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The Integrity Initiative

What is corruption? By: Henry J. Schumacher

Special to the BusinessMirror

hile the Integrity Initiative Inc. focuses on a variety of behaviors, like long-term sustainability over short-term gain, ■ I respect the environment ■ I respect the labor laws ■ I pay the right taxes ■ I don’t smuggle ■ I don’t bribe the main target of our mission is anticorruption, both in the government and in the private sector. To understand corruption, we must first recognize what form corruption takes, what allows it to thrive, what consequences it can have on the society and what measures have been successful in

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A broader look at today’s business n

Tuesday, March 14, 2017 Vol. 12 No. 153

Duterte to impose more stringent mining rules By Elijah Felice Rosales

@alyasjah

hile he has ruled out a total ban on mining for now, President Duterte on Monday said he will tighten mining regulations to ensure that their operations will not destroy the environment.

SOLONS MULL OVER EXCISE-TAX CHANGES M

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Part Two

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See “Duterte,” A12

The annual contribution of mining companies to government funds

By Ma. Stella F. Arnaldo

Continued on A2

business news source of the year

In a news briefing in Malacañang, Duterte told reporters that he has already instructed the Philippine National Police (PNP)

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Favorite, new locations boost PHL tourism vista ITH a new secretary, Wanda Corazon T. Teo, now at the helm of the Department of Tourism (DOT), the agency wants to shine a light on other less-known destinations in the Philippines. To do this, however, she said infrastructure development is of primary importance, as well as adequate connectivity, either by land, air or sea. “I would like to focus on infrastructure development,” she told reporters during her first news briefing on July 1 last year, as she enumerated her priorities during her term of office. “Airports should be improved, as well as the roads to the destinations.” She added the DOT also intends to improve facilities in “underdeveloped destinations”. Thereafter, the agency will ramp up its advertising campaign not just to promote the Philippines in general, but also a select number of perceived rising stars among local tourism destinations. Having just launched a new brand campaign during the Miss Universe beauty pageant in Manila on January 30, the DOT’s first advertisement—“When with Filipinos/Anak”—focuses

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embers of the House Committee on Ways and Means are mulling over changes in the proposed excise tax on automobiles. PDP-Laban Rep. Dakila Carlo E. Cua of Quirino, chairman of the panel, said his committee and the Department of Finance (DOF) are now studying the joint proposal of Chamber of Automative Manufacturers of the Philippines Inc. (Campi) and the Association of Vehicle Importers and Distributors (AVID) to increase to seven-tier tax brackets the four-tier tax brackets earlier proposed under the Comprehensive Tax Reform Package. “We cannot disrupt the competition [in the car industry]. It’s not good if there is no competition in the market,” Cua added. Earlier, Cua said the excise tax on automobiles should be targeted only toward those areas in the country where there are traffic problems. “I am not totally convinced with the proposal imposing excise tax on automobiles [to address traffic congestion in the country]. Traffic is limited to the urban areas, like Metro Manila, Cebu and a few other parts of the country. In places like

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controlling corruption. So what is corruption? Like the heads of Hydra’s dragon, corruption presents itself in many shapes, though all originate from the same: temptation. Forms of corruption differ from one another in terms of both the sources tof power that is exploited and the impact they have on the economy, business and on society at large. Let us look at two forms of corruption, each occupying

Fort Pilar Shrine, as shown in this photo, remains the must-visit in Zamboanga del Sur because of its historical significance and profound religious meaning to Zamboangueños. The shrine is also being promoted by the Department of Tourism, and is frequently visited by local and foreign tourists. Nonie Reyes

Lawmakers seek creation of Benham Rise task force By Recto Mercene

@rectomercene

he reported “incursion” of China into the resourcer ic h Ben ha m R ise has prompted lawmakers to move for the immediate creation of a body that will oversee the development and protection of the 13-million hectare underwater plateau off the coast of Aurora. Party-list Rep. Franciso Ashley L. Acedillo of Magdalo said a fellow congressman is filing a bill in the Lower House within the week to mandate the creation of a task force on Benham Rise. “I’ve been authorized to tell you that there is now a bill to be filed this week with fellow Congressman [Gary C.] Lejano, because Benham Rise is a different regulatory regime from the South China Sea,” Acedillo said at the Kapihan Sa Manila Hotel media forum. “We need to oversee it, so it would be good when we ramp up

our maritime security activities on the Pacific side. Let’s include economic and regulatory activities, as well.” To do it, Acedillo said they would propose a task force to enforce their proposal. “I don’t know what kind of task force it will be, a joint Coast Guard Naval Task Force or a coast watch system, which is already in place right now. Regardless of the final form, it will be sorted out, but the economic and security aspect must be taken care of.” He said this must be undertaken because the Philippines is a member of the International Seabed Authority. “Most countries [like the Philippines] are ill-equipped to regulate the seabed [development], like mining. We don’t have the capacity or the regulations in Benham Rise, unlike in the South China Sea, where the Department of Energy has auctioned off [area] for gas and oil contracts.” See “Lawmakers,” A2

n japan 0.4389 n UK 61.2546 n HK 6.4843 n CHINA 7.2832 n singapore 35.6529 n australia 37.9783 n EU 53.7778 n SAUDI arabia 13.4253

Source: BSP (13 March 2017 )

A2 Tuesday, March 14, 2017

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Favorite, new locations boost PHL tourism vista Continued from A1

on our generosity and unique style of hospitality, treating visitors like family, which makes for a “more fun” visit to the Philippines.

Enchanted River

FEATURED in the DOT’s first ad is the Enchanted River in Hinatuan, Surigao del Sur. A recipient of the much-coveted Certificate of Excellence from crowd-sourced travel review site Trip Advisor, the Enchanted River is so called because of its unique color, almost a deep turquoise green to blue sapphire and locals spinning tales of

fairies, engkantos (environmental spirit) and other spirits that supposedly protect it. Fishermen also talk about fish that thrive in the cool springs-fed river but cannot be caught. There is also an extensive underground cave network within the river, which is surrounded by a lush forest ecosystem. Traveling to the river, however, is less than enchanting. To get there, one must fly to Butuan City or to Tandag City, the capital of Surigao del Sur (90 minutes or two hours by air, respectively). From either city, one needs to travel by bus to (Man-

gagoy) Bislig, for three hours. It will take another three hours from Bislig to Hinatuan on a habal-habal, what locals refer to a modified motorbike designed to carry more than two passengers. So a tourist’s best bet is to stay overnight in Bislig first, to catch one’s breath and sleep, before setting off early the next day to go to the river. (Other popular sights in Surigao del Sur are Tinuy-An Falls in Bislig; Cagwait White Beach in Tandag; and more islands with beaches in Bislig.) Basic accommodations are available in Bislig, such as pension houses, bed and breakfasts and

inns. It’s also a haven for seafood, which makes it an exciting place to dine. DOT data show visitor arrivals in Surigao del Sur numbering 181,159 in 2015.

Surfing capital

ANOTHER destination Teo wants to promote is Surigao del Norte, specifically Siargao, known as the “surfing capital of the Philippines”. The resort island is home to Cloud 9, the most popular surfing spot in the Philippines. World competitions are held annually in Siargao, as major surfing heavyweights troop to the island and ride out Cloud 9’s waves.

Solons mull over excise-tax changes Continued from A1

Quirino province, traffic is not much of a problem,” he said. The DOF is pushing for the excise on vehicles to address traffic in the country. Moreover, in a chance interview, Finance Undersecretary Karl Kendrick Chua said the finance department is now studying the proposal of the Campi and AVID. “We are looking at that [now], we will make computations and I will let you know, because there’s no revenue estimate on the impact of their proposal,” Chua said. The ways and means committee is eyeing the passage of the proposal on Tuesday. In a position paper submitted to the lower chamber, AVID President Maria Fe Agudo and Campi President Rommel Gutierrez have asked lawmakers to reconsider parts of the proposal concerning the tax bracket on automobiles. They said the proposed increase in the rates of excise tax on automobiles is too heavy, adding

Swissair. . .

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exhibitions] events and the single most important culinary tradition is Madrid Fusión Manila. Aside from gastrononomy tourism, we are also developing cruise tourism as niche markets,” Teo stressed.

the motor-vehicle industry will not be able to bear the resulting burden, which they have to pass to consumers and, therefore, suffer from market loss due to corresponding progressive increases in the prices, which may, in turn, restrict inclusive access to transport and mobility. They added the decrease in car sales would translate to economic losses for the industry and related businesses and even to government revenues due to income losses, among others. Under the car industry proposal, if the net manufacturer’s price/importer’s selling price is P600,000, the excise tax will be 3 percent. If the net manufacturer’s price/ importer’s selling price is over P600,000 to P1.1 million, the excise will be P18,000 plus 30 percent of the value in excess of P600,000. If the net manufacturer’s price/ importer’s selling price is over P1.1 million to P1.6 million, the excise will be P168,000 plus 40 percent of the value in excess of P1.1 million. If the net manufacturer’s price/

importer’s selling price is over P1.6 million to P2.1 million, the excise will be P386,000 plus 50 percent of the value in excess of P1.6 million. If the net manufacturer’s price/ importer’s selling price is over P2.1 million to P2.6 million, the excise will be P618,000 plus 80 percent of the value in excess of P2.1 million. If the net manufacturer’s price/ importer’s selling price is over P2.6 million to P3.1 million, the excise will be P1,018,000 plus 80 percent of the value in excess of P2.6 million. If the net manufacturer’s price/ importer’s selling price is over P3.1 million, the excise will be P1,418,000 plus 90 percent of the value in excess of P3.1 million. On the other hand, the DOFbacked House Bill 4774 said if the net manufacturer’s price/importer’s selling price is P600,000 the excise tax will be 4 percent. If the net manufacturer’s price/ importer’s selling price is P600,000 to P1.1 million, the excise will be P24,000 plus 40 percent of the value

in excess of P600,000. If the net manufacturer’s price/ importer’s selling price is P1.1 million to P2.1 million, the excise will be P224,000 plus 100 percent of the value in excess of P1.1 million. If the net manufacturer’s price/ importer’s selling price is P2.1 million, the excise will be P1,224,000 plus 200 percent of the value in excess of P2.1 million. The taxreform package seeks to exempt those earning P250,000 and below from personal income tax. However, aside from the excise tax on cars, the proposal also includes the imposition of excise tax on fuel as compensatory measure for the foregone revenues due to the lowering of income tax. The DOF also proposes 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, and the taxing of lotto winnings from the Philippine Charity Sweepstakes Office’s numbers’ game.

She added that these meetings with German officials and privatesector representatives are indicative of the Philippine government’s commitment to advance bilateral relations with Germany in all aspects, including political dialogues, economic cooperation and peopleto-people exchanges. She invited both Klimke and

Panz to visit the Philippines and personally committed to arrange meetings between DOT-partner universities and institutions, and other government officials and their German counterparts. Tourism Undersecretary Rolando Cañizal, who accompanied Teo in the meetings, noted that European markets posted top

growth rates in tourism arrivals to the Philippines last year. As a region, Europe contributed 629,474 tourists in 2016, with the United Kingdom accounting for the biggest source at 173, 299 guests. (See, “Tourism ‘shines’ through travel bans, terrorism— UNWTO chief,” in the BusinessMirror, March 9, 2017.)

Jovee Marie N. dela Cruz

If one isn’t into surfing, islandhopping is also another favorite activity for tourists who want to snorkel or just dig their heels and sunbathe on white sand beaches. With SkyJet (https://www.flyskyjetair.com/) now offering direct flights from Manila to Siargao daily, travel time to this surfer’s paradise has been reduced to one hour and 40 minutes, from the previous two hours and 20 minutes via Cebu Pacific (https://www.cebupacificair.com), which connects to the resort island only via Cebu. Most resorts can book a private van to pick up its guests arriving at the Sayak airport.

Lawmakers. . . Continued from A1

Acedillo said knowing what is underneath the seabed of Benham Rise would give the Philippines the advantage of determining what can be offered to prospective investors who might be interested in exploring for gas and oil in the area. He said authorities would be able to tell the geography beneath Benham Rise, “and at the very least, we can tell two potential benefits of surveying”. “No. 1, we can tell the geography beneath and No. 2, we can tell where submarines might be able to hide. Since we are not a submarinedeploying country, the immediate benefit to us is economic, we can allow the mining of various metallic minerals there,” he added.

Comprehensive strategy

Senate President Pro-Tempore Ralph G. Recto, on the other hand, said an immediate action is for the executive department to craft a comprehensive strategy aimed at protecting Benham Rise. “No ifs or buts. The government must have a ‘Benham Rise Protection Strategy’. A comprehensive strategy—military, diplomatic and economic—in holding on to and developing Benham Rise,” Recto said. “We cannot be caught unaware. There should be no Pearl Harbor moment that will surprise us that other countries have installed themselves on what by law is part of our territory.” Recto issued the statement following reports that the Department of Foreign Affairs (DFA) has sent a note verbale to the Chinese Embassy to clarify the reported presence of a Chinese survey ship near Benham Rise. Defense Secretary Delfin N. L orenzana had repor ted t he Chinese survey ship was seen plying the waters of Benham Rise for around three months.

Easy prey

Without a protection strategy, Recto said the Benham Rise may easily fall prey not only to poachers, but foreign countries interested in exploring the plateau’s marine and mineral resources. Aside from diverse marine life, Benham Rise is also believed to be a rich source of manganese and natural gas. “We should not allow that area to be partitioned like a frontier homestead. Or cut up into blocks to be controlled and exploited by others,” Recto said. “That area is crucial to our future. If there are gas deposits, it will power our future. It is a fishing area, too. With large swaths of our western seas now declared a no-catch zone to our fishermen, this will provide an alternative venue.” Recto said the Senate, for its part, should consider expediting a bill filed by Sen. Sonny M. Angara providing for the creation of a Benham Rise Development Authority (BRDA)—the lead agency that will be mandated to conduct scientific research and exploration in the plateau. Once equipped with such information, the BRDA shall take

Major carriers also fly directly from Manila to Surigao City, temporarily suspended, however, due to the closure of the city airport, which was damaged by the recent earthquake. Tourists then take a 15-minute jeepney or tricycle ride to the pier, before embarking on a three-hour ferry ride to Siargao island, north of the city. Tour ists have a my r iad of choices in terms of accommodations in Siargao, from ordinary bed and breakfasts/pension inns to luxury resorts. Foreign and local tourists numbering 618,813 visited Surigao del Norte in 2015. To be concluded

the lead in formulating and implementing a development road map for Benham Rise, ensuring that it is aligned with the Philippine Development Plan.

Security, economic concern

Former National Security Adviser Roilo Golez also noted that Benham Rise is a “very big security and economic concern”. “It is a part of Philippine territory, not just exclusive economic zone [EEZ], where our activity is limited to natural resources, as provided for by the United Nations Convention on the Law of the Sea [Unclos], but this is territorial sea as awarded in April 12, 2012.” “ T hat body of water is as important to us territorially, like Manila bay, or the Sulu and Sibuyan Sea, as important as the land encompassing Manila, that’s how important it is,” he added. Because of these implications, Golez said China actually spied on the Philippines when it sent a survey ship to Benham Rise, instead of conducting innocent passage as they claim. According to Golez, innocent passage, as defined by the Unclos in Article 18 and 19, said: “The vessel must travel directly, they can stop only in case of force majeure or if they are distress, needing help, but they can’t loiter around.” “Article 19 prohibits a number of acts on the part of the vessel, which are many, but I will mention only two, they can’t undertake fishing operations and, most important, it prohibits surveying and research.” Golez said those activities are exactly what he believes the Chinese did after loitering and lingering around Benham Rise for three months. “The entry of a survey ship is a violation of our territory, in the same manner that somebody like an explorer enter Laguna de Bay or Manila Bay,” he added. Golez said that, although he had not seen the full report on China’s activities in Benham Rise, he suspects that it sent the 636A survey ship. “It can study the characteristics of the water, the sea, the temperature and salinity, thermocline, the oceanography of the sea, something which we study in Naval Academy.” He said submarines usually hide along thermocline, an area beneath the waves where the various levels of the sea have different temperatures and that make them ideal for hiding submarines because sonar would not be able to penetrate it. Golez, who is a graduate of the US Naval Academy, Annapolis, Maryland, said the Chinese, having reportedly stayed in Benham Rise for a long period, could have easily studied the subsoil and seabed, the mineral, gas and oil underneath, using a seismic survey. “They can determine, maybe several hundred meter deep, what is inside, what is our national wealth and resources under the sea.” “So they spied on our natural resources and, if they were there for three months, as mentioned by Department of National Defense and Acedillo, they could have gotten plenty of information.”

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Malaysia arrests 5 Pinoys for I.S. links

HE Malaysian police said on Monday they have arrested seven suspects, including five Filipinos and one Malaysian immigration officer, in connection with the Islamic State (IS). The first Filipino suspect, who has permanent residence in Malaysia, was found to have provided funds for Malaysian fugitives “Dr. Mahmud Ahmad” and Mohamad Joraimee Awang Raimee, who joined the IS in the Southern Philippines as recruiters for the terror group, said Khalid Abu Bakar, inspector general of the police in a statement. Another two are believed to have assisted the transit of three Indonesian IS militants to the Southern Philippines passing through Sabah, Khalid said. The police believed the arrested Malaysian immigration officer helped arrange the travel for several terror suspects to Mindanao in the Philippines without valid documents. The suspects were arrested in a series of counterterrorism operations between Wednesday and Sunday in Sabah and Selangor, Khalid added. It is not the first time the police uncovered links between Sabah and Mindanao, where the Philippine government exert loose control over the Abu Sayyaf, a jihadist bandit group. The Malaysian police busted a four-member terror cell in Sabah in January, in which the police found the cell helped new recruits of IS-linked militants from Malaysia, Indonesia and ethnic Rohingya community in Bangladesh to transit via Sabah to Marawi City in Mindanao. PNA-Xinhua

The Nation BusinessMirror

Editor: Dionisio L. Pelayo • Tuesday, March 14, 2017 A3

Govt, NDF urged to forge cease-fire before Holy Week

ENATE President Pro Tempore Ralph G. Recto on Monday urged the government and the National Democratic Front (NDF) to forge a ceasefire before the Holy Week next month.

Recto’s call came after negotiators from both sides agreed to resume peace negotiations anew. He said a cease-fire before and during Holy Week will give soldiers and rebels the “opportunity to reunite with their loved ones” and for communities to observe it “in peace”. “Whether unilaterally declared or mutually agreed, the people will welcome a break from fighting. If their time frame of brokering a cease-fire before April will be met, the peace negotiators couldn’t have picked a better time,” Recto said. “It is the right time because we don’t want the solemnity of Lent broken by

RECTO: “It is the right time because we don’t want the solemnity of Lent broken by needless bloodletting among brothers.”

needless bloodletting among brothers,” he added. He added a cease-fire also allows

government forces to pour more resources, manpower and materiél into the all-out war being waged against the Abu Sayyaf. The Kapayapaan Campaign for a Just and Lasting Peace (Kapayapaan), meanwhile, welcomed the resumption of the peace talks. In a statement, Kapayapaan convener Fr. Benjamin E. Alforque said: “We thank the government and the NDF for agreeing to continue the peace talks, to reinstitute their respective unilateral cease-fires, to work toward the completion of the substantive agenda on social and economic reforms, move toward the political and constitutional reforms and work out an agreement on a mutual bilateral cease-fire.” However, even as Alforque was optimistic on the progress of the peace negotiations, he opposed President Duterte’s order to use all available offensive weapons against the New People’s Army (NPA). “We are concerned, however, over President Duterte’s recent order to police and

military forces to use all available assets, including bombs, in fighting the NPA and treating civilians as collateral damage. We would like to remind the President that under the Comprehensive Agreement on the Respect for Human Rights and International Humanitarian Law, actions that harm or threaten civilian communities are prohibited,” he added. Alforque appealed to both the government and the NDF to be steadfast in forging a just and comprehensive peace agreement for the benefit of the Filipino people. “Finally, we urge both parties to have the courage to stick it out together for the sake of peace and the interests of the people. Outstanding issues, such as the release of political prisoners, humanrights violations and the militarization and displacement of communities, should be resolved. “We of Kapayapaan, together with the people and nation, are fully behind the peace negotiations and the continuing quest for a just and lasting peace,” Alforque added. PNA with Marvyn N. Benaning

Economy

A4 Tuesday, March 14, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

NPC seeks ₧1.078-billion recovery cost adjustment from fuel-price fluctuations By Lenie Lectura

@llectura

he National Power Corp. (NPC) has filed an application for recovery cost adjustments worth P1.078 billion. The amount represents additional operating costs incurred by NPCSPUG (Small Power Utilities Group) as a result of the fluctuation of fuel prices used in power generation. Off-grid or missionary areas locations not connected to the grid are served by NPC’s SPUG. The state firm is allowed to recover this deferred fuel costs through the Generation Rate Adjustment Mechanism (Gram). In its eight-page filing with the Energy Regulatory Commission (ERC) last month, the state firm proposed to recover this amount spread over two years by imposing the Gram directly to consumers in NPC-SPUG areas. If approved, the proposed rates will be implemented over two years to fully recover P1,078,243,310 worth of deferred fuel costs to mitigate the impact on NPC customers in the missionary areas. In particular, NPC asked to collect P1.0982 per kilowatt -hour (kWh) in Luzon, P1.0541 per kWh

in the Visayas, and P0.7657 per kWh in Mindanao. NPC said the proposed 15th GR AM, covering the period of January to July December 2015 is “fair and reasonable,” as it was computed in line with the Gram rules and consistent with the principles of free and competitive electricity market as provided under RA 9136. “The proposed 15th Gram application was approved for filing by the NPC Board on February 8, 2017,” the NPC said. Further, the NPC said it has fully complied with the Gram’s monthly reportorial requirements in support of the calculated allowable costs covering the billing period. NPC President Ma. Gladys CruzSta. Rita had said it normally takes at least one year before any petition may be acted upon because any petition has to undergo several public hearing before being endorsed. “NPC normally files its rate adjustment every year to recover the adjustments in fuel costs and dollar exchange but it is not automatically or immediately approved. And with ERC’s intervention, there is hardly an increase in the rates granted to NPC. It is usually spread out over several years,” she said.

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‘Govt’s log-ban policy raised jobless count in countryside’ EO 23

By Cai U. Ordinario

@cuo_bm

he government has been urged to review its log-ban policy to “make it more equitable” for all stakeholders, according to the Philippine Institute for Development Studies (PIDS).

Executive Order (EO) 23, issued by the administration of former President Benigno S. Aquino III, declared a moratorium on the cutting and harvesting of timber in natural and residual forests. However, PIDS said in a discussion paper, the EO only increased unemployment in rural areas and encouraged illegal logging. “The implementation of EO 23 affected not only the supply of wood products to the wood-processing industry, but also led to the increased unemployment in the rural areas. It also encouraged the practice of illegal logging, with the DENR [Department of Environment and Natural

Resources] unable to effectively monitor and enforce the order,” the PIDS study stated. PIDS Senior Research Fellow Danilo C. Israel and Research Analyst II David Feliks M. Bunao also said the inconsistent policies in wood processing have also made it worse for the industry. Israel and Bunao said policies surrounding the harvest of logs discouraged investment in wood processing. When EO 23 was issued and implemented, the number of woodprocessing firms in the country fell. In the case of the Caraga region, it went down from 119 firms in 2010 to only 27 firms in 2015.

The executive order issued during the term of President Benigno S. Aquino III imposing a moratorium on the cutting and harvesting of timber in natural and residual forests

This significantly affected at least 10,000 workers who were directly involved in the wood-processing industry in Caraga. They added the imposition of these policies were carried without consulting with all stakeholders. “The wood-processing industry, in general, has been neglected by the Philippine government partly because of the environmental lobby favoring the log ban is getting stronger. Yet, at no other time in its existence that the industry needs much attention and assistance in order to simply sur-

Group lists job ‘risks’ for fresh college grads By Jonathan L. Mayuga @jonlmayuga

ow wages, job-skill mismatch, short-term contractualized work and unsafe workplaces are awaiting the estimated 1 million graduates in colleges and vocational schools this month, the Associated Labor Unions-Trade Union Congress of the Philippines (ALU-TUCP) said on Monday. “We don’t want to give these young work force any false hope. We don’t to discourage them either, but these are the issues that confront our new graduates who will become the new breed of the millennial work force. It is our wish though that the wisdom they draw between their hope and the realities around them will guide them through,” said Alan Tanjusay, ALU spokesman. According to Tanjusay, mismatch between skills and the actual jobs available in the market is a common problem and cause of underemployment. In the October 2016 round of the government’s Labor Force Survey showed close to 8 million workers are in need of another job to augment daily income, he said. Tanjusay added graduates are

also confronted with low entry-level minimum wage. “The purchasing value of the current P491 entry-level daily wage for workers in the National Capital Region area has eroded to P363 a day, excluding mandatory socialprotection salary deductions and transportation and meals expenses,” he said. Millennial workers are also facing precarious and prevalent job contractualization arrangement. Otherwise known as “555” (five months contract) and endo (end of contract), contractualization is a work arrangement where workers are terminated after five months and then rehired again for another five months. “Seven out of 10 of the current 41 million work force are contractuals. Workers who were contractuals more than five years ago remain contractuals until today, getting the same entry-level pay without security of tenure and the benefits that they [are] supposed to enjoy. That’s how bad and massive contractualization is,” Tanjusay said. Graduates are always faced with the possibility of occupational safety and health hazard, similar to the May 2015 Kentex fire incident in Valenzuela City

Cheaper crude shrank PHL’s oil-import bill in 2016—DOE

Shoreline enterprise Enterprising fishermen set up makeshift stalls to sell their day’s catch along the shorelines of Manila Bay. Contrary to popular reports, the environment group Greenpeace says edible marine life still thrives in the pollution-ridden bay. PNA/Joey O. Razon

that killed 74 workers and the HTI factory fire last month in General Trias, Cavite, that killed five of its workers.

Train program to transfer P170B from wealthy to lower-income households

he Tax Reform for Acceleration and Inclusion (Train) program proposed under the Duterte’s administration envisions to ultimately “reduce poverty to single digit, grow the economy by 9 percent, and transform the Philippines into an Asian economic powerhouse by 2028, with $1.2 trillion gross domestic product.” A lbay Rep. Joey S. Sa lceda, original proponent of the Train (House Bill 4688), said the measure will fairly and effectively transfer some P170 billion annually from the country’s rich to middle class and low-income households. The House Committee on Ways and Means has merged Salceda’s HB 4688 with another tax-reform measure HB 4774, authored by Quirino Rep. Dakila Carlo E. Cua, but retained most of the provisions as originally designed, among them the unconditional cash transfer for three years. Both bills aim to lower

the personal income tax (PIT) rates for 99 percent of the country’s taxpayers while expanding the value-added tax (VAT) base and adjusting consumption taxes rates on petroleum products and automobiles. Congress aims to pass the measure this year as the Tax Administrative Reform Act of 2017. Under the Train program, Salceda said “40 percent of its generated revenue will go the Internal Revenue Allotments of barangays, towns, cities, provinces and the Autonomous Region in Muslim Mindanao.” Its propoor feature has earned it unprecedented support from the government and private sectors, non-governmental organizations and civil-society groups, making it a better understood and appreciated proposed piece of legislation. Train, Salceda said, is seen to break the margin of inequality and injustice between the marginalized and the elite and amend the decadesold tax schedule for personal income,

vive,” the authors said. In February the National Economic and Development Authority (Neda) pushed for “responsible logging” rather than imposing a total log ban. Neda Secretary Ernesto M. Pernia said logging should only stop in places that have already been denuded. Pernia added the President may have just been “thinking out loud” when he was quoted as saying there should be a total log ban. Based on the final results of the 2013 Annual Survey of Philippine Business and Industry-Agriculture, Forestry and Fishing Sector, there were seven firms involved in growing timber forests. These firms were engaged in growing timber forest species, such as gemelina and eucalyptus, planting, replanting, transplanting, thinning and conserving of forest and timber tracts. These firms employed 676 employees, but only 672 were considered paid employees. These firms booked an income worth P138.5 million and expenses worth P128.88 million in 2013.

one of the highest within the Asean. The tax-reform measure is a comprehensive resource equalizer, he said, and represents a single largest direct transfer of wealth mechanism via reduced personal income taxes. Salceda, has been at the forefront of a series of “tax-reform road shows” with the Department of Finance (DOF) and various sectors of society around the country, aimed at further “deepening people’s understanding” of the measure and the advantages it would bring about for the country. To ensure it is properly understood and appreciated, he has initiated dialogues with local government and business sectors, and civil society and NGO leaders in key areas of the country. The Train roadshow has undertaken over 90 consultations, the latest of which was at Shangri-La Makati, conducted with Finance Secretary Sonny Dominguez and leaders of the Philippine Chamber of Commerce and Industry. PNA

“Young workers are not aware that they are walking into death traps and fire-hazard workplace when they apply for work. It’s be-

cause schools didn’t teach college students with the basic occupational safety and health information,” Tanjusay said.

eclining world oil prices pulled down the Philippines’s oil-import bill in 2016 to $6.7 billion, from $7.7 billion, in 2015, even as the country imported more petroleum products. “Overall, the country’s 2016 net oil-import bill amounting to $6.776.8 billion was down by 12.4 percent, from 2015’s $7.733.3 billion,” a Department of Energy report posted on its web site stated. Net oil import is the difference between the country’s net imports and exports. Total oil-import cost was made up of 55.4 percent finished products and 44.6 percent crude oil. The total crude oil imported in 2016 reached 78,772 million barrels (MB), a slight increase of 0.9 percent from 2015’s 78,060 MB. Total import of crude oil amounted to $3.321 billion last year, 17.9 percent lower than $4.043.1 billion in 2015, due to lower price per barrel from 2015’s $51.795 per barrel to $42.149 per barrel. On the other hand, the count r y ’s pet roleu m e x por ts ea r nings for the per iod fel l by 23.2 percent, f rom $878.7 mi l lion in 2015 to $675 mi l lion last year. Lenie Lectura

Neda to Pinoys: Get used to going online

he National Economic and Development Authority (Neda) is urging Filipinos to go online when dealing with government offices and agencies, as the Duterte administration intends to fully automate all government procedures and citizen transactions by 2022. Neda Secretary Ernesto M. Pernia said many Filipinos still prefer to do manual transactions, which take too long. However, Pernia said that, by 2020, or within the midterm of the Duterte administration, this attitude must already change since the government expects significant changes in online government transactions. "I think he [President Duterte] mentioned [that] by midterm, there should already be some signs or clear signs that we are moving [toward automation and that] there is substantial progress there so that by the end [of his term], [full

automation is] in place,” Pernia said. Neda Undersecretary Rosemarie Edillon said many Filipinos are averse to doing online transactions because they do not trust technology. She said the Philippine Statistics Authority (PSA) even admitted that face-to-face transactions in securing civil registry-related documents are still preferred by most of their clients. Data obtained by the BusinessMirror showed that a total of 310,203 transactions were processed by e-Census in 2016. This only represented about 1.8 percent of the total volume of 17.28 million transactions processed in 2016. “[The PSA said] people are not really availing [themselves] of it [eCensus], utilizing the service because they would rather physically go there,” Edillon said. “They prefer talking to a person. [Maybe they have more] assurance that

the transaction was filed,” she added. The Neda said the automation of government procedures is part of the Philippine Development Plan (PDP) 2017 to 2022. Edillon said this is part of the President's plan to cut red tape and shorten the processing time needed to perform everyday transactions, like opening and closing a business. She added the Department of Labor and Employment (DOLE) is one of the early adopters of going online through its i-DOLE. Initially, Edillon said, the i-DOLE caters to overseas Filipino workers who are more accustomed to transacting online. The best practices in the government’s automation efforts is one of the topics that will be discussed in the third Asean-Overseas Economic Cooperation and Development Good Regulatory Practice Network Meeting which is now ongoing in Iloilo City. Cai U. Ordinario

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Editor: Jennifer A. Ng • Tuesday, March 14, 2017 A5

DA needs ₧7B to expand abaca output

By Jasper Emmanuel Y. Arcalas

@jearcalas

ankrolling various interventions aimed at hiking abaca output to 221,238 metric tons (MT) by 2022 would require a budget of P7 billion, according to a road map prepared by the Philippine Fiber Industry Development Authority (PhilFida). In the Philippine Abaca Roadmap (PAR) 2017-2022, a copy of which was obtained by the BusinessMirror, the government indicated that it intends to expand abaca plantations to 231,859 hectares from the current 181,859 hectares. Under the road map, the PhilFida would expand abaca plantations by 17,000 hectares this year; by 10,000 hectares in 2018; 9,000 hectares in 2019; and another 9,000 hectares in 2020. The government is targeting to increase abaca plantations by 5,000 hectares in 2021. The attached agency of the Department of Agriculture (DA) is targeting to expand plantations in the Davao region by 13,000 hectares and by 8,530 hectares in Northern Mindanao. These additional plantations would be concentrated in lowland areas. “Planting from upland to lowland to convert unproductive and idle lands has gained support among farmers and the private sector,” the PAR read.

Manila, Beijing to ink $1.5-billion purchase deal By Catherine N. Pillas @c_pillas29

anila and Beijing will sign an agreement involving China’s purchase of $1.5 billion worth of Philippine goods, including agricultural products, on Wednesday, according to the Philippine Silk Road International Chamber of Commerce. Dr. Francis Chua, chairman of the Philippine chapter of the Silk Road International Chamber of Commerce, said the $1.5-billion purchase agreement covers agriculture products, such as coconut and banana. Chua said other products, like nickel and garments, would be included in the purchase agreement. Last week Trade Secretary Ramon M. Lopez had announced that China is also keen on purchasing locally produced durian, avocado, pineapples, mango, dragon fruit, mangosteen, marang, rice, coffee and cacao. Liu Changyu, deputy director general of the department of foreign trade under China’s Ministry of Commerce, and Jin Yuan, commercial counselor of the Embassy of the People’s Republic of China to the Philippines, as well as representatives from the Department of Trade and Industry and the Philippine Chamber of Commerce and Industry will attend the event. China is the Philippines’s second major trading partner, fourth largest export market and first import supplier in 2015. The Silk Road Internationa l C h a mber w a s est abl i shed by China in 2015 with 40 vice chairmen. The establishment of the chamber in different countries aims to gather support for the China-led Silk Road Economic Belt and 21stCentury Maritime Silk Road.

In five years the PhilFida is targeting to rehabilitate 50,000 hectares of abaca plantation: 800 hectares this year; 7,000 hectares in 2018; 10,000 hectares in 2019; 20,000 hectares in 2020; and 5,000 hectares in 2021. The road map indicated that the rehabilitation and expansion of abaca plantations would increase output to 80,000 MT this year; 106,600 MT in 2018; 124,852 MT in 2019; 154,645 MT in 2020; 190,632 MT in 2021; and 221,238 MT in 2022. The annual abaca output of the Philippines is pegged at 72,734.71 MT.

Interventions

Under the road map, the PhilFida would allocate P5.55 billion, or 80.38 percent, of the total budget for fiber production. The PhilFida would also set aside P910.906 million for its fiber-processing and utilization programs, and P400 million for its research and development (R&D) department. The remaining P44.92 million would be used for fiber-trade development.

FILE photo

The PhilFida would also introduce an “intensive planting method”, which seeks to boost yield per hectare by shortening the growth period of harvestable abaca plant to 12 to 16 months from the typical 18 to 24 months. The increase in output is expected to boost the country’s annual abaca-fiber exports by 10 percent

to 15 percent annually starting this year until 2022, according to the road map. Data from the PhilFida showed that last year’s abaca output of 72,734.71 MT was 8 percent higher than the 67,328.94 MT recorded in 2015. The Bicol region remained as the top abaca-producing region in the country, accounting for 39 percent

of the total output. Its production reached 26,685.1 MT last year, 14.1 percent higher than the 2015 record of 17,708.56 MT. Data from the PhilFida also showed that export revenues from abaca in January to October 2016 reached $113.52 million, 17 percent higher than the $96.95 million recorded in the same period in 2015.

Abaca pulp accounted for the lion’s share of the earnings at 68.4 percent. Exports receipt from abaca pulp grew 18.4 percent to $78.50 million, from $66.30 million earned in 2015. The Philippines produces 85 percent of the world abaca supply, which is globally known as Manila hemp.

Govt exempts suppliers of farm produce from truck ban

he Department of Agriculture (DA) and four other government agencies have agreed to exempt accredited vehicles transporting agricultural commodities from the existing truck ban in the National Capital Region (NCR). The DA said it has inked a memorandum of agreement (MOA) for the Food Lane Project with the Metropolitan Manila Development Authority (MMDA), the Department of the Interior and Local Government (DILG), and the Philippine National Police (PNP) on Monday. Under the MOA, the government will designate food lanes where truckers could travel to prevent delays in transporting rice, fresh fruits and vegetables, livestock and poultry, fish products, feeds, fertilizers and frozen meat. “The government will designate food-lane routes that could be used by vehicles that are exempt from the

ban on access by trucks and large vehicles on major lanes imposed by the MMDA on major streets and highways in the NCR,” Agriculture Secretary Emmanuel F. Piñol said in a statement. “The project is in line with President Duterte’s campaign against corruption and kotong [mulcting] cops by ensuring the elimination of additional fees and checkpoints, which actually add to the cost carried by farmers and fishermen,” Piñol added. Piñol added the implementation of the food-lane routes will reduce postharvest losses estimated at 22 percent of retail cost. “It will also reduce trading layers by 18 percent and eradicate informal cost by 2 percent.” Under the MOA, Piñol said the DA will accredit all individuals or companies that deliver farm and fishery goods and products so they

could use the food-lane routes and be exempted from the truck ban. Piñol added interested companies applying for food-lane route accreditation must be duly registered with the DA and has no pending complaint. “All transport carriers for livestock, poultry and by-products must also be registered with the Bureau of Animal Industry and the National Meat Inspection Service prior to the approval of the food-lane accreditation,” Piñol added. At present, the MMDA implements a truck ban in some of the major thoroughfares in Metro Manila from 6 to 9 a.m. and from 5 to 9 p.m. every day, except Sundays and holidays. The MMDA also implements a “total truck ban” along Edsa, between Edsa Magallanes to North Avenue, Quezon City, every day, except Sundays and holidays.

Under the MOA, cargo trucks carrying goods could pass along the following identified food-lane routes in addition to the existing alternate routes identified by the MMDA for cargo trucks that wish to go to and from the Port Area: Route 1: From Nlex to A. Bonifacio then unload at Balintawak Market and back to A. Bonifacio passing through C-3, then left to R-10 going directly to Divisoria. Route 2: From Nlex to A. Bonifacio take a U-turn at Cloverleaf then turn right to Quirino Highway, then turn right to Tandang Sora Avenue going to Katipunan straight to Libis all the way to C-4, then Slex. Route 3: From Nlex to A. Bonifacio take a U-turn to Cloverleaf then turn right to Quirino Highway then turn right to Tandang Sora Avenue, then right to Mindanao Avenue then left to North Avenue to Elliptical Road going Commonwealath Av-

enue to University Avenue straight to C.P. Garcia going to Katipunan straight to Libis all the way to C-5 then Slex. Route 4: From Nlex to A. Bonifacio take a U-turn to Cloverleaf then right to Quirino Highway, then right to Tandang Sora Avenue then right to Mindanao Avenue to Elliptical Road going to Commonwealth to University Avenue straight to C.P. Garcia going to Katipunan straight to Libis all the way to C-5, then Slex. From Airport to Slex: From Ninoy Aquino International Airport Road turn right to Domestic Road to Airport Road, then Andrews Avenue then Villamor Air Base then Slex. Piñol said delays in delivering critical agricultural commodities to customers in the NCR would cause farmers and truckers to incur losses and hike food prices. Jasper Emmanuel Y. Arcalas

Drop in Atlantic herring a mystery in Maine as bait price booms

OCKLAND, Maine—Maine’s booming lobster industry has a big problem involving a little fish. The state’s iconic lobster fishery is healthy, having set records for volume and value in 2016. But the fishery for herring, a small schooling fish that lobsters love to eat, is another story. Herring is suddenly the secondmost valuable fishery in the state, and Maine’s most valuable species of fish, bringing in $19 million at the docks in 2016. It’s also the most popular bait used in lobster traps, and the climb in value corresponds with demand from the hungry lobster fishery and a drop in catch of herring off of New England. Scientists and fishermen are trying to figure out why Maine’s Atlantic herring catch—the largest in the nation—has fallen from 103.5 million pounds in 2014 to 77.2 million last year. The perpound price of the fish at the dock has gone up 56 percent since 2014,

and that price is eventually borne by people who buy lobsters. “The whole dynamic of the fishery has changed,” said Jeff Kaelin, who works in government relations for Lund’s Fisheries, which lands herring in Maine. Kaelin, and others who work in and study the fishery, thinks climate and the way the government manages herring may have played a role in the decline of catch. Atlantic herring are managed via a quota system, and regulators have slashed the quota by more than 40 percent since the early-2000s. Last year herring were also difficult to catch far offshore, where they are typically caught in large amounts, but they were abundant closer to the New England coast. This led to a bait shortage, because fishermen are only allowed to catch a certain percentage of their quotas in inshore waters. It also fueled speculation that warming waters are preventing herring, which like the cold, from going farther out to sea, where it is

IN this July 8, 2015, file photo, herring are unloaded from a fishing boat in Rockland, Maine. Herring is now the second-most valuable marine resource in Maine, and the most valuable species of fish. But the catch of the fish has actually declined, and tight regulations are making it difficult to meet demand, fishing groups say. AP

warmer. Graham Sherwood, a research scientist with the Gulf of Maine Research Institute in Portland, said it’s tough to say if warming waters are actually keeping herring close to shore in the near term. But long term, the much-documented warming off New England

is bad for the fish, he said. “They are a cold water species. Ten, 20, 30, 50 years, it may no longer be hospitable to herring,” Sherwood said. Federal and interstate regulators are looking at different strategies for how to manage the herring short-

age. No radical changes are planned imminently. It’s all happening at a time when demand for herring is possibly greater than it has ever been. The US lobster fishery, which is also centered in Maine, has exploded in recent years, growing from 81 million pounds nationwide in 2007 to more than 130 million pounds in Maine alone last year. Processed lobster products are growing in popularity, and the Asian market for live lobsters has broken wide open. That growth has driven up demand for bait, said David Cousens, the president of the Maine Lobsterman’s Association. The price of herring to fishermen grew from $30 to $40 per bushel last year, Cousens said. Fishermen also use other types of fish, such as redfish and menhaden, but herring remain the overwhelming favorite, he said. “They’ve cut the quotas in half and we’re using twice as much bait as we used to,” he said. “It’s a huge problem.” AP

The World BusinessMirror

Tuesday, March 14, 2017 • Editor: Lyn Resurreccion

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Turkey-Europe ties sour amid quarrel with Dutch

STANBUL—Turkey’s quarrel with Europe worsened over the weekend after the Turkish president accused the Dutch government of Nazism, and Turkish politicians were barred or disinvited from events in two European countries, amid tensions before a tight referendum on a new Turkish Constitution. Having criticized German officials for barring their Turkish counterparts from campaign events this month, President Recep Tayyip Erdogan turned his ire on the Netherlands after the Dutch stopped the Turkish foreign minister from landing there for a rally last Saturday, and then escorted the Turkish family minister out of the country early on Sunday, citing risks to public order and security. It was an unusually strong reaction from the Dutch, who have generally taken an open stance toward diverse points of view, but who are in the midst of an election campaign in which immigration and integration are major topics. “When those incidents began, I said those are fascistic measures,” Erdogan said in a speech last Sunday afternoon. “I said Nazism had risen from the dead. And then I added: I thought Nazism was over, but I was wrong.” The anti-Dutch remarks from Turkey inflamed tensions among the Turkish community in the Netherlands, who protested in Rotterdam until the early hours last Sunday, when they were dispersed by police officers wielding batons and water cannons. The police arrested 12 people,

and seven were injured, including a policeman, whose hand was broken. Though Turkish law technically bars the practice, Turkish ministers are touring Europe to persuade the continent’s sizable Turkish diaspora to vote yes to an expansion of Erdogan’s powers, amid fears that the “no” campaign may hold the edge in the April referendum. But this campaign has collided with closely fought local elections in the Netherlands and France, where right-wing politicians have sought political capital from stoking tensions with the Turks. The push for votes also comes at a time of increased European alarm over Turkey’s democratic backslide and rising concerns over immigration and integration. The Dutch government said it refused to allow the Turkish foreign minister’s plane to land after the Turkish government publicly called on “Dutch nationals of Turkish origin to turn out in great numbers”. The two countries were negotiating over finding a smaller venue, like the Turkish Consulate, to hold the meeting, but “before these talks had been concluded”, Turkey “publicly threatened the Netherlands with sanctions” making a “reasonable compromise” impossible, the Dutch

Protesters wave flags and banners with pictures of Turkish President Recep Tayyip Erdogan outside the Dutch consulate in central Istanbul’s Istiklal Avenue, the main shopping road of Istanbul, early on Sunday. The escalating dispute between Turkey and the Netherlands spilled over into Sunday, with a Turkish minister unable to enter her consulate after the authorities there had already blocked a visit by the foreign minister, prompting Erdogan to call the Dutch fascists. AP

Foreign Ministry said. Elsewhere in Europe, the Danish prime minister, Lars Lokke Rasmussen, canceled a meeting with his Turkish counterpart, Binali Yildirim, in protest of Turkey’s “rhetorical attacks”. In Sweden a lawmaker from Erdogan’s party, Mehdi Eker, rearranged a campaign event after the meeting’s initial hosts backed out for safety reasons. In France two right-wing candidates, François Fillon and Marine Le Pen, criticized the decision to allow the Turkish foreign minister, Mevlut Cavusoglu, to proceed with a rally in France. Switzerland and Austria have previously made it clear that Erdogan’s

campaign is unwelcome there. In the Netherlands both the conservative prime minister, Mark Rutte, and his far-right opponent, Geert Wilders, hoped to benefit from the dispute, though it was not immediately clear if either would see appreciable gains. The election is on Wednesday, and while it was Wilders who first elevated the issue publicly, Rutte could get credit for barring the Turkish ministers. “Rutte now has premier bonus,” said Bianca Pander, a political strategist at BKB, which works on campaign strategy, referring to his status as prime minister. “He can now show what leadership means.” He is also benefiting from nearly

constant news media coverage on the issue. “Rutte is in the picture now: He’s on every TV show, and on every newspaper,” Pander said. Rutte said the pejoratives leveled at the Dutch were “bizarre” and that the “Turkish republic is moving in the wrong direction for a democracy”. In response, Erdogan accused the center-right Dutch government of playing to a domestic audience by blocking his ministers. “Holland, if you are sacrificing Turkey-Holland relations because of the election on Wednesday, you will pay the price,” Erdogan said last Sunday. Inside Turkey, Erdogan, too, was accused of trying to curry favor with the country’s voters. With the refer-

endum result in doubt, some of the president’s critics argued that he was manufacturing fights with Europe to win the support of nationalists in Turkey who were undecided about whether to back the expansion of his mandate. “Turkish foreign policy today— whatever it is, wherever it is, from Syria all the way to the Netherlands and Germany—is related to the domestic political agenda,” said Cengiz Candar, a veteran Turkish columnist and academic. “There is no Turkish foreign policy now,” Candar added in a telephone interview. “Turkish foreign policy is related to Mr. Erdogan’s referendum campaign.” But others supported Erdogan’s stance. The leader of the main Turkish opposition party, Kemal Kilicdaroglu, who is against the proposed Constitution, called on Erdogan to suspend relations with the Netherlands. A small crowd of pro-Erdogan protesters gathered outside the Dutch Consulate in Istanbul, while an unknown intruder briefly managed to replace the consulate’s Dutch flag with a Turkish one. In a province west of the city, another crowd of protesters squeezed a series of oranges, in a theatrical gesture apparently intended to insult the Dutch, whose national color is orange. Arriving back in Turkey after her deportation, the Turkish family minister, Fatma Betul Sayan Kaya, accused the Netherlands of hypocrisy for claiming to stand up for human rights while restricting her own. “We faced a very inhumane, unethical treatment,” she said at Istanbul’s main airport, according to Anadolu Agency, a state-run news wire. “We had a really very painful night in Holland, which talks about democracy, freedoms, freedom of speech.” New York Times News Service

What to expect in UK markets when May pulls Brexit trigger Hong Kong leader gets top China advisory post T

Hong Kong Chief Executive Leung Chun-ying (left) talks with Chinese President Xi Jinping (right) after Leung’s appointment as a vice chairman of the Chinese People’s Political Consultative Conference (CPPCC) during the CPPCC’s closing session at Beijing’s Great Hall of the People on Monday. AP

EIJING—China’s top political advisory body voted on Monday to appoint Hong Kong Chief Executive Leung Chun-ying to the ceremonial post of vice chairman, ahead of his departure from office in July. Leung announced last December that he wouldn’t seek a second term as leader of the Chinese-controlled territory, a former British colony that returned to Chinese rule in 1997. His five-year term has been marked by increasingly bitter political divisions between pro-democracy activists and Beijing loyalists. Leung has said Hong Kong is an “inalienable” part of China and independence is not possible. Members of the Chinese People’s Political Consultative Conference voted to appoint him on the final day of their annual 10-day meeting. The body advises China’s rubberstamp legislature and is made up of politicians and representatives from busi-

ness, the arts, civil society, sports and academia. China regularly rewards retired or retiring officials for their loyalty with largely ceremonial posts that require them to attend meetings but do little else. Tung Chee-hwa, Hong Kong’s first chief executive after its return to China, is also a conference vice chairman. The Hong Kong-based South China Morning Post said there were questions over whether Leung’s dual roles in Hong Kong and Beijing contravene the “one country, two systems” law, under which Hong Kong retains a separate economic, legal and political system from the communist-governed Chinese mainland until 2047. Premier Li Keqiang said at the opening of this year’s meeting of the legislature that the Chinese government would “continue to implement, both to the letter and in spirit, the principle of ‘one country, two systems’.” AP

he trigger of Article 50 is the event traders have been waiting for since the UK voted to leave the European Union. Yet, as Prime Minister Theresa May approaches her end-March deadline for launching Brexit, there is no consensus on what it means for markets. The pound has slumped 18 percent and the country’s benchmark equities index has rallied about 16 percent since the June 23 referendum. While currency and stock volatility is now calmer ahead of the talks, some analysts are warning markets are too complacent in expecting a smooth path toward an agreement. n Is Article 50 already baked into sterling? No, says Bank of America Merrill Lynch. “We reject the notion that sterling has fully priced Article 50 and beyond. Risks to the currency remain to the downside on a disruptive start to negotiations,” strategists, including Kamal Sharma, said in a note to clients on March 2, adding they see a dip before a recovery into the end of the year. JPMorgan Chase and Co. is also bearish. It recommended on March 3 selling the pound against the dollar at 1.2250, with a stop at 1.2530, as it sees the currency as the most overvalued in the Group-of-10 and

investor confidence as vulnerable. Bank of America’s preferred strategy is to bet on greater swings in the pound, rather than its direction. It has recommended buying three-month forward volatility, a measure of expected swings, with a target for it to gain around 20 percent from current levels. Société Générale SA also sees opportunity in options, as it expects two-month implied volatility to pick up if cable falls below $1.20. Meanwhile, Morgan Stanley is more sanguine and thinks the triggering of Article 50 shouldn’t come as a major surprise. “There may be many Article 50-related news headlines in the coming weeks but we believe that a lot of the negativity around Brexit-related economic data weakness is already in the price,” strategists, led by Hans Redeker, said in a March 2 note. The bank initiated a long sterling versus the euro trade recommendation last month and is targeting a move to 0.8000, as it sees political risks in the euro zone remaining high. n What are key things to watch during negotiations? The key question is whether economics or populist politics dominate the negotiations, according to Bank

of America economist Robert Wood. It should become apparent relatively early into the formal talks that the UK is on course for a harder Brexit, with all of the economic disruption that leaving Europe’s single market is likely to entail, according to JPMorgan. Traders will focus on what the process means for the financialservices industry, a key contributor to the economy, and any signs that banking or broader investment is being relocated out of the UK could potentially have a negative effect on the currency, said Viraj Patel, a London-based strategist at ING Groep NV. n How will Article 50 affect stock allocations? UK equity investors are not losing any sleep over Article 50. In fact, stock volatility as measured by the VFTSE Index is near a record low. That’s in large part because members of the benchmark FTSE 100 Index get about three-quarters of sales from abroad, so their profits have been benefiting from the slide in the pound. If the currency sees a significant drop from here, the index may rise further, after hitting a record high this month. Yet, some analysts argue that

upside is limited, as the weak pound has been priced in. Members of the FTSE 250 Index get about half of revenues from the UK, and that’s at 70 percent for the FTSE Local UK Index, so these firms may struggle if UK growth shows more signs of a slowdown. Investors will watch house-building shares, which have defied expectations since the vote, and may retreat if the economy shows significant weakness. n What about gilts? Bank of America expects a rising risk premium for holding gilts as a result of political headlines early on in the negotiations, and recommends being short five-year gilts versus overnight indexed swaps. JPMorgan also has a bearish view, expecting “market noise” following the Article 50 trigger, and is staying short 10-year gilts. Citigroup Inc. is targeting 10-year yields to fall to 1 percent on a pessimistic economic outlook as consumers start to feel the pinch. ING says it’s worth watching the level of foreign ownership of UK bonds as a gauge of sentiment. Foreign ownership of UK bonds has slipped in the past two months and “if this becomes a six-month theme that’s telling you something,” said ING strategist Patel. Bloomberg News

Trump-Merkel meeting tests odd couple leading Western alliance

resident Donald J. Trump’s first meeting with Germany’s Angela Merkel at the White House on Tuesday will test the power dynamic between the West’s two preeminent leaders, one struggling for credibility on the world stage, while the other fights for political survival at home. For months, Trump has accused Merkel of “ruining” Germany by accepting refugees and predicted voters would overthrow her, even while describing her

as a great world leader. Merkel has reluctantly emerged as the main defender of the liberal global order that Trump has vowed to upend, as he unsettles European allies with protectionist threats, calls for higher defense spending and praise for the UK’s vote to leave the European Union. “This is one of the most important moments early in the Trump presidency,” carrying major ramifications for Trump’s relations with Europe and Russia’s

ambitions, said Nicholas Burns, a Harvard professor and former US undersecretary of state. The two are stylistic opposites, the US president a flamboyant former reality-television star who is guided by instinct and thrives on unpredictability, the German chancellor a physicist by training who’s known as methodical and persistent. Merkel, an 11-year veteran of global summitry sitting at the table with

her third US president, has prepared by poring over old comments and videos of the real-estate magnate. She can quote interviews Trump has given from memory, according to a German official. When Merkel hosted Canadian Prime Minister Justin Trudeau for a private dinner last month in Berlin, she quizzed him for details about his Trump visit days earlier, according to a Canadian government official. Bloomberg News

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Tuesday, March 14, 2017

Saudi king visits Japan, seeks help on diversifying economy Delegates applaud as Chinese President Xi Jinping (center), Premier Li Keqiang (right) and members of the Politburo Standing Committee arrive for a closing session for the Chinese People’s Political Consultative Conference at the Great Hall of the People in Beijing on Monday. AP/Andy Wong

After $225B in deals last year

China reins in firm’s overseas investment

Saudi King Salman (right) meets with Japan’s Foreign Minister Fumio Kishida at the Akasaka Palace state guesthouse in Tokyo on Monday. Salman arrived in Japan as part of a monthlong Asian tour. Kyodo News via AP

OKYO—King Salman and hundreds of business leaders from Saudi Arabia are in Japan for talks on Monday mainly expected to focus on economic ties. The visit is the first by a Saudi king in 46 years, though Salman visited more recently as crown prince. Saudi Arabia is one of Japan’s biggest suppliers of crude oil, accounting for about a third of its total imports of oil from the Middle East. The kingdom is striving to diversify its economy away from its heavy reliance on oil exports, and Salman is on a monthlong tour of Asia to advance his kingdom’s economic and business interests. Japan’s Chief Cabinet Secretary Yoshihide Suga told reporters on

Monday that Japan is willing to provide support for the economic power in the Middle East. “We will discuss growth strategy, including our ‘Saudi Vision’ project,” he said, referring to Japanese collaboration with Vision 2030, a road map adopted by the kingdom last year for its development and economic objectives He did not confirm reports that the countries would agree to set up a special economic zone in Saudi Arabia. Salman met with Japanese For-

$18.6B The volume of Japan’s imports from Saudi Arabia in 2016

eign Minister Fumio Kishida and was to meet Prime Minister Shinzo Abe later on Monday. Reports say Japan plans to urge that Saudi Aramco, the state-run oil company that is being partially privatized, seek a share listing on the Tokyo Stock Exchange. Separately, Saudi Arabia’s sovereign wealth fund and Japanese telecoms provider and energy company Softbank have joined forces in setting up a $25-billion private fund for technology investments. Trade between the countries fell

overall last year as oil prices dropped. Japan’s ¥2.1 trillion ($18.6 billion) in imports from Saudi Arabia in 2016, mostly oil and gas, dwarfed its exports of ¥546.3 billion ($4.8 billion). The delegation arrived late on Sunday on about 10 aircraft. Officials said top hotels and car hire services would be busy handling the unusually large group during its four-day visit. Salman’s stop in Japan follows visits to Indonesia and Malaysia. He is due to travel on to Brunei Darussalam, China and the Maldives. While seeking investment and help with Saudi industrialization and development of its services sector, Salman has also offered help. Earlier, he pledged $1 billion in development finance for Indonesia and closer cooperation for combating transnational crime, such as human trafficking, terrorism and the drugs trade. AP

Oil extends decline as US drilling accelerates amid Opec cuts

il extended its decline below $50 a barrel as US drillers continued to boost activity, countering Organization of Petroleum Exporting Countries’s (Opec) efforts to drain a global glut. Futures in New York headed for a sixth day of losses, dropping as much as 1.2 percent after falling 9.1 percent last week. Rigs targeting crude in the US rose to the most since September 2015, according to Baker Hughes Inc. In Libya crude production dropped 11 percent as clashes among rival armed groups led to the closure of some of the Opec nation’s biggest oil export terminals. Oil last week broke below the $50-a-barrel level it had held above

since Opec and 11 other nations started trimming supply on January 1. US crude stockpiles have climbed to a record and production surged to the highest in more than a year, while Saudi Arabia’s Oil Minister Khalid AlFalih said global supplies are falling slower than expected. “Supply appears to be outpacing demand, putting the focus back on the glut,” said Jonathan Barratt, chief investment officer at Ayers Alliance Securities in Sydney. “Opec is unlikely to react until prices get down to about $40 a barrel.” West Texas Intermediate (WTI) for April delivery lost as much as 59 cents to $47.90 a barrel on the New York Mercantile Exchange and

traded at $48.10 at 1:18 p.m. in Hong Kong. Total volume traded was about 57 percent above the 100-day average. The contract dropped 79 cents to $48.49 on Friday, capping the biggest weekly decline since November. Brent for May settlement fell as much as 52 cents, or 1 percent, to $50.85 a barrel on the London-based ICE Futures Europe exchange. Prices slid 8.1 percent last week. The benchmark traded at a $2.38 premium to May WTI. US drillers boosted the rig count by eight to 617 last week, according to data on Friday from Baker Hughes. Companies have added 92 machines to fields this year. The na-

tion’s crude output has climbed to 9.09 million barrels a day, according to data from the Energy Information Administration. Libyan output has dropped by about 80,000 barrels a day to 620,000 barrels since fighting broke out among armed groups on March 3, according to a person familiar with the matter, who asked not to be identified because they aren’t authorized to speak to the media. Iraq is in talks with US companies, including Exxon Mobil Corp., to develop crude infrastructure projects in the country, according to a statement posted on the oil ministry web site citing Minister Jabbar Al-Luaibi. Bloomberg News

EIJING—China struck $225 billion in deals to acquire companies abroad last year, a record-breaking number that signaled to the world that Chinese business leaders were hot to haggle. Now, China—with a worried eye on the money leaving its borders— is telling some of its companies to cool it down. Last Saturday, in the strongest public signal yet that Beijing was changing course, China’s commerce minister castigated what he called “blind and irrational investment”. At a news briefing during the annual meeting of China’s congress, Zhong Shan, the minister, said officials planned to intensify supervision of what he called a small number of companies. “Some enterprises have already paid the price,” said Zhong, a protégé of President Xi Jinping. “Some even have had a negative impact on our national image.” Just a day earlier, Zhou Xiaochuan, the country’s top central banker, also questioned the wisdom of some recent Chinese overseas deals. “Some are not in line with our requirements and policies for overseas investment, such as in sports, entertainment and clubs,” he said. “This didn’t bring much benefit to China and caused some complaints overseas.” The comments are the clearest confirmation that the government is hitting the brakes on the sometimes chaotic rush overseas by deeppocketed Chinese companies with a reputation for having more money than deal-making aptitude. “Are these guys in over their heads?” said Brock Silvers, a longtime investment banker in Shanghai. “The answer to me is, in some cases, they seem to be.” A series of Chinese deals have come apart this winter—though it is not always clear whether Beijing has stepped in, or whether buyers themselves suddenly decided they were making a big mistake. On Friday the owners of Dick Clark Productions, which produces the Golden Globe Awards, said a $1-billion agreement to sell the company to China’s Dalian Wanda conglomerate collapsed. Dalian Wanda, a real-estate giant that has branched out into filmmaking and cinemas, had no immediate comment. Chinese families and companies have been rushing to move money out of the country for more than a year amid worries over a slowing national economy, a weakening currency and numerous other problems. The outflow has been expensive—China has spent $1 trillion during the past two-and-a-half years to shore up the value of its currency—and threatens to damage the country’s efforts to help its rising middle class. China in recent months has increased its efforts to stanch the flow, considerably tightening enforcement of its strict limits on how much money can move across its borders. The effort appears to be showing success: The most recent data, for February, showed a slight increase in the size of China’s huge holdings

of foreign money managed by its currency administrator, one of the rough proxies for the sum of money moving out. Among the moves, Beijing secretly told banks in late November that any movement of $5 million or more out of the country required special approval. Since then, regulators have also told each bank to not move more money out of the country for clients than they take in. Some banks had been moving up to six times as much money out of the country. That rule has complicated not only mergers and acquisitions but also the way many global companies move their China-made profits overseas, in the form of dividends. That could put in question whether China is complying with its commitments to the International Monetary Fund, which are part of a broader Chinese effort to increase the profile of the country’s currency. Foreign executives describe broad difficulties moving money out of China. “On dividend payments, European Union companies experience more tedious paperwork, extended times of processing and the issue of breaking up the dividends over several months if it is a sizable amount,” said Jorg Wuttke, president of the European Union Chamber of Commerce in China. Zhou, China’s central banker, said on Friday dividends should not be subject to restrictions, but he did not go into details. China’s $225.4 billion in announced deals for overseas properties last year amounted to more than double 2015’s total, according to Dealogic, a data firm that tracks deals. Dealmakers say China is likely to be still active on overseas acquisitions this year, especially as it moves to add technical know-how to its portfolio. The country’s biggest deal announced last year, for the Swiss agricultural giant Syngenta, is widely expected to close this year, although it faces regulatory hurdles. Chinese officials appear eager to portray China’s tougher stance on deals abroad as an effort to prompt more responsible investing instead of an effort to shore up the country’s financial system. Zhong, the commerce minister, said the country had not changed its long-term policy of encouraging Chinese companies to become more global. But Chinese officials have a strong incentive not to acknowledge the administrative limits they have put on large movements of money out of the country. Such limits may make foreign investors more wary of putting money into China, at a time when Chinese leadership is trying to encourage more bond purchases by foreigners and other investments into the country to offset the money moving out. Some Chinese deals have come apart this winter, though the full reasons are not always clear. In one of the biggest, Anbang Insurance, a politically connected company with a murky ownership structure, abruptly pulled out of a $14-billion deal to buy Starwood Hotels and Resorts. New York Times News Service

Tuesday, March 14, 2017

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

Scientists race to prevent wipeout of world’s coral reefs S OUTH ARI ATOLL, Maldives— There were startling colors here just a year ago, a dazzling array of life beneath the waves. Now this Maldivian reef is dead, killed by the stress of rising ocean temperatures.

What’s left is a haunting expanse of gray, a scene repeated in reefs across the globe in what has fast become a full-blown ecological catastrophe. The world has lost roughly half its coral reefs in the last 30 years. Scientists are now scrambling to ensure that at least a fraction of these unique ecosystems survives beyond the next three decades. The health of the planet depends on it: Coral reefs support a quarter of all marine species, as well as half-a-billion people around the world. “This isn’t something that’s going to happen 100 years from now. We’re losing them right now,” said marine biologist Julia Baum of Canada’s University of Victoria. “We’re losing them really quickly, much more quick-

90% The estimated volume of corals that scientists expect to die by 2050

In this March 2016 photo released by The Ocean Agency/Reef Explorer Fiji, a snorkeler swims above coral that has bleached white due to heat stress in Fiji. Coral reefs, unique underwater ecosystems that sustain a quarter of the world’s marine species and half-a-billion people, are dying on an unprecedented scale. Scientists are racing to prevent a complete wipeout within decades. Victor Bonito/The Ocean Agency /Reef Explorer Fiji via AP

ly than I think any of us ever could have imagined.” Even if the world could halt global warming now, scientists still expect that more than 90 percent of corals will die by 2050. Without drastic intervention, we risk losing them all. “To lose coral reefs is to fundamentally undermine the health of a very large proportion of the

human race,” said Ruth Gates, director of the Hawaii Institute of Marine Biology. Coral reefs produce some of the oxygen we breathe. Often described as underwater rainforests, they populate a tiny fraction of the ocean but provide habitats for one in four marine species. Reefs also form crucial barriers

protecting coastlines from the full force of storms. They provide billions of dollars in revenue from tourism, fishing and other commerce, and are used in medical research for cures to diseases, including cancer, arthritis and bacterial or viral infections. “Whether you’re living in North America or Europe or Australia, you should be concerned,” said biologist Ove Hoegh-Guldberg, director of the Global Change Institute at Australia’s University of Queensland. “This is not just some distant dive destination, a holiday destination. This is the fabric of the ecosystem that supports us.” And that fabric is being torn apart. “ You couldn’t be more dumb...to erode the very thing that life depends on—the ecosystem— and hope that you’ll get away with it,” Hoegh-Guldberg said. Corals are invertebrates, living mostly in tropical waters. They secrete calcium carbonate to build protective skeletons that grow and take on impressive colors, thanks to a symbiotic relationship with algae that live in their tissues and provide them with energy. But corals are sensitive to temperature f luctuations, and are suffering from rising ocean temperatures and acidification, as well as from overfishing, pollution, coastal development and agricultural runoff. A temperature change of just 1 degrees Celsius to 2°C can force coral to expel the algae, leaving their white skeletons visible in a process known as “bleaching”. Bleached coral can recover if the water cools, but if high temperatures persist for months, the coral will die. Eventually, the reef will degrade, leaving fish without habitats and coastlines less protected from storm surges. The first global bleaching event occurred in 1998, when 16 percent of corals died. The problem spiraled dramatically in 2015-2016 amid an extended El Niño natural weather phenomenon that warmed Pacific waters near the equator and triggered the most widespread bleaching ever documented. This third global bleaching event, as it is known, continues today even after El Niño ended. Headlines have focused on damage to Australia’s famed Great Barrier Reef, but other reefs have fared just as badly or worse across the world, from Japan to Hawaii to Florida. Around the islands of the Maldives, an idyllic Indian Ocean tourism destination, some 73 percent of surveyed reefs suffered bleaching between March and May 2016, according to the country’s Marine Research Center. “This bleaching episode seems to have impacted the entire Mal-

dives, but the severity of bleaching varies” between reefs, according to local conditions, said Nizam Ibrahim, the center’s senior research officer. Worst hit have been areas in the central Pacific, where the University of Victoria’s Baum has been conducting research on Kiritimati, or Christmas Island, in the Republic of Kiribati. Warmer water temperatures lasted there for 10 months in 2015-2016, killing a staggering 90 percent of the reef. Baum had never seen anything like it. “As scientists, we were all on brand-new territory,” Baum said, “as were the corals in terms of the thermal stress they were subjected to.” To make matters worse, scientists are predicting another wave of elevated ocean temperatures starting next month. “The models indicate that we will see the return of bleaching in the South Pacific soon, along with a possibility of bleaching in both the eastern and western parts of the Indian Ocean,” said Mark Eakin, coral-reef specialist and coordinator of the National Oceanic and Atmospheric Administration’s Coral Reef Watch, which uses satellites to monitor environmental conditions around reefs. It may not be as bad as last year, but could further stress “reefs that are still hurting from the last two years.” The speed of the destruction is what alarms scientists and conservationists, as damaged coral might not have time to recover before it is hit again by warmer temperatures. But some may have a chance. Last month Hoegh-Guldberg helped launch an initiative called 50 Reefs, aiming to identify those reefs with the best chance of survival in warming oceans and raise public awareness. His project partner is Richard Vevers, who heads the XL Caitlin Seaview Survey, which has been documenting coral reefs worldwide. “For the reefs that are least vulnerable to climate change, the key will be to protect them from all the other issues they are facing—pollution, overfishing, coastal development,” said Vevers, who founded The Ocean Agency, an Australian organization seeking new technologies to help mitigate some of the ocean’s greatest challenges. If the reefs remain healthy and resilient, “they can hopefully become the vital seed-centers that can repopulate surrounding reefs.” Nat u re itsel f is prov id i ng small glimmers of hope. Some of Kiritimati ’s corals, for example, are showing tentative signs of a comeback. But scientists don’t want to leave it to chance, and are racing ahead with experiments they hope might stave off extinction. “We’ve lost 50 percent of the reefs, but that means we still have 50 percent left,” said Gates, who is working in Hawaii to breed corals that can better withstand increasing temperatures. “We definitely don’t want to get to the point where we don’t intervene until we have 2 percent left.” Going a step further, she is also trying to “train” corals to survive rising temperatures, exposing them to sublethal heat stress in the hope they can “somehow fix that in their memory” and survive similar stress in the future. “It’s probably time that we start thinking outside the box,” Gates said. “It’s sort of a no-win game if we do nothing.” AP

Unicef: 2016 worst year for Syria’s children

EIRUT—At least 652 children were killed in Syria in 2016, making it the worst year yet for the country’s rising generation, the United Nations’s child relief agency said on Monday. There was no letup to attacks on schools, hospitals, playgrounds, parks and homes last year as the Syrian government, its opponents and the allies of both sides showed callous disregard for the laws of war. United Nations Children’s Fund (Unicef) said at least 255 children were killed in or near schools last year and 1.7 million youngsters are out of school. One of every three schools in Syria is unusable, some because armed groups occupy them. An additional 2.3 million Syrian children are refugees elsewhere in the Middle East. The figures come in a Unicef report released two days before the sixth anniversary of the popular uprising that escalated into civil war. Children were among the first victims of the government’s brutal crackdown. On March 15, 2011, residents in the southern city of Daraa marched to demand the release of teenage students arrested for writing antigovernment slogans on their school’s walls. They were tortured in detention. The report warns that coping mechanisms and medical care are eroding quickly in Syria, driving children into child labor, early marriage and combat. Dozens are dying from preventable diseases. A report released a week ago by the international charity Save the Children said Syrian youngsters are showing signs of “toxic stress” that can lead to lifelong health problems, struggles with addiction and mental disorders lasting into adulthood. The use of child soldiers is on the rise in Syria, Unicef said. At least 851 children were recruited by armed factions last year, more than twice compared to the year before. Children across the country are at risk of severe injury while playing around land mines and cluster munitions. Demining operations in opposition-held areas have been severely hampered by inaccessibility to outside experts. AP

Global religious extremism threat to China, officials say

EIJING—Chinese officials are issuing new warnings about the specter of global religious extremism seeping into the country, following reports of fighters from China’s Muslim minority fighting alongside militants in Syria and Iraq. Sharhat Ahan, a top political and legal affairs party official in Xinjiang, last Sunday became the latest official from a predominantly Muslim region to warn about China becoming destabilized by the“international antiterror situation” and calling for a “people’s war”. Over the past year, regional leaders in Xinjiang, home to the Uighur (pronounced WEE-gur) ethnic minority, have ramped up surveillance measures and police patrols and staged massive rallies intended to showcase the power of the security forces. Those demonstrations are intended to “declare war against terrorists, to showcase the party and the government’s resolve to fight terror, resolve to preserve public safety and [China’s] mighty combat strength,” Ahan told officials gathered in Beijing for this month’s National People’s Congress. AP

AseanTuesday BusinessMirror

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Malaysia says only 315 North Koreans left in the country

alaysia’s deputy prime minister said on Sunday 315 North Koreans are in the country and barred from leaving, amid a diplomatic dispute over the killing of North Korean leader Kim Jong Un’s estranged half brother. The figure is lower than an estimate previously given by a government official, who had told The Associated Press that some 1,000 North Koreans were believed to be in Malaysia. Malaysia says Kim Jong Nam died after two women smeared his face with the banned VX nerve agent at Kuala Lumpur’s airport on February 13, 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. Both countries have also scrapped visa-free travel for each other’s citizens. Deputy Prime Minister Ahmad Zahid Hamidi told local media last Sunday that 2,453 North Koreans came to Malaysia from 2014 to 2017, but that the latest record showed only 315 remained. Foreign Minister Anifah Aman said last Saturday the government hopes to begin formal talks with North Korea in the “next few days” on the release of the nine Malaysians who are in Pyongyang, comprising three embassy workers and their family members. Anifah also said the return of Kim’s body would be part of the talks’ agenda. 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. 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. 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. AP

Sugar breakthrough paves way for Indonesia-Australia trade deal Live cattle

A sugar plantation in Indonesia

ustralia is pinning its hopes on sugar to revitalize exports to Indonesia, as it seeks momentum for a free-trade agreement that has been mooted for nearly a decade. With two-way trade at its lowest since 2009, Australian Trade Minister Steve Ciobo hailed a recent deal to reduce sugar tariffs from 8 percent to 5 percent, bringing the country into line with rate for Southeast Asian nations. Australia is now working on a conclusion of the broader pact “by the end of this year”, he said. “The gains in terms of sugar—to have the Asean tariff rate extended to Australia—are important because Australia was losing market share in Indonesia, losing it to Thailand,” Ciobo said last Wednesday in an interview in Jakarta. Amid slumping global trade, Australia and Indonesia are accelerating efforts to reach an agreement on a comprehensive economic partnership—in essence an FTA. It was first mooted in 2007 and reactivated last

$9.3B

The value of Australia-Indonesia two-way trade in 2015 year after negotiations stalled amid political disputes over spying allegations and Indonesia’s execution of Australian drug smugglers. Australia is Indonesia’s ninth-biggest trading partner—the countries had two-way trade in 2015 of $9.3 billion, though that is down from $12.26 billion in 2012.

Low-hanging fruit

A flurry of recent ministerial

Top Myanmar bank may sell stake to foreign firm

yanmar’s largest privately owned bank by assets says it’s willing to sell a stake to a foreign lender, pending a change in the country’s law, as it gears up to expand its operations in one of Asia’s most underbanked nations. “In any emerging market, capital is important,” said Nang Kham Noung, an executive director of KBZ Bank. “For us, we are open to foreign partnership. However, that’s subject to the central bank and the regulation,” she said in an interview last week in Yangon. Myanmar is considering changes to the companies law that would allow foreign investors to acquire stakes of up to 35 percent in local firms, a government official said last month. Existing laws don’t allow foreign investors to hold stakes in local banks, according to KBZ Bank. Like many companies in Myanmar, the bank needs foreign capital to keep pace with rising demand in Myanmar’s rapidly expanding economy,

Editor: Max V. de Leon • Tuesday, March 14, 2017 A9

which grew by 8.1 percent last year. KBZ Bank, founded in 1994, aims to more than double the number of its branches to 1,000 by 2020, as well as grow mobile financial services to reach people in rural areas, Nang Kham Noung said. It may consider an initial public offering, she said. Myanmar’s banking system is “immature” and regulation remains rudimentary, said Nam Soon Liew, managing partner for Asean financial services at the consultancy EY in Singapore. “Myanmar banks need to make sure that their businesses, operations and risk management are more robust, that they have stronger balance sheets, stronger management control, product platforms and accounting systems,” he added. About 77 percent of the population has no access to banking, according to consultancy Roland Berger.

Group interests

KBZ Bank is part of the KBZ Group, which was founded by Nang Kham

Noung’s father Aung Ko Win. The business empire includes gems and jade mining and trading, aviation, insurance and construction, according to the group’s web site. Aung Ko Win, his wife and three daughters sit on the group’s board, the web site shows. Unlike several other local companies, KBZ wasn’t subject to international sanctions under the former military government, the bank said. “We are working toward international standards in corporate governance” and plan to include more independent directors on KBZ Bank’s board, Nang Kham Noung said. She declined to give details of the current composition of the board. KBZ Bank’s assets grew at a compound annual rate of 44 percent between 2012 and 2016, and now stand at $8 billion, according to the bank. It has 17,889 employees. The bank is recruiting more staff, targeting Myanmar nationals who have lived abroad as well as foreigners, Nang Kham Noung said. Bloomberg News

visits—Ciobo said he had met or spoken with his Indonesian counterpart 15 times since July—was capped last week with the second meeting in two weeks between Indonesian President Joko Widodo and Australian Prime Minister Malcolm Turnbull, this time in Jakarta. “There’s always offensive and defensive interests in any negotiation; that’s completely understandable but there is a commitment to getting a deal done and that’s what were both focused on,” Ciobo said. Still, the deal on sugar may not give major traction to the broader agreement, according to Arianto Patunru, an economics fellow at the Australian National University. “Sugar is easy to deal with, it’s a lowhanging fruit.” “Indonesia’s approach to trade agreements is quite different to the approach taken by Australia,” he said. “Indonesia, usually, and Asean countries, they try to multilateralize their agreements and they’re not really heavy on bilateral.” Indonesian Trade Minister Enggartiasto Lukita said the frequent contact with Ciobo shows “how willing we are to bring our trade and investment relations to the next

level.” He cited agricultural supply chains, education and tourism as sectors on the agenda.

‘Close neighbors’

“I do not believe that this is a zerosum game,” he said last week at a business dinner in Jakarta. “This is about developing a future partnership between friends, between two close neighbors, the two largest economies in Southeast Asia.” The sugar deal was struck under the auspices of an existing deal between Asean, Australia and New Zealand. It will come into effect by the end of the year, according to a spokesman for Agriculture Minister Barnaby Joyce. The higher tariffs had seen sugar exports to Indonesia slump to 300,000 tons a year from 1.25 million tons before Indonesia cut the tariff for Thailand in 2015, according to Warren Males, head economist at Canegrowers, Australia’s chief sugar lobby. The industry is relatively small, but highly dependent on exports. Australia is expected to export 4 million tons this year, making it the world’s third-largest sugar exporter, according to the US Department of Agriculture.

“We’ve got good relationships with Indonesia’s refineries,” Males said. “It’s really been the tariff that’s caused the decline in Australian trade.” Turnbull in Jakarta talked up the prospects for the broader trade deal. He said Widodo, known as Jokowi, is “enthusiastic” about ties and strengthening the prospects for pact. While Australia has agreed to eliminate tariffs on pesticides and herbicides coming from Indonesian suppliers, Turnbull singled out the agreement on sugar, as well as new rules that would enable more live cattle exports from Australia as evidence Jokowi “understands that trade means jobs”. “He is pushing back against the tide of populist protectionism that you see swirling around the world at the moment and he knows that protectionism is not an answer. It’s a dead end,” Turnbull said at the Jakarta business dinner. The neighbors are also seeking progress on a 16-nation pact led by Southeast Asia and backed by China, while Australia is hoping to revive the Trans-Pacific Partnership (TPP). The TPP, which does not include China, was thrown into disarray after President Donald J. Trump abandoned the deal, seen as a key plank of US engagement in Asia.

Chile meeting

Ciobo will be in Chile this week for a meeting of remaining TPP countries. China has been invited. The Chile gathering comes amid concerns about the direction of US trade policy under Trump, who has threatened a trade war with China and attacked the World Trade Organization. “We’ll be having the meeting in the context of still having some questions about US trade policy, which, in due course, will be made more clear,” Ciobo said. “We’re buoyed by China’s desire to continue engaging in and around trade so they’ll be an important voice at the Chile meeting.” Despite the setbacks around the TPP, Ciobo said he did not view it as a race between competing deals. China is championing the separate Regional Comprehensive Economic Partnership. “We can walk and chew gum at the same time,” he said. “They are all part of the landscape that is global trade. If we turn our backs on trade we turn our backs on economic prosperity and on jobs.” Bloomberg News

Singapore eases property rules to stop further drop in prices seen in last 3 yrs

hether you look at prices or policy, the proper ty markets in Singapore and Hong Kong are marching resolutely in opposite directions. Singapore has eased some rules in its property market, after more than three years of home-price declines. Hong Kong last November tightened some restrictions, after prices rallied following a short-lived dip last year. The curbs in Hong Kong have had little impact so far, with existing home prices rising to all-time highs amid brisk demand from buyers. As prices in Hong Kong have continued to rise beyond the reach of most people, the city’s leaders have been dealing with rising discontent. Hong Kong retained the title of the world’s most expensive housing market in the annual Demographia International Housing Affordability Survey for the sev-

A view of a luxury property in Singapore

enth year in a row, with the highest affordability score among more than 400 markets surveyed. While Singapore isn’t cheap, by any measure, tight regulations haven’t allowed affordability to “deteriorate to the acute levels” of cities such as Hong Kong, Demographia said in a report in January.

One of the main differences between Singapore and Hong Kong’s property markets is the public housing component. Singapore’s market is dominated by public housing, while in Hong Kong, it is just the reverse. That gives Singapore an additional tool to help keep a tight lid on prices. Bloomberg News

A10 Tuesday, March 14, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Pursuit of happiness

day of happiness is not an elusive concept for a country like the Philippines. We, Filipinos, are generally a happy people, with an amazing ability to generate laughter even during the direst circumstances. It doesn’t get much easier for millions of Filipinos eking out a living, but day-to-day they manage to find time and every reason imaginable to be happy. Which is why, we suppose, Filipinos would find the International Day of Happiness worth celebrating. Since 2013, the United Nations has celebrated the International Day of Happiness every 20th of March, as a way to recognize the importance of happiness in the lives of people around the world. According to the UN, it is a day to remember that “the pursuit of happiness is a fundamental human goal,” as well as to recognize “the need for a more inclusive, equitable and balanced approach to economic growth that promotes sustainable development, poverty eradication, happiness and the well-being of all peoples.” It is not a bad idea for happiness to figure in a nation’s bottom line or even to use happiness as a measure of a country’s progress. The UN gives the tiny Himalayan nation of Bhutan credit for the idea. In 1971, following the wishes of Jigme Singye Wangchuck, its fourth king who ruled the kingdom until 2006, Bhutan started rejecting conventional yardsticks like the GDP and gross national product (GNP) as ways to measure a country’s progress. Bhutan came up with its own concept, called Gross National Happiness (GNH), an alternative and unconventional development philosophy that measures prosperity by gauging its citizens’ happiness levels. The GNH recognizes that development has many more dimensions other than those associated with the GDP and GNP, and it should be understood as a process that seeks to maximize happiness rather than just economic wealth. Bhutan uses a more comprehensive measure that incorporates the four pillars of GNH: economic development, environmental preservation, cultural promotion and good governance. Its Constitution mandates that all Bhutanese laws subscribe to these four pillars. Are GNH indicators specific enough or even measurable enough to use as bases for government policies? Well, the UN certainly thinks so. In 2011 the UN General Assembly, adopting Bhutan’s call for a holistic approach to development, passed a resolution inviting member-states to consider measures that could better integrate the “pursuit of happiness” in development. Endorsed by 68 countries, the resolution was a validation of Bhutan’s GNH model, as well as an endorsement for its replication across the globe. The first UN World Happiness Report was released a year after in 2012, with Bhutan topping Asia and Denmark topping the list overall. We, Filipinos, do not need to be told that happiness is not always about money. Our people’s perpetual optimism, despite most of them living in abject poverty, is proof enough. We also know that, in measuring national success, GDP numbers are not the end-all and be-all of everything. GDP is simply a measure of the money that changes hands within the economy, typically used by investors, businessmen, economists and policy-makers as an indicator of a country’s economic health. There is nothing wrong with GDP. But we cannot expect its numbers to mean more than they can. Irresponsible miners can pay millions in mining taxes, for instance, and these will certainly boost GDP, but it cannot make up for ruined lands and poisoned waters that also cause untold misery. GDP numbers may be a good measure of wealth, but they don’t tell us whether this wealth is going to most of our poor citizens or only to executives of big companies and the rich who live in exclusive villages. GDP does not show the record remittances, which make our economic figures so rosy but also leave a heavy social toll in terms of broken families. Our country’s GDP numbers have been good enough to maintain our status as one of the fastest-growing economies in Asia. But there is also something to learn from the Bhutanese way. In the end, numbers are just numbers. There are other costs and factors that should count when you’re calculating the economics of a country and the happiness of its people.

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Happy festival of Anna Perenna John Mangun

OUTSIDE THE BOX “And you know something is happening But you don’t know what it is Do you, Mister Jones?”—Ballad of the Thin Man; Bob Dylan 1965

omorrow, March 15, we celebrate the 2,061st anniversary of the assassination of Roman military dictator Julius Caesar. He was replaced by an oligarchic dictatorship. Further, the US Federal Reserve Open Market Committee (FOMC) meets to decide to raise interest rates. Not raising US interest rates will put “The Fed” in the same position as Julius: dead to the world.

Two other historical events that happened on March 15 may be of more significance. In 1917 Russian Czar Nicholas II abdicated the Russian throne, opening the door to at least 100 million being killed by Josef Stalin in the USSR and Mao Zedong in the People’s Republic of China. On this date in 1938, crude oil was first discovered in Saudi Arabia. Two other events happening

on Wednesday may be of more significance to us than the Fed meeting. The Netherlands goes to the polls to elects its parliament and the US government reaches its “debt ceiling”. Bob Dylan’s lyrics were in part a takedown of those that think they know it all but don’t. On another level, most of us are “Mr. Jones” trying to figure out what is going on during this time of global political/

economic hell. It is difficult to understand why those people who voted for Duterte, Donald J. Trump and who may vote for Dutch candidate Geert Wilders or French presidential aspirant Marine Le Pen are so vilified. Even the pope of the Roman Catholic Church has negatively weighed in on the current “populist” movement against the establishment and its government. His statement “populism is evil and ends badly as the past century showed” drips with irony. In times of crisis, he said, people “look for a savior to give us back identity”. Were it not for Christian populism—the unsophisticated “little man” against the corrupt dominant elites—2,000 years ago, Jorge Mario Bergoglio might have spent is life working as a nightclub bouncer in Buenos Aires. If Wilders’s political party wins the most seats as it is now on track to do, the election will throw the Dutch government into chaos, as all the other parties have said they will refuse to form a coalition government. Further, it will show that this “evil” populist movement is not over, leading into the French elections in April and May.

Facts are enemies of the people

By Paul Krugman | New York Times News Service

he US economy added 10.3 million jobs during President Barack Obama’s second term, or 214,000 a month. This brought the official unemployment rate below 5 percent, and a number of indicators suggested that by late last year we were fairly close to full employment. But Donald J. Trump insisted that the good news on jobs was “phony,” that America was actually suffering from mass unemployment. Then came the first employment report of the Trump administration, which at 235,000 jobs added looked very much like a continuation of the previous trend. And the administration claimed credit: Job numbers, Trump’s press secretary declared, “may have been phony in the past, but it’s very real now.” Reporters laughed—and should be ashamed of themselves for doing so. For it really wasn’t a joke. The United States is now governed by a president and party that fundamentally don’t accept the idea that there are objective facts. Instead, they want everyone to accept that reality is whatever they say it is. So we’re just supposed to believe the president if he says, falsely, that his inauguration crowd was the biggest ever; if he claims, ludicrously, that millions of votes were cast illegally for his opponent; if he insists, with no evidence, that his predecessor tapped his phones. And it’s not just about serving

one man’s vanity. If you want to see how this attitude can hurt millions of people, consider the state of play on health-care reform. Obamacare has led to a sharp decline in the number of Americans without health insurance. You can argue that the decline should have been even sharper, that there may be troubles ahead, or that we should have done better. But the reality of the law’s achievement shouldn’t be in question, and you should worry about the consequences of Trumpcare, which would drastically weaken key provisions. Republicans, however, are in denial about recent gains. The president of the Heritage Foundation dismisses the positive effects of the Affordable Care Act as “fake news.” In Louisville over the weekend, Vice President Mike Pence declared that “Obamacare has failed the people of Kentucky” — this in a state where the percentage of people without insurance fell from 16.6 to 7 percent when

the law went into effect. And as for the likely impacts of Trumpcare—well, they literally don’t want to know. When Congress is considering major legislation, it normally waits for the Congressional Budget Office (CBO) to “score” the proposal—to estimate its effects on revenues, outlays and other key targets. The budget office isn’t always right, but it has a very good track record compared with other forecasters; even more important, it has always been scrupulous about avoiding partisanship and, therefore, acts as an important check on politically motivated wishful thinking. But Republicans rammed Trumpcare through key committees, literally in the dead of night, without waiting for the CBO score—and they have been preemptively denouncing the budget office, which is likely to find that the bill would cause millions to lose health coverage. The truth is that, while the office got some things wrong about health reform, on the whole it did pretty well at projecting the effects of a major new bill—and far better than the people now attacking it, who predicted disasters that never happened. And whatever criticisms one may have of its forthcoming score, it will surely be better than the ludicrous claim of Tom Price, the secretary of health and human ser-

While the FOMC is raising interest rates, the US government will potentially run out of money by October, being unable to borrow more as the debt ceiling extension expires. Of course, the “Congressional Clown Circus” will raise the debt ceiling after some theatrical wailing because no one wants to fix the debt problem. It will eventually take a crash and burn to set things right. As an historical note, the Fed doubled interest rates between 1927 and 1929 and the stock market also doubled in price. What happened next was “nobody’s fault”. The Ides of March was supposed to be determined by the first full moon of the New Year. It was also the festival of the deity Anna Perenna. People asked that Anna bestow as many more years to them as they could drink cups of wine at the party. The 2017 Ides of March may see many politicians drinking in hopes of having their political life extended. E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

vices, that “nobody will be worse off financially” as a result of a plan that drastically cuts subsidies and raises premiums for millions of Americans. But this isn’t really about whose analyses of health policy are most likely to get it right. It’s about Trump and company attacking the legitimacy of anyone who might question their assertions. The CBO, in other words, is in the same position as the news media, which Trump has declared “enemies of the people”—not, whatever he may say, because they get things wrong, but because they dare to challenge him on anything. “Enemy of the people” is, of course, a phrase historically associated with Stalin and other tyrants. This is no accident. Trump isn’t a dictator—not yet, anyway—but he clearly has totalitarian instincts. And much, perhaps most, of his party is happy to go along, accepting even the most bizarre conspiracy theories. For example, a huge majority of Republicans believe Trump’s basically insane charges about being wiretapped by Obama. So don’t make the mistake of dismissing the assault on the CBO as some kind of technical dispute. It’s part of a much bigger struggle, in which what’s really at stake is whether ignorance is strength, whether the man in the White House is the sole arbiter of truth.

Opinion BusinessMirror

opinion@businessmirror.com.ph

South Korea does impeachment right

Coming soon: Faster travel to Central Luzon Ernesto M. Hilario

Noah Feldman

BLOOMBERG

outh Korea’s President Park Geun-hye was officially removed from office last Friday, after the constitutional court affirmed her impeachment by the national assembly. It’s a remarkable outcome for a relatively new democracy, and the scandal holds some important lessons for how impeachment can take place in a political culture deeply dominated by partisanship. Park’s removal depended on three key elements: peaceful, sustained popular protests; a corruption scandal so egregious that even politicians from Park’s party were forced to admit it merited impeachment; and an orderly constitutional process for removal that was followed to the letter. These elements arguably form a kind of blueprint for presidential removal, a process pretty similar to the one followed by Brazil in the impeachment and removal of President Dilma Rousseff in 2015-2016. It’s important to note that South Korea isn’t a natural political environment for impeachment, because its politics are divided between two main parties: Park’s center-right Liberty Korea Party is opposed by the center-left Together Democratic Party. Both are descendants of earlier parties that go back to the period of democratization in the 1980s. Including Park herself, there have been six presidents since the declaration of the Sixth Republic, a useful shorthand for the onset of democracy. Of those, three were left-ish and three right-ish. A system that features just two major parties makes removal difficult, because no party likes to see its own president removed from office. And the South Korean legal structure doesn’t make impeachment easy. Under the Korean constitution, an impeachment resolution against the president must be introduced by a majority of the national assembly. Then a vote of two-thirds is required for the impeachment to pass. And that’s not the end of the process. The constitutional court must then adjudicate and affirm the impeachment. As laid out in the Constitutional Court Act of 1988, the court has to determine whether the president violated “the Constitution or laws in the performance of his/ her duties.” The law provides for oral pleadings and a hearing. Taken together, the partisan structure of Korean politics, the supermajority requirement in the assembly and the reviewing role of the constitutional court make impeachment hard. The process is harder than the American removal process. That requires impeachment by a majority of the House and conviction by twothirds of the Senate, measures that bear a family resemblance to the legislative part of the Korean process. But the judiciary has no decisive role in an American impeachment,

except for the symbolic function of the chief justice of the United States presiding over the Senate trial. In South Korea popular protests against Park were a major element in shifting her party’s perception of its own interests, convincing members that they had more to lose by ignoring the president’s unpopularity than to gain by toughing it out. In particular, it mattered very much that the protests were peaceful and orderly, and did not threaten the democratic process itself. To be sure, there were also very large counterprotests in favor of Park. The opponents put perhaps 2 million people on the streets against her, and the pro-Park forces got roughly a million in their largest protest. But the outpouring of public desire for Park’s removal clearly played a major role in changing her party’s position. The other major reason that the political calculus shifted was the nature of the corruption scandal that surrounded Park. She is hardly the first corrupt official in South Korean political history. Close ties between the presidency and the owners of the major Korean conglomerates, or chaebol, go back to her father’s era. But the scale of the wealth transfer from the chaebol to the president’s family and associates was big enough that it couldn’t be ignored. There were other, more sensational elements to the scandal, such as reports that a close friend of Park’s, who was at the heart of the bribery, was arranging shamanic rituals for the president to facilitate communication with the dead. And there was the strange matter of Park’s apparent disappearance immediately after a ferry disaster that killed 304 passengers and crew. But in the end, these details mattered less than the clarity of the corruption. Ultimately, 62 members of Park’s party voted for her removal. Added to the votes of major and minor opposition parties, this got past the two-thirds threshold for removal. That left the constitutional court’s review as the final key element of the removal process. The unanimous decision by the constitutional court was not unexpected. But it provided a guarantee of the democratic legitimacy of the removal process. That legitimacy is what makes impeachment different from a coup. It’s why Seoul Plaza is not Tahrir Square in Cairo.

ABOUT TOWN

here’s good news for those who regularly use the North Luzon Expressway (Nlex) to get to destinations in Central and Northern Luzon. We’re talking about the plan of the Manila North Tollways Corp. (MNTC), the Nlex concessionaire, to build 64 new lanes in Bulacan and Pampanga.

The P2.6-billion new expressway lanes project will no doubt improve travel convenience and promote economic growth in the Central Luzon region and beyond. Once completed, road capacity of the Nlex stretch from Santa Rita in Bulacan to San Fernando in Pampanga will be expanded from the existing 2x2 lanes to 3x3 lanes in each direction, allowing motorists faster, more seamless travel. The road-expansion project will also include the construction of new expressway lanes on both sides of the 5-kilometer-long Candaba Viaduct, which was built in the 1970s. MNTC has already completed a new 2x2, 4-km expressway in the Mabalacat City portion of the Nlex, which includes two new bridges. This project, completed in October last year, will segregate northbound and southbound traffic, thus promoting road safety. MNTC is now awaiting government approval, via the Toll Regulatory Board (TRB), before the new expressway lanes are opened to the motoring public.

S a couple finishes its business, millions of sperm begin theirs: rushing toward an egg to fertilize it. But these days, scientists say, an increasing proportion of sperm—now about 90 percent in a typical young man—are misshapen, sometimes with two heads or two tails. Even when properly shaped, today’s sperm are often pathetic swimmers, veering like drunks or paddling crazily in circles. Sperm counts also appear to have dropped sharply in the last 75 years, in ways that affect our ability to reproduce. “There’s been a decrease not only in sperm numbers, but also in their quality and swimming capacity, their ability to deliver the goods,” said Shanna Swan, an epidemiologist at the Icahn School of Medicine at Mount Sinai, who notes that researchers have also

linked semen problems to shorter life expectancy. Perhaps, you were expecting another column about political missteps in Washington, and instead, you’ve been walloped with talk of bad swimmers. Yet, this isn’t just a puzzling curiosity, but is rather an urgent concern that affects reproduction, possibly even our species’ future. Andrea Gore, a professor of pharmacology at the University of Texas at Austin and editor of the journal Endocrinol-

For MNTC President and CEO Rodrigo Franco, the new expressway projects are consistent with the company’s support for the government thrust to spur socioeconomic growth with road projects that facilitate more efficient and faster transport of goods and services within Central Luzon. He has given assurances that “once inaugurated, the new expressway lanes will not only provide faster, safer and more convenient travel to motorists, but will also decongest traffic in the urban areas.” MNTC has already installed 800 expressway-standard LED road lighting between the Balagtas section all the way to San Fernando City. It also plans to light up an additional 33 kms along the Nlex to improve road safety. One other benefit of the opening of the new expressway lanes is that this will provide motorists with easier access to Clark International Airport and Clark Green City, the 9,450-hectare development project within the Clark Special Economic Zone in Tarlac. The Duterte administration

has embarked on an ambitious infrastructure development program costing no less than P8 trillion from now until 2022 that will include the construction of more roads and bridges, railways and the modernization of various airports to boost economic growth. The “build, build, build” battlecry aims at sustaining the momentum of economic growth by attracting more investments and creating new jobs to reduce poverty and improve the lives of Filipinos.

Economic growth means more urban poor?

The World Bank recently released a study that made an interesting conclusion: the more Asian economies grow, the higher the likelihood that urban areas would have shantytowns or slum areas. That means the richer a society becomes, the more there will be more urban poor despite outward signs of affluence. The World Bank study found that about 55 percent of the urban population live in slum areas in Cambodia, 43 percent in Mongolia, 41 percent in Myanmar and 38 percent in the Philippines. In three countries with the fastest-growing economies— Vietnam, China and Indonesia—the ratio is more than 20 percent. The World Bank concludes that these countries have become the victim of their own success, with many people from the countryside flocking to the cities for work only to end up living in slums. “Emerging slums are proof that the economy is growing and the opportunities are often in cities,” the World Bank said. “But governments

Who pays protection money?

ogy, put it to me this way: “Semen quality and fertility in men have decreased. Not everyone who wants to reproduce will be able to. And the costs of male disorders to quality of life, and the economic burden to society, are inestimable.” Human and animal studies suggest that a crucial culprit is a common class of chemical called endocrine disruptors, found in plastics, cosmetics, couches, pesticides and countless other products. Because of the environmental links, The New Yorker once elegantly referred to the crisis as “silent sperm”, and innumerable studies over 25 years add to the concern that the world’s sperm are in trouble. And so are men and boys. Apparently related to the problem of declining semen quality is an increase in testicular cancer in many countries; in undescended testicles; and in a congenital malformation of the penis called hypospadias (in which

E-mail: ernhil@yahoo.com.

be about twice as damaging as a tax against the Euro area, and about three times as damaging as a tax against Mexico. That may seem surprising, but Mexican goods have a high US component to them, meaning that “Made in Mexico” is more “Made in Mexico with US help”. For high-income Americans, a trade-protection tax against China is about twice as damaging as a tax against Mexico— higher-income Americans are less inclined to buy goods made in China than are low-income Americans. A trade-protection tax is a direct tax on the living standards of Americans. For most goods other than cars, it is a tax that will be paid disproportionately by low-income Americans.

at trade in value-added data and different consumption patterns, economists can get a sense of which groups in America suffer most under a trade-protection tax. If a trade-protection tax were applied by product, then trade protection against something, like food imports, would do far more harm to the living standards of low-income Americans than to high-income Americans. Low-income Americans spend a relatively high proportion of their incomes on food. The impact of trade protection on food would be almost 70 percent more serious for the lowest-income Americans than for the highestincome Americans. It is a different situation for cars.

Paul Donovan’s latest book The Truth About Inflation was published by Routledge in April 2015. Visit www.ubs.com/pauldonovan for more research. Paul’s commentaries in the UBS series of documentaries on Nobel Laureates in economics is available at www.ubs.com/nobel. Donovan is the managing director and deputy head of global economics of Zurich-headquartered UBS. He is responsible for formulating and presenting the UBS Investment Research global economic view, drawing on the bank’s worldwide resources. Donovan took up philosophy, politics and economics at Oxford University. He holds an MSc in financial economics from the University of London. In the Philippines, his column will appear exclusively once a month in the BusinessMirror.

the urethra exits the side or base of the penis instead of the tip). These problems are often found together and are labeled testicular dysgenesis syndrome. There is still disagreement about the scale of the problem, and the data aren’t always reliable. But some scientists are beginning to ask: At some point, will we face a crisis in human reproduction? Might we do to ourselves what we did to bald eagles in the 1950s and 1960s? “I think we are at a turning point,” Niels Erik Skakkebaek, a Danish fertility scholar and pioneer in this field, told me. “It is a matter of whether we can sustain ourselves.” One recent study found that of sperm donor applicants in Hunan province, China, 56 percent qualified in 2001 because their sperm met standards of healthiness. By 2015, only 18 percent qualified. “The semen quality among young

Chinese men has declined over a period of 15 years,” concluded the study, which involved more than 30,000 men. Perhaps even more alarming, Canadian scientists conducted a seven-year experiment on a lake in Ontario, adding endocrine disrupting chemicals and then observing the impact on fathead minnows. The chemicals had a devastating impact on males, often turning them into intersex fish, with characteristics of both sexes but incapable of reproducing. The crisis for male reproductive health seems to begin in utero. Male and female fetuses start pretty much the same, and then hormones drive differentiation of males from females. The problem seems to be that endocrine disrupting chemicals mimic hormones and confuse this process, interfering with the biological process of becoming male. How should we protect ourselves?

Swan said she avoids plastics as much as possible, including food or drinks that have touched plastic or been heated in plastic. She recommends eating organic to avoid pesticide residues, and avoiding Tylenol and other painkillers during pregnancy. Receipts from thermal printers, like at gas pumps and ATMs, are also suspect. When in doubt, she consults guides at ewg.org/consumer-guides. Yet, this isn’t just a matter of individual action, but is also a public policy issue that affects tens of millions of people, their capacity to reproduce and their health and life expectancy. What’s needed above all is more aggressive regulation of endocrine disrupting chemicals. The United States has been much slower than Europe to regulate toxic chemicals, and most chemicals sold in the US have never been tested for safety.

he Trump administration is contemplating different methods of trade protection. Whether through tariffs or a border tax, trade protection is a consumer tax. The tax distorts markets to persuade consumers to buy more expensive domestic goods they do not want, instead of cheaper imported goods they do want. A trade protection tax may protect jobs in inefficient domestic industries. Those jobs are paid for through a lower real standard of living (the cost of the tax). From a presentation perspective, a trade protection tax can be made to look attractive. The benefit of “1,000 American jobs saved” is more tweetable than the cost of “0.2-percent increase in prices”. Economically, the costs nearly always outweigh the benefits, but in a world of hashtag economics, reality often loses out to fake news. A consumer tax has the potential to redistribute living standards. Different people buy different sorts of goods and services. Thus, different people will be affected in different ways by a consumption tax. Looking

cannot keep up with providing adequate housing. There is a need to improve land-use policies and make housing finance more affordable.” Uncontrolled migration from the countryside to the cities is what is taking place in the Philippines and other Southeast Asian countries. This has strained the capability of governments to put up the necessary public infrastructure and social services. Hence, slum communities tend to rise alongside imposing skyscrapers and condominiums. What the Philippines and other developing nations should do, the World Bank says, is to draw lessons from the success of countries like Singapore, South Korea and Japan, which also had to cope with slums in the past but have transformed their cities by building affordable housing. The Duterte administration has drawn up a socioeconomic agenda that includes dispersing economic development to the regions. It wants to put economic hubs in all the regions outside the national capital, particularly in Mindanao, to redress decades of government inability to spur inclusive and equitable socioeconomic development. Equally interesting is the World Bank observation that the urban poor or slum-dwellers should not be a burden for the government and for society. The reality is that they fill up many of the jobs required in the urban areas and they are the backbone of the economy. They only need to be helped by the government so they can live better lives.

Low-income Americans do not buy new cars. Trade protection against car imports, therefore, has little direct consequence for a low-income American. However, high-income Americans have a strong inclination to buy new cars, and as their cars are either imported or contain a high number of imported components, the impact of trade protection in the auto sector hurts high-income Americans over three times as much as it hurts low-income Americans. Looking across the spectrum of products for which we have data, tariffs on products other than cars will consistently hurt lowincome Americans more than they will hurt high-income Americans. This, perhaps, helps to explain the increasing concern expressed by Republican, as well as Democrat politicians in the US about the consequences of tariffs for “working Americans” (although the damage to retired Americans, who are disproportionately low income, is potentially more severe). What happens if the trade protection is not applied to specific sectors, but is instead a blanket tax on a country or group of countries? Again, there is a difference as to whether the auto sector is included. For lowincome Americans, a universal tradeprotection tax against China would

Paul Donovan

Are your sperm in trouble? By Nicholas Kristof | New York Times News Service

Tuesday, March 14, 2017 A11

2nd Front Page BusinessMirror

A12 Tuesday, March 14, 2017

www.businessmirror.com.ph

NGCP sets major network upgrade

By Lenie Lectura

@llectura

he National Grid Corp. of the Philippines (NGCP) announced it will undertake several major facility-improvement programs this year to ensure reliable transmission of power.

“NGCP has built 2,472 circuitkilometers [ct km] of transmission lines since we took over. This year 24 transmission projects are set to be completed, 26 are in the middle of construction and 22 projects will commence. In total, that’s an additional 674.9 ct km of lines to be added to the country’s transmission network for 2017 alone,” the company said on Monday. Among the projects NGCP is pursuing are the Luzon 500-kilovolt (kV) backbone, to accommodate incoming generating plants; the Cebu-Negros-Panay backbone, to improve power sharing between the major islands; and the Mindanao 230-kV backbone, to reinforce the Mindanao grid as new plants come online. “Another aspect of NGCP’s commitment is to ensure that all its facilities are well-maintained and reliable. Our continuous auditing of existing assets has resulted in a preventive replacement program designed to miti-

674.9 ct km The additional transmission lines that NGCP is constructing this year, 27 percent of what it built since 2009 gate any unplanned transmission outages,” it said. T he prog ram out lines t he replacement of aging towers and poles and substation equipment over the next four years. For this year, the grid operator is set to replace 2,134 wood poles considered grid facilities with steel structures. These wooden poles were parts of the aging transmission facilities NGCP inherited from National Transmission Corp. (Transco) when it took over as concessionaire in 2009. NGCP is also set to replace an additional 417 wood poles—considered residual subtransmission

assets—this year. Facilities that serve to strengthen the network as a whole are considered grid facilities, while those that serve a single entity or user, whether that user is a power plant, a distribution utility or directly connected industrial consumer, is considered a subtransmission asset. Since 2009, NGCP has installed a total of 13,200 megaVolt-amperes (MVA) of substation capacity. Over 30 transformers in substations across the country are also set to be replaced between 2017 and 2019. Nine transformers with 300 MVA, 100 MVA and 50 MVA ratings located in critical areas, such as Las Piñas, San Jose and Naga, among others, are expected to be replaced this year alone. “That’s an additional 1,480 MVA in substation capacity over the next three years,” NGCP said. “When we took over, it was very clear to us that upgrading and improving the failing and aging facilities we inherited from Transco was top priority. At the time this concession was bid out, many of the transmission facilities already reached, or were about to reach its maximum economic life. It was very clear to us that government could no longer continue to fund the massive transmission-related projects needed to ensure that the transmission facilities remained relevant, up to date, and able to address the pressing needs of a growing economy,” the company said.

Swissair unit Edelweiss Air expresses interest in PHL By Ma. Stella F. Arnaldo

@akosistellaBM Special to the BusinessMirror

DELWEISS Air, a leisure carrier operating out of Zurich, Switzerland, has expressed interest in flying to Manila or Cebu. Tourism Secretary Wanda Corazon T. Teo revealed this in a news statement, after meeting with Edelweiss Air’s Chief Commercial Officer Alain Chisari. Edelweiss, wholly owned by Swiss Air and under the Lufthansa Group of Cos., has been branded the “Holiday Airline”, as its main market are families that go on holidays. She did not say, however, if the carrier was considering direct flights to the Philippines, or flights under fifth freedom rights. Fifth freedom rights allow a carrier to fly between two countries, then on to another after landing in its first destination, before flying back home. “The Department of Tourism [DOT] is keen on increasing air access between European markets and the Philippines. Your initiative is very timely, considering that the Philippines is expanding its airport infrastructure, as well as route development to key tourist markets,” Teo was quoted telling Chisari.

At present, the quickest route from Zurich to Manila is via Swiss Air, which lands in Hong Kong, then Cathay Pacific from Hong Kong to Manila. Turkish Airlines also flies from Zurich to Manila, with a layover in Istanbul, the carrier’s home airport. The DOT secretary is in Berlin to attend the ITB Berlin trade and travel show, which was held from March 8 to 12. She also held a series of meetings with European travel executives and government officials, including German Parliament member Jurge Klimke in Berlin. In her meeting with representatives of DERTouristik and FTI Touristik AG, two of the largest tour operators in Germany, Teo requested them to expand their tour packages to the Philippines to include other destinations, such as Vigan, Siquijor and Balesin, to name a few. She also assured the tour operators that among the top priorities of the Philippine government are the safety of foreign and local tourists. “The Duterte administration has aggressively undertaken various steps to ensure the safety of tourists visiting the Philippines. Together, military and police personnel have stepped up security and safe movement of local and foreign tourists throughout the

What is corruption? extreme positions on a scale of corrupt activities. At one end is a somewhat benign example, such as the doorman asking for a small tip to let you into the office. At the other end, we find a more malignant example of a leader treating society’s assets as personal property. Most people are ex posed to

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corr uption in its benign for m when they have to pay a br ibe to receive a ser v ice from a gover nment of f ice. Quite often, the ser v ice would have been a right of the citizen; the bureaucrat may merely have discretion over imposing some costs (in the form of delays and opportunity costs of permit denials) on

country,” she stressed. Visitor arrivals from Switzerland grew by some 8.2 percent to 29,420 in 2016. Arrivals from Germany, on the other hand, jumped 14.6 percent to 86,363 that same year. Meanwhile, Teo and Limke discussed ways to promote tourism between the Philippines and Germany, as well as the exchange programs available for Filipino and German students and professionals. At present, qualified Filipino applicants are allowed to pursue post-graduate research and doctoral studies in a German university under the German Academic Exchange Service, or DAAD. Teo likewise met with Robert Panz, administrator of the Hamburg Hotel School. He expressed interest in implementing “possible joint exchange program with Philippine educational institutions.” The Hamburg Hotel School specializes in cruise, events and catering, gastronomy and international hotel management. This followed the DOT head’s revelations that one of the agency’s priorities is to promote the Philippines as a culinary and cruise destination. “The Philippines remains at the foref ront of gastronomy tourism by hosting big MICE [meetings, incentives, conventions

Coca-Cola and Tesda provides 40,000 women microentrepreneurs with scholarships

Tagum City Council for Women President Alma Uy (from left), Philippine Commission on Women Commissioner Rowena Burden and Congressional Spouses Foundation Inc. President Emily Alvarez lead the attendees to the International Women’s Day celebration of CocaCola Philippines in Davao City.

s part of its yearly advocacy, 40,000 women microentrepreneurs who own either a sari-sari store or a carinderia will be offered scholarships and receive proper training from the Sari-sari Store Training and Access to Resources (STAR) program of Coca-Cola Philippines and the Technical Education and Skills Development Authority (Tesda). The main objective of Coca-Cola Philippines’s 5by20 STAR program is to upskill these business women with the right training, including access to capital, assets and even provide them with sound business advice when needed. By the end of 2016, approximately 83,000 women already benefited from the program. For this year, the STAR program was launched recently in Davao and more than 5,000 women attended the event held at the USEP gym in Obrero, Davao City, entitled as “We Make Change Work for Women”. Other program partners are CocaCola FEMSA, Tagum City Council of Women, Philippine Commission on Women, and the Davao City Local Government. By 2020, the goal of the STAR program is to upskill 200,000 women or more.

Duterte. . .

Coca-Cola Philippines President and General Manager Diego Granizo expresses the continuing commitment of the beverage company to economically empower women across the country.

See “Swissair,” A2

to go after mining firms that make use of explosives to break up rocks. Blasting is often used in open pit and underground mining operations. “I am ordering PNP Ronald M. dela Rosa to tighten rules [on importing] explosives. Explosives should never be used because it will destroy the environment,” the President said. Under Republic Act (RA) 9516, only persons or entities issued a manufacturer’s license, dealer’s license or purchaser’s license by the PNP-Firearms and Explosives Division may import any of the chemical or accessories that can be used in the manufacture of explosives or explosive ingredients from foreign suppliers. RA 9516 covers chemicals, such as chlorates, nitrates, nitric acid and accessories, that can be used for the manufacture of explosives and explosive ingredients. “Any person or entity who

intends to import, sell or possess the aforecited chemicals or accessories shall file an application with the chief of the PNP, stating therein the purpose for which the license and/or permit is sought and such other information as may be required by the said official,” RA 9516 read. Duterte said the issue of the preservation of the environment is “nonnegotiable” for him and that mining firms and prospective investors should keep this in mind. “If firms can do responsible mining, then maybe we can have a compromise. But please do not contaminate our waters. Do not destroy marine life,” Duterte said. He also said investors who are keen on setting up mining operations in the Philippines should be required to allocate one third of their start-up capital for the rehabilitation of their mine area. The Department of Environment and Nat ura l Resources (DENR) has cited the preservation of watersheds as one of the major factors behind the government’s decision to shutter 23

mines last month. Environment Secretary Regina Paz L. Lopez has been getting the flak for her order to shutter mines operating on or near watersheds. The President, however, threw his support behind the embattled DENR chief. Duterte said he would rather listen to Lopez than earn P70 billion from mining. “We can live without the P70 billion in taxes. Let’s just develop other industries and preserve our environment,” he said. The President made the statement after the chief of the DENR was grilled at her second Commission on Appointments hearing last Thursday. During the hearing, mining firms and engineering students argued that Lopez lacked the technical expertise and preparation for the post. Last month the DENR shuttered 23 mines for operating on or near watersheds. Lopez said these mines contaminated coastal waters. Lopez also canceled 75 mineral production-sharing agreements approved by her predecessors.

the citizen before granting the ser v ice. A bribe is demanded to reduce that cost. T his for m of bureaucratic cor r uption usua lly occurs once a reg ulator y reg ime has been deter mined and the resource allocation decisions have been made—the bureaucrat is, in fact, inter fering w ith the implementation of decisions. At the other extreme, ‘political’ or ‘grand’ corruption arises from a leader or leadership team

that has control over the country’s resource allocation and expenditure decisions. These people will ma ximize their personal wealth rather than the welfare of the population. A p or t io n o f t he w e a lt h amassed through corruption is used to purchase the loyalty of those who will help these corrupt people to remain in power and to undermine the civic society and public institutions that may rise in opposition. This form of

corruption leads to a misallocation of resources and an extreme degree of concentration of wealth in the hands of a few. A nd t here a re m a ny ways to view corruption other than in between the two extremes discussed above. But corruption is also well entrenched in the private sector. Where does it happen? In the top management, in human resources, in sales and marketing, in finance and account-

ing and especially in procurement and logistics. That is the reason the Integrity Initiative’s endeavours are directed to both government and the private sector. While good progress is made in parts of the government (I will provide examples in future), the majority of the private sector is still reluctant to make the important step to sign the Integrity Pledge and live up to the commitments detailed in the pledge.

Continued from A1