juan Elementary School.

Ocean conservation gains momentum in Tañon Strait Story & photos by Jonathan L. Mayuga

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@jonlmayuga

cean conservation and protection is gaining momentum in the Visayas, with various stakeholders coming together to stop illegal fishing in Tañon Strait, one of the country’s major fishing grounds and home to amazing creatures of the sea.

Pitching the call for stronger protection measures for the Tañon Strait Protected Seascape (TSPS), Oceana led a three-day event starting on February 28 in Negros and Cebu provinces highlighting the benefits and people’s appreciation of the ocean’s bounty and conservation efforts in the strait. Oceana’s advocacy in Tañon Strait is part of the $53-million, five-year program to boost fish population under the Vibrant Oceans Initiative of Bloomberg Philanthropies in Brazil, Chile and the Philippines. Tañon Strait, a narrow strait that divides Negros and Cebu, is threatened by overfishing, with foreign and local commercial fishing vessels encroaching on municipal fishing grounds while erring fishermen continue to use dynamite and cyanide to boost daily fish catch. During the event, Oceana’s leaders, led by CEO A nd rew Sharpless; Mike Hirshfield, chief scientist and strategy officer; Gloria Estenzo Ramos, Oceana vice president in the Philippines; and Rocky Sanchez Tirona, vice president of Rare in the Philippines, met with officials of the two provinces, which boasts of best practices in the fight against illegal fishing.

Multistakeholder

Oceana’s advocacy in Tañon Strait has generated strong support from various stakeholders. On March 10, 2016, closing ranks with concerned government agencies, civil-society organizations working in Tañon Strait, they have affirmed support for the protection and sustainable management of the TSPS. In partnership with various national government agencies and concerned local government units, Oceana launched the search for Ocean Heroes and best locally

$53M The cost of the five-year program to boost fish population, including Oceana’s advocacy in Tañon Strait, under the Vibrant Oceans Initiative of Bloomberg Philanthropies in Brazil, Chile and the Philippines

managed marine protected areas (NPAs) in Tañon Strait. The advocacy for stronger-protection measure in the TSPS also pushed the passage of a resolution by the Protected Area Management Board (PAMB) mandating that all fishing vessels entering the Tañon Strait should install vessel-monitoring device. “It is in the law but it is not being implemented because there is no implementing rules and regulations. Now, under a new leadership, the DA-BFAR [Department of Agriculture-Bureau of Fisheries and Aquatic Resources] has created a technical working group that will draft the implementing rules and regulations,” she said.

Sardines capital

On February 28 Negros Occidental Gov. Alfredo Marañon Jr. met with Oceana and Rare executives in the provincial capitol in Bacolod City, where he underscored the importance of protecting the Tañon Strait. Marañon said partnership with communities is a key ingredient in the success of the province’s initiatives. “The Visayan Sea is rich in sardines,” he noted, underscoring the need to protect Visayan Sea’s most treasured fish. From

and other livelihood,” she said. “If we protect the ecosystem, we also provide the habitat for fish for their entire life cycle—from larvae up to the period when they are useful [for the community],” she said partly in Filipino.

Huge opportunity

Gov. Alfredo Marañon Jr. (left) gives Oceana and Rare executives a briefing about the province’s efforts to fight illegal fishing and to conserve the ocean in its territory within the Tanon Strait.

November to February, fishing of sardines is banned to allow the fish to breed and replenish the ocean, Marañon said. Jimely O. Flores, senior marine scientist of Oceana, said there are nine species of sardines that can be found in the Visayan Seas, including the one that is being dried and sold as tuyo (dried fish), a favorite breakfast among Filipinos. Besides sardines, Flores said the Visayan Seas is rich in commercial fish, like tuna, and other seafoods like prawn and shrimp, which are exported by the Philippines. “That is why it is important to protect Tañon Strait, because in these areas, they are being overfished, threatening sustainable fisheries,” Flores, a fishery expert, said in Filipino.

Model against illegal fishing

In March 2014 Marañon created Task Force Lawod, which led to a 90-percent drop in illegal fishing in the province. Lawod is the Visayan word for the Filipino term laot, or ocean in English. The initiative also led to the decrease in the use of dynamite and cyanide. Marañon backs efforts to integrate ocean conservation and protection in the elementary and high-school curricula in the province to increase awareness among his constituents.

Marine protected areas

Mayor Araceli Somosa of the municipality of Calatrava, who is also the chairman of the TSPS Protected Area Management Board Site Management Unit (SMU1) in the first district of Negros Occidental, said from an alliance of North Negros Aquatic Resource Area, Calatrava is happy to be part of TSPS. “As a mayor, I learned to understand how to do these things. It is

A parrot-fish mascot is swarmed by schoolchildren at the San Juan Elementary School on Sipaway Island in San Carlos City, Negros Occidental.

hard to support your coastal management program if you don’t know what is going on. I was so happy, being the chairman of SMU1, I was able to attend trainings and seminars being sponsored by Oceana and Rare,” Somosa said. Calatrava is one of the 17 priority sites of the Fish Forever Flex Program of Rare under the Vibrant Oceans Initiatives of Bloomberg Philanthropies. The municipality has a total of 313 hectares of MPAs in Calatrava established in 2010 through Municipal Ordinance 12 called the Calatrava Reef Complex. “Our fishermen even used to connive w ith fishing vessels. T hey used to tip them whenever fishes start to gather near t he pa ya w [f i sh- a g g reg at i ng dev ice]” she said. However, currently, she said fishermen in Calatrava have come to understand more the importance of protecting and conserving MPAs.

Island MPA

In San Carlos City, also in Negros Occidental, Mayor Gerardo P. Valmayor Jr. said people have started to appreciate the bounty provided by the ocean and the gains in establishing MPAs. One of its treasured territories, the Sipaway Island, is home to t wo MPA s—the barangay San Juan MPA, which has a total area of 90 hectares, and the Barangay Ermita MPA, which has over 300 hectares. Poly Montano, president of Ermita Fisherfolks Association, said with the support of the mayor they are able to patrol the MPAs on Sipaway Island with ease and confidence. “We rely on community support in patrolling our municipal fishing grounds, including the MPAs in

our barangays, because they are very important to make sure that our fish stock is adequate,” he said partly in Tagalog and Ilonggo.

Starting them young

On March 1 Valmayor joined Oceana and Rare officials in a ceremony highlighting the gains of ocean protection and conservation efforts on the island, with pupils of the Barangay San Juan Elementary School taking the lead. In his speech, the mayor said protecting and conserving the ocean is one way of securing the future generations, emphasizing that everyone should do their part, including the young children, who will benefit from the endeavor. During the event, pupil of the elementary school put their best foot forward in rendering songs, dance and poems, highlighting the importance of the ocean as the key to human survival—for food, transportation and livelihood. The schoolchildren later joined officials of Oceana and Rare in painting a mural on the school wa l l, showcasing the ocean’s bounty and rich biodiversity.

Ocean and biodiversity

Director Theresa Mundita S. Lim of the Department of Environment and Natural Resources’s Biodiversity Management Bureau, who joined Ocean and Rare during the visit in the area, was elated in the “ buy-in” of local communities of the conservation effort in Tañon Strait. “ We a re happy to see t he buy-in of the local communities to the conservation efforts, and for them to be able to realize the linkage of protection to their livelihood—like fisheries

“The Philippines has a huge opportunity to make sure that there are a lot of fish in the Philippine ocean for people to catch and people to eat. But to make that happen, the Philippines needs to do what countries all over the world need to do. It needs to make sure the laws are enforced and there are protected areas where baby fish can grow,” Oceana’s Sharpless said. He acknowledged that in the Philippines, such as in San Carlos City, policies are in place to make sure that good things will happen. The Tañon Strait is supposed to be a place where there is no commercial fishing, he said. “In the coming years, we are going to see lots and lots of fish. They are already seeing lots of fish right now and they are seeing bigger fish more than they used to,” he added

Success story

“This is a success story already. It can be a bigger success story. We want the whole region, the whole of Tañon Strait, to take the lead in this area, what this city has shown and then we want the world to do it. The world has the same problem. We have been overfishing, we are not protecting nursery areas. The Philippines, starting here, can show the way and Oceana will take the message to other countries and say ‘Look, the Philippines can rebuild their ocean,’” he said. Sharpless said teaching the young generation is very crucial in protecting and conserving the ocean. “It is quite striking to me that the speeches that the children made were speeches that I would be proud to have an Oceana adult make. They were very eloquent, they were very clear. They understood the importance of key details—having science-based catch limits, having nurseries, enforcing the law. These children spoke of those points and they spoke forcefully. Their parents will learn from their children, but more important, the policymakers here, the politicians and policemen who are here today, can take courage from the message that the children gave. And that is good. It gives the confidence and optimism we need today,” he said.

Biodiversity Monday BusinessMirror

Asean Champions of Biodiversity Media Category 2014

Monday, March 13, 2017 A13

Editor: Lyn Resurreccion • www.businessmirror.com.ph

Abra River Basin: Integrated river management ‘a must’ for sustainable development By Jonathan L. Mayuga

@jonlmayuga Conclusion

Water-resource management

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o prevent the further deterioration of the Abra River and the potential water-supply shor tage in the future, the master plan came up with recommendations underscoring economic value in all its uses—promoting coordinated development and management of water, land and related resources within the Abra River Basin—without compromising the sustainability of vital ecosystems. Major projects include the expansion of total irrigated area to cover 10,000 of potential irrigable area, identification of 200 units of Small Water Impounding Projects and Small Farm Reservoir, and hydropower development, mapping and feasibility studies of groundwater utilization for domestic and industrial u s e, a g r i c u l t u r a l i n te n s i f i c at i o n , diversification and extension. To mitigate the extent of flooding and its damages to agriculture and infrastructure and to optimize waterresources development, the government needs at least P6.67 billion to implement various projects spread in a span of 15 years. Structural measures include construction of multipurpose dams, riverbank protection, irrigation projects, hydropower development and other infrastructure that would cost P5.97 billion, while nonstructural measures, such as feasibility studies, institutional development, research development and extension, advocacy and public awareness campaign would require around P700 million.

Watershed management

The master plan also recommended to follow traditional and nontraditional forest-rehabilitation strategies, including reforestation, assisted natural regeneration, agroforestr y, forest plantation and, if feasible, industrial tree plantations anchored on the National Greening Program (NGP). Current polic y and strategy in implementing the NGP is anchored on community-based forest management to ensure ownership of the projects and involvement of various stakeholders. Th e p ro p o s e d w a t e r s h e d a n d environment programs and projects include NGP, Protection of Remaining Forest Stands, Private Sector Participation in Industrial Tree Plantations, Piloting the Philippine National Reducing Emissions from Deforestation and Forest Degradation plus Strategy, Introduction of Renewable Energy Systems, Rewarding the Upland Poor for Environmental Services and various livelihood projects for upland communities. The planners also recommended the conduct of research and feasibility studies of Basin Sediment Transport M o d e l i n g, S o i l Ero s i o n M o d e l i n g, Research and Development on Soil and Water Management, Biodiversity and Water Quality Monitoring. These 15-year activities need a budget of P805 million.

Climate change, reduction of disaster risk

To address the impac t of climate change and reduce the risk of disaster, proposed intervention includes structural a n d n o n s t r u c t u ra l p ro g ra m s a n d projects, including setting up of green infrastructure, facilities and equipment to directly regulate climate changerelated hazards, such as typhoons, floods, landslides and erosion, and drought. Structural programs or projects, which include construction of new and rehabilitation of old flood-control and slope-protection structures, setting up of automatic weather stations and search and rescue and evacuation facilities, will cost around P6.21 billion. On the other hand, nonstructural programs and projects, which would cost around P760 million, include the establishment of science and technologybased technologies, information and

decision-suppor t systems to avoid the adverse effects of climate-change hazards and risks. These include establishment of early warning systems; information, educ ation and communic ation on cropping calendars; drought-tolerant crops and forest species; tropical fruits and bamboo for windbreaks; vegetative intervention for erosion control; waterharvesting technologies; and geohazard mapping to be integrated into the comprehensive land-use plans (CLUPs).

Poor implementation

Acco r d i n g to Donna M. Gordove, d e p u t y exe c u t i ve d i re c to r o f t h e Department of Environment and Natural Resources-River Basin Control Office (DENR-RBCO), the master plans for the 18 major rivers remain unimplemented. On a scale of 0 to 10, she said the implementation is only about 2. Gordove said the master plan for the 18 major rivers is already integrated in the various programs, such as the NGP. Gordove added out of the 14 completed master plans, 11 have already been approved by the Regional Development Councils (RDCs). But the master plans for Abra River Basin and the ApayaoAbulog and Ilog-Silabangan, remain to be approved by their respective RDC. She admitted big infrastructure projects are not implemented because “[they] should be adopted by the Neda [National Economic and Development Authority] for inclusion in the Philippine Development Plans and funding,” Gordove said. Small projects, like irrigation and water impounding, integrate the recommendations in the master plans, she said.

Promotion

“We do advocacy work among concerned government agencies. Through the R i ve r B a s i n O rg a n i z a t i o n ( R B O ) , there has to be a consensus for its implementation,” she said. RBOs are composed of representatives from various stakeholders, including concerned national government agencies, LGUs, community-based groups, academe and faith-based groups. “We cannot enforce or dictate the adoption or implementation of the master plans. That is why we are pushing for the creation of [RBOs] to lobby for its adoption a nd implementation,” Gordove said. Gordove said only through an act of Congress or a presidential decree that master plans can be enforced by the DENR-RBCO or any agency tasked to implement them. Gordove said RBO members also talk how to strengthen the master plans, citing the Central Cebu River Basin Management Council, which “drafted an executive order and asked Presidential Assistant for Visayas Secretary [Michael] Dino for endorsement.” There were also efforts to consult congressmen, who had filed bills in the House of Representatives, she said. Gordove said the best way for the master plans to be integrated is through the LGUs. “By integrating some of these plans in the [CLUPs] and development agenda, there is hope that the master plans will be implemented because infrastructure projects recommended in them entail huge costs unlike bioengineering proposals,” she said. For the Abra River Basin, the master planners recommended the creation of a multistakeholder council called the Abra River Basin Management Council. It shall serve as an apex body that will advocate and serve as guardian, planner, development facilitator and coordinator for the implementation of various programs and projects to sustain growth and development through the integrated river-basin management approach. According to Gordove, the adoption of the master plans will not only ensure the protection and conservation of the country’s ecosystem and watersheds, but will also spur economic activities that will boost and ensure sustainable growth and development in various parts of the country.

AdÉlie penguins in Antarctica Wikimedia Commons

WMO verifies highest temperatures for Antarctic

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World Meteorological Organization (WMO) committee of experts has announced new records for the highest temperatures recorded in the Antarctic region, as part of continuing efforts to expand a database of extreme weather and climate conditions throughout the world. Knowledge and verification of such extremes is important in the study of weather patterns, naturally occurring climate variability and human-induced climate change at global and regional scales, the WMO news release said . The highest temperature for the Antarctica region (defined by the WMO and the United Nations as all land and ice south of 60°S) of 19.8 degrees Celsius (67.6 degrees Fahrenheit) was observed on January 30, 1982, at Signy Research Station, Borge Bay on Signy Island. The highest temperature for the Antarctic continent, defined as the main continental landmass and adjoining islands, is the temperature extreme of 17.5°C (63.5°F) recorded on March 24, 2015, at the Argentine Research Base Esperanza located near the northern tip of the Antarctic Peninsula, the news release said.

Third, the highest temperature for the Antarctic Plateau (at or above 2,500 meters [8,202 feet]) was -7.0°C (19.4°F) made on December 28, 1980, at an Automatic Weather Station (AWS) site D-80 located inland of the Adélie Coast. The lowest temperature yet recorded by ground measurements for the Antarctic Region, and for the whole world, was -89.2°C (-128.6°F) at Vostok station on July 21, 1983. It is possible, indeed likely, that greater extremes can and have occurred in the Antarctic region. As with all WMO evaluations, the extremes are identified based on only those events with available high-quality ground-based data. The WMO’s Commission for Climatology maintains an archive of weather and climate extremes. This includes the world’s highest and lowest temperatures, rainfall,

heaviest hailstone, longest dry period, maximum gust of wind, longest lightning flash and highest significant wave height. S p a n n i n g 14 m i l l i o n k m (roughly twice the size of Australia), the Antarctic is cold, windy and dry. The average annual temperature ranges from about -10°C on the Antarctic coast to -60°C at the highest parts of the interior. Its immense ice sheet is up to 4.8-km thick and contains 90 percent of the world’s freshwater, enough to raise sea level by around 60 meters were it all to melt. The Antarctic Peninsula (the nor thwest tip near to South America) is among the fastest warming regions of the planet, almost 3°C over the last 50 years. Some 87 percent of glaciers along the west coast of the Antarctic Peninsula have retreated in the last 50 years, with most of these showing an accelerated retreat in the last 12 years. T he ve r i f ic at ion of t he s e three Antarctic extremes helps increase understanding about the Antarctic’s distinct climatic regimes, specifically maritime versus plateau environments. The Commission for Climatology international evaluation committee noted that the records at all three stations occurred during an influx of warm air. At Signy and Esperanza, there was a warming “föhn” wind. At D-80, solar heating under clear skies at high elevation

was a major contributory factor. The WMO investigations also serve to improve the quality of observations through the careful analysis of observation practices and proper equipment selection. “ The Antarctic and the Arctic are poorly covered in terms of weather obser vations and forec a sts, even t hough bot h play an important role in driving climate and ocean patterns and in sea-level rise. Verification of maximum and minimum temperatures help us to build up a picture of the weather and climate in one of Earth ’s final frontiers,” said Michael Sparrow, a polar expert with the WMO cosponsored World Climate Research Programme. In an effort to increase weather forecasting and environmental prediction capability in the Antarctic and Arctic, the WMO is one of the organizers of the Year of Polar Prediction from mid-2017 to mid- 2019. This is a concerted effort to increase and improve research, observing and modeling capabilities in the poles, the news release said . “This investigation highlights the need to continually monitor all of the Antarctic region and ensure that we have the best possible data for climate change analysis at both the regional and global scales,” said Randall Cerveny, WMO rapporteur on climate and weather extremes.

Panda express: Bao Bao arrives in China onboard FedEx B777F

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edEx Express, a subsidiary of FedEx Corp., has recently donated the use of its extensive global transportation network to ship a giant panda from the United States to Chengdu, China. The giant panda Bao Bao landed at China’s Chengdu Shuangliu Airport onboard FedEx B777Freighter—known as the FedEx Panda Express—from Washington, D.C., in the US. Upon arrival, the panda was transported to her new home in Sichuan province, the China Conservation and Research Center for the Giant Panda’s Dujiangyan City Reserve. “It’s a great honor for FedEx Express to be able to support this latest mission by donating our expertise and resources, and to be entrusted once again with such a valuable and symbolic shipment,” said Karen Reddington, president of FedExExpress Asia Pacific. “We’ve assisted with giant panda shipments several times in the past and have considerable experience of managing the process, which involves months of planning and cross-disciplinary teamwork. Transporting Bao Bao is also an act of good global citizenship that leverages our unique network and specialized capabilities to help connect the world.”

The special crate containing giant panda Bao Bao being off-loaded from the FedEx Panda Express. FedEx

The zoo packed up the American-born panda on Tuesday for a one-way flight to Chengdu, China, where the 3-year-old will eventually join a panda-breeding program, The Associated Press (AP) said. Bao Bao left the zoo in a special crate and began her 16-hour flight to China Washington Dulles International Airport in Virginia. The cub won’t have to worry about finding overhead bin space or dealing with a talkative seatmate on the 16-hour, nonstop

flight. She’ll be the only panda on the plane, traveling with a keeper and a veterinarian. In preparation for the trip, keepers have packed Bao Bao’s favorite foods, including bamboo, apples and sweet potatoes, AP said. Bao Bao, a 3-year-old female panda born at the Smithsonian’s National Zoo, is the offspring of Mei Xiang and Tian Tian, both currently living in the US. FedEx provided a dedicated aircraft to bring Bao Bao’s brother Tai Shan to China in 2010,

Bao Bao, the beloved 3-year-old panda at the National Zoo in Washington, enjoys a final morning in her bamboo-filled habitat before her flight to China to join a panda-breeding program on Tuesday. AP/J. Scott Applewhite

and her parents, Mei Xiang and Tian Tian, to the United States in 2000. Bao Bao was born on August 23, 2013, at the Smithsonian’s National Zoo’s David M. Rubenstein Family Giant Panda Habitat. She has been living separately from her mother, Mei Xiang, since March 2015. Giant pandas are solitary in the wild, and cubs separate from their mothers to establish their own territories between 18 months and 2 years old. With AP

A14 Monday, March 13, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

The CA doing its job

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he recent Commission on Appointments (CA) deliberations on the appointments of Perfecto R. Yasay Jr. and Regina Paz “Gina” L. Lopez to their respective Cabinet positions proves one point. The CA is doing its job as outlined and mandated in the Philippine Constitution.

The relevant article of the 1987 Philippine Constitution reads in part, “The President shall nominate and, with the consent of the Commission on Appointments, appoint the heads of the executive departments.” This is based on the United States Constitution that says, “[The President] shall have power, by and with the advice and consent of the Senate…to appoint ambassadors, other public ministers and consuls.” Interestingly, though, for those who wish the Philippines would change to a parliamentary type of government, the CA would probably not be a part of the system. In the United Kingdom the prime minister exclusively selects and appoints primarily other elected members of parliament to his or her Cabinet without any review process. While in both the Philippines and the US, members of Congress can be appointed to Cabinet positions, but they must resign their elected offices to be a part of the Cabinet. Alexander Hamilton in his Federalist Papers reasoned that the mere act of having to submit nominees to a public body like the Senate would be reason for the President to put more thought into the decision. From this viewpoint, that is exactly what is happening as a result of the CA procedures. The public is allowed to watch and form their opinion about the presidential choices and that transparency is beneficial. To quote Winston Churchill, “The spectacle of a number of middle-aged gentlemen who are my political opponents being in a state of uproar and fury is really quite exhilarating to me.” It is exhilarating to see the “uproar and fury” of the CA deliberations. The decisions on presidential appointments handed down by the CA are, of course, going to be “absolutely brilliant” or a “disgrace to the nation”, depending on whether your guy or gal “won” the CA’s approval. We expect the members of the CA to have the wisdom of King Solomon, the divine truth as spoken by the Oracle of Delphi, and the impartial detachment of a Tibetan Buddhist monk from a 1,000-year-old monastery. Those traits are never ever going to rule the process and, perhaps, they should not. Everyone in the room is motivated by their own personal agenda. It is the purpose of the collegial body to collectively share the responsibility and to decide, which “personal agendas” are in the best interest of the nation. And, hopefully, they are correct more often than they are wrong. That is how a democratic system works just as in the election process. Every three years, over 50 million Filipinos are given the opportunity to vote their personal agendas for the best interests of the nation. That is how the democratic process functions. Since 2005

BusinessMirror A broader look at today’s business

Protect yourself from cybercrime Atty. Jose Ferdinand M. Rojas II

RISING SUN

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ith the rise in online scam cases in the country, Internet users need to be more careful with their online activities. According to the Philippine National Police’s Anti-Cybercrime Group (PNP-ACG), there was a significant rise in 2016 until the beginning of this year. The figure is higher than records from previous years. According to ACG, victims of online buying and selling scams, paluwagan, investment, pyramid scams and other forms of online fraud have filed complaints with the agency. The most common cases are online libel, online threat, antiphoto and antivideo voyeurism, computerrelated identity theft and hacking. PNP-ACG is also investigating cases of unjust vexation, sextortion, automated teller machine and credit-card fraud, child abuse, illegal access, child pornography and violations of the Anti-Violence Against Women and Their Children (VAWC) Act of 2004 (Republic Act 9269). With so many people using the Internet these days, it pays for us to

know how we can protect ourselves and our loved ones from cybercrime. Here are some basic tips to consider. n Keep hard-to-crack passwords: At least eight characters; a combination of numbers, letters and symbols; and unrelated to you. And don’t give your password to anyone. n Only visit sites you trust. If you go to hacker sites, adult web sites and the like, you are exposing yourself to possible cyber attacks. n Ignore pop-ups. Any e-mail or pop-up window that asks for your username or password is suspect. If you’re unsure, call the company to verify the message. Pop-ups that offer things like site surveys should be ignored.

Plan B

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Siegfred Bueno Mison, Esq.

T. Anthony C. Cabangon

S

hortly after becoming a lawyer, I left the Army and joined a law office in Pasig City. I then briefly worked in the United States as a contracts lawyer for a software development company. Of course, I went to the US principally to test the waters of the legal profession, as well as the viability of actually migrating. Knowing that I still had aspirations for the country, the president and founder of that company told me—“There should never be a Plan B.” He actually suggested to me to “burn bridges” so I will always go forward and never backward. Last week I recently accompanied a relative to the US embassy who took great lengths to secure a permanent resident visa only to surrender his “green card” after more than 20 years of having it. His response to one of the questions in the USCIS Form I-487 as to why he is giving up his resident visa was apt and simple. In his own words, he wanted to “live the rest of my life in the Philippines”. When asked by some why he applied for a green card in the first place when his career in the Philippines was much better than most of our relatives, he explained that he wanted to secure a better future for his children. His green card was his Plan B then. Today, he does not need a Plan B or a backup plan anymore,

as he managed to send most of his children to the US in the late-1980s, during the tumultuous times in our country’s history. Recently rejected by the Commission of Appointments, “former” Foreign(er) Secretary Perfecto R. Yasay Jr. presumably had his own Plan B when he opted to become a US citizen sometime in 1986—the period of uncertainty as the country recently experienced people power. For quite a number of Filipinos, America remains as the land of opportunity; hence the need for a Plan B. Leaders are trained to have a fallback position in case all options fail. There is no such thing as a foolproof or failsafe plan as there are many factors beyond our control. In mili-

n If you’re unsure, don’t click. Sometimes hackers would convince their would-be victims to click on a link or open an attachment. Don’t do it. And if someone wants to connect with you on Facebook or LinkedIn, for example, and you don’t know this person, the best thing to do is ignore. Do not engage in online conversations with strangers. It’s the same rule that applies offline. n If you need to shop online, do so on secure sites only. “Before entering your card details, make sure that the locked padlock or unbroken key symbol is showing on your browser.” A secure connection’s URL would begin with “https” rather than http. If a web site changes back to “http” once you have logged on, it’s a red flag. n Double-check your FB security settings. Don’t post your home address, phone number, date of birth and any information that may be used to fake your identity. Privacy settings must be for “friends” only. Don’t publish personal data for the public and be careful about the things you post about yourself and your loved ones: location, habits, plans, etc. n Use a different e-mail account for each site you visit. If a hacker manages to get through one account, at least he won’t have access to the other places. Use one e-mail

account for your bank account, another for shopping and a different one for your social networks. n Don’t use public Wi-fi to do online banking. Somebody might intercept your data while you are doing your transaction because Wifi hot spots usually do not encrypt information. These are just some of the basic ways to protect yourself from online crimes or attacks. In the same way that we are careful whenever we go out into the streets, we should also exercise the same caution whenever we are on the Internet. One cannot be too careful these days, so it’s always better to err on the side of caution. The PNP-ACG encourages the public to report incidents of cybercrime through www.pnpacg.ph, or through their hotline number 7230401 local 5313, or e-mail address pnp.anticybercrimegroup@gmail.com.

tary operations, there is always a rally point where troops converge and regroup when the initial plan fails. Hence, the need for a Plan B. But, must there really be a Plan B in our lives? In his book, Today Counts, Harold Sala says “nothing of value is ever accomplished by giving up”. In the movie Apollo 13, when the mission encountered some technical problems and was apparently headed toward disaster, the head of Nasa Mission Control, the character played by actor Ed Harris, exclaimed to his staff—“Failure is not an option!” In military operations, commanders have been heard saying – “No retreat. No surrender.” Through the years, I have found myself “failing” in a few undertakings, in my personal relationships with loved ones and in my professional career in the Army and in the Bureau of Immigration, to name a few. My life has experienced quite a few left turns here and there. One relative who opted not to have a Plan B in his life never had any left turns in his life, so to speak. After graduating from the Philippine Military Academy in 1984, he joined the Philippine Air Force and flew the C-130 transport planes. Amid the political instability, he rejected a very enticing offer to join a private company. Although he knew that he will still fly planes for that company with a salary five times his existing

pay in the Air Force, he opted to go for a “make or break” decision that somehow affected where he is now. After earning his first star before reaching 50 years old, he has been promoted to a three-star rank late last year. By simply having no Plan B, my brother, Lt. General Salvador Melchor B. Mison Jr., managed to follow a straight and direct path toward becoming the Vice Chief of Staff of the Armed Forces of the Philippines (AFP)—the second highest position in the entire Armed Forces. As a result of discarding that handsome offer from a reputable company when he was still a captain, he has served the AFP for 33 years (and counting) and has earned an unblemished reputation for discipline and integrity. In my case, I am gradually getting my bearings straight after stints in the Army, in law practice, in government bureaucracy and now in the corporate sector. I am slowly regaining my course toward becoming a better person by simply putting my faith in Him. In Proverbs 3:5-6, believers are made to “trust in the Lord with all thine heart; and lean not unto our own understanding. In all ways, acknowledge Him, and He shall direct thy paths”. Predestination is a word I recently learned in a Bible study. All of us are exactly where He wants us to be. Whether we succeed or fail, He has predestined us to do so. So, yes, we all need a Plan B in life. And “B” stands for Believe!

nnn

WE remember Ambassador Antonio L. Cabangon-Chua on his first death anniversary on March 11. He was the Philippine ambassador to Lao PDR under former President Gloria Macapagal-Arroyo’s term, a reserved colonel of the Armed Forces of the Philippines, and a philanthropist. May our Lord grant his soul eternal rest.

Opinion BusinessMirror

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The most valuable asset of your company is missing, what’s next? Filbert Tsai

DEBIT CREDIT Conclusion

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discussed in the first part of my article my hypothesis that only about 20 percent of a business enterprise’s actual value is reflected in the balance sheet. I submit that a large portion amounting to about 80 percent of the value can be attributed to such factors as “human capital”, unrecognized brand name values, carbon efficiency, culture, or other intangibles that are currently not capitalized or reflected in the company’s financial statements under accounting standards. To look further into this, I evaluated the financial statements of two listed telecommunication companies in the Philippines, i.e., Globe Telecom Inc. and PLDT Inc. I used the following methodology and premises: 1. Extracted relevant 2015 business combination information from published financial statements. 2. Intangible assets and goodwill recognized as a result of the business combination are summed in ‘Total Intangibles’ column. 3. Fair value of net assets is based on the disclosed amount, excluding the recognized intangible assets and goodwill. 4. Percentage of the business acquired represented by intangible assets is determined as a percentage of the total net assets after the business combination (fair value of net assets and total intangibles). 5. Total intangible assets recognized out of negative net assets is assumed to be 100 percent. I arrived at the following results that clearly showed that the respective values of these two companies are attributable to the intangibles: Fair Value of Net Assets, Intangible Total Excluding Company Acquiree Assets Acquired Goodwill Intangibles Intangibles % Intangible Globe Telecoms BTI 1,784,324,000 1,154,029,000 2,938,353,000 787,551,000 100.00% PLDT Takatack 229,500,000 229,500,000 3,700,000 98.41%

Intangible assets acquired by Globe from Bayantel Telecoms Inc. (BTI) are related to the customer contracts, franchise and license held by BTI. What is interesting here is the amount related to goodwill. Goodwill is an interesting account in the financial statements, which represents anything that cannot be quantified individually and is measured as the residual amount after allocating the purchase price to the fair value of the net assets. Based on this simple test performed, it appears strikingly factual that intangible assets represent more than 80 percent of a company’s value. It is incredible to see how much your business is actually worth if you have to consider these items floating in the air. The purchase price determined by the valuator is generally determined based on a discounted cash flow model, which assumes includes various discrete and nondiscrete assumptions about the company’s future cash flow. The cash-flow model follows the accounting standards, which can either be based on the acquiree’s free-cash flow, excess earnings, distributable reserves or other methods as appropriate. Effectively, the purchase price is actually the corporate value of a business at a point in time. Understanding how the purchase price is determined is helpful in understanding why there is a significant gap between the company’s balance sheet and the corporate value. The balance sheet accounts for historical transaction and allows only the recognition of actual events, which have an exact (or almost exact) value, this avoids the risks that fraud will be perpetuated in the recognition of bogus assets. The corporate value takes into account the future performance of the company, economies of scale, process efficiencies and future harmonies between the acquirer and the acquiree, among others. While the balance sheet provides an accurate picture at a point in time, the corporate value represents the saleable value of the business. The gap between the balance sheet and the saleable value is the so-called intangibles that we’ve discussed earlier. Overall, what drives the business value of a company can be attributable to three key intangible items: (1) people; (2) culture; and (3) process. These three drivers together allows the company to run on autopilot and create future financial value for the business. Understanding how this works is crucial for the long-term success of your business. Without a viable business and good process at the back end, the corporate value can either be equal or less than the balance-sheet value of your business. Understanding how corporate value works can provide substantial leverage in business planning, in whatever stage you are. A start-up would need to understand that business plans are not just about financials anymore. It is important that you start your business with a plan in mind to align your financial goals with the company’s vision and to work on long-term investments, which would allow better organic growth of the business. An established business would need to revisit how much catch-up it needs to do to redirect efforts on placing more focus on developing its people and establishing a culture of trust. Businesses that project too much financial focus will lose their people and create a culture of fraud and distrust. It is important that business owners be more comfortable working with financial concepts. Business valuation is a rather niche market until today, even in matured market, such as in the United Kingdom, where business valuations are mostly done in preparation for public offers or merger and acquisition transaction. However, there are simple approaches that businesses can do to determine and monitor their corporate values through business model templates. Understanding is the first step; curiosity is next. Filbert Tsai is a Filipino accounting advisor in the UK with global and public-sector experience. His key areas of interests are start-ups and MSMEs. His blog and page, Ask the Accounting Advisor, provide relevant insight for start-ups and MSMEs in the Philippines. This column accepts contributions from accountants, especially articles that are of interest to the accountancy profession, in particular, and to the business community, in general. These can be e-mailed to boa.secretariat.@gmail.com.

Monday, March 13, 2017 A15

Changing the rules of the concession game By Alberto Agra

PPP Lead Continued from A1 n The worst kind—contract cancellation. Early this year, as reported in the media, the International Center for the Settlement of Investment Disputes of the World Bank directed the Philippine government to pay P1 billion. Why? After securing all the clearances from government agencies during the Arroyo administration, the contract for the P18-billion flood-control project along Laguna Lake was canceled under the second Aquino administration. The cancellation was effected through the nonacceptance of the grant from the Belgian government.

n The worse kind—change in interpretation. For the two water concessions in Metro Manila, the recoverability of the corporate income tax became an issue. For 13 years, it was consistently held that Manila Water and Maynilad were classified as agents and contractors of Metropolitan Waterworks and Sewerage System (MWSS) who was the public utility. But MWSS under the second Aquino administration modified the then prevailing opinion. It held that the concessionaires are the public utilities themselves. As a consequence, it reversed the practice and rejected the claim of the concessionaries that they

could recover the information and communications technology (ICT). n The other kind—recall of some delegated functions. Another form of successor risk is the attempt of the government to assume functions that have been delegated to concessionaires. The plan of the National Transmission Corp. (Transco), as reported in newspapers, to undertake the completion of the Visayas-Mindanao grid interconnection may be construed as one such interference. This function has been granted to the National Grid Corp. of the Philippines (NGCP) under its Congressional franchise. Under the law, NGCP has the exclusive mandate to construct, rehabilitate, finance, operate, manage and maintain the nationwide transmission system. n Harmful effects of successor risk. The likelihood of successor risk happening in the Philippines is, arguably, becoming “likely” and its impact and significance on existing PPP contracts and PPP policies

is “major”, even “catastrophic”. The occurrence of this risk dampens investor confidence and, worse, it deprives the people of much needed facilities and services. Laguna de Bay remains silted and lakeshore residents face flooding risk. The unrecoverability of the ICT heightens the possibility that future water and wastewater service obligations will not be met. Using government funds for a project already “conceded” to NGCP deprives the public of resources for social-development projects. n Why is this happening? Lack of trust is the culprit. The current administration simply does not trust the past. If the cycle continues, the future will not trust the current. Admittedly, trust is not a given in politics. But trust is needed in any partnership, PPPs included. Meaningful dialogue and genuine openness are key to building trust. Every administration should start on the right foot.

The art of smiling and smirking at Beijing Ricardo Saludo

DIPLOMASIA

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aybe it’s good-cop, bad-cop diplomacy. Over the past month, then-Foreign Affairs Secretary Perfecto R. Yasay Jr., ousted last Thursday, and Defense Secretary Delfin N. Lorenzana piqued Beijing with remarks about Chinese maritime activities. Weeks before his March 9 rejection by the Commission on Appointments over his past American citizenship, Yasay recounted that in the Association of Southeast Asian Nations foreign ministers’ meeting on Boracay island last month, “a number of ministers expressed concern over recent developments and escalation of activity in the [South China Sea] area, which may further raise tensions.” That led to the last-minute postponement of Chinese Commerce Minister Gao Hucheng’s visit, scheduled late-February, to finalize initial agreements for Philippine infrastructure projects worth billions of dollars for China funding. Plus: Foreign Ministry Spokesman Geng Shuang admonished: “Mr. Yasay’s recent remarks apparently deviate from the consensus of the two leaders [Presidents Xi Jinping and Rodrigo Duterte, and]...disagree with the overall stable situation of the South China Sea.” In short, Beijing was not amused.

Not the time to tweak the dragon

Asean foreign ministers routinely express concern about South China Sea happenings, especially the military kind. And Yasay’s language could cover both anti-aircraft weaponry on Chinesereclaimed islands in disputed waters, as well as the sailing thereabouts of a

full-strength carrier task force led by the USS Vinsons, part of the Third Fleet, all the way from San Diego, California. So, what’s the big deal? Well, China may just be extrasensitive these days, with tensions over North Korea’s ballistic missile launch, for which the 90-plane USS Vinsons probably forayed. Not to mention unsettling January pronouncements by Secretary of Statedesignate Rex Tillerson, later echoed by the White House, on restraining moves by the People’s Liberation Army Navy in the South China Sea. Indeed, soon after the US Navy reported the USS Vinsons voyage, Chinese state media, including the PLA-linked Global Times paper, warned against provocative actions. It is the biggest US naval sortie hereabouts since 1995, when another well-escorted aircraft carrier sailed through the Taiwan Strait, amid Beijing’s hyperventilation, complete with missile firings, over independence stirrings on what it considered a renegade island province. Thus, what could have been taken as Yasay’s even-handed summing up of Asean ministerial concerns over actions of both American and Chinese forces, elicited a double-barreled riposte from Beijing, provoking Foreign Ministry finger-wagging and delaying the formal goahead of massive projects offered during

President Duterte’s October 2016 visit. Wisely, the Philippine leader wasted no time in unruffling Chinese feathers, stressing “we will talk as friends” about issues. So, last week, Gao was finally in town, and initial agreements for several billion dollars’ worth of infrastructure were initialed, with more projects expected.

Here we go again

But relieved smiles in Manila and Beijing didn’t last. There came new smirks as the ink was drying on project contracts. Lorenzana had his exchange of critical remarks with China. And this time, Malacañang backed up, not played down, the expressions of concern. First, Lorenzana said US pressure stopped China from building structures on Scarborough Shoal, seized by Beijing in 2012. It was reported last year that then-US President Barack Obama warned China not to repeat at the shoal the reclamation and construction done at Fiery Cross Reef and Mischief Reef. Then, last week, Lorenzana publicly stated that Chinese vessels had been surveying the seabed in Benham Rise, a vast area off Northeast Luzon’s Pacific coast, where the Philippines obtained recognition of its exclusive economic zone (EEZ) and extended continental shelf (ECS) under the United Nations Convention on the Law of the Sea (Unclos). Last Friday Presidential Spokesman Ernesto C. Abella chimed in: “We are concerned about the presence of a Chinese ship in Benham Rise, which has been recognized by the United Nations as part of the Philippines. The Department of National Defense has already notified the Department of Foreign Affairs [DFA] regarding this matter as we continue to assert our sovereignty over our territory.” Under the Unclos, EEZs confer the sole right to exploit resources in waters within 200 nautical miles (370 kilometers) from a country’s territorial baseline. ECSs, meanwhile, accord similar rights

over the seabed up to 320 nm (592 km) from the baseline. However, EEZs and ECSs are not part of the national territory, and do not confer full sovereign rights, which extend only up to 12 miles from shore and over the territorial seas within the archipelago’s baselines, including waters between major islands, like the Sulu Sea between Palawan and Mindanao. Hence, beyond the Philippines’s 12-mile territorial boundary, the rest of Benham Rise is considered international waters open to innocent passage by foreign vessels, though not economic activities covered by the country’s EEZ and ECS rights. Over the weekend, China retorted that its ships merely passed through and did not do exploration work, including the survey of possible underwater sites to park submarines, as Lorenzana alleged, based on allied intelligence. The Defense chief also reportedly said that the DFA had sent several notes to Beijing since August, citing Chinese vessels in Benham Rise, but got no response. It is not clear whether the matter was brought up in top-level talks during Duterte’s October visit. Nor did DFA Spokesman Charles C. Jose mention the notes cited by Lorenzana in the former’s brief statement last Friday about Benham Rise: “We are studying the matter in consultation with other concerned agencies.” So, where is this going? There are parties keen to see frictions heat up, thereby justifying increased American military deployment and access to bases. But newly appointed Acting Foreign Secretary Enrique Manalo will likely cool things down, unless Duterte reverses his own nonadversarial stance. In May Sen. Alan Peter Cayetano is expected to take over the DFA, and his assertive style could raise temperatures again. Or maybe not—especially if he wants the coveted prize of getting Beijing to sign a binding Code of Conduct on the South China Sea at Asean meetings in the country this year.

Understanding international humanitarian law and human-rights law Atty. Lorna Patajo-Kapunan

legally speaking Conclusion

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hile international humanitarian law (IHL) applies exclusively in armed conflict (whether international or noninternational), human-rights law applies, in principle, at all times, i.e., in peacetime and during armed conflict. However, unlike IHL, some human-

rights treaties permit governments to derogate from certain obligations during public emergencies that threaten the life of the nation. Derogation must, however, be necessary and proportional to the crisis, must not be introduced on a discriminatory basis and must not contravene other rules of international law—including provisions of IHL. Certain human rights can never be derogated from: among them, the right to

life, the prohibition against torture or cruel, inhuman or degrading treatment or punishment, the prohibition against slavery and servitude and the prohibition against retroactive criminal laws. IHL aims to protect persons who are not or are no longer taking direct part in hostilities. It protects civilians and combatants hors de combat, such as the wounded, the sick and the shipwrecked or prisoners of war. Human-rights law, developed primarily for peacetime,

applies to all persons within the jurisdiction of a State. Unlike IHL, it does not distinguish between combatants and civilians or provide for categories of protected person. IHL and human-rights law share common substantive rules (such as the prohibition of torture), but they also contain very different provisions. IHL deals with many issues that are outside the purview of human-rights law, such as the status of combatants’ and prisoners of war, the protection of the red cross and red crescent emblems and the legality of specific kinds of weapon. Similarly, human-rights law deals with aspects of life that are not regulated by IHL, such as the freedom of the press, the right to assembly, to vote, to strike and other matters. Furthermore, there are areas that are governed by both IHL and human-rights law, but in different— and sometimes contradictory—ways. This is especially the case for the use of force and detention. Regarding the use of force, IHL rules on the conduct of hostilities recognize that the use of lethal force is inherent to waging war. This is because the ultimate aim of military operations is to prevail over the enemy’s armed forces. Parties to an armed conflict are, thus, permitted,

or at least are not legally barred from, attacking each other’s military objectives, including enemy personnel. Violence directed against those targets is not prohibited by IHL, regardless of whether it is inflicted by a state or a nonstate party to an armed conflict. Acts of violence against civilians and civilian objects— as well as indiscriminate attacks—are, by contrast, unlawful because one of the main purpose of IHL is to spare civilians and civilian objects the effects of hostilities; and under IHL, precautions must be taken in order to minimize civilian losses. Human-rights law was conceived to protect persons from abuse by the state; it regulates, not the conduct of hostilities between parties to a conflict, but the manner in which force may be used in law enforcement. Law enforcement is predicated upon a “capture-rather-than-kill” approach; the use of force must be the last resort for protecting life, when other means are ineffective or without promise of achieving the intended result, and must be strictly proportionate to the legitimate aim to be achieved (e.g., to prevent crime, to effect or assist in the lawful arrest of offenders or suspected offenders, and to maintain public order and security).

2nd Front Page BusinessMirror

A16 Monday, March 13, 2017

www.businessmirror.com.ph

Regulator expects more infra firms to tap debt market in raising capital

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By VG Cabuag

@villygc

HE Securities and Exchange Commission (SEC) said it expects more firms in the infrastructure sector would raise capital through fixed-income securities. SEC Chairman Teresita J. Herbosa said the agency is encouraging these companies to undergo shelf registration, rather than raising the necessary cash through banks.

“Last year almost 90 percent of those who floated bonds did so through shelf registration. This year it’s practically all,” Herbosa said. “And the infrastructure

HERBOSA: “Last year almost 90 percent of those who floated bonds did so through shelf registration. This year it’s practically all.”

bonds, most likely, they will do it through shelf registration because their needs changes.” Herbosa said last year renewable-energy firms took advantage of the regulator’s new policy that allows companies to file with the SEC a registration statement to float bonds in tranches. These bonds can be scattered within a

three-year period. Herbosa added the SEC may move to enhance the features of shelf registration. At the moment, the three years seem sufficient, according to her. “This year we are encouraging those in the infrastructure, agriculture and manufacturing [to undergo shelf registration].” The regulator is pleased with the policy allowing for shelf registration of debt instruments as the corporate bond market has more than doubled in 2016. The SEC said private companies registered around P280.82 billion in fixed rate and deferred coupon paying bonds and commercial papers. The figure more than doubled

from P120 billion in debt instruments that were registered with the securities regulator. Of the P280-billion registered corporate bonds, some P142.29 billion had been issued and made available to the investors, the SEC said. The regulator added that around P236 billion, or 84 percent of these debt instruments, were registered through the enhanced shelf-registration system. Top registrants last year included property developer SM Prime Holdings Inc., which registered P60 billion. Ayala Land Inc. and SM Investments Corp. each filed for a P50-billion issuance. Petron Corp. registered some P40 billion in debt, while BDO Leas-

ing and Finance Inc. submitted P25 billion in commercial papers. The SEC also redefined the term commercial paper, now described as evidence of indebtedness of any person with a maturity of 365 days or less. The new rules prompted the halt to the use of the terms “long-term commercial paper” and “short-term commercial paper.” Selling commercial papers is also made easier with the requirement of an issuer rating instead of a separate rating for each issuance. The issuers of commercial paper last year included Cityland Inc., Cityland Development Corp., City and Land Developers Inc., BDO Leasing and SL Agritech Corp.

EXPORTS TO RECOVER THIS YEAR ON MORE SHIPMENTS TO E.U., WEAKER PESO–DTI By Catherine N. Pillas @c_pillas29

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hilippine exports are expected to rebound this year on the back of a projected increase in shipments to the European Union (EU) and the weakening of the peso, according to the Department of Trade and Industry (DTI). The DTI’s Export Marketing Bureau (EMB) said it is upbeat that export receipts this year could grow by as much as 7 percent. On an annual basis, government data showed that merchandise exports in 2016 declined by 4.4 percent.

SOKA-U.E. PARTNERSHIP University of the East (UE) Chairman Dr. Lucio Tan (fifth from left) and Soka University President Dr. Yoshihisa Baba (third from left) sign a memorandum of understanding (MOU) formalizing the partnership and exhange program between the two universities. The MOU signing follows the conferment of a medal of honor and honorary doctorate degree upon Tan at the university’s main campus in Tokyo, Japan. The tycoon was recognized for his valuable contributions to Philippine education through the UE-Tan Yan Kee Foundation scholarship program, teacher-training programs of the Foundation for Upgrading the Standard of Education and other educational charities of the Lucio Tan Group.

US, China trade war won’t benefit either side–Zhong A

t r ade w a r b e t w e e n China and the United States would harm the world ’s two largest economies and offer no benefits to either side, China Commerce Minister Zhong Shan said. “Many American and western friends think that China can’t live without the US, and they’re half right,” Zhong told reporters last Saturday in Beijing. “Similarly, the US also can’t live without China,” he said, citing US exports of Boeing Co. airplanes, soybeans and automobiles to China. President Donald J. Trump accused China of unfair trade practices and has threatened to introduce punitive measures. Commerce Secretary Wilbur Ross said in a Bloomberg Television interview last week that a plan of action will be announced “as soon as we have a proper case”. At his first press conference after being promoted to lead the commerce ministry on February 24, Zhong said the US and Chinese economies are “intertwined”. He said he looks forward to meeting his US counterpart, praising Ross as an “excellent” businessman and good negotiator. “Our common mission is to enhance cooperation, manage differences and achieve healthy, stable

and sustainable development of our bilateral economic and trade ties,” he said on the sidelines of the annual legislative session of the National People’s Congress. Zhong, 61, previously served as a ministerial-level international trade representative and vice commerce minister. Before that, he was a deputy governor of exporting powerhouse Zhejiang province and worked under Chinese President Xi Jinping, the then-party chief. Meanwhile, China’s economy has shown signs of improvement in the first two months of the year with little risk of a hard landing, senior Chinese officials said. China’s macroeconomy stabilized in the beginning of 2017, Ning Jizhe, head of the National Bureau of Statistics, said at the sidelines of the annual legislature meeting in Beijing last Sunday. Industrial output in January and February grew more than 6 percent, and the services sector expanded over 8 percent, he said. In combination with rising retail sales and fixed-asset investment data, “these readings would suggest robust growth momentum continued in early 2017,” Bloomberg Intelligence Chief Asia Economist Tom Orlik wrote in a recent note.

Ning’s remarks indicated that policy-makers in the world’s second-largest economy are more upbeat as they set a 2017 growth target of about 6.5 percent. Premier Li Keqiang had earlier warned of “graver” internal and external challenges in his work report to the gathering of the National People’s Congress, while stressing economic fundamentals remain sound and systemic risk is under control. Industrial activity also picked up, with electricity generation, power consumption and rail volume all posting steady growth, according to Ning. The country’s campaign to cut overcapacity also appears to be bearing fruit. The coal and steel industries reported negative growth and property inventories in China’s third- and fourth-tier cities declined in the first two months, he said. A slew of China’s economic data is scheduled to be released on Tuesday. Domestic demand has been robust and the market expectation on China’s economy has improved, the statistics chief said. He reiterated the government’s determination to root out fake data, saying 15 cases of statistics fraud in nine provinces last year had been probed. Bloomberg News

While the government has yet to release the official targets for exports this year under the Philippine Export Development Plan (PEDP), EMB Director Senen M. Perlada said “definitely exports growth will be in the positive territory but in the low single digits”. The DTI expects the PEDP to be released by the end of March. The government’s sanguine outlook on exports is supported by “encouraging” January figures. On an annual basis, shipments in January amounted to $5.13 billion, 22.5 percent higher than the $4.18 billion recorded a year ago. Perlada noted that exports to the EU

saw an 80-percent hike in January. The DTI official said the end of El Niño, which slowed farm exports and weakened the peso, pushed higher the value of shipments to foreign markets. Last month, the peso hit the 50 to a dollar level—the lowest in over a decade. Observers and experts chalked this up to uncertainties in the global economy. According to the EMB, services exports last year may have reached the $32-billion level, from $29.3 billion in 2015. Receipts from services exports were boosted by the information management and businessprocess management industry, specifically the health-care information sector.

ADB eyeing to provide more climate-change funds to PHL By Cai U. Ordinario

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@cuo_bm

he Asian Development Bank (ADB) said it is keen on increasing its climate changerelated financing support to the Philippines starting next year. In a recent interview, ADB Philippine Country Representative Richard Bolt told the BusinessMirror the multilateral development bank has a couple of projects lined up that could help in various climate-change mitigation and adaptation efforts nationwide. “It’s going to be more forward, there’s going to be more from us in the future,” Bolt said. He said one project involves the possibility of directly offering disaster-related insurance to local government units (LGUs). While the ADB is still in discussion with the Department of Finance (DOF) regarding the specifics of the project, there is also an option that this can turn into a Catastrophe-Deferred Drawdown Option (CAT-DDO). This is similar to the $500 million worth CAT-DDO from the World Bank, which was extended for emergency relief, recovery and reconstruction efforts following a major natural disaster. The drawdown from the World Bank’s CATDDO can be triggered by a presidential declaration of a “state of calamity.” The drawdown period is three years and is renewable up to four times or for a total of 15 years. Whether this is going to be the same arrangement or an insurance financing scheme, Bolt said these fulfill the need to “reduce the burden on the national government in a postdisaster situation”. “We think

[disaster insurance] is going to work better for larger cities so we’re still doing the scoping. The other is if we could use a catastrophe deferred drawdown facility, the same thing the World Bank did so that’s another option,” Bolt said. Another project seeks to help the government “build back better” for housing units in disaster areas. Bolt said the potential technical assistance project will be done by the ADB with the Housing and Urban Development Coordinating Council (HUDCC). He added the ADB hopes that its recent efforts in “building back better” the schools in Yolanda-affected areas with the Japan Fund for Poverty Reduction (JFPR) will be replicated for homes destroyed by typhoons. Bolt said the schools they built with JFPR followed the new building code crafted by the Department of Public Works and Highways (DPWH). As a result, the buildings withstood the onslaught of Typhoon Ruby recently with only the paint of the buildings being chipped off. The ADB, he said, is also working on “risk sensitive” land-use planning in parts of Region 8 based on the lessons learned after Yolanda. Bolt said the land-use planning includes relocation from high-risk areas. “[For] others, it’s quite challenging mainly because communities themselves, I think, are having a hard time making the decision to move. Because if you say ‘okay, let’s move’, you basically say good-bye to generations of ties, social and economic ties,” Bolt said. Financing climate-change projects is one of the primary concerns of finance ministers and senior offi-

cials from 15 developing economies across Asia and the Pacific or the Vulnerable Twenty Group of Ministers of Finance (V20), including the Philippines. The top officials of the V20 are conducting a three-day regional consultation to mobilize international, regional and national investment for climate action, as well as discuss financial instruments for disasterrisk reduction, public financial management and carbon pricing. The event will support the rollout of the V20 Action Plan—adopted in 2015 to address V20 climate finance needs— and provide an opportunity to exchange knowledge and experience between the countries in support of enhanced climate finance and technical capabilities. It will also focus on disaster risk financing to strengthen the countries’ financial resilience against disaster risk at national and international levels. Led by the Philippines when it was established in 2015, the V20 has expanded to 43 developing economies from Africa, Asia and the Pacific, Latin America and the Caribbean. The 15 participating countries in the Asia-Pacific consultation include Ethiopia (the current V20 chairman, Bangladesh, Barbados, Cambodia, Costa Rica, Fiji, Kiribati, Maldives, the Marshall Islands, the Mongolia, Palau, Tuvalu, Vanuatu and Vietnam. The Manila-based multilateral development bank said it is on track in meeting its goal of doubling climate-change financing to $6 billion by 2020. The ADB has already approved $2.6 billion worth of new investments in mitigation and $1.1 billion in adaptation last year.