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Hacktivism: A threat to 2016 polls? By Mia Rosienna Mallari

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Conclusion

RATIFICATION is what hacking is about for 20-year-old Kyuubei. As young as 10, the person behind the name has entered the myriad of codes and computer systems—a contrasting shift to his fascination for animé and manga. “It is self-satisfying; the bounty comes last,” he said. “For example, on Facebook, you get $100 per exploit. Last time I checked

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in Google, you can earn $1,337 per exploit.” It is rarely regarded in public there are two kinds of hackers: white hats and black hats. Kyuubei considers himself neither. Based on his narrative, white-hat hackers are usually seen on online meet-ups, those who enjoy reading white paper and guides on hacking and earning for it in a “respectable way.” Black hats, on the other hand, are more notorious online. Kyuubei usually Continued on A2

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A broader look at today’s business n

Wednesday, March 30, 2016 Vol. 11 No. 172

IF INCOMING GOV’T WILL ADOPT NEW INDUSTRIAL STRATEGY

Blueprint to attain 9% growth agenda bared 8.2% T By Catherine N. Pillas

he Philippines can achieve a GDP growth rate of 7 percent to 9 percent if the next administration will implement the newly minted Comprehensive National Industrial Strategy (CNIS), the Department of Trade and Industry (DTI) said on Tuesday.

Average manufacturing growth rate in the past five years Trade Undersecretary for Industry Development and Board of Investments Managing Head Ceferino S. Rodolfo said if the Continued on A12

INSIDE

P7-Billion project to be a game changer in Bicol

property

e1

TAXMAN COMETH of Internal Revenue Commissioner Kim S. Jacinto-Henares and Management Association of the Philippines (MAP) President Atty. Perry Pe share a light moment last the MAP General Membership Meeting on Tuesday in Makati City. NONIE REYES

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Privatize Pagcor, get casinos under Amla–Senate By David Cagahastian

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ith the apparent role of Philippine casinos in the alleged laundering of $81 m i l l ion stolen by c yber criminals from the Bangladesh central bank’s account at the Federal Reserve Bank of New York, the issue of privatizing the Philippine Amusement and Gaming Corp. (Pagcor) has come to the fore. At the resumption of the Senate hearing on the alleged laundering in the casinos of the Bangladesh funds, Pagcor’s role as operator and regulator of casinos was described as an “anomaly.” Pagcor President and COO Eugene D. Manalastas told the Senate the state gaming firm was amenable to the inclusion of casinos under the ambit of the country’s Anti-Money Laundering Act (Amla). But Sen. Ralph G. Recto pointed out that Pagcor’s position on the inclusion of casinos in the antimoneylaundering law would still result in the absurd situation where the state gaming firm will be on the lookout for money-laundering activities that could be done theoreti-

₧4M

Proposed threshold amount of any transaction at Philippine casinos that fall under the ambit of the antimoney-laundering law. cally by Pagcor itself. “Could you reasonably say that you can regulate yourself?” Recto asked Pagcor officials at the Senate hearing. In the deliberations at the House of Representatives to amend the scope of the antimoney-laundering law, Pagcor proposed to include any transaction in the casinos that will reach the threshold amount of P4 million. Although the revival of the proposal to privatize Pagcor’s commercial function was discussed during the Senate’s investigation on the role of casinos in the alleged laundering of the Bangladeshi government’s stolen funds, the privatization of the state gaming firm See “Pagcor,” A12

Obama meeting Xi as sea tensions rise

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resident Barack Obama will be meeting with Asian leaders in Washington this week, as fears grow that long-smoldering tensions on the Korean Peninsula and in the South China Sea risk flaring into conflict. World leaders, including those from China, Japan and South Korea, will be in town for a summit hosted by Obama on nuclear security—the final round in the US president’s drive for international action to stop materials that could be used for an atomic weapon or dirty bomb from getting into terrorist hands. But other pressing security issues will be up for discussion on the sidelines of the two-day gathering that starts on Thursday. Obama will on Thursday meet separately with Chinese President Xi Jinping, at a time when frictions between the two world powers over

China’s island-building in strategic waters are growing and look set to intensify with an upcoming ruling from an international tribunal on Beijing’s sweeping territorial claims. The US president is also meeting with the leaders of Japan and South Korea. Washington is looking for an elusive unity between its core allies in Asia, as threats from North Korea reach fever-pitch after Pyongyang was stung with tough sanctions in response to its recent nuclear test and rocket launch. Obama will be urging China to implement the United Nations sanctions it signed up to for use against North Korea, its traditional ally. For his part, Xi will want the US to restart negotiations with the authoritarian government of Kim Jong Un, which has been touting progress in miniaturizing nuclear devices and missile technology that could

n japan 0.4097 n UK 66.2388 n HK 5.9889 n CHINA 7.1347 n singapore 33.9278 n australia 35.0263 n EU 52.0285 n SAUDI arabia 12.3900

Continued on A2

Source: BSP (29 March 2016 )

A2 Wednesday, March 30, 2016

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Hacktivism: A threat to 2016 polls?

encounters them selling credit-card information from exploited web sites and selling exploit software in the underground online market. They’re usually found on the anonymous browser that blocks traffic analysis, diverting data surveillance and prevents users from being tracked down. “You can’t get tracked if you’re not stupid. That’s where pedophiles hang out to sell and share CP [child pornography], Hard Candy or Snuff. Again, if you’re not stupid. That’s the price for making it so secure.”

If you feel like your rights were violated on the Internet as stated in the cybercrime law, then go directly to the Electronic Frontier Foundaion. But if you feel like you were ever offended through posts and comments, welcome to the Internet: this is the reflection of humanity.” —Hacker

Uncertainties

to the government and businesses in any industry worldwide, including the Philippines. The Comelec web site was defaced by Anonymous Philippines some time around midnight of March 27. The homepage was compromised, as the hacktivist group demanded that the full-security features of the Precinct Count Optical Scan machines be utilized. This is in line with the decision of the commission not to print voter’s receipts in the upcoming May 9 polls. In the latter part of 2015, the web site of the National Telecommunications Commission (NTC) was infiltrated by the hacktivist group Anonymous, protesting the sluggish Internet speed in the country. The group said they “are sympathizing with our fellow Filipino netizens whose battle cries are the ‘overpromised, underdelivered’ system of our Internet service providers.” The hacking was done shortly after the NTC conducted a bandwidth test on the broadband connection of four Internet providers in the country. The group vandalized the site’s homepage with its staple black background with the overlaid message alongside a figure of the character “V.” The anarchist and vigilante from the V for Vendetta movie has become the unofficial face of the group. It was the same figure used by 60 masked hacktivists in 2013 during a protest against

ACCORDING to Niño Valmonte, director of product management and marketing at IP Converge Data Services Inc. (IPC), there is no specified data as to how many security attacks are launched periodically in the country. Nevertheless, the global report of cloud-based security service Imperva Incapsula recorded alarming rates of Distributed Denial of Service (DDoS) attack growth worldwide. “Web application and DDoS attacks are doubling in number every year, with a recorded peak of more than 100-gigabytes per second attack [in terms of] bandwidth last year,” Valmonte said in an interview with the BusinessMirror. “With these massive attacks, most organizations cannot withstand it and will become vulnerable.” He explained companies, such as IPC, offer mitigation services “as far as technologies against DDoS attacks are concerned.” “This would be beneficial for the Comission on Elections [Comelec] and Namfrel [National Movement for Free Elections], because they provide election-related information via their web sites, making them a potential target this coming elections,” Valmonte said. The Incapsula report is a clear indication of how DDoS poses a formidable threat

pork barrel in Batasang Pambansa. The protesters held placards that said, “The corrupt fears us. The honest supports us. The heroic joins us.” In the same year, the group has paralyzed more than 30 government web sites simultaneously as it expressed its political views. Kyuubei said that, despite the slow Internet speed in the country, it does not post much of a hindrance for hackers like him. “If you’re doing some big s_t, you will use another machine or virtual private server.” According to him, there are endless ways of hacking into a web site, like using a cross site script (CSS), where he can run a modified script into the system that can hack an end-user of the web site. Another is the file-inclusion exploit, where a hacker can upload any kind of file to a web site that without that does not filter its content. “This is the most common and most dangerous kind of exploit, especially if the web site handles tons of user information, SQLi or Structure Query Language Injection, where they can execute commands in a page and download all the contents of a database on a web site,” he explained. Kyuubei disclosed that this is what Anonymous uses most of the time to hack into web-site databases. He also said this is the easiest exploit a hacker can learn to run.

Continued from a1

Improvements

AFTER the implementation of the Cyber Crime Act and the beefing up of security on government web sites, he commended the government for the drastic measures it has taken. “Improved!” Kyuubei said. “Dati ’ di marunong mag-filter ng SQL ’yung mga DB ng government web site at gumagamit sila ng exploited CMS.” Now, according to Kyuubei, all software used by the government are updated. He didn’t say how he got this information. Still, these measures are not enough as, he said, hackers have consistently managed to infiltrate government web sites, the latest of which was the Comelec’s. “DDoS is a serious online crime that cannot be ignored. It warrants a definitive course of action from highly skilled professionals trained in this type of cyberwar,” IPC President Rene Huergas said. The study published by Incapsula revealed there were changes in the DDoS attack patterns during the last quarter of 2015 and a surge in the use of DDoS-forhire services. A 25.3-percent increase from the previous quarter in terms of frequency of network layer attacks was also recorded.

Protection

POLITICAL concerns aside, the young hacker said online protection is not always up to concerned government organizations. What gets hackers like him through a system sometimes is the absentmindedness of users. “My point is that the government does not protect you from the Internet. It’s up to you,” Kyuubei said. “Once you’re online and you post information about yourself, you’re only making yourself vulnerable like most people. What you only have to do is lessen your vulnerability.” He encourages users to come up with passwords that are lengthy and difficult to

guess. Avoid signing up in doubtful sites, because some web sites do not encrypt the user’s password, he added. He also recommended the use of GNU Privacy Guard when sending sensitive data to another user. This lessens the probability of risking information, as well as encrypting e-mail conversations, providing the only keys to the user to unlock the encryption. “And people are still stupid enough to click scandal and hoax links. For crying out loud, that is the No. 1 target of hackers, because it lures a lot of people.” He also added that both individuals and organizations should update their systems regularly and use trusted antivirus and antispyware, even if it means spending on software. On the legislation side, the Philippines has the Cybercrime Prevention Act of 2012 that protects web sites from defacement and data hacking. Nevertheless, most hackers remain undetected, because of the anonymous hosting software they use for operations. Kyuubei has already committed several crimes, including illegal access, illegal interception, data interference, system interference and willfully streaming of child pornography. If taken into account, his crimes could land him between 12 years and 48 years in prison. If found guilty, Kyuubei also faces a P1-million fine. That is, if he ever gets traced by authorities. Ironically, Kyuubei stated that if ever a netizen feels like his online rights were abused, they should report it immediately. “Read up on laws? If you feel like your rights were violated on the Internet as stated in the cybercrime law, then go directly to the Electronic Frontier Foundaion,” he said. “If you feel like you were ever offended through posts and comments, welcome to the Internet: this is the reflection of humanity.”

Obama meeting Xi as sea tensions rise

In this November 30, 2015, file photo, President Barack Obama (left) meets with Chinese President Xi Jinping in Le Bourget, outside Paris. Xi will meet with Obama in Washington next week on the sidelines of a nuclear-security summit. AP/Evan Vucci Continued from A1

directly threaten America. With Obama’s presidency in its final year, there’s uncertainty among Asian nations on what the next administration will portend. Republican presidential frontrunner Donald Trump is calling for Japan and South Korea to pay more for US military protection, and is advocating a tougher trade policy toward China. During his seven years in office, Obama has deepened engagement with Asia, despite the huge distraction of chaos in the Middle East. The US and China have cooperated on issues like climate change and nuclear security, even as their strategic rivalry has grown. The US is a major player in China’s fastgrowing nuclear industry, and this month the US and China opened a center in Beijing to train technicians and scientists from across the Asia Pacific on nuclear security. But when Obama and Xi meet, the hottest topic will be the most divisive one: China’s bold pursuit of its sweeping territorial claims in the South China Sea. China has reclaimed more than 3,000 acres (1,200 hectares) of

land in the past two years near sea lanes crucial for world trade. On these artificial islands, Beijing has installed airstrips and other military facilities that US intelligence assesses will enable China to project offensive military power in the region by early next year. Despite conflicting territorial claims from five other Asian governments, China contends it has a historic right to most of the South China Sea and maintains the US has no business there. It accuses the US of stoking tensions by sending military ships and planes through the area on freedom of navigation maneuvers. “ Washing ton shou ld k now that the more provocative moves it makes against China, the more countermeasures Beijing will take. Such an undesirable cycle may push both sides nearer confrontation and cause both to prepare for the worstcase scenario, potentially making it self-fulfilling,” the US edition of the state-supported China Daily said in a recent editorial. The stakes are set to rise by midyear when an international arbitration body is set to rule on a case brought by the Philippines challenging the legal basis of the nine-dash line—Beijing’s rough

demarcation of its claims. If the Hague-based tribunal rules in the Philippines’s favor, as most experts anticipate, it could undermine China’s insistence that its stance is consistent with international law. China has refused to participate in the arbitration and says it will ignore the ruling, but a growing number of countries say both parties should be bound by it. Jeffrey Bader, Obama’s former principal adviser on Asia, wrote in a commentary ahead of the summit that there’s concern in Washington and the region about how China might react to the ruling, and whether it will militarily challenge Filipino territorial claims. He said that as the Philippines is a US ally, Obama “may warn Xi of the risks of escalation.” The last time Xi visited Washington, last September, he publicly said that China did not intend to pursue militarization in the Spratly islands, where most of the land reclamation has happened—a statement that US officials remind Beijing of at every opportunity. But in recent weeks, China has reportedly positioned more military equipment on disputed islands in the South China Sea. AP

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Globe boosts data capacity, coverage

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By Lorenz S. Marasigan

obile services operator Globe Telecom Inc. is embarking on the second tranche of its multimilliondollar network modernization program—a feat that is seen boosting its capacity and helping plug the infrastructure gap in the Philippine telecommunications industry.

Ernest L. Cu, president of the Ayala Corp.’s telco arm, said his company is ready to pour in billions of pesos to implement its program that will build up the listed firm’s data capacity and coverage. “Coverage is something that consumers have, but coverage is not enough. We have to retune our network once again to increase our mobile and wireline capacity by 70 percent,” he said. Cu said this program will future-proof Globe’s network for another round of data explosion, as users morph into what he calls “data monsters.” “Data access is currently one of the most important drivers of economic

10 Indonesians held hostage by ASG M

By Rene Acosta

embers of the Abu Sayyaf Group (ASG) have reportedly kidnapped 10 Indonesian crew members of a Taiwanese tugboat in the waters off Tawi-Tawi. Brig. Gen. Restituto Padilla Jr., spokesman of the Armed Forces of the Philippines (AFP), however, said the military, particularly the Western Mindanao Command (Wesmincom), is still validating the report. “The AFP through the Wesmincom has received initial information on the missing crewmen of a certain foreign-owned vessel in the Zambasulta [Zamboanga, Basilan, Sulu and Tawi-Tawi] area,” Padilla said. “We could not yet confirm this information as we are still in the process of validating it. We shall issue a statement once there is certainty that the said incident actually occurred,” he added. Report said the Taiwanese tugboat was en route to Manila from Jakarta, Indonesia, when it was allegedly intercepted by suspected Abu Sayyaf terrorists off Tawi-Tawi. It was not clear when the actual kidnapping happened. The report added one of the Indonesian crewmen managed to call their Taiwanese employers to report the kidnapping. The crew reportedly tagged the terrorist ASG as their captors. The captors had reportedly conveyed their demand for an unspecified amount of ransom. A report from the Police Regional Office-Autonomous Region in Muslim Mindanao (PRO-ARMM)

competitiveness and growth. For the Philippines to fully take advantage of new digital opportunities, we need to create an Internet superhighway and provide ultra-fast Internet connection that will enable growth in every corner of our country,” he explained. He added: “We want to make use of technological innovations to make Internet service experience at par with other countries.” Bulk of the company’s capital expenditures for 2015—pegged at $750 million—will be spent to deploy fiber-optic cables in 20,000 barangays all over the country to provide faster and more reliable Internet access in about 2 million

homes nationwide. The infrastructure buildup is expected to take five years and will extend network coverage to more areas that currently have no connection or spotty service. Cu emphasized that elsewhere in the world, new digital trends such as cloud computing, mobile web services and e-commerce are already radically changing the digital landscape. In line with its vision of ushering in a digital nation, the expansion will also increase the capacity of its network for both mobile and wirelines using different technologies, including 3G, LTE and even Wi-Fi. It will, likewise, replace the old

copper wires that have been used for wireline connections in the past. One of the most important advances in broadband technology, fiber optics offer the fastest way to access data, providing consumers with higher download and uploads speeds, lower latency and faster Internet browsing, including streaming of high-definition multimedia content, among others. Cu said that, unlike the company’s previous network modernization program, this one will be as pervasive as possible. It will also depend on other stakeholders, such as the cooperation of local government units and homeowner’s associations.

CebuPac ramps up domestic, international flights in summer

All our forces are on alert, ready to assist if necessary and help ascertain the incident.”—Wesmincom Spokesman Maj. Filemon Tan Jr. said an abandoned vessel with markings “Brahma 12” was found in Languyan Island on Monday morning. The PRO-ARMM reported that elements of Languyan municipal police station, led by Police Officer 1 Arsenio Allama, were dispatched to check on the reported sighting of a drifting vessel along the vicinity of Barangay Tubid Dakula. The responding policemen managed to board the boat and found no one aboard. They also found floating devices with markings “Jakarta YDB 4731.” The boat was subsequently brought to shore and anchored at Languyan Wharf for safekeeping and further investigation. On the other hand, Wesmincom Spokesman Maj. Filemon Tan Jr. said military units in Zambasulta areas were already alerted about the reported abduction. “All our forces are on alert, ready to assist if necessary and help ascertain the incident,” he said.

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UDGET carrier Cebu Pacific is hiking its flight frequencies from Manila, Cebu, Iloilo and Davao to key domestic and international destinations to accommodate passenger demand during the summer peak travel period. The airline will add a daily flight from Manila to the popular vacation spot of Bohol (Tagbilaran), for a total of 28 weekly flights beginning on April 1. The low-cost carrier will also strengthen its Cebu hub with a total of 51 weekly flights between Cebu and Davao, gateway to the Philippines’s southern islands, beginning on May 1. Throughout the summer season, the airline will also increase frequencies from Cebu to the following domestic destinations: Bacolod (up to 17 weekly), General Santos City (up to 10 weekly), Kalibo (up to 17 weekly), Puerto Princesa (up to 22 weekly) and Zamboanga (up to 12 weekly). Those flying between Cebu and Iloilo can choose among 16 weekly flights, with some flights upgraded from ATR to Airbus A320 aircraft to increase the number of available seats. Within the first week of April, Cebu Pacific also aims to meet robust passenger traffic in the Visayas

and Mindanao with additional three weekly frequencies between Iloilo and Davao, and two weekly frequencies between Davao and Zamboanga. Four weekly frequencies between Zamboanga and Tawi-Tawi will also be added starting on May 1. Meanwhile, passengers heading to Singapore can avail themselves of more travel options as Cebu Pacific ramps up its flights from both Iloilo and Davao to the Lion City. Beginning on March 30, the airline will add one flight per week from Iloilo to Singapore, and another flight per week from Davao to Singapore starting on April 2.

The carrier’s Iloilo and Davao hubs will operate three weekly flights each to Singapore. “We hope to encourage our valued guests to cross more destinations off their travel bucket list, with our additional flights this summer. Passengers can maximize their vacation by taking advantage of our lowest year-round fares and widest flight network in the Philippines,” Cebu Pacific Vice President for Corporate Affairs Paterno S. Mantaring Jr. said. Cebu Pacific’s 57-strong fleet include eight Airbus A319, 35 Airbus A320, six Airbus A330 and eight ATR 72-500 aircraft.

iPhone security is the casualty in Apple’s victory over the FBI

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pple Inc. suffered one major casualty in its legal victory over the Federal Bureau of Investigation (FBI): bragging rights over the iPhone’s security. The FBI’s decision to abandon its effort to force Apple to help break into a terrorist’s handset marks a win for the company. Yet, the agency’s claim that it found a way to hack into the device via an anonymous third-party deals a blow to customers’ faith in the iPhone’s ability to protect their information. “It’s not the best news for Apple,” said Chris McClean, a data-security researcher at Forrester Research Inc. “The Apple brand takes a little bit of a hit here. Because we don’t have details, customers are still going to question whether their device is safe. If one company can get into it then potentially that exploit is reusable for any device.” The FBI backed down after six bruising weeks of public sparring with Apple, during which the technology community rallied behind the world’s most valuable company, while politicians on both sides of the aisle advocated cooperation between the antagonists. Apple’s refusal to accede to the request ignited a debate over the balance between the needs of law enforcement and the importance of customer privacy. “We will continue to help law enforcement with their investigations, as we have done all along, and we will continue to increase the security of our products as the threats and attacks on our data become more frequent and more sophisticated,” Apple said in an emailed statement.

iPhone dangers

The iPhone maker has said that creating

what amounted to a backdoor to the smartphone would set a dangerous precedent and endanger millions of iPhone users the world over. Though it won this round against the Justice Department, the fact that an external party managed to crack the device at the center of the controversy showed Apple devices may not be impervious to hackers. Apple regularly updates the iOS software which runs iPhones and iPads, and with each new generation, it fixes security vulnerabilities. That was the case last week, when it rolled out iOS 9.3. Among the flaws plugged was an opening discovered by researchers at Inverse Path, a security consultancy in Trieste, Italy. The researchers said it might be possible to modify iOS and bypass security features via the USB port, while Apple itself acknowledged the vulnerability in a post on its web site.

Closing the door

Any weakness fixed last week wouldn’t prevent the FBI from hacking the San Bernardino shooter’s iPhone 5C, which runs an older version of the software. The agency has, so far, declined to reveal the exact method it’s using, leaving customers uncertain as to whether updating their operating system closes the backdoor. The judge presiding over the case must now decide whether to accede to the FBI’s request to end the case. Apple’s lawyers said last week that they would expect the government to outline successful methods employed to crack the phone. Closing the case would impede the company’s ability to get that information. Under a relatively new process

known as an equities review, however, the FBI may be obligated to reveal the details unless it can show administration officials that there’s a substantial national security need to keep the flaw secret. Whatever the judge decides, the debate

over the priorities of law enforcement and personal privacy is likely to continue. “I don’t foresee a scenario in which both sides are happy,” said Eric Berg, a former Department of Justice attorney who’s now a litigation partner at Foley & Lardner Llp.

in Milwaukee. “There are reasonable arguments on both sides for what the privacy lobby and the law-enforcement community are lobbying for. I have trouble seeing an outcome which would satisfy both sides of that debate.” Bloomberg News

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Asean children face burden of obesity, undernutrition

$248B

Economic cost of noncommunicable diseases in Indonesia per year

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ome countries in Asean are facing simultaneous crises of over and undernutrition, with some children overweight while their peers suffer from stunting and wasting, said a joint report released on Monday by United Nation agencies and their partners. The report released by the United Nations Children’s Fund (Unicef), the World Health Organization (WHO) and the Asean has shed new light on the nutrition situation of children across the region. This “double burden of malnutrition” is happening in middle-income countries, such Indonesia, Malaysia, the Philippines and Thailand, the report said. “Many countries in Southeast Asia have seen impressive economic gains in the last decade, lifting millions of children out of poverty,” said Christiane Rudert, regional nutrition adviser for Unicef East Asia and Pacific, in a press release. “However, at the same time, we have seen the rise of conditions like obesity, previously associated with high-income countries. Asian children are now at risk of malnutrition from both ends of the spectrum,” she said. In Indonesia the proportions are reportedly exactly the same: 12 percent of children are overweight and 12 percent are wasted. In Thailand child wasting and overweight are both on the rise: between 2006 and 2012, wasting increased from 5 percent to 7 percent, and overweight from 8 percent to 11 percent. According to the findings, the causes of overweight and undernutrition are intertwined. A child, whose growth was stunted in early childhood, is at greater risk of becoming overweight later in life. The risk for being overweight goes up with increased access to junk food and drinks (those with high trans-fat or sugar content and low nutritional value), physical inactivity and sedentary lifestyles. This is an increasing trend in many countries in the region, and contributes significantly to the growing prevalence of chronic diseases, like diabetes and heart conditions, according to the report. In addition to poverty, other contributing factors include traditional diets that lack nutritious foods; poor infant feeding practices; inadequate clean water and sanitation; and farming a limited variety of crops. If children are stunted, this impacts their development in other areas, including health and education, affecting their chances in life. Meanwhile, the report also found that stunting prevalence is highest in Cambodia, Lao PDR and Myanmar, as well as in parts of Indonesia and the Philippines. Child malnutrition also has a significant impact on countries’ economies, the report said. It reduces parents’ productivity and creates a burden on health-care systems. It can lead to noncommunicable diseases, disability and even death, reducing the potential work force. The economic cost of noncommunicable diseases in Indonesia, much of which is diet-related, is estimated at $248 billion per year, it said. On the other hand, Unicef and the European Union recently completed a five-year partnership to tackle nutrition issues in five Asian countries, including Indonesia, Laos and the Philippines. PNA

Editor: Max V. de Leon • Wednesday, March 30, 2016 A5

Singapore: China security push should match economic model

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s Xi Jinping heads to Washington this week to meet with some of the world’s biggest powers, one of Asia’s smallest countries is urging him to match China’s economic clout with better leadership on the security front. Singapore views China’s rise in Asia with “sublime acceptance,” Defence Minister Ng Eng Hen said on Thursday in an interview. “It’s a fait accompli,” he said. “You cannot contain China.” Still, he said, “there is a distinct difference if you think about it, if you look at it, between how the Chinese assume leadership and even initiatives in the economic arena versus the security arena.” He highlighted China’s contrasting approaches: While it is looking to make investments in roads, railways and ports in Southeast Asia via a new maritime Silk Road trading route to the Middle East and Europe, and leads a new Asia infrastructure bank, its land reclamation activities and increased military presence have sparked tensions with other claimant states, as well as the US, in the contested South China Sea. China is one of the biggest trading partners for many Southeast Asian nations. That trade has stayed robust in the face of the South China Sea disputes and political friction between China and the likes of the Philippines and Vietnam. Yet, surveys often show how its actions in the maritime sphere undercut that economic goodwill, with China scoring low on trust among citizens in the region. Singaporean Prime Minister Lee Hsien Loong warned last May that smaller countries don’t want to be squeezed by competition between China and the US for influence, or feel they have to pick a side.

It’s a fait accompli. You cannot contain China.” —Singapore Defense Minister Ng Malaysian Defense Minister Hishammuddin Hussein said late last year that, while the major powers were welcome in Southeast Asia, he hoped they would not create “a situation that will increase tensions.” It’s a dilemma Xi himself has publicly acknowledged: In a speech in Singapore last September he said security cooperation was “out of step” with economic collaboration, and called on nations to “never let animosity” divide them. Under Xi, China has stepped up efforts to assert control of the South China Sea, building islands that offer possible military bases. While its coast guard has been accused of harassing boats from other countries and it has warned planes by radio to stay away from reclaimed reefs, China has also promoted the construction of facilities as potentially assisting in navigation for ships and providing quick disaster relief. Xi touts the South China Sea actions as part of a broader return by China to great power status, a stance

CONVICTED

Vietnam’s prominent blogger Nguyen Huu Vinh (left) and his assistant Nguyen Thi Minh Thuy stand together during a trial in Hanoi, Vietnam, on March 23. A court in Hanoi sentenced Vinh, a former police officer and a son of a late government minister, to five years in prison for posting antistate writings in a one-day trial that highlighted the communist country’s tough approach to dissent. Thuy was given three years in prison on the same charge. The two had been in prison since their arrests in May 2014. AP

that has seen tensions increase with the US, a country that has dominated the postwar security order in Asia. Xi will join leaders, including US President Barack Obama, this week for a nuclear summit in Washington, where a bilateral meeting with Obama is scheduled. China claims more than 80 percent of the South China Sea based on a nine-dash line drawn on a 1940s map for which it gives no precise coordinates. The waters host more than $5 trillion of shipping each year and are home to about a 10th of the world’s annual fishing catch. Some of the sea is also claimed by the Philippines, Vietnam, Brunei Darussalam, Malaysia and Taiwan. “Whatever their foreign policy is, it’s clear their position has hardened positions on countries around Asia and Asean,” Ng said. He cited several examples, including Vietnam allowing a Japanese submarine to call at

its port and the Philippines permitting a greater US military presence. “Would that have happened without the Chinese position?”

‘New rules’

The dilemma for some Southeast Asian nations has been highlighted by recent scuffles involving fishing vessels and coast guards. Indonesia, which like Singapore, is not a claimant in the South China Sea and has sought to stay neutral in the disputes, was forced to publicly chastise China this month after an incident involving a fishing vessel it said was detained in its waters. In the ensuing melee, a Chinese coast guard ship rammed the fishing boat that was under tow by Indonesia in a bid to free it. At the same time, China is Indonesia’s largest two-way trading partner and President Joko Widodo is relying on it to fund much of his

country’s infrastructure needs. China is building a high-speed rail link between Jakarta and Bandung. There need to be rules for countries of all sizes to buy into for a stable overall system, and the South China Sea is a test case of that, Ng said. He urged countries to extend an agreement for unplanned encounters at sea from the navy to the coast guard. Referring to China, he said, “We accept that your position as a leader will have to be recognized and that there will be new rules, but China has to decide what these new rules are.” “We’re realistic enough to recognize that you will never have a situation where there are no disputes, we’re not in Utopia,” Ng said. “Disputes should be settled peacefully and you need mechanisms for that. We’re in the phase where we are trying to build mechanisms that prevent such escalation.” Bloomberg News

Thailand shifting to cashless society sooner than expected

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reams of a cashless society in Thailand could materialize sooner than expected, as officials race to develop the national e-payment system, under which money transfers will be just a click away and the cost of doing business will drop. E-payment will allow people to access money-transfer services even if they do not have a bank account, along with other financial purposes, such as making e-commerce transactions, curtailing loopholes in the tax system and directing subsidies to the underprivileged.

E-payment overview

The plan for Thailand to rely less on physical cash, and develop into a society geared toward electronic payment, is composed of five modules. The first two of the five phases—Any ID and expansion of electronic data capture (EDC)—will be available in the next six months, Finance Minister Apisak Tantivorawong said in February. Any ID will enable anyone to transfer money and make financial transactions using an ID card, a mobile number or an e-mail address. As it runs in tandem with EDC, more people using the Any ID service means the number of payment terminals will also have to increase. Apisak wants all companies registered with the Commerce Ministry to be equipped with the EDC system and says another 2 million EDC units are needed for Thailand to gear toward a cashless society. The country currently has only 300,000

2M

Number of electronic data capture that Thailand needs to add to the existing 300,000 units to shift the country to a cashless society EDC units. The other three phases entail linking e-payment and the Revenue Department’s taxation system to make tax collection more efficient, allowing the government to subsidize all low-income earners directly by using only their ID cards, and creating a campaign offering incentives to encourage people to use the e-payment system. Tongurai Limpiti, the Bank of Thailand’s deputy governor overseeing financial institutions stability, said the government is planning to set up a national e-payment system in which money transfers can be made via the recipient’s phone number instead of a bank account number. The idea can come into effect by establishing a central “switcher” and “registrar,” with the latter responsible for linking an individual’s phone number with a bank account number to facilitate accurate cash transactions, she said. “There should be one main bank

account, otherwise, it [the moneytransfer process] will be complicated and confusing,” Tongurai said. Technically speaking, one mobilephone number can be linked with several bank accounts, but this would be an added burden for the central switching system, so a better move would be to designate one mobilephone number to a single bank account, she says. “If anyone wants to have more than one main bank account number, then that person has to link it with a different mobilephone number.” The government also wants to use citizens’ national ID cards with the EDC system in order to create an “e-purse” to disburse socialsecurity money, which can be linked with the 13 digits on an ID card, she says. The cashless society might be a novelty for Thailand, but the concept has been in progress for a while in other parts of the globe. South Korea is genuinely transforming itself into a cashless society, where noncash payments accounted for 70 percent of the total value of consumer payments in 2014, while South Koreans with debit cards make up 58 percent, according to a CNBC report. The same report also highlights European countries as front-runners of becoming cashless societies, in which noncash payments’ share of the total value of consumer payments accounted for 89 percent in both Sweden and Britain, and as high as 93 percent in Belgium. Debit card users in Belgium, Sweden and Britain are registered at 86 percent, 96 percent and 88 percent, respectively. A nuchit A nuchitanu ku l, a

member of the panel tasked with installing the e-payment system, says e-payments now constitute 19 percent of all financial transactions in Thailand. Of the total, credit cards represent 98 percent and debit cards make up the rest. The three major mobile operators, Advanced Info Service, Total Access Communication and True Move, made a move to support the cashless society scheme on December 1, 2015, by allowing mobile users to directly transfer money across the three mobile networks to a receiver simply by entering the receiver’s mobile number. The maximum amount is limited to 10,000 baht a transaction, capped at 30,000 baht a day.

Central supervision

National ITMX Co. is poised to be tasked with developing and managing the registrar system since the company already manages the central switching system for automated teller machine (ATM) transactions, Tongurai said. Under direction from the Bank of Thailand’s Payment Systems Committee, National ITMX, abbreviated from Interbank Transaction Management and Exchange, will be the key interbank payment infrastructure and central data-processing system that exchanges, manages and processes data across memberbanks and organizations in order to support e-payment and electronics fund transfers, according to the company’s statement on its web site. The system supports all kinds of electronic payments and fund

transfers from various channels, including ATMs, counters, the Internet, phone and mobile channels. Tongurai says the central bank, National ITMX and commercial banks have held several rounds of discussions on developing the e-payment system, as the government wants the system to start operating in the second or third quarter of this year. Commencement of the national e-payment operation is likely to fall in the third quarter to fit in with the operation’s schedule, she said. E-payment security is expected to be overseen by National ITMX since it is set to manage both the central switcher and registrar systems. Tongurai said the technical specifications of the e-payment security have not been finalized, but there should be a one-time password or locked options to prevent unauthorized transfers in cases where someone’s mobile phone is stolen. Epayment security is essential because the plan is to use a mobile phone app to facilitate cash transactions from one bank account to another. The central bank has sent three supervision teams associated with information-technology supervision, e-payment business and technical support to work with National ITMX on developing the e-payment system, she says. E-payment services are regulated under the Royal Decree on Electronic Payment Systems issued under the Electronic Transactions Act, as well as under a notification of the Finance Ministry issued under Section 5 of Revolutionary Council Decree 58, according to Tilleke & Gibbins. MCT

The W

Business

A6 Wednesday, March 30, 2016 • Editor: Lyn Resurreccion

Sanders planning to hijack Clinton’s superdelegates

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A long-range ground-based interceptor is launched from Vandenberg Air Force Base in California, this image from the US Defense Department’s Missile Defense Agency, taken on January 28, shows. Defense Department’s Missile Defense Agency via AP

N. Korean nuclear threats spotlight US missile defense

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ASHINGTON—As North Korea rattles its nuclear saber, threatening to bomb the US at “any moment,” a nervejangling question hangs in the air: If Pyongyang did launch a nuclear-armed missile at an American city, could the Pentagon’s missile defenses overcome their spotty test record and shoot it down beyond US shores? America has never faced such a real-life crisis, and although officials say they are confident the defenses would work as advertised, the Pentagon acknowledges potential gaps that North Korea or others might be able to exploit, someday if not immediately. One possible v u lnerabilit y involves a foe’s “countermeasures,” or decoys carried aboard long-range offensive missiles to fool a US interceptor missile into hitting the wrong target. The Pentagon has poured at least $84 billion into missile defense over the past decade and is planning to spend another $3.3 billion over the next five years for a single element of the system, known as Ground-based Midcourse Defense. Its key part is a network of interceptor missiles designed to launch from underground silos, fly into the path of an enemy missile as it arcs through space and smash into it, destroying it. That system has failed three of its last four-intercept tests. The only success in that series was the most recent test, in June 2014. A congressional watchdog agency,

$84B

The amount Pentagon has poured into US missile defense over the past decade

the Government Accountability Office, said in February that the Pentagon “has not demonstrated through flight testing that it can defend the US homeland against t he c u r re nt m i ssi le defe n se threat.” Adm. William Gortney, America’s homeland defender as head of US Northern Command, told Congress this month that the nation needs “more capable forces and broader options.” K e y i mprove me nt s a re i n t he work s, inc lud ing a “ longra nge d i sc r i m i n at ion” rad a r for more ef fect ive t rac k ing of incom ing m issi les. The North Koreans’ harsh rhetoric, including a threat in February to deal “fatal blows at the US mainland any moment,” is linked in part to its anger at US-South

Korean military exercises, which the North sees as a rehearsal for an invasion. No one is predicting a bolt-out-of-the-blue North Korean nuclear attack, but the threat looms larger as the North Koreans seemingly move closer to fielding a nuclear-armed missile that can reach US territory. Already, this year they have claimed a successful H-bomb test, put a satellite into space orbit and claimed a successful simulated test of the warhead reentry knowhow needed for a missile strike on the US. On Thursday the North claimed to have successfully tested a solidfuel rocket engine which, if true, would mark a significant further technological advance. The use of solid fuel reduces launch preparation time and thus shortens warning time for US defenses. More appears to be in store. State-run media reported earlier this month that leader Kim Jong Un ordered preparations for a “nuclear warhead explosion test” soon and test-firings of “several kinds of ballistic rockets able to carry nuclear warheads.” With increasing regularity, the North Koreans are claiming major advances on the nuclear front that have caught Washington’s attention, even if they are exaggerated. P re s id e nt B a r a c k O b a m a , who plans to address 50 heads of state gathered in Washington this week for a nuclear-security summit, has said North Korea’s pursuit of nuclear and missile programs “increasingly imperils the United States.” Of particular worr y is a longrange missile under development in Nor th Korea that the US ca lls the K N- 08. T he Pentagon’s most recent public report on North Korea says the K N- 08 has a range of more than 3,400

miles (5,470 k ilometers), putting it into the categor y of an intercontinenta l ba l listic missile Gor tney said the K N- 08 has “profound impl icat ions,” especia l ly if it is deployed as a road-mobile weapon, meaning it could be moved and launched from vehicles that ma ke it less v u lnerable to detection. Such mobilit y, he said, would enable the Nor th Koreans to elude or confound traditiona l US prelaunch war ning systems. Gortney says the North Koreans may have figured out how to make a nuclear warhead small enough to fit atop a KN-08 missile. “W hile the KN- 08 remains untested, modeling suggests it could deliver a nuclear [weapon] to much of the continental United States,” Gortney told a Senate panel on March 10. The segment of US missile defenses designed to stop a longrange North Korean missile are the interceptors based at Fort Greely, Alaska, and Vandenberg Air Force Base in California. Three years ago this month, then-Defense Secretary Chuck Hagel announced that the Pentagon would increase the number of deployed interceptors to 44 by putting an extra 14 at Fort Greely. The price tag for that expansion, initially put at $1 billion, has jumped to $1.5 billion. None of the extra 14 interceptors has been deployed yet, but all are to be in place by the end of next year. Defense Secretary Ash Carter told a House committee last week that the Pentagon also is working on a more effective “ kill vehicle,” which is the device attached to the top of an interceptor; its internal guidance system helps steer it into an oncoming missile, destroying it by force of impact. AP

ASHINGTON—As the Bernie Sanders campaign accepts the reality that securing enough votes at this point to win the Democratic nomination outright is impossible, it has moved on to a new phase in its long-shot bid for the White House: Hijack Hillary Clinton’s so-called superdelegates. Sanders’s advisers are targeting these party leaders and elected officials who have outsized influence in deciding who gets to be the Democratic nominee, and whom Hillary Clinton moved swiftly and aggressively to lock down early in the race. Each one of their votes at the convention in July is weighted as heavily as those of thousands of voters. Clinton has 469 of them in her corner. Sanders has just 29. Sanders’s advisers argue that if they can come close to catching Clinton in votes by the time the time the primaries conclude in June—even if they fail to overtake her—they will be able to persuade these lawmakers and other Democratic dignitaries to reconsider their loyalties to Clinton. They offer any number of reasons why that would happen. Clinton is losing the momentum she had earlier in the campaign, they say. Or she can’t seal the deal with young voters who will be crucial to any winning coalition for Democrats in the fall. Or Clinton’s big lead early on was artificial because Sanders did not compete hard in many of those states. Sanders said in an interview with CNN on Sunday that he believes the superdelegates will “begin to look at the reality, and that is, in poll after poll, we are beating Donald Trump by much larger margins than is Secretary Clinton.” “I think the momentum is with us,” Sanders said. “A lot of these superdelegates may rethink their position with Hillary Clinton. A lot have not yet declared. And then you have got superdelegates who are in states where we win by 40 or 50 points. I think their own constituents are going to say to them, ‘Hey, why don’t you support the people of our state, vote for Sanders?’”

Still, the plan is not exactly alarming the Clinton campaign, which revealed on Monday that it expects to have the nomination locked up by the end of next month. “We are going to get to the point where, at the end of April, there just is not enough real estate for him to overtake the commanding lead that we’ve built up,” Clinton pollster Joel Benenson said on a call with reporters. By then, Wisconsin, New York and Pennsylvania will have voted. Even if Sanders narrowly wins those states, Benenson said, the delegate gap between him and Clinton will still be immense, without even factoring in superdelegates. And polling shows Clinton poised to do well in those contests. Benenson also pointed out that Clinton has so far won about 2.5 million more votes than Sanders nationwide, which suggests that even if the superdelegates abandoned her in states where the Vermonter has done well, even more of them would have reason to stay put. Asked about the Sanders plan to steal Clinton’s superdelegates, Benenson said when he heard about it, he “kind of chuckled.” He noted many of those pledged superdelegates are in Congress, where they have known Bernie Sanders for years, and he argued if they had any inclination to side with him, they would be saying so. Benenson compared Sanders advisers announcing that superdelegates were poised to side with him to former President Richard Nixon declaring on the evening of the 1968 election that a secret peace plan with Vietnam was in the works—a peace plan that never materialized. “There is no indication folks have flipped,” Benenson said. Sanders strategist Tad Devine said that while “we don’t have 300 superdelegates waiting to go to Bernie tomorrow,” the campaign is confident that a strong showing in the next few months will have scores of them reconsidering their support for Clinton. “She has emerged as a weak front-runner,” Devine said. TNS

Trump faces rough reception as race turns toward Wisconsin

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ADISON, Wisconsin—Republican front-runner Donald Trump faces a rough reception as the primary race turns toward Wisconsin, where his two remaining rivals hope to put a roadblock on the billionaire’s drive to secure the party’s presidential nomination. The Wisconsin primary on April 5 is shaping up to be a key moment in the Republican nomination contest. A solid win by Texas Sen. Ted Cruz would narrow Trump’s path to the nomination and increase the likelihood of a contested convention this summer. Cruz—who has recently picked up a wave of Republican establishment support—has been crisscrossing the state and has begun airing $500,000 in ads. Ohio’s Republican Gov. John Kasich was also looking to pick up support in Wisconsin. As Trump prepared to campaign in the Midwestern state, Wisconsin’s Republican Gov. Scott Walker said that he would announce on Tuesday whom he’s backing on a Milwaukee-based talk radio show whose conservative host Charlie Sykes has already endorsed Cruz. Walker, whose short-lived run for president ended in September, has been sending signals he intends to back Cruz. Meanwhile, Cruz heaped praise on his former rival, calling Walker’s fight against labor unions “inspired people all over the country.” Walker said last week that Cruz was the only candidate who had a chance at beating Trump. When Walker ended his presidential bid, he called on other candidates to also quit the race so it would be easier to take on Trump. “I am a big, big fan of Scott Walker’s,” Cruz told reporters before a campaign stop in central Wisconsin. “He is a terrific governor and strong conservative.” On Monday Trump endured a harsh grilling from Sykes, an influential voice for local Republicans.

Sykes pressed Trump on a range of issues, including whether he should apologize to Cruz’s wife, Heidi, whom he mocked on Twitter last week. Trump indicated that he was simply retweeting a message from a supporter who had posted an unflattering photo of Heidi Cruz next to a glamorous shot of Trump’s model wife, Melania. “Is your standard that if a supporter does something despicable, that it’s OK for you, a candidate for president of the United States, to behave that same way?” Sykes asked. “I mean, I expect that from a 12-year-old bully on the playground, not somebody who wants the office held by Abraham Lincoln.” Sykes said that he hoped Trump realized that “here in Wisconsin we value things like civility, decency and actual conservative principles” and asked him to declare that wives would be off limit in the discourse ahead of the state’s primary. Trump said he would be in favor of that but said that he would not apologize until Cruz first said he was sorry for the ad his supporters ran in Utah featuring a photo of a partially clad Melania Trump that had originally appeared in GQ magazine. Cruz has said he knew nothing about the ad, which was published by a Super Political Action Committee that backed him. Trump has scheduled a campaign rally on Tuesday in Janesville, Wisconsin, but protesters were already awaiting his arrival. The Janesville Gazette reported that about 60 protesters occupied the lobby of the Holiday Inn Express in Janesville on Monday night and about 20 more stood outside. In the Democratic race, Vermont Sen. Bernie Sanders swept three Western state caucuses over the weekend, but still faces an uphill climb to overcome front-runner Hillary Clinton’s significant lead in the all-important delegate count. AP

World

sMirror

news@businessmirror.com.ph • Wednesday, March 30, 2016

California’s $15/hour wage could help workers, cost jobs S

ACRAMENTO, California—A political deal to raise California’s minimum wage to a nationleading $15 an hour could help some workers cope with the state’s crushing cost of living, but also deprive other low-wage earners of jobs altogether, economists said on Monday, as Gov. Jerry Brown and other leaders touted what would be a landmark agreement. California’s economy is larger than that of most countries, with a wide diversity of earners. While newly minted millionaires gentrify neighborhoods in the San Francisco Bay Area, some Central Valley field hands lack access to clean water. A jump from the current $10 an hour spread over six years would affect millions. Rafael Gutierrez, a 53-yearold farmworker, said the increase would let him treat his family to weekend dinners out and a short vacation to Disneyland from his home in Fresno County. His last job picking peaches and grapes paid $11 an hour. His girlfriend makes $14 an hour at Target. Though their region is far from California’s costliest, “Right now, we’re just making it,” Gutierrez said. “Life is expensive.” And then there are employers, such as Chuck Herrin, owner of Sunrise Farm Labor, which provides roughly 2,500 workers each year in the San Joaquin Valley. Herrin predicted that farmers would hire 10 percent fewer workers because of the higher cost of business. “It’s going to be devastating,” said Herrin of the impact on fieldworkers and their dependent relatives. On Monday Brown touted the deal his administration struck with legislative and labor leaders as potentially historic, calling it a matter of economic justice. Under the proposal, which the Legislature has yet to approve, the

5-10

Percentage of workers who would be removed from work

minimum wage would rise gradually, reaching $15 by 2022. After that wages would rise with inflation, though in tough economic times the governor could delay increases. Lawmakers could send the bill to Brown’s desk as early as Thursday, said Sen. Mark Leno, a San Francisco Democrat. The hike would create the nation’s highest statewide minimum wage. California and Massachusetts are the current highest at $10. Washington, D.C., stands at $10.50. Oregon’s governor signed legislation this year that would raise wages by 2022 depending on location. In the largest city of Portland, the minimum will rise to $14.75. Rural areas would see an increase to $12.50. Income inequality has emerged as a top issue nationally, with President Barack Obama proposing an increase to the federal minimum wage and Democratic presidential candidate Bernie Sanders pushing a $15-per-hour standard. In California’s most-desirable

Chuck Hammers, owner of Pizza My Heart, poses for a portrait in one of his shops on Monday in San Jose, California. A political deal to raise California’s minimum wage to a nation-leading $15 an hour could help some workers cope with the state’s crushing cost of living, but also deprive other low-wage earners of jobs altogether, economists said on Monday, as Gov. Jerry Brown and other leaders touted what would be a landmark agreement. AP/Marcio Jose Sanchez

areas, gas, housing, food and other essentials can bring sticker shock. While the median price of homes sold in the state is about $400,000, a fixer-upper in San Francisco or parts of Los Angeles can easily top $1 million. About 4 million workers in California earn wages in the $10 to $15 rate, according to calculations by Jeffrey Clemens, an economics professor at the University of California at San Diego. “The key question is what fraction of these workers will be lifted to the new minimum and what fraction will lose their jobs,” Clemens wrote in an e-mail. Advocates for the wage increase and their economists put the number of affected workers at closer to 6 million. Economists, including Clemens, said in interviews that projecting what would happen in California is tough because the proposed increase is significantly larger than those in the past and may have unintended consequences. One leading economist on minimum wage issues said an increase from $10 to $15 would reduce em-

ployment among the least-skilled workers by at least 5 percent to 10 percent. But the impact on employment might be even bigger because employers would have to absorb significantly higher costs. “I would go so far as to call this reckless,” said David Neumark, an economics professor at the University of California, Irvine. Neumark noted that the effects would vary by geography: In highwage counties such as San Francisco and Santa Clara, about 22 percent of workers would get a raise. In places such as Fresno and Merced counties, about half the workers would see more money. San Francisco voters approved a measure two years ago to increase the minimum wage of $10.74 an hour to $15 in 2018. It’s currently $12.25. Brian Hibbs, owner of comic-book and graphic-novel store Comix Experience, said he supports the idea of a minimum standard of living, but he thinks the wage hike won’t accomplish that because it will hurt small businesses. Projecting that his payroll for six

employees will be $40,000 greater in 2018, he started a graphic novel membership club to meet the new wage requirements. If the membership doesn’t grow, he said, he may have to close. “I don’t think this was thought through,” he said. “The cost of labor is so high. It’s very, very difficult to run a profitable business at this point.” Yasmin Fernandez, an activist who has sought a higher minimum wage, works in San Jose as a cashier at a gas station in the morning and at a Panda Express restaurant in the afternoon and evening. The 34-year-old said she takes home about $2,400 per month after taxes. After paying her living expenses and helping her widowed mother, sick brother and four nephews back in Mexico, she usually has about $150 left for herself. She works from 6 a.m. to 11:30 p.m. almost every day. An increase to the minimum wage “will be heavenly,” she said, describing how it would offer “a little more money for me, to maybe go to a concert or do something fun once in a while,” as well as “help my family even more.” AP

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Argentina hails UN decision to expand its maritime territory

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UENOS AIRES, Argentina—Argentina’s government celebrated on Monday a decision by a UN commission expanding its maritime territory in the South Atlantic Ocean by 35 percent to include the disputed Falkland Islands and beyond. The Argentine foreign ministry said that its waters had increased by 0.66 million square miles (1.7 million square kilometers) and the decision will be key in its dispute with Britain over the Islands. Argentina lost a brief, bloody 1982 war with Britain after Argentine troops seized the South Atlantic archipelago that Latin Americans call the Malvinas. The UN Commission on the Limits of the Continental Shelf sided with Argentina earlier this month, ratifying the country’s 2009 report fixing the limit of its territory at 200 to 350 miles from its coast. “This is a historic occasion for Argentina because we’ve made a huge leap in the demarcation of the exterior limit of our continental shelf,” Foreign Minister Susana Malcorra said. “This reaffirms our sovereignty rights over the resources of our continental shelf.” Oil exploration is already pumping millions of dollars into the Falkland Islands economy. Many islanders remain concerned about Argentina’s claim, as well as the potential for problems from rapid change brought by the new industry. The UN commission’s finding included the caveat that there is an unresolved diplomatic dispute between Argentina and Britain over the islands. T he Falklands are internally self-governing, but Britain is responsible for its defense and foreign affairs. The British government says islanders cannot be forced to accept Argentine sovereignty against their will. The Falkland Islands government said on Monday that it is seeking clarification from the British government on “what, if any, decisions have been made, and what implications there may be” for the territory in relation to the UN ruling. “As soon as we have any firm information we will make it available,” Mike Summers, chairman of the Legislative Assembly of the Falkland Islands, said in an e-mailed statement. AP

Modi rebuts analysts who doubt India’s world-beating growth

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ndia’s Prime Minister Narendra Modi offered a wideranging rebuttal to critics who say he’s gotten lucky with low oil prices. Loan growth has picked up, corporate-rating upgrades are now outpacing downgrades, foreign direct investment hit a record last year and some key manufacturing sectors, such as carmakers, are growing rapidly, Modi said at an event organized by Bloomberg LP in New Delhi on Monday. The focus is now on clean energy, farm incomes and creating jobs, he said. “Obviously, there are some who find that difficult to digest and come up with imaginative and fanciful ideas to belittle that achievement,” Modi said. “The fact is that India’s economic success is the hard-won result of prudence, sound policy and effective management.” Nearly two years since a landslide election win, Modi is battling criticism that India’s 7.6-percent annual expansion is thanks to crashing global oil costs, which help shrink deficits and curb inflation in the $2-trillion economy. He’s also trying to strike a balance between pleasing investors who want faster economic reforms and winning rural votes before this year’s state elections. Several economists, including those at HSBC Holdings Plc.

and Deutsche Bank AG—as well as Modi’s political opponents—have said that India’s economic expansion masks underlying weaknesses. Deutsche’s Taimur Baig pointed to a record 15-month drop in exports, falling factory output and lower corporate earnings to question the data, while HSBC’s Pranjul Bhandari said the surge is likely to fade once oil prices stabilize. Modi’s two years in office have belied expectations of big-bang reforms that came after his election win. He has failed to push through a goods-and-services tax that would create a single market among India’s 1.3 billion people, dropped a proposal to make it easier to acquire land and kept in place powers to retroactively tax companies. India’s stocks, bonds and currency are among Asia’s worst performers this year. Disenchantment with the administration has also grown on concern that Modi will fail to provide jobs for the 1 million youth who enter India’s work force each month. India created 296,000 jobs from June 2014 to June 2015, according to Labor Bureau figures for eight selected sectors.

7.9 percent

This February, following back-toback droughts and an election loss

Most confident

India’s Prime Minister Narendra Modi (left) speaks during the inauguration of a massive cultural festival on the banks of the river Yamuna in New Delhi, India, on March 11. India’s environmental watchdog fined the organizers of the event, Art of Living foundation, 50 million rupees ($740,000) for building on the riverbanks. AP/Manish Swarup

in the mostly rural state of Bihar, Modi vowed to improve the lives of Indians living in the hinterland. He expanded irrigation, revamped crop insurance, pledged to improve groundwater resources. Every village would have electricity by May 2018 and every impoverished household would have cooking gas, he vowed, referring to

the 70 percent of Indian citizens who live in villages. Every poor family would get better health care, and Modi also aims to double farm incomes by 2022. “With a good strategy, welldesigned programs, adequate resources and good governance in implementation, this target is achievable,” Modi said on Monday.

“And, as a large share of our population depends on agriculture, a doubling of farmers’ incomes will have strong benefits for other sectors of the economy.” A boost in farm output will spur the increase in GDP to 7.9 percent in the year starting April 1, according to D.K. Joshi, an economist at Crisil Ltd., the local unit of Standard & Poor’s.

Modi has t he tools to a id him: Ind i a h a s t he world ’s most op t im ist ic compa ny c h iefs, most con f ident con su mers a nd i s on pace to h ave t he l a rgest work force. A id ing technolog ic a l de ve lopment a nd gender equ a l it y w i l l prov ide outsi zed b e ne f it s t o I nd i a comp a re d w it h t he rest of t he world, w it h t he potent i a l to add a s muc h a s $1 t r i l l ion to t he economy, accord i ng to Mc K i n se y. Outf lows from foreign funds are slowing, and direct investment touched a record $42 billion in 2015. The administration plans to focus on education and skill development. It will offer 20 selected institutes additional funding as well as complete autonomy on decisions including the curriculum, Modi said on Monday. More money will be spent on improving the quality of primary education, he added. The government will also work to boost investment in and usage of clean energy across the country, Modi said. “I know it will be difficult,” Modi told the gathering of investors and diplomats. “But I am sure it is doable. And I am confident, it will be done.” Bloomberg News

The World BusinessMirror

A8 Wednesday, March 30, 2016

Pakistanis ask: ‘What was the crime of these kids?’

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SLAMABAD—As families buried their children and doctors tended to scores of seriously wounded, the Pakistani military on Monday vowed a major operation to avenge a suicide bombing at a crowded public park in the eastern city of Lahore. Officials raised the death toll in the Sunday evening bombing to 72 people, including at least 25 children. The explosion occurred as the park was packed with families celebrating Easter, among them members of Lahore’s Christian minority, although the vast majority of casualties were Muslims. About 300 more were injured. “What was the crime of these kids, whether they were from Christian or Muslim families?” said Muhammad Imtiaz, 32, whose brother-in-law was killed in the bombing and sister remained unaccounted for. Two of his nephews were injured. Pakistan’s powerful army seized the initiative from the civilian government, with military officials saying that soldiers and paramilitary forces would conduct a “full-blown” operation against militants across the populous eastern state of Punjab, particularly in southern areas that are believed to be extremist strongholds. Jamaat-ul-Ahrar, a splinter group of the Pakistani Taliban militant federation, claimed responsibility for the bombing and said it targeted Christians, who make up less than 2 percent of Pakistan’s population of 182 million. Officials said at least 14 Christians were among the dead. In five operations conducted following the blast, security forces arrested an undisclosed number of suspects and recovered a “huge cache” of weapons and ammunition, said the army’s chief spokesman, Lt. Gen. Asim Bajwa. Pakistan’s Dawn News reported that investigators had learned the identity of the bomber and had arrested three members of his family for interrogation. “Terrorists have assassinated my sons and daughters in this war and, God willing, we will wipe them out from this country,” said Prime Minister Nawaz Sharif, who hails from Lahore, Pakistan’s second most populous city. It was not the first time that Pakistanis have heard such resolve from their leaders. In December 2014 following a massacre at an army-run public school in the northeast that left 150 people dead—most of them children—the government and military launched a harsh crackdown against militants that included reinstating the death penalty for terrorism suspects. Pakistan has since put more than 320 people to death, including many death row inmates whose cases were unrelated to terrorism. Militant violence is down overall, but many Pakistanis believe the government’s policies have not made them safer—particularly as the Pakistani Taliban and its offshoots continue to wage headline-grabbing attacks against civilians. After Sunday’s explosion, which took place in a parking lot near a set of children’s swings at the expansive Gulshan-e-Iqbal Park, Imtiaz rushed to a hospital to search for his sister and her family, who had been at the park. He found a scene of chaos, including the mangled bodies of children and medical staff tending to injury victims in overflowing corridors. “There were bodies everywhere,” Imtiaz said. “I saw blood on the floor of the hospital while dozens of injured were crying. They were horrible scenes.” The bombing on Sunday was the second major attack against Christians in Lahore in less than a year. Last May, Pakistani Taliban militants attacked two churches in Lahore on the same day, killing at least 15 Christians. Peter Jacob, a Lahore-based Christian human-rights activist, said the Christian community took precautions in the week leading up to Easter Sunday and that government forces had provided security to major Christian neighborhoods in the city. But witnesses said the park was a soft target, with scant security on Sunday evening. Los Angeles Times/TNS

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Belgian police hunt airport suspect; victim toll rises to 35

Police in riot gear protect one of the memorials to the victims of the recent Brussels attacks, as rightwing demonstrators protest near the Place de la Bourse in Brussels on Sunday. AP/Alastair Grant

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RUSSELS—As the number of victims in the Brussels suicide attacks rose to 35, Belgian police released a video of a mysterious man in a dark hat seen in the company of the bombers who attacked Brussels Airport, indicating that he is still at large.

“Police are seeking to identify this man,” the Belgian Federal Police’s web site said on Monday. The video’s release came as a Belgian magistrate also ruled that a man identified as Faycal C., who was arrested during the police raids

that followed the March 22 attacks, could be released. Faycal C. was among those taken into custody and facing preliminary terror charges. Belgian media reported the man was the mysterious suspect in the white

jacket and dark hat spotted with the two bombers at the airport the morning of the attacks. But the Belgian magistrate ruled that new evidence uncovered by investigators revealed there were no grounds to keep Faycal C. in custody and he was released, the Belgian Federal Prosecutor’s Office said. The Belgian Federal Police’s web site posted a 32-second video of the still-unidentified suspect as he wheels baggage through the terminal alongside the bombers. “If you recognize this individual or you have information concerning this attack, please contact investigators,” the police asked. Tensions remain high in the city, particularly in the Brussels suburb of Molenbeek, where several of those involved in both the attacks on Brussels and those in Paris last November, hailed from. Jamal Ikazban, a member of

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Number of suspects linked to the attacks being held

the Molenbeek council, tweeted on Monday that young people in the neighborhood were being sent text messages by recruiters. Ikazban did not provide further details, beyond writing that “we must ensure these recruiters can do no more damage.” Belgian authorities also announced that three more people swept up in police raids that followed the attacks on the airport and on a Brussels subway train were be-

ing held on charges of participating in terrorist activities. It was not clear if the suspects ordered held by an investigating judge were linked to the attacks themselves. The three—identified by Belgian prosecutors as Yassine A., Mohamed B. and Aboubaker O.—were detained during 13 police searches on Sunday in Brussels and the northern cities of Mechelen and Duffel. The federal prosecutors’ office provided no details of the alleged actions committed by the suspects and released a fourth person without charge. The bombings, the bloodiest in recent Belgian history, were claimed by the Islamic State extremist group and confirmed Belgium’s status as an unwitting rear base from which Muslim extremists can stage attacks in Europe. Many of those responsible for the November 13 attacks in Paris that killed 130 people and wounded hundreds came from Belgium. Four more people wounded in the Brussels attacks died in the hospital, Belgian Health Minister Maggie de Block announced on her Twitter account on Monday. She posted: “Four patients deceased in hospital. Medical teams did all possible. Total victims: 35. Courage to all the families.” De Block had reported over the weekend that 101 of the 270 wounded in the blasts were still being treated in hospitals, including 32 in burn units. A doctor at one of those burn units who had once served in Afghanistan described patients’ wounds as shocking. One week after the devastating attacks, which severely damaged Brussels Airport’s departure area, the facility is planning to test its capacity to partially resume passenger service. Florence Muls, an airport communications manager, said 800 staff members on Tuesday would test temporary infrastructure and new arrangements designed to handle passenger check-ins. It’s too early to say when airport service might actually resume, she said, adding that government and firefighters must approve the new system before Brussels Airport can start handling passenger traffic again. Before the bombings, Brussels Airport served some 600 flights a day and 23.5 million passengers per year. AP

Gunman at U.S. Capitol had disrupted Congress before, officials say

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ASHINGTON—An armed man, who was shot on Monday trying to enter the US Capitol building, was known to Capitol Police and had previously disrupted a session of Congress, according to local and federal law-enforcement officials. Larry Dawson of Tennessee was stopped by Capitol Police after he set off a metal detector trying to enter the Capitol Visitor Center, a federal official said. After an argument, Dawson drew a weapon and pointed it at officers, said the official, who was not authorized to speak publicly on the matter. At least one officer opened fire, shooting the suspect, Capitol Police Chief Matthew Verderosa said. A weapon was recovered at the scene, he added. Dawson was taken to a hospital for treatment. A female bystander, age 35 to 45, was hospitalized with what Verderosa called “minor” injuries from the incident. Dawson’s motives remain unclear. Verderosa did not identify Dawson by name during a press briefing outside the Capitol, but said the suspect was known to Capitol Police. “We believe this is an act of a single person, who has frequented the

Law enforcement and rescue vehicles are seen on Capitol Hill in Washington on Monday after a US Capitol Police officer was shot at the Capitol Visitor Center complex, and the shooter was taken into custody. AP/Alex Brandon

Capitol grounds before,” Verderosa said. “There is no reason to believe this is anything more than a criminal act.” Dawson’s identity was confirmed

by a federal law enforcement official who was not authorized to speak on the investigation. Last October Dawson reportedly shouted from a House balcony that

he was a “prophet of God.” Verderosa said the building’s security precautions prevented the suspect from entering the building. “It appears the screening process

worked the way it’s supposed to,” he said. Police also located and seized the suspect’s car on the Capitol grounds, he said. The 2:40 p.m. EDT shooting briefly shut down the Capitol complex as police told panicked visitors and staff to take immediate shelter and close, lock and stay away from doors. “Due to police activity, Capitol Police have issued a shelter in place for the Capitol complex. Please stay in your designated area,” the Senate sergeant-at-arms said in a tweet during the shutdown. By 3:40 p.m. EDT, the Capitol reopened but the visitors center remained closed. It will reopen for visitors on Tuesday. Though House and Senate lawmakers are away on recess, the Capitol remains a popular draw for tourists and school groups visiting in spring at the peak of cherry blossom season. Joe and Leslie Stephenson, who are visiting from the San Diego area with their two small children, were at the National Air and Space Museum when they suddenly saw people fleeing the Capitol complex. “They were out of breath and really shaken up,” said Leslie Stephenson, a nurse. TNS

Thailand’s leaders unveil new proposed Constitution

BusinessMirror

World The

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A9 | Wednesday, March 30, 2016 • Editor: Lyn Resurreccion

A bus carrying some passengers from the hijacked EgyptAir aircraft drives by the plane at Larnaca Airport in Cyprus on Tuesday. AP/Petros Karadjias

Egyptian plane hijacked, taken to Cyprus; passengers released

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ICOSIA, Cyprus— An EgyptAir plane was hijacked on Tuesday while flying from the Egyptian Mediterranean coastal city of Alexandria to the capital Cairo, and later landed in Cyprus, where all passengers except four foreigners were allowed to get off the aircraft, according to Egyptian and Cypriot officials. The hijacker, who was later identified as an Egyptian man, apparently had a suicide belt with which he threatened the plane’s pilot. The Airbus Flight MS181 had 55 passengers onboard and was flying on a regular route when the hijacking took place, the Egyptians said.

Egyptian state television said there was a lone hijacker and identified him as Ibrahim Samaha. It gave no further details. The plane took off from the small Bourg el-Arab airport just outside the Mediterranean port city of Alexandria. It was flying a regular route

to Cairo, a flight that normally takes up to 30 minutes. Details were sketchy and the hijacker’s motives were also not known, but an Egyptian Aviation Ministry statement said the “hijacker” threatened that he had a belt of explosives, the weapon of choice for Islamic militants in the Middle East. Shortly after the hijacking, the plane landed at the airport in the southern Cypriot city of Larnaca, also on the Mediterranean. Cypriot officials said there were suspicions of a bomb onboard. The official later said the hijacker later allowed an unspecified number of women and children to go free and some were disembarking. EgyptAir later said in a statement that all passengers were released by the hijackers except for the crew and four foreigners. It did not specify the nationality of the foreigners. Initially a second Cypriot official said there “seems like there’s more than one hijacker” and that there were no other demands made, except that police vehicles move away from the aircraft. All the offi-

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Passengers onboard the hijacked EgyptAir plane cials in Egypt and Cyprus spoke on condition of anonymity because they were not authorized to speak to the media. The hijacking, however, will most likely bring to the fore again the question of security at Egyptian airports, five months after a Russian aircraft crashed over Egypt’s Sinai Peninsula minutes after it took off from Egypt’s Red Sea resort of Sharm el-Sheikh. All 224 people onboard were killed in the crash. Russia later said an explosive device brought down the aircraft and the extremist Islamic State group said it downed the plane. AP

W.H.O. urges more oversight amid China vaccine scandal

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EIJING—China must exert stronger oversight over vaccines sold on the private market in the wake of a developing scandal involving expired or improperly stored vaccines, the World Health Organization (WHO) said on Tuesday. Dr. Lance Rodewald of WHO China’s immunization program told reporters that the ongoing investigation into the “troubling” scandal that came to light last month would help identify ways to tighten regulation of the private market in vaccines. “What we’re seeing here is problems on the private-sector distribution side,” Rodewald said. “The vaccines that are in the private sector need to be managed, stored, handled, distributed and used in accordance with recognized standards.” Chinese police say a woman and her daughter, who are now in detention, are thought to have sold nearly $100 million worth of the suspect products nationwide since 2011. More than 130 people have been questioned and 69 criminal cases filed in connection with the pair. A total of 29 pharmaceutical companies are suspected of selling the faulty vaccines and 16 institutions of buying them. The scandal reinforces longstanding public concerns over the safety of China’s food and medi-

Officials from China’s State Food and Drug Administration inspect vaccines stored at the local Center for Disease Control and Prevention office in Rong’an county in southwestern China’s Guangxi Zhuang Autonomous Region. Police in eastern China have detained people implicated in a scandal involving the selling of poorly refrigerated and probably ineffective vaccines, state media reported on March 23. Chinatopix via AP

cine supply fed by scandals involving phony infant formula, snacks tainted with chemicals and phony or defective medications, including vaccines. Rodewald said the WHO has full confidence that vaccines in China “start their life safe, pure, potent and effective.” He said that confidence applies

both to the free and mandatory vaccines provided by the government for all children, as well as the voluntary vaccines available on the private market. Investigators say the latest scandal involves the voluntary, or secondary, vaccines, including those given to children to protect against maladies such as pneumococcal disease and rotavirus

gastroenteritis. Overseen by China’s Cabinet, a joint task force from the China Food and Drug Administration, the health ministry and national police force is investigating how the faulty vaccines entered the distribution network, the official Xinhua News Agency reported on Monday. AP

Alaska volcano calming after eruption; alert downgraded

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NCHORAGE, Alaska—The activity level of an Alaska volcano has declined after the mountain erupted with a massive ash cloud that prompted the cancellation of dozens of flights. The US Geological Survey (USGS) said in a news release late on Monday night that the intensity of the eruption had “declined significantly.” Pavlof Volcano, one of Alaska’s most active volcanoes, is 625 miles southwest of Anchorage on the Alaska Peninsula, the finger of land that sticks out from mainland Alaska toward the Aleutian Islands. The volcano in the 8,261-foot mountain erupted about 4 p.m. on Sunday, spitting out an ash cloud that rose to 20,000 feet. Lightning over the mountain and pressure sensors indicated eruptions continued overnight on Sunday. By 7 a.m. on Monday, the ash cloud had risen to 37,000 feet and winds to 50 mph or more had stretched it over more than 400 miles into interior Alaska. “It’s right in the wheelhouse of a lot of flights crisscrossing Alaska,” said geologist Chris Waythomas, of the USGS, part of the Alaska Volcano Observatory, along with the University of Alaska and the state Division of Geological and Geophysical Surveys. In its statement late on Monday, the USGS said the volcano’s activity decline began around noon on Monday and that by late at night a continuous emission was no longer being observed by satellite. Consequently, a volcano alert—that had been at its highest level, warning of hazards both in the air and on the ground—was downgraded from a warning to a watch. But the agency said that a significant eruption was still possible. Earlier in the day, Alaska Airlines said it canceled 41 flights, affecting about 3,300 customers heading to Fairbanks, Bethel, Kotzebue, Nome, Barrow and Deadhorse. The airline said it will resume its 54 regularly scheduled flights on Tuesday if conditions improve. Volcanic ash is angular and sharp and has been used as an industrial abrasive. The powdered rock can cause a jet engine to shut down. USGS geologists have compared it to flying into a sand blaster. An eruption of Mount Redoubt in December 1989 sent out an ash cloud 150 miles that flamed out the jet engines of a KLM flight carrying 231 passengers to Anchorage. The jet dropped more than 2 miles before pilots were able to restart the engines and land safely. “We just simply will not fly when ash is present,” Alaska Airlines Spokesman Bobbie Egan said. Waythomas had received no reports of ash falling in communities. The closest community, Cold Bay, is 37 miles southwest of the volcano, opposite of where the wind was blowing ash. Geologists call Pavlof an open-system volcano, Waythomas said. “The pathways that magma follows to the surface are pretty open in a volcanological sense,” Waythomas said. AP

ANGKOK—Thailand’s proposed new constitution was unveiled to the public on Tuesday, amid criticism that the charter is undemocratic and gives too much power to the military that staged a coup two years ago. The draft will be put to a referendum in August, followed by elections that junta chief Prayuth Chan-ocha has promised for 2017. The referendum will mark the first time Thais return to the ballot box since Prayuth led a May 2014 coup that toppled an elected government and suspended democracy in the Southeast Asian country. Prayuth has justified the military takeover as necessary to restore order after years of political upheaval and to rid Thailand of corruption and abuse of power. He has insisted that the new constitution will help him achieve those goals. Politicians from both sides of Thailand’s political divide have opposed the proposed constitution, which includes clauses for a fully appointed Senate, with seats reserved for senior military officers. In the run-up to its release, the military government banned criticism of the charter, and over the weekend detained a politician for a Facebook posting saying Prayuth should resign if the constitution is rejected at the polls. Prayuth has vowed to hold elections in mid-2017, but has not specified what will happen if the constitution is rejected. It is widely believed that the army is concerned about stability when the throne passes from ailing 88-year-old King Bhumibol Adulyadej, who has been the constitutional monarch since 1946. The military’s critics say the army wants to keep its grip on power to ensure a smooth succession. Prayuth has restricted free speech in Thailand since the coup and barred public protests, amid other crackdowns on civil liberties. The junta has generally equated criticism of its actions with incitement to unrest and instability. AP

Infant’s 5-month life points to hunger’s spread in Yemen

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AZYAZ, Yemen—The baby was born in war, even as planes blasted his village in Yemen. Five months later, Udai Faisal died from war: his skeletal body broke down under the ravages of malnutrition, his limbs like twigs, his cheeks sunken, his eyes dry. He vomited yellow fluid from his nose and mouth. Then he stopped breathing. “He didn’t cry and there were no tears, just stiff,” said his mother, Intissar Hezzam. “I screamed and fainted.” The spread of hunger has been the most horrific consequence of Yemen’s war since Saudi Arabia and its allies, backed by the United States, launched a campaign of air strikes and a naval blockade a year ago. The impoverished nation of 26 million people, which imports 90 percent of its food, already had one of the highest malnutrition rates in the world, but in the past year the statistics have leaped. The number of people considered “severely food insecure”—unable to put food on the table without outside aid—went from 4.3 million to more than 7 million, according to the World Food Program. Ten of the country’s 22 provinces are classified as one step away from famine. Where before the war around 690,000 children under five suffered moderate malnutrition, now the number is 1.3 million. Even more alarming are the rates of severe acute malnutrition among children—the worst cases where the body starts to waste away—doubling from around 160,000 a year ago to 320,000 now, according to United Nations Children’s Fund estimates. Exact numbers for those who died from malnutrition and its complications are unknown, since the majority were likely unable to reach proper care. The Saudi-led coalition launched its campaign on March 26, 2015, aiming to halt the advance of Shiite rebels known of Houthis who had taken over the capital, Sanaa, and stormed south. The Houthi advance was halted. But they continue to hold Sanaa and the north. In the center of the country, they battle multiple Saudi-backed factions supporting the internationally recognized government that tenuously holds the southern city of Aden. The fighting and the heavy barrage of air strikes have killed more than 9,000 people, including more than 3,000 civilians, according to the UN Human Rights Office. Coalition air strikes appear to be “responsible for twice as many casualties as all other forces put together,” Zeid Ra’ad Al Hussein said. The coalition argues that the rebels often use civilians and civilian locations as shields for their fighters. Around 2.3 million people have been driven from their homes. Strikes have destroyed storehouses, roads, schools, farms, factories, power grids and water stations. AP

A10 Wednesday, March 30, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

To those who live for others

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efore the peace and quiet of Holy Week get overwhelmed by the chatter and jabber of daily life, we pause to recall the lives of three men who lived for others, caring for others in the most selfish of surroundings. We refer to Alfredo de la Rosa, Antonio Cabangon Chua and Jovito Salonga—all of whom left positive imprints in the hearts of people they touched. We start with de la Rosa, the obscure one of the three. The editor and publisher of one of Manila’s respected daily newspapers until his eyesight began failing him some 10 years ago, Fred was not a typical journalist. He was quiet in his ways, never given to proclamations of his greatness, of his wide-ranging learning. A man of tremendous wit, he could turn an ordinary accident into the most historic occurrence with his satirical pen. What made him stand out among his peers was the encouragement he gave to aspiring young writers and reporters to realize their potential in journalism and literature. In his late years, he devoted his attention to people with visual disabilities. He died with the adulation of the people he served. We focus next on Cabangon-Chua, owner and publisher of our own BusinessMirror. Tony started life under the sole care of his mother, having lost his father at an early age. By sheer determination, he worked his way through college. Literally working 24 hours a day, he built an empire of businesses spanning many sectors, estimated to be worth not in the millions, but billions of pesos. Later, he became Philippine ambassador to Laos. But the most outstanding aspect of his life was the generosity he showed to people he came in contact with and to causes that help uplift the ordinary folk. Nowhere was the love and admiration for him more evident than in Mandaluyong, where he grew up. There, in the church in the middle of the town, the people gathered and stayed through the night to pay their last respects to the man they loved and admired. Last but not least is Salonga. A bar topnotcher, Jovie dedicated his life to public service. From hard-working congressman, to a committed adversary of the martial-law dictatorship and defender of oppressed people under that regime, to senator of the Republic and later to President of the Senate, he never wavered in his commitment of loyal service to the Filipino people. Never was he associated with any act of wrongdoing in and out of government. One of his last acts was to spearhead the Senate group that terminated the United States military bases in the Philippines. In the last years of his life, as statesman par excellence, he provided counsel of loyalty and dedication to honest governance to all people who came to seek his guidance and wisdom. Though this piece is meant to give tribute to the eminent men mentioned above, it is, likewise, our intention to honor all Filipinos who dedicated their lives to the service of others. May their examples serve as beacons to guide us in our own ponderous existence.

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regional offices n DXQR -93dot5 HOME RADIO CAGAYAN DE ORO E-MAIL ADDRESS: homecdo@yahoo.com ADDRESS: Archbishop Hayes corner Velez Street, Cagayan de Oro City CONTACT NOs.: (088) 227-2104/ 857-9350/ 0922-811-3997 n DYQC -106dot7 HOME RADIO CEBU E-MAIL ADDRESS: homecebu@yahoo.com ADDRESS: Ground Floor, Fortune Life Building, Jones Avenue, Cebu City CONTACT NOs.: (032) 253-2973/ 234-4252/ 416-1067/ 0922-811-3994 n DWQT -89dot3 HOME RADIO DAGUPAN E-MAIL ADDRESS: homeradiodagupan@ yahoo.com ADDRESS: 4th Floor, Orchids Hotel Building,

All About Social Security

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hat happens if a member passes away without claiming his or her retirement benefit, even though he or she was entitled to it?

This was the case of a member who I shall call Maria, who was born in September 1927 and turned 60 in September 1987. At that time, she was already separated from employment and had 153 monthly contributions posted in her records. For some reason, however, she did not file her retirement claim up to the time of her death in February 2014,

at the age of 87. Maria was single and based on Social Security System (SSS) records, both her parents and her sister Glenda had predeceased her. She was survived by her other sister Anna and Glenda’s children Cathy and Dan. Will Maria’s surviving heirs be entitled to her accrued retirement benefit? A legal opinion issued by the

Rizal Street, Dagupan City CONTACT NOs.: (075) 522-8209/ 515-4663/ 0922-811-4001 n DXQM – 98dot7 HOME RADIO DAVAO E-MAIL ADDRESS: home98dot7@gmail.com ADDRESS: 4D 3rd Floor, ATU Plaza, Duterte Street, Davao City CONTACT NOs.: (082) 222-2337/ 221-7537/ 0922-811-3996 n DXQS -98dot3 HOME RADIO GENERAL SANTOS E-MAIL ADDRESS: homegensan@yahoo.com ADDRESS: 2nd Floor, Penamante Clinic Tiongson Street, General Santos City CONTACT NO.: 0922-811-3998 n DYQN -89dot5 HOME RADIO ILOILO E-MAIL ADDRESS: homeiloilo@yahoo.com

ADDRESS: 3rd Floor, Eternal Plans Building, Ortiz Street, Iloilo City CONTACT NOs.: (033) 337-2698/ 508-8102/ 0922-811-3995 n DWQA -92dot3 HOME RADIO LEGAZPI E-MAIL ADDRESS: homeradiolegazpi@ yahoo.com ADDRESS: 4th Floor, Fortune Building, Rizal Street, Brgy. Pigcale, Legazpi City CONTACT NOs.: (052) 480-4858/ 820-6880/ 0922-811-3992 n DWQJ -95dot1 HOME RADIO NAGA E-MAIL ADDRESS: homenaga@yahoo.com ADDRESS: Eternal Garden Compound, Balatas Road, Naga City CONTACT NOs.: (054) 473-3818/ 811-2951/ 0922-811-3993

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SSS on November 23, 2000, stipulates that the retirement benefit is payable to the member himself or herself and, therefore, any accrued retirement benefit will form part of the estate of the deceased member and should be settled in favor of his or her heirs. In the case of Maria, her accrued retirement pension will be inherited by her surviving legal heirs, namely, Anna, a sister; and Cathy and Dan, a niece and a nephew, respectively. Since Maria had no direct ascendant and descendant, the rules on Intestate or Legal Succession, as provided under the New Civil Code of the Philippines, governed the disposal of her estate. Following the provisions in the New Civil Code, the accrued retirement pension was divided in equal parts between Maria’s siblings, Glenda and

Anna. Glenda’s share was divided equally between her two children Cathy and Dan. In answer to the question above, any unclaimed retirement pension of a member who passes away, but is already qualified to receive such benefit, will accrue to the account of the member and, thus, become part of his or her estate. The appropriate provisions on the settlement of estate in the New Civil Code will apply in the payment of the benefits to the surviving heirs.

To know more about the benefits under the SSS, you can join our live video streaming on the SSS Facebook page. Watch out for the next schedule of this interactive video streaming. Visit the SSS Facebook page, the SSS web site at www.sss.gov.ph, call our 24-hour call center at 920-6446 to 55, and e-mail us at member_relations@sss.gov.ph for more information.

An innovative solution to the monster traffic problem

Max V. de Leon Jennifer A. Ng Dionisio L. Pelayo Vittorio V. Vitug

BusinessMirror is published daily by the Philippine Business Daily Mirror

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Chairman of the Board & Ombudsman President VP-Finance VP-Corporate Affairs VP Advertising Sales Advertising Sales Manager Group Circulation Manager

Accrued retirement pension of a deceased member

Michael Makabenta Alunan

on the contrary

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nnOvative win-win solutions to the horrendous worsening traffic on Edsa and other major Metro Manila thoroughfares are still possible, given the same limits of road space, the same number of public-transport vehicles and the same tight passenger capacity of the Metro Rail Transit (MRT)/Light Rail Transit (LRT) train system. However, the genuine long-term solutions are building more infrastructure, particularly more effective railway mass-transit systems and more efficient public buses, which must be combined with a roadcongestion pricing policy, each one of which merits separate discussion in the future.

Solution takes some imagination

What it takes is a little imagination and a simple application of the principles of spatial management to solve the traffic that is causing losses of P2.4 billion a day, a Japan-funded study says. Some may disagree vehemently, and insist on their views on what is right. On the contrary, my proposal may be right for a given point in time. After all, what is right is relative. In Filipino, right means tama. This tempts me to suggest the idea of an advocacy group, which others may pick up and call the Transport Advocates’ Movement for Action (TAMA). It may not always claim to be right, but it may just be right at certain times. Its inherent message for immediate action simply articulates the mass frustration of both

the commuters and motorists who get stuck in daily traffic, which will get worse, considering the yearly massive sales of vehicles. In 2015 sales of vehicles hit 310,000, about one-third of which were registered in Metro Manila. Maybe 60 percent find their way into Metro Manila for those registered in nearby Central Luzon and the Calabarzon regions, from where many motor to work and business or shop occasionally in Metro Manila, particularly during holidays. Standing policy? This innovative solution is premised on the fact there is no way to widen road space, and the arrival of new MRT coaches will take time. This viable and immediate solution effectively increases the passenger capacity of buses by reducing the number of seats from five seats to only two seats per row, or limiting the seats around the inner section of the bus, similar to seats on a train, which will be reserved for the handicapped, elderly and pregnant women. If this is possible for the MRT and the LRT, why can’t it be applied temporarily to city buses? This can literally be called Department of Transportation and

Communications’ (DOTC) “standing policy,” which will “allow for wider aisles and more standing room to accommodate more passengers by 50 percent to 80 percent. Faster turnaround means less traffic. The wider aisles will allow faster disembarking and loading, and, therefore, lesser time spent at bus stops, thus resulting in faster turnovers and time savings by at least 20 percent. The DOTC can do time and motion studies on this by experimenting on a few buses on a pilot basis. The higher revenue returns can mean two things: For one, bus operators will no longer push for higher fares during fuel-price hikes, which is good for commuters. Second, drivers will earn more with more passengers and faster turnover. Thus, it will be easier to impose limits on working hours to avoid accidents caused by sleepy drivers working overtime, some of whom even use prohibitive drugs just to keep themselves awake. However, this must be strictly adopted for Metro Manila buses, which experience slow-moving traffic. Spatial management means optimizing space, or increasing passenger capacity of existing public buses. It also means maximizing road space through faster turnover of commuters and motorists so that those coming at later-time schedules do not compete for road space and transportriding capacities with those coming much earlier who are still stuck on the road due to slow turnover.

Ironic MRT reverse rides for faster turnovers

A friend of mine, transport Koop organizer Dave Garcia, said this principle can also be applied to the MRT and LRT trains, despite the decline

in the number of coaches owing to obsolescence. On the contrary, despite the limited number of coaches, it is still possible to increase the MRT’s passenger capacity by reducing the train stops to three stops one-way, when the volume of passengers is heavy (i.e., North to South in the morning rush, and Pasay Taft to North during the evening rush), but allowing train passengers to commute back in the opposite direction where the volume of passengers is light, until they reach their intended destinations. Perhaps, we can have three midway stops from North to South in the morning rush, say, at Cubao, Shaw and Ayala, before reaching the final destination at Pasay Taft. If one has to get off before any of these major stops, one simply has to get off way beyond, go to the other side, then ride back to one’s intended destination. This will enable the MRT trains to make faster turnarounds, so as to avoid the one-way buildup of commuters, whose resulting long queues have spill over effects and the resulting mad scramble for alternative-bus rides onto Edsa. The solutions presented here do not entail added cost for the government. They simply require a simple executive fiat from our policy-makers. We just hope our transport leaders will take notice of the common good, rather than get bogged down with indecision, incompetence and squabbles over deals and delivery of services from the MRT, car plates and drivers’ licenses. I hope, they have the WHEEL (will) power to get the transport sector moving. E-mail: mikealunan@yahoo.com.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Real investment adviser sold some fake investments

T

When I was young,

By Matt Levine | Bloomberg View

here are a lot of creative and amusing investment frauds in the world, but there is one great simple investment fraud, one original source from which all the others developed:

Tell people that you have a risk-free investment that will give them their money back, with 15-percent interest, any time they want. Take their money. Why don’t people do this all the time? Well, I mean, they do. It’s a pretty popular fraud. But it is usually a fairly small-scale and labor-intensive fraud, because most investors who are at all sophisticated realize that the risk-free 15-percent return is itself a red flag. Real investments are risky or uncertain or at least illiquid; the proper response to a guaranteed liquid 15-percent return is “what’s the catch?” So the charges that the Securities and Exchange Commission and federal prosecutors brought today against Andrew Caspersen are surprising in that Caspersen allegedly used exactly that pitch to take $25 million from a single hedge fund, which is a level of size and sophistication where you wouldn’t expect people to fall for it. But here’s what Caspersen’s investor allegedly bought: The November Note stated, in part, that: (i) the SPV would pay the Foundation the principal sum of $25 million “in immediately available funds” together with interest on the unpaid principal; (ii) interest on the outstanding unpaid balance shall accrue at an annual rate of 15 percent; (iii) interest shall be paid quarterly; (iv) upon 90 days’ notice to the SPV, the Foundation may redeem the principal sum of $25 million; (v) the SPV “shall maintain cash or cash equivalents in an amount equal to or greater than” the total of the outstanding principal and accrued but unpaid interest. So the investor—a charitable foundation affiliated with “a multinational hedge fund, headquartered in New York”—was expecting a 15-percent annual return on an investment with 90-day liquidity fully collateralized by cash. That promise is itself pretty suspicious, and Caspersen’s alleged explanation of why this too-good-tobe-true opportunity was available was even weirder: Supposedly, Coller Capital, a firm that buys secondary stakes in private-equity funds, had agreed to take out a loan to buy a secondary stake in a private-equity fund run by Irving Place Capital, but turned out not to need the loan, but “was obligated to pay interest” anyway, because it “had already agreed to the Loan,” so Caspersen was raising money to lend to Coller to just park it and pay 15-percent interest. That...doesn’t really happen? Any sophisticated investor might suspect that something was amiss, except that Caspersen himself was impeccably credentialed to pull it off. Caspersen was a managing director in the Park Hill Group, a unit of PJT Partners (and formerly of Blackstone) that really was in the business of marketing and funding secondary transactions in privateequity stakes. Irving Place investors really were selling stakes in their fund, and Coller really was reported to be a buyer. Caspersen allegedly told the investor that his own family office was investing in the loan, and the Caspersen family office really did, at one point, manage $1 billion. The loan was—according to the complaint— fictitious, and Park Hill, Coller and Irving Place all had nothing to do with what Caspersen was selling. But, besides the silliness of the investment opportunity itself, the other details had the ring of truth. I mean, not all the other details. After Caspersen hooked the foundation for $25 million, he tried for another score, and earlier this month he allegedly asked the foundation for another $20 million. Again the pitch was pretty ridiculous—another (fictitious) investor had redeemed out of the magical 15percent notes, but Caspersen “had convinced Firm-1 [i.e., Coller] to reissue the other investor’s promissory note to new investors.” That is, Coller had taken out a loan at 15-percent interest, realized that it didn’t need the money, paid back part of the loan—and then Caspersen convinced Coller to take out another loan that it didn’t need? Come on. The investor was, I guess, suspicious at this point, and told Caspersen that he wanted to speak to “Individual-3,” supposedly a Coller employee who had signed the documents for the first loan: In response, Caspersen sent an e-mail to Individual-1 [the hedge-fund employee

who had invested the $25 million] and to an e-mail address containing both the name of Individual-3 [the supposed Coller employee] and the name of Firm-1 [Coller Capital] (the “e-mail address”), to set up a conference call for later that day. You can probably guess where the Justice Department is going with this: Later that day, a representative of Firm-3 (Individual-1’s employer) informed Individual-1 that the domain name of the e-mail address had been registered that same morning, approximately 20 minutes after Individual-1 requested a telephone call with Individual-3, and that the domain name was not the same as Firm-1’s actual domain name. Individual-1 also was told that a representative of Firm-3 had called Firm1’s New York office and was told that no one named Individual-3 worked at Firm-1. Coller’s actual domain name is collercapital.com. I hope the fake e-mail address was, like, john.doe@noreallyitscollercapital.com. On learning it was fake, the investor called Caspersen, who I have to say handled it with aplomb: He “responded that he found the information ‘strange,’ and that Caspersen would get to the bottom of it and call Individual-1 back.” And then, instead of running to the airport like I would have, he really did call the investor back: Caspersen further stated that an analyst at Firm-2 [Park Hill] had provided Caspersen with contact information for Individual-3, and that things “don’t look very good” for a colleague of Caspersen’s. That is some smooth deflection of blame. It didn’t especially work: That was like three weeks ago, and Caspersen was arrested this past weekend, which is probably some sort of speed record for something like this unraveling. Caspersen had also allegedly tried to raise $50 million from another investor, but that investor more or less uttered the magic words (“legal due diligence”), and Caspersen vanished. This scheme was too silly to survive even the mention of due diligence. The saddest part may be what Caspersen did with the money. A total of $27.5 million went into the SPV’s bank account—$25 million from the investor, and $2.5 million from, presumably, Caspersen himself. Of that, $8.1 million allegedly went to a Park Hill bank account “to cover up an earlier unauthorized wire transfer of the same amount Caspersen had caused to be made to a bank account he controlled” rather than to the Park Hill bank account. The criminal complaint just sort of leaves that there. Caspersen...apparently embezzled $8.1 million from Park Hill? Allegedly? Or, like, quasiallegedly? Hintedly? And then paid back Park Hill before anyone noticed, by taking funds from a client? Best not to ask. Caspersen allegedly blew most of the rest of the money—$14.5 million or so—trading options on the Standard & Poor’s (S&P) 500 Index, which is a last refuge of the desperate, the financialmarkets equivalent of the roulette tables. Caspersen allegedly just made leveraged bets on whether the stock market would go up or down. He had no particular insight into whether the stock market would go up or down, and so, utterly predictably, those bets did poorly, and he lost almost all of the money he used to trade options. Obviously, if I managed to get clients to wire $25 million to my personal account, I would not sit around gambling on S&P 500 options; I’d be on the next plane to a nonextradition country with good beaches. But Caspersen—whose father was “immensely wealthy” and died in a somewhat mystifying suicide in 2009, leaving his sons with encumbered trust funds—presumably was not doing all of this just to fund a long vacation away from the US justice system. It is pretty hard to know why he was doing it, really. (Caspersen’s attorney declined Bloomberg News’s request for comment on the charges.) That’s the thing about pulling off this sort of thing on a large scale. Sure, you can go around the country raising $10,000 at a time from unsophisticated retirees by promising them high risk-free returns and then stealing the money. But that is risky and exhausting. And to do this trade in size, $25 million at a time, just offering a fake 15-percent return isn’t enough.

Teddy Locsin Jr.

Free fire

I

read about an intriguing trinity. Three persons united almost by nothing but courage. One was the poet Percy Shelley; the other, the poet George Gordon, Lord Byron; and the third had no achievements in their field nor in any other endeavor but mystery. Yet, in a fleeting blaze of glory, his fame would equal the fame of the other members of that trinity. His name was Trelawney—just a surname, and I am not sure of how to pronounce it. Yet, of the three, it was he who always stood out in this young man’s imagination. Of Trelawney, it was said that when Percy Shelley washed up on the shore of a lake, the body was put on a funeral pyre and set aflame. As the flames wrapped around the body, and broke it open in places, Trelawney’s hand shot out and pulled the smoking heart from the poet’s chest. That image stuck in my mind. So, one of the trinity was gone, leaving two. Both left for Greece to fight for

the freedom of another race—Byron to die before the fight, Trelawney to fight and marry the daughter of a king. When Psinakis came into view in our society back then, by marrying the beautiful daughter of a man who was all but a king, the image of Trelawny came into my head, and that is where it stayed. Martial law came, the Lopezes were exiled, though one was detained along

Wednesday, March 30, 2016 A11

with the son of a politician with a name of equal fame. One evening, I went, as I usually did, to visit a distant cousin at her home; we both assumed it was watched by the military. Her brother shared Geny Lopez’s detention. I knew that she would not be there; but I went just the same to keep up the pretense that she was there. I don’t recall seeing her again, until we met again in San Francisco. That night her brother and Geny Lopez were spirited away, in a daring escape organized by the only man I knew who would do such a thing. There were other stories about him, about how this foreigner chose to fight for our freedom—not with words but actions. Indeed, his actions were so bold that when I suggested to the Palace that he be honored for the daring deeds he’d performed, I was made to understand: the thought was appreciated, but a public honor, so soon after the fall of the US-backed dictator, would not be taken kindly by a government that frowned on freedom fighters

really fighting dictatorial clients like Marcos. So Psinakis went on with his life, unofficially honored by his own choice. But you could tell he did not feel in the least diminished by the lost public honor. A hero is not chosen by the people he saves but by the man himself, when he takes the solitary and the dangerous decision to be one. Perhaps, such men are better honored by their enemies than by the people they save. Much later, I would see Psinakis…. Oh, he could never be just Steve to people like me. He was old, often in a wheelchair, but never frail. The fire in his eyes never dimmed, and when they looked at me, into my mind there rushed again the name and image of the English adventurer who went to a foreign land to fight for the freedom of another race. And whose spirit—who knew?—might have left Greece, 150 years later, to return the favor to yet another race. Sleep well, modern Achilles, in your family’s, and in your adopted country’s fond and grateful embrace.

Consolidation in the insurance industry: Charter Ping An sale to AXA PHL Atty. Dennis B. Funa

INSURANCE FORUM

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hilippine AXA Life Insurance Corp. (AXA Philippines) has acquired 100 percent of Charter Ping An Insurance Corp. (CPA) from GT Capital Holdings (GTCH) for $48.3 million (or €45 million), or P2.3 billion. The purchase signaled the entry of AXA Philippines into the nonlife-insurance market, and consolidating the life and nonlife interests of GT Capital in one entity and under AXA auspices. AXA Philippines is now able to offer “a complete suite of protection products.” The share-purchase agreement (SPA) was executed on November 5, 2015. In a letter to Severinus Hermans, president and CEO of AXA Philippines, dated December 22, 2015, the insurance commissioner granted approval to the proposed acquisition pursuant to Section 302 of the Amended Insurance Code and CL 2014-37, dated September 5, 2014. AXA Group was represented by AXA Asia. With this acquisition, the operations of the two insurers will remain separate, and CPA may be a wholly-owned subsidiary of AXA Philippines. Earlier, or in October 2013, GT Capital purchased 66.7 percent of Charter Ping An from First Metro Investment Corp. (FMIC) for P1.4 billion. This was followed in

January 2014 by the acquisition by GT Capital of the remaining 33.3 percent of Charter Ping An for P712 million, making GT Capital the 100percent owner of CPA. AXA Philippines is a joint venture among the AXA Group (AXA Asia), GTCH and FMIC, a subsidiary of Metropolitan Bank & Trust Co. (Metrobank). GTCH owns 25.33 percent, while FMIC owns 28.18 percent of AXA Philippines, for total holding of 53.5 percent. AXA Group owns 45 percent, with the remaining 1.49 percent owned by minority stockholders. It is, as of 2015, the second-largest life-insurance company in the Philippines in terms of total premium income. AXA Philippines started operations in the Philippines in 1999, pioneering in bancassurance. As of 2015, AXA Philippines gross premiums

amounted to P17.2 billion, a 36-percent increase from P12.6 billion the year before. Its life-insurance net income increased 31 percent yearon-year to P1.1 billion. Charter Ping An is a nonlifeinsurance company wholly-owned by GTCH. It sells fire, motor car, marine cargo, personal accident, bonds, casualty and engineering insurance. It is, as of 2015, the fourthlargest nonlife-insurance company in terms of net premiums written and premiums earned, and fifth in terms of gross premiums written (GWP). In 2014 its GWP was $73 million (€68 million). It has a 21-percent annual average growth in GWP between 2011 and 2014. Its net profit for the year 2014 was €1.8 million with gross earned premiums of €64 million. The AXA Group, on the other hand, is, as of 2012, the No. 1 nonlife international insurance company and No. 3 international lifeinsurance company in Asia. It was ranked as No. 1 global insurance brand for seven consecutive years, from 2009 to 2015, by Best Global Brands. It has 103 million customers in 59 countries. It was ranked as the 20th-largest corporation by the 2015 Fortune Global 500 list. It offers life and savings, property and casualty insurance, and asset management. Forty-one percent of its pretax earnings come from its nonlife business. Speaking about its presence in the Philippines,

Investors are in denial about China By Christopher Balding Bloomberg View

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s you’ve, no doubt, noticed, companies and investors around the world are feeling the pain of China’s economic slowdown. They’re worried about all the layoffs, cuts to surplus capacity and deleveraging to come on the mainland, which will further depress demand. The natural temptation is to blame China for the world’s woes. But outsiders should focus just as much on their own missteps—starting with the widespread misperception that “this time” would be different. Back in 2009, as China unleashed a massive fiscal stimulus and investment spree in response to the global financial crisis, the rest of the world was all too willing to believe the impossible. Aided by consultant research predicting decades of explosive growth, companies placed huge bets on China and expected to ride the never-ending boom to riches. Amid the gold rush, they bulked up to sell China T-shirts or tons of iron ore. They urged their governments to sign free-trade deals

with Beijing. Commodity producers heedlessly expanded capacity, believing that a 10-percent growth would continue indefinitely. Consumer brands rushed to set up flagships in third-tier Chinese cities. Shipping companies scrambled to build new fleets to meet an expected explosion in global trade. However, as with so many previous bouts of irrational exuberance, this time wasn’t really different. The ruthless rules of supply and demand still applied. And now, the longer that painful decisions are delayed, the harder they’ll become. Commodities firms, in particular, are learning that lesson the hard way. As prices rose with Chinese demand, they made large up-front investments financed by borrowing— often on a 20-year timeline, in the expectation that growth would last and last. Now, with China’s economy slowing and the prices of everything from oil to metals plummeting, the bills are coming due. Major iron-ore firms, which had predicted that Chinese steel demand would keep rising until about 2030, are now looking at substantial overinvestment and deteriorating credit.

Dairy farmers, who increased their herds with future Chinese consumer demand in mind, are feeling the pinch as milk prices plunge. After years of ramping up production to fuel China’s expected growth, oil-producing countries from Saudi Arabia to Norway are facing grim decisions about their public finances. Russia is rapidly draining its sovereign wealth fund. Venezuela is pleading with China for loans—on top of the nearly $60 billion already doled out—to stave off collapse. Pundits are warning that the large debt load of US shale-gas and oil producers could pose greater risks than subprime lending did a decade ago. No less so than China, the rest of the world needs to face up to some new realities. First, the golden age of Chinese construction is over. There’s now enormous surplus capacity in virtually every industry that requires fixed-asset investment. Companies can no longer rely on the “Beijing put” of new government stimulus to boost growth. Iron-ore producers and copper miners all need to begin a painful process of downsizing and deleveraging—just as China’s

A X A Asia Regional CEO JeanLouis Laurent Josi stated that AXA Group’s “close partnership with GT Capital and Metrobank has enabled us to build a strong presence in this high-growth market, and this milestone will create new opportunities for further growth, as well as to help enhance the local insurance sector with a wider range of offerings.” Metrobank is the No. 2 bank in the Philippines in terms of assets and deposits, with 938 branches nationwide, as of 2014. It has been in bancassurance partnership with AXA Philippines since 1999. The same arrangement is true with its sister company, the Philippine Savings Bank, a thrift bank. GT Capital is a listed business conglomerate of George Ty, with ownership in Toyota Motor Philippines Corp., Federal Land Inc., Metrobank, Global Business Power Corp., AXA Philippines and Charter Ping An. A notable effect of the acquisition is the extension of its bancassurance partnership with Metrobank to cover property and casualty (P&C) insurance, as well. The acquisition also signified their confidence in the growing P&C market, which still has a low penetration rate of only 0.45 percent of GDP as of 2014. Atty. Dennis B. Funa is currently the deputy insurance commissioner for Legal Services of the Insurance Commission. E-mail address: dennisfuna@yahoo.com.

bloated state-owned enterprises do. Producers around the world haven’t faced up to the new normal. Second, companies of all stripes have to put in the effort to understand China better. Expectations of double-digit growth, regardless of how poor the performance, have vanished. Luxury brands that once hoped their Beijing flagships would smooth the balance sheets at European headquarters need to recognize that different markets require different strategies, and that shops in China won’t run on autopilot. They need to compete. Third, companies and countries alike need to face up to their own irrational exuberance. Whether it’s failing to diversify, spending recklessly on the back of high prices, or taking on too much debt, fundamental mistakes can’t be blamed on China. Doing so only delays the inevitable. Few investors seem to fully appreciate the balance-sheet reckoning that is coming. Failing to address the global supply glut only increases the risk of a larger correction. We know that because this time isn’t different: The bill always comes due.

2nd Front Page BusinessMirror

A12 Wednesday, March 30, 2016

Blueprint to attain 9% growth agenda bared Continued from A1

next administration will adopt DTI’s main industrial policy, it can improve the national output by one to two percentage points in the next six years. “From the 5 percent to 6 percent we have, we can achieve 7 percent to 9 percent starting in the next six years,” Rodolfo said during the media presentation of the CNIS. The growth projection hinges on the assumption that agriculture can grow to 3 percent, and services can diversify into sources of growth other than business-process outsourcing (BPO). “We assume services can grow from the current rate of 6 percent to 8 percent. And if industry can also grow from 6 percent to 10 percent in six years, I think a GDP growth of 7 percent to 9 percent is possible,” Rodolfo added. Agriculture growth, at less than 1 percent now, is the biggest challenge, the BOI managing head pointed out. “Agriculture is the main hurdle. If we can make it grow to 3 percent, which is doable, we can have that growth range in six years,” he said. The DTI will initially focus on five key sectors in its “mother pro-

gram” that charts the Philippines’s industrial policy and develop local industries, based on the CNIS. Trade Assistant Secretary for Industry Development Rafaelita Aldaba named Manufacturing, Tourism, Information TechnologyBusiness-Process Management (Knowledge-Process Outsourcing), Agribusiness, and Infrastructure and Logistics as the “five priorities” under the CNIS. The CNIS was presented to the media, government, different industry stakeholders and the private sector on Tuesday. Regarded as the main blueprint for the country’s industrial development, the CNIS was crafted for three years by the DTI’s Industrial Policy group. “CNIS is the mother of all of these programs, a comprehensive plan to put together our dreams and projections on industry, agribusiness and ser vices,” Trade Secretary Adrian S. Cristobal Jr. said in his opening remarks during Tuesday’s CNIS presentation. Among its main objectives is to integrate the major sectors of manufacturing, services, and agribusiness, mining and fishery. To link these sectors, the DTI will first focus and improve the

competitiveness of the respective subsectors. The DTI has chosen these major industries based on their strong backward and forward linkages to other subsectors, apart from their substantial contribution to employment. Manufacturing will enable local industries to be integrated to global value chains in multinational companies; agribusiness will improve economic development in the country’s regions; and services is a cross-cutting sector to all industries. The DTI also made a timeline of growth for each of these major sectors. For manufacturing, Phase 1 (2014-2017) will include development of automotive, aerospace parts, electronics, garments, food, resourcebased industries, chemicals, furniture, tool and die, and shipbuilding. For agribusiness, pivotal to responding to rural poverty, the DTI is eyeing development of highvalue crops, such as rubber, coconut, mangoes, banana, palm oil and other emerging high-value crops in the initial phase. Physical infrastructure and human resource development is also in the Phase 1 of agriculture. An industrial strategy is needed

for the agricultural sector as there remains huge disparities in agricultural productivity among the country’s regions. The National Capital Region, Calabarzon and Central Luzon have the highest manufacturing share to gross regional domestic product. Other regions, namely, the ARMM, Caraga, 4B, 5 and 9, are sorely underdeveloped in terms of agriculture, leading to high poverty incidence. Services development hinges on the nurturing of labor-intensive sectors like tourism, construction, ship repair, maintenance, repair and overhaul operations. An important point for services development is moving up the value chain in BPO. “We are already No. 1 in voice services, but the challenge is to move from voice to nonvoice, in particular to go into the high-value-added activities under KPO, and link these with services embedded to manufacturing, such as finance, design and engineering,”Aldaba said. The DTI has already started the implementation of a major program under manufacturing: the Comprehesive Automotive Resurgence Strategy (CARS). The CARS Program aims to

make the Philippines an auto manufacturing hub through more parts localization and development of higher-value-added auto parts in the Asean region through a set of incentives. “Under manufacturing, we are currently discussing plans for shipbuilding, as well as other industries such as electronics and chemicals,” Aldaba said, referring to subsectors under the key priority of manufacturing. Tourism remains a major employment generator, while infrastructure and logistics are important in tackling the Philippines’s looming connectivity problem, she added. Cristobal said the five priority sectors are just the initial areas. The new industrial policy is needed as the country’s manufacturing sector, the main driver of industry, is on the rise; and macroeconomic fundamentals has been stable in the past five years. Manufacturing growth has averaged 8.2 percent in the past five years, faster than the growth of national output. However, on the downside, unemployment has consistently stayed above 5 percent since 2013, according to the DTI’s presentation.

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Pagcor. . .

Continued from A1

had been submitted for approval some months before to President Aquino, who has yet to act on the proposal. The Governance Commission on Gover nmentowned and -controlled Corporations (GCG) had already submitted its recommendation to the Office of the President to privatize the commercial functions of Pagcor. The proposal to privatize the state gaming firm was among the 14 pending recommendations to either close down, privatize or merge GOCCs for various reasons, such as redundancy, inefficiency and nonprofitability. Among the 14 GOCCs recommended to be abolished or privatized include some units of the Development Bank of the Philippines (DBP) and Land Bank of the Philippines (LBP), both of which are seen merging as ordered by President Aquino. Other GOCCs that were recommended to be abolished or privatized are the Philpost Savings Bank, the Quedan and Rural Credit Guarantee Corp., the Armed Forces of the Philippines Retirement and Separation Benefits System, Duty Free Philippines Corp., and the Center for International Trade Expositions and Missions. Although Pagcor has its own legislative charter, its privatization may be done through an executive order by the President upon the recommendation of the GCG as provided for by the GCG’s own legislative mandate to promote the financial viability of all GOCCs.