Businessmirror may 02, 2017

The Market of political Influence and Access

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he events in South Korea, moving the President from the Presidential Office into a prison cell, are highlighting the issue of political influence and access as a potential avenue to corruption. Oxfam reports that the 50 largest US corporations moved $1.6 trillion into tax oases in 2015, $200 billion more than in the year before. Meanwhile, this group of tax migrants invested about $2.5 billion into lobby operations “around” the US government, of which $325 million was directed toward tax issues. Obviously, such »continued on A12 political “massage” work is beneficial.

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Tuesday, May 2, 2017 Vol. 12 No. 201

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By Cai U. Ordinario

@cuo_bm

igher infrastructure spending and remittances from overseas Filipino workers would make Philippine economy the third-best performer in Southeast Asia until next year, according to the United Nations Economic and Social Commission for Asia and the Pacific (Unescap).

SENATE LEADERS BACK BID TO REDUCE TRADE BARRIERS IN ASEAN By Butch Fernandez @butchfBM

enate leaders sig na led support on Monday for enabling legislation to carry out Malaysian Prime Minister Najib Razak’s reported bid to cut tariff and nontariff barriers to boost trade and commerce among member-countries of the Asean. Asked if the Philippine Senate is likely to support at least a 50-percent reduction of the nontariff barriers within Asean, Senate President Aquilino L. Pimentel III promptly backed the proposal, even as he added details of the planned cuts still need to be spelled out. “Yes. That idea is consistent with the plan to develop one common Asean market,” the Senate President told the BusinessMirror. Pimentel added, however, senators would also “need to identify those nontariff barriers” in upcoming Senate hearings expected to be called before an enabling bill is submitted for plenary approval. In a brief interview, Senate Majority Leader Vicente C. Sotto

III added the lawmakers also need to first get a firm Palace position on trade issues before Congress starts the process of enacting a law lifting the tariff and nontariff barriers. “We should find out what the Executive department has to say before we look into the proposal,” Sotto said. This developed as Najib was reported over the weekend to have recommended the reduction of trade barriers among Asean members. Najib had suggested in an interview on the sidelines of the 30th Asean Leaders’ Summit the need to adopt a “scorecard approach” to gauge tariff and nontariff gradual reduction schemes. He also asserted the importance of getting firm commitments from Asean members to “reduce costs and simplify procedures” to facilitate free trade. The prime minister made the suggestion amid projections that the estimated $2.6-trillion Asean economy is likely to reach $9.2 trillion by 2050, despite remaining barriers that could hamper trade in the region.

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GDP growth seen hitting 7% in 2018

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By Henry J. Schumacher

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Beating the catch-up game

Manny Villar

THE ENTREPRENEUR

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6.9%

The projected GDP growth of the Philippines for 2017 In the 2017 Economic and Social Survey of Asia and the Pacific, Unescap said Philippine GDP could grow by See “GDP,” A2

or many developing countries, major infrastructure projects, which are needed to drive the economy, are difficult to undertake because of the huge funding involved. Some countries tap the private sector to help in the funding part. In the Philippines the Public-Private Partnership (PPP) Program encourages private corporations to finance and build infrastructure projects, while the government provides for the sites for the projects. To enable the private partners to recoup their investments and generate profits, contracts usually include concessions, which allow the private proponents to collect fees from endusers, such as motorists driving on toll roads. Participants in PPP projects, particularly those entailing huge amounts of funding, usually comprise of consortiums or partnerships between local companies and private foreign investors. Continued on A10

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The Labor Movement: Impact of Herrera law after 28 years By Psyche Roxas-Mendoza @PsycheRoxas

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Part Two

NDER a muggy weather, the air was heavy with a faint stench of rotting garbage in Baseco, Tondo, Manila, a reclaimed land kissed by murky water. This is where the Maribojo couple’s castle stand: a 2x2-foot covered space on the ground floor of a twostory structure made of rusty scrapiron sheets, chicken wire, recycled bamboo and beat-up plywood. Wenie, 59, sat on a wooden bench, where she and husband Leovigildo, 63, rest their back for the night. She smiled after recalling how Leovigildo used to stand next to a brittle, wire mesh of a window and told stories of his life as a laborunion leader in the late-1980s. “I was the last president of the workers’ union at the old Sulpicio Lines,” he said, his eyes squinting at the arid brightness of the noonday sun. In 1986 Leovigildo recounted he was accepted as one of the van drivers in the huge shipping company. He stayed for 18 years, retiring in 2004 at the age of 50. Leovigildo proudly said he received a salary that was above minimum. “I got paid P382.90, when

Members of militant labor groups congregate for a rally in Manila protesting labor-only contracting on May 1. Two decades ago, the government’s labor-industry regulator issued an order allowing for contracting and subcontracting arrangements as “expressly allowed by law”. NONOY LACZA

the minimum wage was around P368. But that was because of our collective bargaining agreement [CBA]. We bargained for decent wages,” he said. A native of Kalibo, Aklan, Leovigildo mentioned he was at Pier 1

when the Edsa People Power broke out in 1986. “It was a historic occasion, but so many things happened later that did not augur well for the trade-union movement,” he said in the vernacular.

No strike, no lockout

ON May 7, 1987, almost two years before the passage of the Herrera law on March 21, 1989, then-Labor Secretary Franklin M. Drilon issued Department Order (DO) 007-87. Continued on A2

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Source: BSP (27 April 2017 )

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A2 Tuesday, May 2, 2017

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The Labor Movement: Impact of Herrera law after 28 years Continued from A1

The DO contained the guidelines that operationalized the “Accord on Industrial Harmony”, forged during the April National Tripartite Conference involving labor leaders, employers and the Aquino administration. It included a “no strike/no lockout clause as a standard provision” in collective bargaining agreements (CBAs) between labor and management. “All provisions of collective bargaining agreements [CBAs] particularly, the no strike/no lockouts clause, shall be strictly enforced,” the DO said. “Henceforth, the no strike/no lockout c lause sha l l be a mand ator y standard provision of all collective bargaining agreements to be submitted to the Department of Labor and Employment [Dole].” The order added: “In this regard, the Director of the Bureau of Labor Relations shall advise all parties concerned to include in their collective bargaining agreements a no strike/no lockout clause as a standard provision.” According to the DO, “All differences, grievances and disputes shall be resolved strictly in accordance with grievance procedures,

GDP. . .

Continued from A1

6.9 percent this year and 7 percent next year. This will make the Philippines the third-best performer in the region where average growth is projected to settle at only 4.7 percent this year and 4.8 percent next year. “Higher oil prices would help boost economic activities in the Middle East, which hosts many Filipino overseas workers. In addition to higher workers’ re-

through joint consultation in labor-management committees, or through conciliation and arbitration so that at all times, all matters and disputes are dealt with and resolved justly and speedily by the proper machinery and/or agency established for the purpose.” In June 1989 Congress passed the Wage Rationalization Act (RA 6727), leading to the creation of various Regional Tripartite Wage and Productivity Boards or Regional Boards that became responsible for prescribing minimum wages per region. RA 6727 ended for good the practice of legislated wages, where Congress determined the amount of minimum wage to be given to workers and thereafter passed a law for its implementation. Labor leaders like Maribojo criticized the implementation of the “no strike, no lockout” policy, as well as the creation of regional wage boards. He said these directives weakened the workers’ right to bargain for decent wages. IN 1997 then-Labor Secretary Leonardo Quisumbing issued Department Order (DO) 10-97. That order amended the rules implementing Books III and IV

of the Labor Code as amended, in particular the rules on labor contractualization. It was the first time the Dole issued a DO expressly stating that, “ labor-only-contracting, as defined herein, shall be prohibited”, while at the same time saying that “contracting and subcontracting arrangements are expressly allowed by law”. The wording of the DO was such that contracting and subcontracting was allowed by law, but that it may be subject to regulations “consistent with the promotion of employment, protection of workers’ welfare and enhancement of industrial peace and rights of workers to self-organization and collective bargaining. It was also stated in DO 10 that “contractors and subcontractors, as well as their employees, are entitled to all the rights and privileges, and are subject to all the duties and responsibilities which the Labor Code, as amended, attaches to every employeeemployer relationship”. The DO 10-97 provided a list of jobs that cannot be contracted, thereby allowing contractualization for jobs not included in the list. Within the years 1990 to 1994

mittances, fiscal support would support household consumption,” Unescap said. Apart from these, Unescap said the government’s budget in 2017, which is over 10-percent higher than in 2016, will boost growth and promote inclusivity in the economy. This is mainly because the increase in the budget is focused on education and infrastructure spending. The national government’s infrastructure plans will also expand capital investment in the country for several years. Unescap also said the country’s

growth will be “mildly affected” by increasing inflation. Inflation is projected to settle at 3.2 percent this year and 3.4 percent next year, from only 1.8 percent in 2016. The average inflation rate in Southeast Asia is seen at 3.2 percent this year and 3.5 percent in 2018. “The inflation rates in 2017 and 2018 are projected to remain below the past trend,” Unescap said. In Southeast Asia, Myanmar is projected to grow the fastest at 7.5 percent this year and 7.6 percent next year. Unescap said Cambodia would be the second fast-growing economy, which would grow by 7.2

Ramos years

the combined share of nonregular workers (casuals, contractuals and part-time workers) in total enterprise-based employment was between 14 percent to 15 percent, according to research conducted by the Asia-Pacific Research Network (APRN) in the year 2000. The APRN study added that the share of nonregular workers went up to 18.1 percent from 1994 to 1995. By 1997 the figure had reached 21.1 percent. This meant that for every five workers, one is either a contractual or a casual worker.

Arroyo and DO 18-02

THE d iscourse on whether contracting and subcontracting arrangements are legal and based on the law resurfaced during the time of former President Gloria Macapagal-Arroyo. Under Labor Secretary Patricia Santo Tomas, the DOLE issued on February 21, 2002, the rules implementing Articles 106 to 109, as contained in DO 18-02. DO 18-02 rescinded DO 1097, which was signed during the administration of then-President Fidel V. Ramos. Still, the Santo Tomas DO also stated that, “contracting and subcontracting arrangements are percent this year and 7.1 percent in 2018. Unescap said the GDP growth of Asia and the Pacific is expected to average 5 and 5.1 percent in 2017 and 2018, respectively. This is higher than the average GDP growth of 4.9 percent in 2016. “As we enter the second year of the 2030 Agenda, economic growth in Asia-Pacific economies is steady but modest amid prolonged weak external demand and rising trade protectionism. Future economic growth will need to rely more on productivity gains, compared to factor accumulation,” UN

expressly allowed by law and are subject to promotion of employment and the observance of the rights of workers to just and humane conditions of work, security of tenure, self-organization and collective bargaining”. Reiterating that “labor-only contracting [LOC] is prohibited,” DO 18-02 defined LOC as “an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal”. Likewise, the DO defined such arrangement as acceptable if the contractor or subcontractor does not have substantial capital or investment that relates to the job, work, or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities that are directly related to the main business of the principal. Also, the DO is lenient on LOC if the “contractor does not exercise the right to control over the performance of the work of the contractual employee”.

Aquino and DO 18-A

FOR all the criticisms heaped on the Arroyo administration by former President Benigno Simeon Undersecretary-General and Escap Executive Secretary Dr. Shamshad Akhtar said. “ I n add it ion to en su r i ng sustained and robust economic grow th, policy makers w ill need to address social and environmental challenges in order to improve the quality of this growth,” she added. To address challenges in the region, Unescap called for effective governance, in particular, a proactive fiscal policy through productive investments in infrastructure, social protection and resource efficiency.

Aquino III, his administration also supported contractualization. Former Labor Secretary Rosalinda Baldoz issued DO 18-A, Series of 2011, that also contained the rules implementing Articles 106 to 109 of the Labor Code as amended. Signed on November 14, 2011, the DO followed previous reiterations contained in the DO 10-97 under Ramos and the DO 18-A under Arroyo. The Baldoz DO also defined LOC as a prohibited practice unless it is “an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal”. Compared to its predecessor, the Aquino government posted faster increases in nonregular workers or contractuals. Data from the Philippine Statistics Authority (PSA) showed that from 2010 to 2014, contractual workers in private establishments increased by 51 percent, seasonal workers increased by 254 percent and agency-hired increased by 82 percent. Based on PSA estimates, there are about four nonregulars in every 10 employed in establishments with 20 workers or more under the Aquino administration . To be continued

Piatco. . .

Continued from A12

any injury to the public or is against the public good? We answer in the negative. Definitely, any amount that goes to the government coffers is not detrimental, but on the contrary, beneficial to the public,” the CA ruled. “There may be public policy against unlawful and unnecessary expenditure, but there is no public policy that prohibits the recovery of that expenditure by the government,” it added. The CA explained Piatco’s opposition against the government’s claim was geared toward preventing the government from wasting public money. However, the CA noted by the time the government filed a petition with the trial court seeking the enforcement of the Arbitral Tribunal award, cost and expenses were already incurred. The appellate court also gave weight to the fact that both the government and Piatco agreed the losing party in the arbitration proceedings should pay the cost incurred by the winning party. It can be recalled that in April last year, the Supreme Court affirmed its decision directing the government to compensate Piatco for the expropriation of Ninoy Aquino International Airport Terminal 3 (Naia 3) in the amount of more than $510 million as of December 2014. The Court denied Piatco’s partial motion for reconsideration seeking an additional compensation in the amount of $107 million from the government. However, it partly granted the motion for reconsideration filed by the government by declaring that the full ownership over the Naia 3 will be transferred to the government upon full payment of the just compensation. The Court has fixed the principal amount of just compensation at $326,932,221.26 as of December 21, 2004. It added that the amount of $267,493,617.26, which is the difference between $326,932,221.26 a nd t he prof fered v a lue of $59,438,604.00, shall earn a straight interest of 12 percent per annum from September 11, 2006 until June 30, 2013, and a straight interest of 6 percent per annum from July 1, 2013 until full payment. Based on the Court’s computation, the total interest from September 11, 2006 to December 2014 amounted to $242,810,918.

Economy

A4 Tuesday, May 2, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

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DOE backs Visayas-Mindanao grid connection project at govt’s expense

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By Lenie Lectura

@llectura

he Department of Energy (DOE) has backed a proposal of the National Transmission Corp. (Transco) for the government to undertake a multibillion-peso VisayasMindanao grid connection project.

“I agree. It should be the government, so that the cost would no longer be passed on to the consumers,” Energy Secretary Alfonso G. Cusi said. He said ongoing studies on how the project would be financed, as well as the technical issues involved, would be finalized within the second quarter. Thereafter, Cusi said, Transco would have a more concrete plan on how best to carry out the project. The National Grid Corp. of the Philippines (NGCP) earlier said it could complete the interconnection

project by 2020 at a cost of P52 billion, Cusi added. NGCP won a 25-year concession to run the country’s transmission network. It has completed the hydrographic survey determining the viable location for the VisayasMindanao grid interconnection project, which is along the country’s western seaboard, from Cebu all the way to Dipolog. Transco President Melvin Matibag has proposed to tap the Malampaya fund to finance the project construction so that consumers would

₧52B The total cost it would entail for the implementation of the Visayas-Mindanao grid connection project by 2020

not be burdened to pay for it. “We will justify why it should be Transco, instead of NGCP, that must undertake the project,” Matibag said. “That [P52 billion] will be an additional cost to the consumer. Baka matapos na iyung concession, ’di pa nabayaran ’yung P52 billion. If Transco will build the interconnection project, there will no longer be a pass-on cost to consumers, since funding will be sourced from the Malampaya fund.” The balance of Malampaya fund reached P235.662 billion as of 2016, according to the DOE. The government’s share from

the energ y resource development fund, commonly known as the Malampaya fund, reached P13.43 billion in 2016, slightly lower than the P14.32 billion recorded a year earlier, with some P5,374,201,272.14 allocated as “source of assistance to LGU [local government unit], while the net share of the national government stood at P8,061,301,906.79.” In 2015 the total gove r n m e nt s h a r e a mo u nt e d P14,320,625,845.66. Of the total amount, LGU assistance stood at P5,728,250,338.82, while the remaining net national government share reached P8,592,375,506.84. Sen. Sherwin T. Gatchalian, for his part, said the use of the Malamapaya fund is “very specific”. It is possible, however, that the said funds can be used for other purposes. “We’re looking at passing a law to clear it up, because there are a number of interpretations on the use of Malampaya fund,” Gatchalian said. In February NGCP made public

Stiffer penalties for violators of minimum-wage law pushed By Jovee Marie N. dela Cruz @joveemarie

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he chairman of the House Committee on Labor on Monday has vowed to prioritize the bills raising penalties for noncompliance with the governmentprescribed minimum wages and other workers’ benefits. National Unity Party Rep. Randolph S. Ting of the Third District of Cagayan said House Bill (HB) 5018, authored by Speaker Pantaleon D. Alvarez, is one of the measures seeking to ensure the employees’ right to their wages, including wage-related benefits, and social security and welfare benefits, amending for the purpose Presidential Decree 442, otherwise known as the Labor Code of the Philippines. He also said DIWA Rep. Emmeline Aglipay-Villar’s HB 356 also seeks to raise the penalties for noncompliance with the government prescribed minimum wages, amending for the purpose Section 12 of Republic Act 6727, otherwise known as the Wage Rationalization Act, as amended. Ting said his committee is set hear these bills this week. For his part, Alvarez said the current penalties are not strong enough to completely stop the unjust and unreasonable conditions suffered by labor workers. HB 5018 aims to curb the illegal practice of private-sector employers of noncompliance with the proper and appropriate payment of minimum wage. “Labor workers are ‘a company’s

job hunters Thousands of job applicants, mostly fresh college graduates, line up for prospective jobs during the Jobs and Business

Fair jointly sponsored by the Department of Labor and Employment and the Quezon City local government in commemoration of the global observance of Labor Day. Nonoy Lacza

greatest asset’ according to businesswoman Anne Mulcahy, and these assets should receive the right wages and benefits they so rightfully deserve. This bill seeks to increase the penalties so as to impose stricter guidelines for the employers. In doing so, this could serve as a deterrent to the noncompliance of payment of prescribed minimum-wage rates by unjust employers,” Alvarez said. When it comes to wages, the Speaker said the Regional Tripartite Wages and Productivity Board or the Regional Wage Board imposes the minimum wage in their respective regions and employees in the Philippines. He said it must be paid no less than the specified rates. In the case of the National Capital Region, for instance, the minimum wage is P481 per day. “Aside from wages, basic entitle-

ments of employees also include, among others, the right to receive wage-related benefits through coverage under the Social Security System (SSS), Philippine Health Insurance Corp. and the Home Development Mutual Fund or Pag-IBIG Fund. These benefits are also essential to ensure the economic and social security of the workers,” Alvarez said. On the other hand, Aglipay-Villar’s HB 356 seeks to protect private sector minimum-wage earners by increasing the penalty imposed on employers for noncompliance with the applicable minimum-wage rates. “The minimum-wage rates fixed by the different Regional Tripartite Wages and Productivity Boards are lower than the ideal living wage. Be that as it may, compliance by employers or establishments of the regional mandated minimum wages

has remained a persistent problem. Data culled by the Department of Labor and Employment reveal that one in every five workers is not paid the applicable minimum wage,” Aglipay-Villar said. Increasing the penalty for noncompliance with the prescribed daily minimum-wage rates will, thus, serve as a deterrent to the commission of wage violations by unscrupulous employers, Aglipay-Villar added.

Jobs openings

Moreover, House Deputy Majority Leader and Nacionalista Rep. Gerald Anthony V. Gullas Jr. of Cebu said job openings for young professionals, especially graduates of information technology (IT)-related courses, are up on account of the law that requires government agencies, as well as private firms, to employ data protection

the result of a study that will interconnect the Visayas and Mindanao grids. In an NGCP-commissioned hydrographic survey conducted from September to November 2016, it was determined that the most viable route for interconnecting the Visayas and Mindanao grids was along the country’s western seaboard. The project is envisioned to be finished by 2020, assuming all regulatory approvals are secured on time. With the hydrographic survey result, NGCP will now proceed with the preparation of a conceptual design, detailed cost estimate and update of system simulation study using the Cebu-Dipolog route. “We need the support of the government, the Energy Regulatory Commission, the Department of Environment and Natural Resources and the different local government units the project will traverse, among others, to push this forward. With their full support, we are confident that we will be able to complete this project on time,” stated the company. officers (DPOs) and compliance officers for privacy (COPs). “Establishments that control or process the personal information of individuals living within and outside the country now have the legal obligation to engage the services of DPOs, and if the entities have branches or multiple offices, they may also have to hire extra COPs,” Gullas said. He said DPOs and COPs are now as indispensable as an accountant or a finance officer in every organization that handles the personal records of individuals. “We are now well into the digital age. It is very easy to store and transfer large amounts of personal data through computers and the Internet, and even by means of small electronic devices, such as USB flash drives. Without adequate controls, the risk is great that whole systems of personal information may be stolen, lost and misused,” Gullas said. Congress passed the Data Privacy Act, which aligns the country’s personal data protection policies with global standards, in 2012. However, enforcement of the law was delayed extensively because Malacañang constituted the threemember National Privacy Commission—the implementing authority—only on March 7, 2016. Gullas said among agencies that need DPOs and COPs are the Philippine Statistics Authority (civil registrants); Department of Foreign Affairs (passport holders); Social Security System; Government Service Insurance System; Philippines Health Insurance Corp.; Pag-IBIG Fund; the Overseas Workers Welfare Administration (members); Land Transportation Office (motor vehicle drivers); Professional Regulation Commission (professionals); National Bureau of Investigation (clearance holders); Bureau of Internal Revenue (taxpayers); Philippine Overseas Employment Administration (overseas contract workers); and the Department of Social Welfare and Development (cash-transfer recipients).

House, Senate leaders list 39 priority bills

FARIÑAS: “We will meet with our Senate leadership counterparts on Tuesday to discuss what will be our priority or agenda [before the sine die adjournment].”

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he leadership of the 17th Congress will meet on Tuesday (today) to set both chambers’ legislative agenda, a leader of the House of Representatives said on Monday. Major it y L eader and PDPLaban Rep. Rodolfo C. Fariñas of Ilocos Norte said the House of Representatives and the Senate will identify which measures listed in the priority bills will be passed first. “We will meet with our Senate leadership counterparts on Tuesday to discuss what will be our priority or agenda [before the sine die adjournment],” he said. Congress will resume its session on May 2. It is also expected to go on a sine die adjournment from June 3 to July 23. Meanwhile, the 39 bills listed in their legislatives priorities are Revision of the Constitution; Government Procurement Reform Act amendments; Coconut Farmers and Industry Development Act; Social Security Act amendments; Income Tax Reform Act; Traffic and Congestion Crisis Act; Prohibit Conversion of Irrigated Land; Estate Tax Reform Act; Corp. Code of the Philippines; End of Contractualization Act; Department of Housing and Urban Development Act; Free Irrigation Services Act; Ease of Doing Business Act/Fast Business Permit Act; Public Service Act amendments (strengthen the Public Service Act, as well as the National Telecommunications Commission); Legislative franchise for operating railways; stiffer penalty for violating minimum-wage laws; Revised Penal Code indexation; Salary of Standardization Law IV; Free Internet Access in Public Place Act; Community Service in lieu of imprisonment for the penalty of arresto menor; Occupational Safety and Health Standards Act; Enhanced Universal Healthcare Act; antihazing law amendments; Criminal Investigation Act; AntiDiscrimination Act; Expand Coverage of Local Absentee Voting Act; Free school feeding/Pagkaing Pinoy Para sa Batang Pinoy Act; Free Higher Education Act; Refusal of hospital and medical clinics to administer medical treatment in emergency cases; Allowable/Recoverable System Loss Act; Philippine Passport Act amendments; Family Code of the Philippines amendments; National ID System; Amendment of Fair Election Act; Agrarian and Agricultural Credit Condonation Act; Extension of Driver’s License Validity; One town: One Doctor Act; Unified Uniformed Personnel Retirement Benefits and Pension Reform Act; and Philippine Mental Health Act.

Jovee Marie N. dela Cruz

Albay joins food show, pushes drive for access to international market

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EGAZPI CITY—Albay culinary producers here, particularly in its second congressional district, are set to join and participate in the upcoming Ifex Philippines, Asia’s premier ethnic food and ingredients show set from May 19 to 21 at the World Trade Center in Pasay City. Albay Second District Rep. Joey S. Salceda’s congressional office here has been negotiating in behalf of local food manufacturers for slots in the food

show, particularly those with exportready products to help them further access the international market. Salceda has continuously supported Albay’s food industry via the Culinaria Albay brand, which he pioneered during his nine-year stint as governor of his province. Culinary tourism has significantly helped boost Albay’s economy. Ifex Philippines is the country’s biggest international trade exhibi-

tion of the Philippines and Asia’s ethnic and specialty food, vegetables, tropical fruits, seafood, beverages, bakery and confectionery, meat and poultry, halal-certified, as well as natural, organic and healthy food products. The Bicol province’s forthcoming participation in Ifex Philippines 2017 follows the impressive successes of the Culinaria Albay brand in the recent Madrid Fusion food

expo from April 6 to 8 at the SMX Mall of Asia, where buyers—having familiarized themselves with Albayano ethnic gustatory tastes—have shown astounding interest in native Albay foods. Following the Madrid Fusión Manila food exposition, three international chefs and food writers from Russia, London and the Middle East have chosen Albay and Sorsogon for their post-expo destinations, a vali-

dation of Culinaria Albay’s forward march, Salceda noted. Negotiations are also being undertaken for Albay to join the World Street Food Jamboree from May 31 to June 4 this year at the Mall of Asia, with 28 of the world’s best Street Food Masters from 12 countries dishing out authentic mouth-watering heritage street foods. Salceda has sustained strong support for the promotion of culinary

tourism, urging Albayanos to patronize more local products to further strengthen the native industry, “their homegrown chefs and restaurateurs” and help push their promotion worldwide. Albay had earned world recognition as a global tourist destination, with its interesting culinary assets as among its highlights, and had received various awards in tourism and related fields in recent years. PNA

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Govt to cut rice production cost by 41% By Jasper Emmanuel Y. Arcalas

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@jearcalas

he Philippine Rice Research Institute (PhilRice) is targeting to reduce the cost producing paddy rice in the country by 41 percent to P7 per kilogram by 2022, from the current P12 per kg.

Under its recently approved 2017-2022 Strategic Plan, PhilRice Acting Executive Director Sailila Abdula said the attached agency of the Department of Agriculture will capitalize on research and development (R&D) to cut production cost. “PhilRice believes that the most sustainable pathway to realizing rice security is to domestically produce sufficient rice at a competitive cost,” Abdula said in a statement. To bring down the cost of the country’s staple, PhilRice said it will use technologies that would

lower labor intensity, investments costs, accessibility and efficiency of inputs used by farmers. PhilRice added that it will also address water scarcity in rice farms and will develop “user” and “environment-friendly” tools and programs that would teach farmers on management of pests, fertilizer and soil. “There is an urgent need to improve the competitiveness of Filipino farmers by boosting their productivity and reducing costs to pre-Asean integration levels,” said

Flordeliza H. Bordey, PhilRice acting deputy executive director for development. PhilRice said it is also eyeing to increase average rice yield per hectare by 1 metric ton (MT) for irrigated lands and a minimum of 0.5 MT for rainfed areas through the development of new highyielding rice seed varieties. “It will narrow the gap between experimental and on-farm yields by increasing the attainable yields of varieties with improved resistance to many stresses. The institute will particularly support varietal improvement through the acquisition, preservation, characterization, evaluation, documentation and distribution of genetic resources,” the agency said. PhilRice said it will conduct research on how to reduce the postproduction losses of farmers to 10 percent, from the current 16 percent in six years. “Efficient postproduction, better product quality, and reliable supply and distribution system will optimize rice trade.”

“The institute will help reduce postproduction losses incurred in harvesting, piling, hauling, threshing, drying and milling from 16 percent to 10 percent. It will work harder to increase milling recovery to the ideal 65 [percent] to 70 percent through improved milling machines,” the agency added. PhilRice said it will promote the use of machines to reduce labor cost, which accounts for 35 percent to 40 percent of expenses incurred by rice farmers. Data from the Philippine Statistics Authority (PSA) showed that Filipino rice farmers spend at least P47,470 per hectare to produce the staple. Planting capital paid with cash accounted for 44.5 percent of the farmer’s expenditure. Farmers’ cash cost is pegged at P21,167 with labor costs accounting for at least 40 percent of the total financial expenditure. A Filipino rice farmer spends at least P8,632 for hired labor. PSA data also showed that the current average palay yield is at 4 MT/hectare.

PHL pineapple-fiber output down 27.1% in 2016

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he countr y’s pineapplefiber production in 2016 declined by 27.1 percent to 5.79 metric tons (MT), from 7.95 MT recorded in 2015, according to data from the Philippine Fiber Development Authority (PhilFida). PhilFida Planning Division Chief Ramon M. Branzuela attributed the drop in output to the “sluggish” and “irregular” demand for pineapple or piña cloth products, as it is an expensive fabric. “It has practically limited the market to the upper segment of society and some designers’ preference for cheaper materials over piña fabric to cut cost,” Branzuela told the BusinessMirror. He said the piña fiber and cloth industry is centered in Aklan since the Red Spanish variety used for fiber production is mainly found in Panay Island. Branzuela said the total area planted with pineapple used for piña-fiber production in 2016 reached 2,818 hectares, most of which are found in Camarines Norte. The pineapple variety is also cultivated in Palawan, Aklan and Antique. He said piña fiber is extracted by hand-scraping, decortication or retting. “It is only by hand-scraping that good quality fibers are produced for hand weaving. Production of the fiber is very limited because of the very tedious process of handscraping and is confined chiefly in Aklan,” he said, adding that decorticated piña is produced in Camarines Norte. Branzuela said there have been “encouraging” developments

FILE Photo

which could boost local piña-fiber production, one of which is the decision of Nonwoven Fabrics Philippines Inc. (NFPI) and Ananas Anam Ltd. (AAL) to procure pineapple leaves from Filipino farmers. In December last year Agriculture Secretary Emmanuel F. Piñol met with the top honchos NFPI and AAL. The former manufactures Piñatex substrate, while AAL converts Piñatex substrate into leather alternative material. Both NFPI and UK-based AAL expressed interest in hiking their local procurement of pineapple leaves from

the country’s local producers. AAL Founder Carmen Hijosa, who is a scientist by profession, developed a technology which processes pineapple leaves into leather used by shoemakers, furniture designers and car manufacturers, and is dubbed “Piñatex”. Branzuela said the fibers used for making Piñatex are extracted from pineapple leaves through decortication using PhilFida-designed decorticating machine. He said the increase in demand for Piñatex byproducts, such as shoes, bags and other accessories,

in Europe has prompted the government to boost its assistance to farmers. “The Department of Agriculture [DA] through PhilFida, invested in agricultural machineries that were provided to farmer cooperatives, which will produce pineapple fibers for the Piñatex substrate,” Branzuela said. He added that the venture between AAL, NFPI and the DA would result in the reduction of waste products in the fields and increased income of farmers, Branzuela said.

ARMM, WFP to conduct comprehensive study on food security

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AMBOANGA CITY—The Autonomous Region in Muslim Mindanao (ARMM) and the UN’s World Food Programme (WFP) have teamed up to carry out a comprehensive study that will help the regional government come up with holistic interventions to ensure food security in the region. “We came up with an idea to conduct a thorough and comprehensive study in partnership with the WFP to determine and know the real score of food and nutrition security in the ARMM,” ARMM Executive Secretary Laisa Masuhud Alamia told the Philippines News Agency (PNA). Alamia said the results of the Comprehensive Food Security and Vulnerability Assessment (CFSVA) study will help the regional government to chart new programs and strengthen current socioeconomic development in the autonomous Muslim region. In a separate statement sent exclusively to the PNA, the WFP said the study, which will start on Wednesday, is critical in getting accurate measurement “on food and nutrition security, as well as disaster risk-reduction management programs, which support the ARMM Development Framework 2017-2022”. “The upcoming data collection and consequent analysis will provide us with a number of significant details that we can look more closely, to help identify the current causes of food insecurity and malnutrition,” it said, adding “ultimately, it will allow the ARMM government and its partners to tackle the root causes of the region’s vulnerability and provide the necessary support to those who are most in need.” In March the ARMM and WFP inked an agreement that “embodies a framework for nonexclusive collaboration” to carry out a comprehensive study on the region’s food security. “Food insecurity and malnutrition rates are among

Guacamole costs to jump as avocado shortage sparks record prices

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hat bowl of guacamole on Cinco de Mayo will be more expensive this year, as avocado prices rise to a record on surging demand and a smaller crop in Mexico and California. A 10-kilogram (22-pound) box of Hass avocados from the state of Michoacan, Mexico’s biggest producer, cost P530 ($27.89) on Thursday, according to the government. The price, which is subject to seasonal swings, is more than double what it was a year earlier and the highest in data going back 19 years. The jump in demand in recent years has been dramatic. American per-capita consumption was 6.9 pounds in 2015, versus 3.5 pounds in 2006, according to the

US government. People are being drawn to the fruit not just for its taste but also for its healthy oils and fats, a trend borne out in the US by Starbucks Corp.’s announcement last month it’s selling avocado sandwich spread. “You have increased consumption in China and other areas of the world, like Europe,” said Roland Fumasi, an analyst at Rabobank in Fresno, California. “They’re pulling a lot more of the Mexican crop, so there’s less available for the US.” Mexico supplies 82 percent of the avocados eaten north of the border. Its shipments into the US surged to 1.76 billion pounds in 2015, from just 24 million pounds in 2000, according to data from

the Hass Avocado Board in Mission Viejo, California. Avocado trees are alternatebearing crops, with large harvests one year and smaller ones the next. A lighter crop is expected this season, Fumasi said. In California, which accounts for the rest of supply in the US, production will be down about 44 percent this year, the state’s avocado commission forecasts. US restaurant chain Chipotle Mexican Grill Inc. said earlier this week the shortage of avocados is putting pressure on costs. Hass avocados retailed in the US for $1.27 each on April 21, up from 98 cents a year earlier, US Department of Agriculture data show.

Cinco de Mayo

None of this is good news for those celebrating Cinco de Mayo next week. The date of the Mexican Army’s victory over French forces at the Battle of Puebla in 1862 has become a broader celebration of Mexican-American culture. It’s also turned into one of the top occasions to consume guacamole in the US, besides the Super Bowl. Avocado prices will “remain at relatively elevated levels. It could be all the way through summer,” Fumasi said. Buyers will have to wait until the fall, and hope next season’s Mexican crop is bigger, before there’s enough volume to push prices considerably lower, he said. Bloomberg News

Bloomberg

the highest in the Philippines, and in order to identify meaningful solutions, it is critical for us to obtain a comprehensive overview on the food security and nutrition in one of its vulnerable regions” the WFP said. It said both parties have carried out a similar “exercise” in the provinces of Lanao del Sur and Maguindanao in 2016. “So we are expecting an interesting comparison on how the situation evolved over the past year,” it said. “We look forward to working with all relevant stakeholders to strengthen the collaborative spirit that has brought the ARMM-WFP Framework Agreement into being, and help secure a world where all people have access to safe, healthy, nutritious food all year round, where there are zero stunted children, where food systems are sustainable and where there is zero loss or waste of food,” the WFP said. On Wednesday enumerators will start the 10-day data collection in the provinces of Lanao del Sur and Maguindanao, while the enumerators for the islandprovinces of Basilan, Sulu and Tawi-Tawi will start its collection on May 15 and will end before the holy month of Ramadan on May 26. Over the weekend, at least 30 enumerators from Basilan, Sulu, and Tawi-Tawi ended their five-day training workshop here. The enumerators are composed of heads and senior staffs from the different government agencies in the ARMM. The WFP technical advisors facilitated the trainings, and will analyze the data. Under the study, the enumerators must interview at least 1,900 households across the five provinces of ARMM. The initial results will be presented to the leaders of ARMM, led by its governor, Mujiv Hataman, in July. Part of the plan is to come up with a book that will serve as reference for decisionmakers in the region to come up with programs on food security. PNA

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Tuesday, May 2, 2017

The World BusinessMirror

Bipartisan pact reached to fund govt through Sept

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ASHINGTON— Congressional leaders reached a bipartisan agreement last Sunday to fund the government through September, according to aides from both parties, effectively ending any suspense about the possibility of a government shutdown next weekend.

Senate Minority Leader Charles Schumer of New York, with (from left) Rep. John Yarmuth, Democrat-Kentucky; Rep. Hakeem Jeffries, Democrat-New York; House Minority Leader Nancy Pelosi of California and Sen. Chris Van Hollen, Democrat-Maryland, speaks to reporters about President Donald J. Trump’s first 100 days, during a news conference on Capitol Hill in Washington on April 28. AP/Manuel Balce Ceneta

The agreement, which still must be voted on by lawmakers, includes increased funding for the military and for border security. But it does not include funding for the wall that President Donald J. Trump wants to build along the border with Mexico, one of his major campaign promises. The deal increases funding for the National Institutes of Health, despite the Trump administration’s request that its budget be reduced for the rest of the fiscal year. And it provides millions of dollars to reimburse costs incurred by local law-enforcement agencies to protect Trump and his family—a boon to New York City, which has had the costly task of helping to protect Trump Tower. The spending package would be the first significant bipartisan

measure approved by Congress during the Trump presidency. Republicans, despite having control of both houses of Congress and the White House, were unable to pass any marquee legislation in the president’s first 100 days. The deal should spare Republicans the embarrassment of seeing the government shut down on their watch. But it also gave a glimpse of the reluctance of lawmakers to bend to Trump’s spending priorities, like his desire for sharp cuts to domestic programs, with the increase in funding for medical research a prime example. And it leaves the border wall looming as a fight in future spending negotiations, especially if Trump presses the issue, as he vowed to do during a rally last Saturday night to mark his 100th day

in office. Details of the agreement were not yet public last Sunday night, but several congressional aides described key parts of it. The measure will cover the rest of the fiscal year, which ends on September 30. Lawmakers had already taken action to keep the government open while they finalized the spending agreement. On Friday Congress approved a one-week spending measure that averted a shutdown last Saturday. In recent days, the spending talks on Capitol Hill had seemed unlikely to result in the kind of impasse that could lead to a shutdown, the last of which occurred in 2013. Some key obstacles, including the border wall and a standoff over subsidy payments to insurers under the Affordable Care Act (ACA), seemed to fall away as congressional negotiators worked on a deal. The White House said last week that it would continue to make the payments, and that assurance satisfied Democrats who wanted to ensure that the subsidies, which lower deductibles and other outof-pocket costs for low-income consumers, would remain. Lawmakers were able to reach a resolution last Sunday on another potential sticking point, the fate of retired coal miners who faced losing their health coverage, an issue that brought lawmakers close to a government shutdown in December. The deal provides a permanent extension of health coverage for the retired miners. Though the spending agreement saves the president and congressional Republicans from the specter of a shutdown during a period of one-party rule, it does deprive Trump of a major victory on the border wall, and Democrats seemed pleased with how they fared. “ This agreement is a good ag reement for t he A mer ica n people and takes the threat of a government shutdown off the table,” Sen. Chuck Schumer of New York, the minority leader, said

in a statement. “The bill ensures taxpayer dollars aren’t used to fund an ineffective border wall, excludes poison-pill riders, and increases investments in programs that the middle-class relies on, like medical research, education and infrastructure.” He added that Democrats had “clearly laid out our principles” early in the debate, and argued that the final measure “reflects those principles”. Rep. Nancy Pelosi of California, the Democratic leader, cheered the deal as a “sharp contrast to Trump’s dangerous plans to steal billions from lifesaving medical research” and expressed relief that the bill would not pay for an “immoral and unwise border wall or create a cruel new deportation force”. As of late Sunday, neither Sen. Mitch McConnell of Kentucky, the majority leader, nor the House speaker, Paul D. Ryan of Wisconsin, had issued statements appraising the agreement. A spokesman for the House Appropriations Committee, Jennifer Hing, said, “The agreement will move the needle forward on conservative priorities and will ensure that the essential functions of the federal government are maintained.” The negotiations took place in recent days amid a furious scramble inside the White House to demonstrate progress before Trump’s 100th day in office. Republicans in the House still hope to advance a revised version of their bill to repeal and replace the ACA. Last week the rev ised bil l earned the backing of the hardl ine House Freedom Caucus, though the changes gave pause to numerous moderate Republicans, including some who had backed the initial proposal. It was unclear when a vote on that measure might occur, despite pressure from the White House. Republican leaders in Congress have said repeatedly that a vote will come when they can ensure passage through the House. New York Times News Service

Angry voters in France’s poor suburbs may skip big election

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TAINS, France—For voters in the poorer, largely immigrant suburbs of Paris, the motivation to turn out for France’s presidential runoff seems clear: to defeat Marine Le Pen, the farright leader of the National Front, who has pitched her campaign against immigrants and Muslims. The other candidate, centrist Emmanuel Macron, would seem to be an easy alternative. But the reality of this election cycle in towns like Stains, where public frustration is high over the failure of politicians to deliver on past promises, is that many voters may simply choose to stay home last Sunday for the critical, final vote. “Don’t count on the working-class neighborhoods this year to save France,” said Inès Seddiki, a 26-year-old FrenchMuslim in Stains, whose parents came from Morocco. Although Seddiki said she would vote reluctantly for Macron, she feared she was an exception: “White people who say ‘You have to vote against Marine Le Pen because you will lose more than we will’ don’t realize that for us, we already live in a racist country.” In the first round of the presidential election on April 23, voters in many poorer Parisian suburbs did turn out, but for the fiery candidate on the extreme left, Jean-Luc Mélenchon, who channeled the anger of communities neglected by the political system. And many also chose not to vote. That second option—not voting—is

now a real possibility in the final round for those who previously voted for Mélenchon, even though they arguably have the most at stake. Just how many voters abstain could determine whether Le Pen can upend expectations and beat Macron. The prevailing assumption is that a broad majority of voters—a Republican Front that includes the poorer suburbs—will come together behind Macron in the name of turning back Le Pen and the far right. But a low turnout could threaten this belief and help Le Pen. In France’s poor suburbs, many French are of Arab extraction with parents or grandparents who came from Algeria, Morocco or Tunisia. Many are also from sub-Saharan Africa; the former French colonies of Ivory Coast, Mali, Senegal and Togo; and what were once French Indochina, today’s Cambodia, Laos and Vietnam. For them, neither the right nor the left has delivered when it comes to making jobs more available and reducing discrimination. Recent terrorist attacks have worsened the stigma attached to immigrants and Muslims. A number of the house searches after the terror attacks in and around Paris on Nov. 13, 2015, were conducted by police in Seine-St.-Denis, the political jurisdiction that includes Stains. “The second round is a catastrophe,” said Cheker Messaoudi, 29, a Frenchman of Tunisian heritage. “I think with Macron we are facing a war on the

economy and with Le Pen we are facing a civil war, so it is bad both ways.” With an abstention rate of 38 percent, including blank ballots, in contrast to 23.5 percent nationwide in the first round of the presidential election, Stains reflects a particularly high degree of disillusionment. A community of about 38,000 inhabitants on the outskirts of Paris, it voted overwhelmingly for Mélenchon, a former Trotskyite, who finished fourth. With Mélenchon out, many people see the race, as expressed in an old French saying, as a choice between “la peste et le choléra [the plague and the cholera].” To many people here, the policy proposals of both candidates are unattractive: Le Pen proposes a lawand-order program that would place binational Muslims at higher risk of expulsion from the country if they are considered even remotely connected to those suspected of having terrorist links. She also has inveighed against wearing a headscarf in public. Macron, a former banker, is seen as close to the moneyed elite. He is disparaged for his support for Uber, which employs many people at low wages and often under poor conditions. He worked as a minister to Socialist President François Hollande, who promised improvements that never arrived. Sociologists and political scientists who study France’s poorer suburbs with substantial minority populations, known here as banlieues, said

neither candidate had given people much reason to vote for him or her. “They are really tired of people talking about the banlieues but not doing anything,” said Julien Talpin, a researcher in political science at the University of Lille. “Macron in the banlieues is a kind of big failure. He appears to be an embodiment of the establishment, of the elite, and people can tell he’s not one of them.” Macron received 22 percent of the vote in Stains. Thomas Kirszbaum, a sociologist, says the demographics and voting patterns of the poorer suburbs are far more complex than is widely understood. Living together are people of immigrant backgrounds, who vote on the far left or not at all, and some longtime residents, usually white, but also some immigrants, who vote on the extreme right. In Stains, nearly 15 percent of voters favored Le Pen. Then there is a small, new class of young entrepreneurs, both Muslims and non-Muslims, many of whom support Macron, who has made outreach to entrepreneurs a priority. Talpin noted a big change from 2012, when the poor suburbs turned out in large numbers to vote for the Socialist Party candidate, Hollande; he was running against President Nicolas Sarkozy, whom many people opposed. “They haven’t really mobilized so much against Le Pen,” he said, despite the xenophobic tone of her campaign. “They are somehow feeling they are experiencing that discrimination on a daily basis.”

New York Times News Service

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

UK’s May: No VAT hike, hints at other tax increases

BRITIAN’S Prime Minister Theresa May delivers a statement after a visit by Prime Minister Shinzo Abe of Japan to Chequers near Wendover in Buckinghamshire, England, on April 28.

13 AP/Kirsty Wigglesworth

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K Prime Minister Theresa May pledged there will be no increase in valueadded tax (VAT) after the June 8 general election, but suggested she will ditch her Conservative Par t y’s promise not to ra ise other taxes when it publishes its program for government. Asked if she will stick to a pledge not to raise income tax, VAT or national insurance—made by her predecessor David Cameron before he was elected in 2015— May said she will not make “specific proposals” before the vote. Chancellor of the Exchequer Philip Hammond said on April 21 that he had been “constrained” by Cameron’s promise. “We have no plans to increase the level of tax but I’m also very clear we don’t want to make specific proposals on taxes, unless I’m absolutely sure that I can deliver on those,” May told BBC’s Andrew Marr Show last Sunday. “It would be my intention as a Conservative prime minister and a Conservative government to reduce taxes on working families.” In a later interview on Sunday with ITV’s Robert Peston, she backed down from her position on specific proposals, saying she will not increase VAT, a sales tax. May is seeking to widen her Conser vative Party’s majority and win her own mandate unfettered by Cameron’s pledges on ta x, immigration, welfare a nd educ at ion a s she steers Britain’s divorce from the European Union (EU). New opinion polls show her party remains on course to win a bigger majority in the June general election.

Pension pledge

The prime minister said the Tories will vary another of Cameron’s pledges, on increasing state pension payments to retirees, by introducing a change to the promise that they should be increased by whichever is greatest of inflation, average earnings or 2.5 percent. “Under a Conservative government, the state pension will go up every year in the next parliament,” May said on the BBC. “Exactly how we calculate that will be for the manifesto.” John McDonnel l, economy spokesman for the opposition Labour Party, ruled out a VAT increase during an interview on Peston’s show and said his party would increase taxes for the rich if it wins power. “We will end the tax giveaways to corporations and the rich,” he said on ITV. “There will be no increases in income tax for middle and low earners.” While a series of overnight polls showed a narrowing of the Conservative lead over Labour—from 16 percentage points to 13 points, according to YouGov Plc.—May’s party remains comfortably ahead. Tim Farron, leader of the Liberal Democrats, argued that this meant voters should back his party in order to restrain her.

‘Colossal coronation’

“The prime minister is heading for a colossal coronation,” Farron said on the BBC. “She expects

The percentage points of lead the Conservative Party has over Labour Party, which narrowed from 16 percentage points, YouGov Plc. said

the British people to turn up in their Sunday best and wave the flag. Britain desperately needs a strong opposition.” Farron is trying to position the Liberal Democrats as the party of those who oppose leaving the EU, warning that the prime minister is heading for “the cliff edge of a hard Brexit” and arguing that the outcome of exit negotiations should be the subject of a second referendum. May last Sunday insisted she would get a good deal, adding that she thought it was realistic to negotiate a free trade deal with the EU alongside the withdrawal talks. “We’re in a different position from other countries,” she told ITV. “It’s not like we’re a third country who’s starting negotiations with them. We’re starting from an entirely different point.” While the prime minister argues that the election is about giving her a mandate for Brexit, she is also starting to set out domestic priorities. Last Sunday she pledged new restrictions on company takeovers as part of a plan to protect workers’ pensions f rom “u nscr upu lous” bosses. Authorities will get the power to block such deals and launch criminal prosecutions of company bosses who put pension programs at risk. Her focus on protecting pensions follows a public outcry in Britain over the collapse of the retail chain BHS after Philip Green, majority owner of clothier Arcadia Group, sold the company. In February he agreed to pay as much as £363 million ($470 million) to compensate 19,000 former workers of the department store chain after months of haggling with the country’s Pensions Regulator. Under May’s plan, any company pursuing a merger or acquisition valued over a set amount—or w ith more than a prescribed number of employees—would h ave to not if y t he Pensions Reg u l ator, whic h cou ld t hen apply clearance conditions. In extreme cases, where there was no credible plan or willingness to ensure the solvency of the sc heme, t he pension sc heme or Pensions Regulator could be given new powers to stand in the way of takeovers. Bloomberg News

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

The World BusinessMirror

Tuesday, May 2, 2017

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China factory gauge declines from 5-year high

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hina’s official factory gauge declined on lower commodity prices, clouding the outlook for sustaining the past two quarters’ acceleration in economic growth.

The manufacturing purchasing managers index (PMI) fell to 51.2 in April from an almost five-year high of 51.8 in March, missing the median estimate of 51.7 in a Bloomberg survey and falling short of all projections. The services PMI decreased to a six-month low of 54 from 55.1. Both gauges still show momentum, as readings over 50 indicate improving conditions. The first official economic indicator for the second quarter signals growth is poised to slow after unexpectedly picking up to 6.9 percent in the first quarter, the first back-to-back acceleration in two years. Factory and services activity remain at relatively robust levels, but April data showed weakening across employment, output, new orders and export orders. “We may have already seen the peak,” said Lou Feng, director of the economic analysis department at the Chinese Academy of Social Sciences (CASS), a statebacked think tank in Beijing. “Government investment can’t

51.2

The rate to which China’s manufacturing purchasing managers index fell in April from an almost five-year high of 51.8 in March

last long, and growth momentum will slow when the policy emphasis goes back to reining in risks and the effects of earlier fiscal support fade.” While analysts have upgraded their forecasts for growth this year, according to a recent Bloomberg sur vey, tighter property curbs introduced in major cities and a higher base of producer prices than last year are likely to weigh on output in coming months, and top officials have sig na led t hey w i l l introduce

A factory belt in China Bloomberg

stricter regulatory measures to curb financial risk. The subgauge for employment slipped to 49.2 from 50 in March, according to the National Bureau of Statistics (NBS) report released on Sunday. Output decreased to 53.8 from 54.2, while new orders and export orders also posted declines. “The weakness is across the board,” signaling slower growth momentum, Zhou Hao, an economist at Commerzbank AG in Singapore, wrote in a note. “This on one hand reflects that there’s little improvement in underlying demand; on the other hand, the deleveraging effort by the Chinese authorities has started to work. In general, China is in the course of monetary tightening and regulation strengthening.”

Manufacturing weakened on falling market demand, lower commodity prices and slower export growth, the NBS said in a statement. Factories remain in expansion mode, driven by the growth in high-tech equipment and consumer goods, it said. Economists have upgraded 2017 growth forecasts, though projections show deceleration in each quarter. Full-year expansion will slow to 6.6 percent from 6.7 percent last year, according to an April 18 to 25 Bloomberg survey as well as a report on Friday by CASS’s Lou. Growth in the remaining quarters will to slow to 6.7 percent, 6.6 percent and 6.5 percent, Bloomberg’s survey and CASS estimates show. “Initial signs for April add to the case that China’s growth may be close to a peak for the year,”

Tom Orlik, chief Asia economist at Bloomberg Intelligence in Beijing, wrote in a note. “The main driver of that: a turn in the real estate sector, with sales slowing in the first quarter. A slightly tighter monetary policy stance, as the People’s Bank of China (PBOC) edges rates higher and loans slow, is also a factor.” A gauge of input prices tumbled to 51.8 from 59.3, reflecting lower commodities prices. Producer prices surged in March at nearly the fastest pace since 2008, though pulled back from February, suggesting the reflationary boon to industrial profits will moderate. Those earnings jumped 23.8 percent in March from a year earlier. Prices were the main drag on the factory gauge, which fell largely on slower heavy-industry output growth, according to China International Capital Corp. economist Eva Yi in Hong Kong. The outlook was brighter for small businesses, though they still lag the biggest firms, which are dominated by state-owned companies with easier credit access. The small enterprises PMI rose to a two-and-a-half-year high of 50, while large and mid-size companies declined. Manufacturing will likely stabilize or retreat slightly amid a stronger government emphasis on financial stability, said Wen Bin, a researcher at China Minsheng Banking Corp. in Beijing.

President Xi Jinping is ramping up efforts to ensure stability ahead of a twice-a-decade leadership transition this fall at the 19th Communist Party Congress. Xi said safety is “strategically important” last week at a meeting of the Communist Party Politburo also attended by PBOC Governor Zhou Xiaochuan and other top financial regulators. Nomura Holdings Inc. analysts said it signals stricter financial regulatory measures to come. CICC’s Yi said she doesn’t expect higher rates or tighter regulations to sap the expansion. “Although the ongoing monetary tapering and regulatory tightening may reduce the excess built-up in highly leveraged f ina ncia l products, t he tightening effect is unlikely to become restrictive to economic growth,” Yi wrote in a note on Sunday. “Financial conditions remain conducive to grow th, while the policy coordination has improved notably to safeguard against potential systematic liquidity events.” In other data due this week, a private factory gauge probably edged up. The Caixin Media and Markit Economics China Manufacturing PMI rose to 51.3 in April from 51.2 in March, economists said in a Bloomberg survey before the report on Tuesday. Markets in mainland China and Hong Kong were closed on Monday for the Labor Day holiday. Bloomberg News

On trade, a politically feisty Trump risks economic damage A s political theater, the t hreat l ast week f rom the Trump administration that it would pull the US out of the North American Free Trade Ag reement (Naf ta) effectively enhanced the W hite House storyline. From the campaign through his first 100 days in office, President Donald J. Trump adroitly exploited the most conspicuous downsides of trade in portraying himself as a hero to those who go to work in coveralls. But as economic policy, the feist y words— qu ic k ly dow ngraded to a pledge to “renegotiate” terms of trade with Mexico and Canada—potentia l ly imperil significant swaths of the US economy. A rupture to trade with those two countries would disrupt the global supply chain, jeopardizing US factories that depend on imported components in making their wares. It could raise the costs of shoes, clothing and other consumer goods, while discouraging investment amid the uncertainty. It would threaten reprisals from trading partners, risking barriers to US exports. It could cost jobs in the name of saving them. “Recreating trade bar r iers between the United States and Mexico will hurt many of the people Trump is ostensibly trying to help,” said Pietra Rivoli, a trade expert at the McDonough School of Business at Georgetown. “We can expect higher prices for many consumer goods, and we can expect negative effects for our many firms that rely on Mexico for inputs.” Not that Nafta is sacred. Economists and advocates across the ideological spectrum have long criticized the landmark agreement with Canada and Mexico as being in need of updating. Nafta was negotiated in the elder George Bush’s administration and signed into law by former President Bill Clinton in 1993—before the web was a commercial force. It lacks rules for e-commerce. It is weak on labor and environmental protections, relegating them to

unenforceable side agreements. It gives multinational companies rights to sue for compensation when local regulations damage their profits, tripping concerns about national sovereignty. A n e a r ne s t re ne got i at ion would afford an opportunity to address gaps. The Obama administration renegotiated some terms of trade with Mexico and Canada as part of a regional pact, the Trans-Pacific Partnership (TPP). That deal enhanced the ability to enforce labor and environmental standards while adding rules for the digital age, though it maintained mechanisms allowing multinationals to sue. Trump revoked US participation within days of taking office. Whatever the merits, Trump has accelerated a fundamental reordering of global trade policy. Big trade deals involving multiple countries—long championed by reigning elites as a key to expanding prosperity—have become political liabilities shunned as toxic to the public interest. Britain’s vote to abandon the European Union—a step that Trump has praised—will remove the world’s fifth-largest economy from Europe’s vast single marketplace, which allows companies to sell products from Ireland to Greece free of duties. Even before Trump took office, a mammoth deal negotiated by the Obama administration liberalizing trade with Europe, the Transatlantic Trade and Investment Partnership, appeared doomed. Labor groups in the US and across Europe attacked it as a threat to job security. European watchdogs intoned that it would open the region to a flood of genetically modified Frankenfoods. On both sides of the Atlantic, those concerned about rising cor porate power argued the deal undermined national sovereignty by giving multinationals rights to seek compensation for costly regulations. Similar contentions fueled opposition to the TPP, which the Obama

President Donald J. Trump, joined by (from left) Vice President Mike Pence, Secretary of Veterans Affairs David Shulkin and Secretary of Commerce Wilbur Ross, signs an executive order on the Establishment of Office of Trade and Manufacturing Policy at The AMES Companies Inc. in Harrisburg, Pennsylvania, on April 29. AP/Carolyn Kaster

a d m i n i s t r at io n c h a mp io ne d as a means of ex panding commerce while checking China’s grow ing stature. In place of these ar rangements, Trump favors bilateral deals, those forged between two countries. This is a return to a previous era. During the administration of former President George W. Bush, the United States struck bilateral deals with smaller countries—among them Colombia, Panama and Peru. Those deals entailed major political acrimony for minimal economic ga in. W het her t he trading partner was South Korea (home to 50 million people, meaning a potentially large customer for American goods) or Panama (population 4 million), unions and industries vulnerable to competition waged war.

For me r P re s id e nt B a r a c k Obama shifted the focus to multilateral deals, seeking to extract maximum expansion of markets for the political pain of trade negotiations. Trump’s preference for bilateral trade pacts is in keeping with his deal-making style, cultivated in the rough-and-tumble world of real estate. In the Trump realm, negotiations are like boxing matches in which one side emerges with the golden belt. In any bilateral deal, the US possesses unrivaled leverage because it owns the world’s largest economy. Every country has greater incentive to gain expanded access to the US market than the other way around. “He starts off by thinking about any negotiation as zero sum,” said Chad P. Bown, a trade expert at the Peterson Institute

for International Economics. “If he’s the big player, the bully, he’s going to get a better deal by negotiating with one other country.” In another sign that he intends to press US advantages, Trump threatened on Thursday to scrap what he called a “horrible” trade pact with South Korea. “We are going to renegotiate that deal or terminate it,” he told Reuters. But trade is not zero sum. More trade tends to enhance growth, yielding greater spoils. Trade does generate losers along with winners. The losers stand out, making them tempting fodder for politicians. When the US opens its markets to dishwashers manufactured in Mexico, people who make appliances in Michigan become vulnerable to increased competition. When a factory transfers jobs to

Mexico, the spectacle lends credence to the notion that trade is malignant. Abandoned workers have bills to pay and children to feed. Trade is a handy villain. The beneficiaries of trade are vastly more numerous, yet also diffuse. Homeowners who buy cheaper dishwashers may spend extra dollars on local contractors and restaurants. Auto parts imported from Mexico enable US workers to continue making cars in Michigan. But these realities can be hard to spot in the vastness of the US marketplace. Abandoned factory workers, on the other hand, are easily recognized. They appear on sidewalks waving placards, on television and—if they are fortunate—in the Twitter feed of @realdonaldtrump. New York Times News Service

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Tuesday, May 2, 2017

The World BusinessMirror

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

N. Korea missile fears in Japan: B Whatever will be, will be

Civilian casualty toll could complicate Iraqi reconciliation

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USSA, Japan—Residents living near US military bases in Japan are facing a fresh reality: Their neighborhoods are on the front line of North Korea’s dispute with America and, if Pyongyang were to attack, they would have just minutes to shelter from incoming missiles.

“It’s impossible. There is no way we can run away from it,” said Seijiro Kurosawa, a 58-year-old taxi driver in Fussa, near Yokota Air Base. “We don’t have bunkers, shelters or anything like that.” His company recently instructed drivers to park their cabs and take immediate refuge in the event of an attack, but he isn’t sure where he could go. “All we can do is run into a department store perhaps,” he said. A possible missile strike and what to do about it have dominated TV talk shows and other media in Japan in recent weeks as regional tension has spiked, with the North Korean regime continuing to testfire rockets and President Donald J. Trump sending an aircraft carrier to nearby waters in a show of force. North Korea has yet to meet its goal of developing a nucleartipped missile that can reach the US mainland, but analysts believe its current arsenal is capable of striking the 50,000 US troops stationed across Japan. The government raised caution levels in March after Pyongyang said four ballistic missiles that landed a few hundred kilometers off Japan’s coast were meant to simulate a nuclear strike on US bases there. While Japanese tabloids and television programs have reported on nuclear shelters ordered by a handful of rich people or touted gas masks as a more affordable option, it’s largely business as usual in Fussa, a town of 58,000 people in Tokyo’s western suburbs. “Whatever will be, will be,” said 34-year-old Jumpei Takemiya, who runs a shoe repair shop across from Yokota Air Base. “Just think calmly about it. Is Yokota really

10 mins The speed in terms of time at which a missile from North Korea to reach Japan going to be the first one to be hit? I doubt it, and frankly I’m not so nervous,” he said. Looking out his shop window, he added: “As you can see, there is no heightened secur it y or any other unusual development around here.” For 75-year-old Yoshio Takagi, the talk of North Korean missiles brings back memories of World War II, when he had to temporarily relocate to a rural village to avoid American bombs falling in and around Tokyo that killed his two older brothers. He remains opposed to the use of weapons, but is also realistic about current circumstances. “ Tension has esca lated and the situation has become more unpredictable under Tr ump,” he said. “But Japan relies on the US militar y and there is a base here. I think we just have to accept the consequences.” Visits to a government crisis management web site surged to the millions in April from a previous record of tens of thousands in March, as the government tweeted and put out fresh instructions for what to do in the event of a missile attack. The instructions are simple: If you are outdoors, take refuge in strong buildings or underground shopping arcades, and if no such facilities are nearby,

A woman cycles out from the US Air Force’s Yokota Air Base in Fussa in Tokyo’s western suburbs. AP/Koji Ueda

drop to the ground and cover your head. A chemical weapon is possible, so the instructions advise covering your nose and mouth with a cloth and shutting doors and windows. A first-ever missile attack drill was held in March in Akita prefecture in northern Japan, and the government recently instructed all 47 prefectures to draw up plans quickly for similar drills. So fa r, on ly t wo ot hers— Yamagata in the north and Nagasaki, home to Sasebo naval base, in the south—have started to make concrete plans for drills in the coming months. “We need to plan carefully in order to raise awareness, not to scare off the public,” said Keiko Nakajima, a Tokyo crisis response official. Some think the risk is overblown. North Korea is “mostly bluffing its military capability, and the missile scare is further hyped up largely by TV,” said Hiroki Fujii, a 40-year-old utility employee who lives near Yokota. Akinori Otani worries more about a US military plane crashing in the area. At bases around Japan, residents have raised concern about the safety of the tilt-rotor MV-22 “Osprey” aircraft. “Ospreys are actually flying around,” said Otani, a 42-year-old resident of Hamura, another town

near Yokota. “I’m more concerned about them than a missile that I think is unlikely to hit us.” In the southwestern town of Iwakuni, home to a US Marine Corps air station, residents began asking about attack response plans after the area was mentioned on TV among possible targets, said Yuji Yamaguchi, an emergency response official there. He questioned whether it is possible to predict a missile’s course and issue an alert before it reaches Japan and said that without such information, drawing up an evacuation scenario is difficult. It is believed that it would take about 10 minutes for a North Korean missile to reach Japan, yet when the four missiles landed off the coast in March, it wasn’t until 20 minutes after that the government notified local fishermen. For Reiko Naya, who runs a gift shop just outside the Yokota base, she is concerned that the tension may be used by the government as a justification to bolster Japan’s military capability. “Japan has renounced war, but it seems we are gradually getting embroiled into a conflict,” she said. “We thought North Korean missiles would never reach Japan, but after all these tests, they now seem routine. Eventually, one of them might come flying.” AP

Venezuela’s Maduro hikes wage amid rising protests

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ARACAS, Venezuela—Venezuelan President Nicolas Maduro hiked wages and handed out hundreds of free homes last Sunday amid his efforts to counter a strengthening protest movement seeking his removal. O n h i s reg u l a r te le v i sion show, Sundays with Maduro, the president ordered a 60-percent increase in the country’s minimum wage starting on Monday. It was the third pay increase the socialist leader has ordered this year and the 15th since he became president in 2013. It is small solace to workers who have seen the buying power of their earnings eroded by a sinking currency and the world’s highest inflation—forecast to accelerate to 2,000 percent next year, according to the International Monetary Fund (IMF). With the latest wage increase and mandatory food subsidies, the minimum take home pay for millions of Venezuelans now stands at 200,000 bolivars a month—or less than $50 at the widely used black market rate. “We’re here to take care of the workers, those who are most humble, and not the privileges of the oligarchs,” Maduro said. In addition to the pay hike, he

announced a special “economic war” bonus to retirees to make up for what he says are attempts by the opposition to sabotage the economy. The president also watched as officials in several states handed over the keys to hundreds of new apartments, some built with Chinese funding, bringing to 1.6 million the number of public housing units built by a program started by the late-President Hugo Chavez. The announcements came as government supporters and Maduro’s opponents prepared for rival marches to commemorate May Day on Monday. Twenty-nine people have been k il led, hundreds injured and more than 1,300 arrested during a month of protests that are the bloodiest to hit Venezuela since antigovernment unrest in 2014 resulted in more than 40 dead. Protesters accuse Maduro of taking Venezuela down the path of dictatorship, unrest triggered by the government-stacked Supreme Court stripping congress of its last vestiges of power. They are demanding early elections and freedom for dozens of political prisoners as a way out of the stalemate. The opposition blames the re-

cent deaths on security forces and pro-government militias for the deaths. The government has complained of what it considers biased media coverage that will pave the way for some sort of foreign intervention in Venezuela. Last Saturday Foreign Minister Delcy Rodriguez met with foreig n cor respondents for a second straight week to present the government’s case. Rodriguez sought to “completely disprove” the opposition’s claim that security forces fired a tear gas canister, which hit the chest of 20-year-old college student and killed him during a protest in Caracas last week. She said there were strong indications that the youth, Juan Pablo Pernalete, might have been killed with a cattle stun gun used against him by fellow protesters. A s pol itica l tensions have mounted, Maduro, a former bus driver, has worked hard to reinforce his everyman image. In recent days he has appeared on state TV tossing a baseball around with aides, rapping with a hip-hop group and taking first lady Cilia Flores on a popular tourist gondola to the top of Avila Mountain overlooking Caracas. But the campaign to project

business as usual has sometimes bac k f ired. For e x a mple, l ast week he posted to his more than 3 million followers on Twitter a video showing him driving a car at night through a neighborhood that hours earlier experienced street clashes between antigovernment protesters and security forces. It didn’t take long before someone noticed that passing by the open passenger window was a large graffiti scribbled on a wall that read “Maduro: Assassin of students”. Maduro last Sunday repeated his call for dialogue, which the opposition has rejected after Vatican-sponsored talks collapsed last December with little progress. He also repeated a pledge to hold gubernatorial elections soon, perhaps as early as this year. Many in the opposition consider Maduro’s offer of gubern ator i a l e lec t ion s a n empt y concession and are pushing for an early presidential vote after the gover nment canceled regional races last year. Maduro’s allies currently govern in 20 of Venezuela’s 23 states, but polls indicate the opposition would likely win the next election after it took control of congress in December 2015 by a landslide. AP

AGHDAD—The US-led coalition has come under increasing scrutiny by monitoring groups regarding civilian casualties in the fight against the Islamic State (IS) group in Iraq, a turn that is worr ying some in the country’s political leadership who fear the destruction and loss of life could complicate hopes of reconciliation with the country’s minority Sunnis. The Pentagon acknowledged over the weekend that at least 352 civilians have been killed by coalition strikes in Iraq and Syria since the start of the air campaign against IS in 2014. However, activists and monitoring groups say the number is much higher. The coalition argues that casualties are inevitable in urban warfare with irregulars mixing with civilians and determined to stage a last stand. But critics see a degree of recklessness and excess that aligns with the heavy-handed rule of the Sunni areas by the Shiite dominated Iraqi government. Here’s a look at some aspects of the situation.

A devastating mistake

IN March, the Pentagon launched an investigation into an incident in which Mosul residents say a single air strike killed more than 100 civilians sheltering in a house in the western part of the Iraqi city that was also being used by IS fighters. While both Iraqi and coalition planes are active in the skies above Mosul, the US acknowledged coalition planes conducted a strike “at the location corresponding to allegations of civilian casualties”, but did not confirm the number of casualties inflicted or the circumstances of the event. The incident sparked outrage in Iraq and beyond with calls from local government officials, as well as the United Nations, for greater restraint in the fight against IS for Mosul. Despite the allegations surrounding the March 17 strike, the spokesman for the US-led coalition Col. John Dorrian told The Associated Press that the coalition’s antiIS operations remain “the most precise air campaign in history”. “But all the tactics, techniques and procedures and plans that we have, all these things are executed by people,” he said, “and what that means is, it’s not going to be perfect, it’s going to be as good as we can possibly make it.” More t h a n a mont h si nce the incident, Dorrian declined to specify when the investigation—the most extensive single investigation into civilian deaths undertaken by the coalition since the fight against IS began—would be complete.

Why it’s happening

Civilian deaths in the nearly t h ree -yea r bat t le aga i n st I S spiked as Iraqi forces pushed into Mosul, undertaking some of the toughest fighting, yet. The battle space, with its narrow streets, is claustrophobic and the IS group is holding hundreds of thousands of civilians in the city as human shields. Since Iraqi forces pushed into western Mosul in February, the fighting has killed and wounded more than 4,000 civilians, according to the UN, a number that only counts civilians who reached a trauma hospital for treatment. In the most recent report, the Pentagon announced last Sunday that investigations conducted during the month of March show that coalition air strikes killed 45 civilians, mostly in and around Mosul. In each incident, the Pentagon said “all feasible precautions were taken”, but the strikes still resulted in “unintentional” loss of civilian life. The report came days after President Donald J. Trump gave the Pentagon greater flexibility

to determine the number of US troops in Iraq and Syria. The Pentagon had already been making quiet, incremental additions to the troop levels in both countries in recent months.

A look at the numbers

The Pentagon acknowledged over the weekend that at least 352 civilians have been killed by coalition strikes in Iraq and Syria since the start of the air campaign against IS. Activists and monitoring groups put the number much higher, with London-based monitoring group Airwars reporting coalition strikes have killed more than 3,000 civilians in Iraq and Syria since 2014. The Pentagon’s Sunday statement also included the findings of an audit begun in March that inspected the way the US-led coalition reports and tracks civilian casualties in the fight against IS. The statement said the audit found that 80 civilian deaths caused by coalition air strikes had not been previously publicly reported and two civilian deaths previously reported were found to have not been caused by the coalition. Some in Iraq’s political leadership have expressed concern that the levels of damage and loss of human life in Mosul will make reconciliation with the country’s minority Sunni population more difficult after a military defeat of IS.

What it means for postwar governance

Iraq’s Parliament speaker, Salim al-Jabouri, one of the highest ranking Sunni government officials, has said reports of increased civilian casualties in western Mosul are of “great concern”. W hen Haider al-Abadi took office in 2014, he promised reforms that would hold corrupt Iraqi leadership accountable and allocate more of a political stake to the country’s Sunnis. Al-Abadi has handed more control over to Iraq’s regional leadership and appointed a Sunni to lead the Ministry of Defense. But some Iraqis are warning the outcome of the Mosul operation could be pivotal for how the country’s Sunnis view Baghdad ’s Shiitedominated government. Iraq’s foreign minister has warned such a massive reconciliation effort will need funding and support akin to the Marshall Plan that helped western Europe recover from the devastation of World War II. In order for Iraq’s militar y gains to stick, the international community needs “to present assistance to Iraqis and support development and overcome the effect of war against Daesh [Arabic name for IS] terrorist gangs”, Jaafari said in a statement released by his office.

Roots of IS support

When the IS group rampaged through northwestern Iraq in 2014, the extremists were welcomed by some Su n n i s who thought IS represented a Sunni revolution that would deliver them from the country’s Shiite-dominated government in Baghdad. Under former Prime Minister Nouri al-Maliki, many of Iraq’s Sunnis began to view the country’s security forces as an occupying force. Police and military units often swept through Sunni communities detaining all military-aged males in an attempt to quell dissent, filling the country’s prisons with men arrested on trumped-up terrorism charges. Baghdad has not yet presented a comprehensive plan for the governance of Nineveh province once the fight for Mosul is concluded and plans for an Iraqi “national guard” that would give greater control of local security to regional leaders have languished in Parliament. AP

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Cebu labor fronts aghast over Dino’s statement

House leaders order committee to probe Ilocos Norte purchase of P66.4-M motor vehicles

By Charles R. Pepito Correspondent

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S the entire nation commemorated Labor Day on May 1, the unified labor fronts in Cebu were aghast with the pronouncement of Presidential Assistant for the Visayas Michael Lloyd Dino. A few days before Labor Day, Dino had alleged a “mafia” in the country’s labor arbitration process and the same must be investigated. Dino was referring to the familyowned Unicraft Industries International Corp. that encountered a labor problem not too long ago. The company is a maker of wrought-iron and stonein-laid furniture. The labor case reached to the Supreme Court (SC) when 32 employees filed a complaint for illegal dismissal, underpayment/nonpayment of wages, overtime pay 13th- month pay and service incentive leave pay to the National Labor Relation Commission (NLRC). The Court of Appeals (CA) affirmed the decision of the Voluntary Arbitrator (VA), stating, among others, the herein respondent firm Unicraft indeed violated workers’ rights and labor standards and were ordered to pay the workers a total of P21,777,299.84. “The case has undergone a tedious proceeding, processes and reviews by both parties,” the labor groups’ statement read. Not contented and satisfied with the decision, Unicraft elevated the case to the SC. Their petition for review of the case was partially granted, but with some modification on the computation of the monetary benefits due to the workers because some workers accepted settlements while the case was still pending. The case of illegal dismissal, underpayment/nonpayment of wages, overtime pay and 13th-month pay and other violations of labor standards were affirmed by the decision of the SC. “Who is antilabor and who is antipoor? Who is the mafia on this case?” the group asked. They said Dino’s statement to the media calling the Department of Labor and Employment (DOLE) and NLRC as “agencies run by mafia-like organization is a product of his pure and wild imagination, insinuation and, thus, without basis.” “Mafia in the labor arbitration process must be investigated. It’s not necessary that my office will probe it. I am urging for an investigation regardless what office will probe it. I have a firsthand experience on this syndicated labor arbitration,” Dino was quoted by a local daily as saying.

Editor: Efleda P. Campos • Tuesday, May 2, 2017 A9

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By Jovee Marie N. dela Cruz

@joveemarie

EADERS of the House of Representatives has directed the House Committee on Good Government and Public Accountability to conduct an inquiry on how the province of Ilocos Norte uses its shares from the excise taxes on locally manufactured Virginiatype cigarettes.

In House Resolution 882, Majority Leader and PDP-Laban Rep. Rodolfo Fariñas of Ilocos Norte, Deputy Minority Leader and PDP-Laban Rep. Juan Pablo Bondoc of Pampanga and PDP-Laban Rep. Aurelio Gonzales Jr. of Pampanga said the province purchased motor vehicles made through cash advances without the benefit of public biddings for the total amount of P66.4 million. The House Committee on Good Government and Public Accountability is set hear the resolution on Tuesday morning. The resolution said the provincial government of Ilocos Norte made the purchases on three separate transactions of motor vehicles through cash advances from its

Proposed ₧746-million bridge to rise in Virac, Catanduanes By Manly M. Ugalde | Correspondent

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IRAC, Catanduanes—Once known as a typhoon-battered island province exposed to the sea, Catanduanes may soon have a Manila baywalk-type boulevard with the expansion of the 40-year-old existing 4-kilometer Imelda Boulevard stretching the Virac shoreline. If realized, the lone congressional district comprising 11 towns, Catanduanes would be linked to the Bicol mainland with the proposed 10-kilometer bridge stretching Caramoan town to the Caramoan peninsula of Camarines Sur. The Regional Development Council in 2013, then headed by Albay Gov. Joey S. Salceda, approved the P10-billion proposed CatanduanesCamarines Sur bridge project originally proposed during the late-1980s by then-Catanduanes Gov. Ambassador Leandro Verceles Jr. Estimated to cost P746 million with an expected initial funding of P300 million, the Virac baywalk project set to begin implementation by 2018 would cover the length of 2.64 kilometers. The Virac shoreline is a composition of beaches spanning barangays Peñafrancia, Salvacion, Capilihan and San Vicente. The existing Imelda Boulevard with a 70-meter long pier built perpendicularly also include a breakwater considered as one of the best in Bicol. A legacy of the Alberto’s led by the late-Rep. Jose Alberto, the existing Imelda Boulevard in Virac built during the early 1970s served as the town’s protection from storm surges other Bicol provinces would like to copy. Residents wonder that the more than 40-yearold Imelda boulevard with its thickly concreted 5-meter high wall stretching half of the 4-kilometer boulevard that served as a protection for half of the capital “poblacion” survived the onslaught of scores of strong typhoons, however, incurring manageable damage only. The other half of the boulevard measures around 3 meters in height.

Today, the longest boulevard that attracts local and foreign tourists is the Legazpi Boulevard spanning its 6-km shoreline of four barangays starting from Barangay Pigcale to Barangay Puro built during the Arroyo administration and estimated to cost P3 billion. With the beautiful perfect cone of Mayon Volcano in clear full background view, Legazpi Boulevard is almost comparable with the Manila Baywalk. The expansion of the Imelda Boulevard in Virac is part of the convergence program of the Departments of Tourism and Public Works and Highways that would include the boulevard’s widening to four lanes, extension, construction, improvement and rehabilitation, all to cost P750 million, District Engr. Elmer Redrico said. Imelda Boulevard, which serves as the pride of Catanduanes, was implemented phase by phase that began during the late 1960s under President Ferdinand E. Marcos and Rep. Jose Alberto and eldest brother Gov. Juan Alberto. Governor Alberto was assassinated in 1968 while entering the GSIS building in Manila. He was succeeded by younger brother Vicente Alberto. Rep. Alberto, who became Marcos’s chairman of the Congress’s powerful Appropriation Committee, was also hailed as the leader of the politically united Bicol Bloc represented by the Espinosas, the Imperials in Albay, and Fuentebellas in Camarines Sur. With the Alberto’s stature under the Marcos regime, Imelda Boulevard was fast completed, with the province prioritized on infrastructure projects and funding releases. The boulevard expansion would be swallowing 12 meters wide toward the sea, according to the plans, said DPWH Arch. Abraham Tatad Peña. Mayor Sammy Laynes said with the expansion of the existing Imelda Boulevard similar to the Manila Baywalk, certainly tourism in the province would be boosted with the existing developed beaches.

shares in the excise tax of tobacco. The resolution said the purchases by way of cash advances of the subject vehicles for the gigantic amount of P66.4 million were in blatant violation of Republic Act (RA) 7171, or an act to promote the development of the farmer in the Virginia Tobacco producing provinces, Government Procurement Reform Act and the Government Auditing Code of the Philippines. Under RA 7171, 15 percent of the excise taxes collected from the manufacture of locally produced Virginiatype cigarettes shall be allotted as a special support fund for the provinces producing Virginia tobacco. The tax collected shall be divided among

the beneficiary provinces pro rata, according to the volume of Virginia tobacco production. The law said the fund shall be utilized to advance the self-reliance of the tobacco farmers through cooperative projects, livelihood projects, agro-industrial project and infrastructure projects. It added it is a declared policy of the State to extend special support to the farmers of the Virginia tobacco-producing provinces inasmuch as these farmers are the nucleus of the Virginia tobacco industry which generates a sizable income,intermsofexcisetaxesfromlocally manufactured Virginia-type cigarettes and customs duties on imported blending tobacco for the national government.

DOH-Mimaropa to intensify training of life guards following deaths of 3 tourists in March By Claudeth Mocon-Ciriaco Correspondent

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HE Department of Health (DOH) in Mimaropa vowed to intensify the training of water attendants in Palawan following the drowning of two Czech tourists in Kayangan Lake in Coron and a 60-year-old Japanese man at Nagtabon Beach, Barangay Bacungan, Puerto Princesa, all in March. Mimaropa is composed of the provinces of Oriental Mindoro, Occidental Mindoro, Marinduque, Romblon and Palawan. “If there was a trained water personnel in the area, the incident could have been avoided. This is the reason we need to prepare and teach all water personnel on water search and rescue for them to be able to prevent water accidents, such as drowning,” Regional Director Eduardo C. Janairo said. Janairo added they target to train as many water attendants as possible. He said that from April 24 to 28, the DOH-Mimaropa, in partnership with the Philippine Coast Guard-Palawan District, has conducted the eigth batch of the fiveday Water Search and Rescue (Wasar) training with 43 successfully trained water attendants of Puerto Princesa City. Those who underwent the training completed the Wasar training held in various locations in the city. The participants included swimmers, surfers and divers. There were 39 male and three female trainees. All were residents of Puerto Princesa City. Most attendees were from Barangay Bancungan, where Nagtabon Beach is located and a reported case of drowning

was reported on March 3. The DOH—Mimaropa has yet to conduct a training in Coron, where the two Czech divers died. Janairo said the regional office conducted a survey in areas where there are Wasar-trained personnel and found out there is no case of drowning and water incident. “Proper knowledge and the ability to provide immediate emergency response must be properly taught for them to have a better perception on how to manage a possible victim prior to and upon arrival of the health response team,” he said. Since the start of the “Health in Tourism Program” on March 24, 2015, DOHMimaropa has trained a total of 205 Wasar water personnel and the first 28 certified lifeguards in the province of Palawan. The target is to have at least 500 aquatic personnel in the whole region. “The objective is to ensure safety of the public who frequents resorts and beaches,” Janairo said. Janairo also reminded the trainees to continue undergoing healthy lifestyle practices by maintaining strong physique and refraining from smoking and drinking alcoholic drinks, which can affect perception and awareness while on duty. Wasar training is the search for and provision of aid to people who are in distress or imminent danger. Participants are trained on the proper way of water entry, types of swimming, lifesaving techniques, group survival, water evolution and knot tying. Under the law, the PCG has the sole authority to provide Wasar and lifeguard training in the country.

Resident cleans up polluted creek in Iligan City By Cha Monforte | Correspondent

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ITO de la Corta, 54, only wanted to end the foul odor emanating from the murky and polluted Baslayan creek area near his house. It was also a breeding ground for the big flies and mosquitoes that annoy his family and, yes, threaten the health of their neighborhood. Then de la Corta saw his neighbor make a pond in the creek for tilapia production, just enough for family consumption. So, from his neighbor’s raw clearing, he cleaned a 60-square-meter area of the creek, just by the outer opening of the manhole at the side of the national highway section fronting Gaisano Mall in Iligan City. The manhole was the drain of four drainage culverts where wastewater from commercial and residential areas flowed out. The Baslayan creek section at Purok de Oro, Zone 3, drains to the coast in Tambacan. It was November 18, 2016, when he started cleaning and clearing the place. It was really a trash creek where garbage piled up, leachate and flotsam mixed with slowly running murky canal water. Now it has become a koi fishpond, looking like a big aquarium with the few décors he set up. More than 100 big koi fishes of various colors are thriving in a pond with continuous clear water

running through it. It’s really a big wonder how the canal water became clear and looked refreshing. De la Corta’s pond is now a city attraction. He simply put up screens to filter the running canal water, and it became clear, he said in an interview with the BusinessMirror last Thursday. He’s earning a little from the feed pellets for the kois at P5 per small pack. Anyone who wants to have all the colorful kois come before him has only to throw feed pellets to the kois—to enjoy the sight and, at the same time, contribute a small amount to help maintain the environment. De la Corta is an itinerant seller of everything— from cars, spare parts, lots, etc. How he wished civic clubs in Iligan City would step in to be a cooperator and “mount their tarpaulins here”. He said donations of flowers, neem trees, more kois and décors are most welcome. He and his neighbor with the tilapia pond were recently given an award by City Mayor Celso Regencia for their innovative project that could be replicated to clean canals nationwide. Where before the Baslayan Creek section near Lito’s house could immediately become the dumping ground of neighbors’ wastes, it has become almost a big aquarium now where people are ashamed to throw their wastes, and children no longer pee on the sides of the canal.

CREEK converter Lito de la Cotta (right) and a friend stand beside the renewed creek section in Iligan City.

CHA MONFORTE

A10 Tuesday, May 2, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Teach them how to fish

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E support Presidential Consultant for Entrepreneurship Jose Concepcion’s proposal for the gradual phaseout of the government’s Conditional Cash Transfer (CCT) Program, an idea that is backed by many in the business sector and, supposedly, by some members of the Cabinet, including the head of the National Anti-Poverty Commission (NAPC).

With a budget of almost P80 billion this year and some 20 million beneficiaries, the Philippine government’s CCT, also called the Pantawid Pamilyang Pilipino Program or 4Ps, is among the top 5 largest CCT programs in the world in terms of scale, according to a World Bank report. The 4Ps was the centerpiece antipoverty program of the administration of former President Benigno S. Aquino III. Under the program, poor families are given a monthly stipend on several conditions—that parents will send their children to school and have them checked regularly in barangay health centers. The CCT extends a health grant amounting to P500 monthly year-round and an education grant of P300 per child for 10 months each year to each participating household. To receive the cash grants, pregnant women must avail themselves of prenatal and postnatal care, and be attended during childbirth by a trained professional. Parents or guardians must attend the family-development sessions, which include topics on responsible parenting, health and nutrition. All these are worthy endeavors. We are not saying the CCT has not worked at all. But we can certainly argue that it has not been making significant headway in poverty reduction. The percentage of poor Filipinos in the country, going by government statistics and other surveys, has remained virtually unchanged since the administration of Gloria Macapagal-Arroyo began implementing the CCT Program, raising questions about its effectiveness as an antipoverty measure. Even the current NAPC head, Liza Maza, said there are better ways to address poverty, other than the CCT Program. Maza said, rather than continuing the CCT, the government would do well to invest its resources on livelihood programs that may have greater impact on the lives of the poor. During a briefing at the sidelines of the 30th Asean Summit, Concepcion had suggested shifting the CCT’s multibillion-peso annual budget to provide loans for small businesses for the poor. Concepcion said providing funding to small businesses, which account for 97 percent of all registered businesses in the Philippines, would be a sure way to help lift people from poverty compared to the CCT Program. We agree that using these CCT billions to help poor Filipinos start their own collateral-free or collateral-friendly small businesses would give them a better chance of licking poverty in the long run. To date, the share of micro, small and medium enterprises (MSMEs) on domestic output is only about 36 percent, despite the fact that they employ about two-thirds of the country’s labor force. The CCT billions could increase the share of MSMEs on domestic output and also have a multiplier effect. The start-up businesses that can be generated out of it would not only help the poor help themselves but would also give more jobs to their fellow poor Filipinos. The best solution for poverty is to help poor people find a decent way of earning a living, either by giving them jobs or helping them start small businesses. In the long term, dole outs cannot solve poverty and they will not help much. They may alleviate hunger for a day or a few months, but after that, what? Sure, the government needs short-term measures to address hunger and poverty. But cash dole outs are palliative measures at best. In the end, what we want is along the lines of that Confucian aphorism— teach people how to fish to feed them for a lifetime, instead of giving them fish to feed them for a day. Since 2005

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THE Entrepreneur Continued from A1

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nfortunately, not a lot of big-ticket projects have been completed since the launching of the PPP Program several years ago, under the previous administration.

President Duterte’s decision to adopt an independent foreign policy after assuming office in mid-2016 also opened new funding sources for infrastructure development, as well as markets for Philippine products. Even before concluding his meeting with Chinese President Xi Jinping in Beijing in October last year, the Chinese government announced that it was lifting its advisory to its citizens against traveling to the Philippines. It was a big boost to Philippine tourism because China is the world’s biggest source of tourists. China has also lifted restrictions on Philippine banana exports, and has even committed to buy other agricultural products from the Philippines.

After his trip to China, Duterte went on to Japan, where he received another commitment for investments and assistance. Now, the Philippines is now in an enviable position of being wooed by Chinese and Japanese investors who want to participate in infrastructure development. During his visit to Beijing, Duterte received a $24-billion package consisting of $9 billion in loans and $13.5 billion worth of pledges. In his trip to Japan, Duterte received an offer for a $48-million government loan plus more than $17-million investment pledges by Japanese companies. During his visit to the Philippines last January, Prime Minister Shinzo Abe announced an $8.66-billion public-private sector funding to support

How stock markets ‘crash’ John Mangun

OUTSIDE THE BOX

Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos

BusinessMirror is published daily by the Philippine Business Daily Mirror

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Beating the catch-up game

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any experienced investors do not understand the trading and pricing system of a stock market. In this ignorance, they do not understand how a stock market can suddenly go down or up by a large percentage. In our everyday lives, we are used to “fixed prices”, like at the department store or supermarket. This is a “take it or leave it” pricing system. The seller fixes the price and the buyer has the option to buy or not. When we buy a T-shirt at the Baclaran market or an automobile from an individual or a dealership, this is a “Contract Market”. The price is negotiated between the buyer and seller. Usually, the seller starts the negotiation and the buyer offers a lower price until the two parties meet at an agreeable price, like what you see on the television series Pawn Stars. In the financial markets, the

commodity exchanges used to operate exclusively on a contract pricing system between two parties. That has changed to a structure similar to the stock exchanges because of electronic trading, which does not easily lend itself to contract negotiation. Stock markets determine prices based on an “Auction System”, like on the US television series Storage Wars. The “seller” asks if anyone in the group of buyers is willing to pay $200 for a storage unit. If there are no takers, he lowers the price until someone is willing to bid. That is how the stock market works and why buyers, not sellers,

infrastructure projects in the Philippines for five years. Companies from both countries are now in a race to enter into partnerships with local companies not only on infrastructure projects but in other business activities. Chinese Vice Premier Wang Yang, in a demonstration of China’s seriousness in honoring its commitments to the Philippines, met with Duterte on March 18. Wang’s delegation included Vice Minister Fu Ziying of the Chinese Ministry of Commerce, who exchanged letters with Finance Secretary Carlos G. Dominguez III related to the construction of the Panay-Guimaras-Negros bridges project and the Davao City expressway project, which are among the nine projects that China would finance. On March 30 the PhilippinesJapan Joint Committee on Infrastructure Development and Economic Cooperation held its first meeting in Tokyo to begin the process of implementing Abe’s commitment. The Philippine delegation was headed by Dominguez, while the Japanese panel was led by Dr. Hiroto Izumi, the special advisor to Prime Minister Shinzo Abe. During the meeting, the Philippine delegation presented a list of priority infrastructure projects

for possible implementation with Japanese official development assistance. The list covers projects in railway, irrigation and public works projects covering road and flood management. There appears to be a competition between Japan and China because some projects are in both countries’ list. One is the proposed commuter line of the North-South Railway Project (NSRP). The 653-kilometer NSRP south line will consist of commuter railway operations between Tutuban in Manila and Calamba, Laguna, as well as long haul railway operations between Tutuban and Legazpi City in Albay province. In addition to China and Japan, other funding sources for infrastructure, as well as investments in other areas are opening up for the Philippines. Duterte, who traveled to the Middle East during Holy Week, was expected to bring home more than $650 million worth of investment commitments. With the new funding sources, the Philippines has breached one of the major barriers to infrastructure development. This should allow us to catch up with our peers, sooner rather than later.

determine stock prices. You want to sell your shares of Ayala Corp. and “offer” or “ask” P900. If no one is willing to pay that price, you may drop the offer. Another seller may come in at a lower price than you to have their shares be bought first. Notice that as long as buyers are not willing to take the price, sellers will—theoretically—lower the price until they find a buyer. If the sellers are not willing to go any lower and the buyers will not pay any higher, there is no transaction or liquidity. Liquidity is ultimately determined by the buyer. We are told that stock prices went down because “there were more sellers than buyers”. There is always the same “number” of buyers and sellers. It should read, “There were less buyers at a higher price”. If the local stock market trades P10 billion and goes up 100 points, there was P10 billion of selling and P10 billion of buying. The difference was that buyers were willing to pay higher prices. The same is true for the down side. This past Thursday, the Philippine Composite Index was down 65 points on a trading volume of P5.6

billion. Again, the same peso amount of buying and selling. But on that day, buyers of Globe Telecom were not wiling to pay the previous day’s price of P2,150. Buyers—58 percent —were only willing to buy at P2,078 and another 26 percent were willing to buy at P2,080. It is not as if the sellers walked in that day and said, “I want to sell my Globe shares at a price 3.35 percent lower than yesterday”. The sellers did not have a choice because P2,080 was the highest price that most of the available buyers were willing to pay. Buyers determine the price; not the sellers. Panic selling and panic buying happens in the wake of strong oneway price movements. This is the “irrational exuberance”—and “irrational depression”—that can overtake the market on a short term basis. Prices are determined by the buyer, which proves that “whoever has the gold makes the rules”.

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

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

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Congress should look into FDA budget cut

Tension in the Korean Peninsula Edgardo J. Angara

Ernesto M. Hilario

ABOUT TOWN

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S another storm brewing and headed in the direction of the Department of Health (DOH)? There are reports that some stalwarts of the country’s pharmaceutical industry have been quietly talking to some solons and asking them to look into the recent move by Health Secretary Paulynn Jeann B. Rosell-Ubial to slash the budget of one of its attached agencies—the Food and Drugs Administration (FDA). The industry appears to be worried by Ubial’s move, since this will definitely adversely affect the ongoing campaign of the FDA against one of the industry’s biggest nemeses: product counterfeiters. Why Ubial should specifically slash the FDA’s law-enforcement budget baffles the industry. That Ubial’s move appears to have been timed with the FDA’s renewed war against illegal food and drugs products is even more puzzling. Why cripple an attached agency that’s been doing a good job that benefits the pharmaceutical sector, industry observers ask. Product counterfeiting has been a headache in the pharmaceutical sector for the longest time. This scourge appears to have grown over the years, apparently unchecked and encouraged by the lack of the necessary will and resources on the part of government. An extensive study conducted by the World Health Professions Alliance (WHPA) cited a report by the World Health Organization (WHO). According to the WHO, a “significant fraction of the world’s drug supply is counterfeit and falsified”. The estimate runs up to 10 percent to 15 percent of the world’s supply, and up to 25 percent in developing countries. That’s one out of every four drug products sold in the market. The report warned, however, that it is difficult to establish the real volume of counterfeit drugs in the market, since that can be determined only when these fake goods have been seized and assessed. The WHPA estimated the volume of business in counterfeit-drugs peddling has already reached some $75 billion a few years back. What is alarming is that, in the Philippines, the top five counterfeited drugs are those used by many underprivileged Filipinos. These are antihypertensive drugs, antiasthma, analgesic medicines, antidiarrhea and vitamins. That the pharmaceutical sector should be enraged by the DOH move to clip the FDA’s resources in the fight against counterfeit drugs is understandable. The WHPA report cited a study by the Pharmaceutical Research and Manufacturers of America, which explained that it takes pharmaceutical companies about 10 to 15 years to develop a drug at a whopping cost of about $820 million. “Copying the drug takes only three to five years, at an approximate cost of $60,000,” the report said. It is also expected that the pharmaceutical industry would demand and expect that the FDA sustain and intensify its drive against counterfeit drugs.

After all, industry members have paid all the necessary dues to the government to have their products licensed and registered. The revenues they make from the sale of legitimate products are taxed by government. It is only fair that the government—through the FDA—should protect them from the syndicates that peddle the counterfeit versions of their products. The industry has no doubt that newly appointed FDA Director-General Nela Charade Puno intends to do just that. In fact, the FDA’s partnership with the Philippine National Police for its law enforcement operations has already produced positive results. Now, the industry wonders why Ubial apparently wants to stop FDA’s efforts. There have been earlier speculations that the budget slash—reportedly a shocking P700 million of the total FDA budget—was triggered by a very flimsy reason: certain DOH personalities have a serious dislike for Puno. Others speculate that the budget slash could be intended to prevent the FDA from overshadowing its mother agency. The view is that a major achievement on the part of the FDA might underscore the reality that there has been none so far on the part of the DOH. Whether or not this is true, we hope that the DOH would change its mind and just let the FDA do its job. True, the success of FDA would make Puno look good. But that would not necessarily make Ubial look bad. Besides, that is not the issue. We don’t care about Ubial or Puno. The point here is that cutting FDA’s budget is unfair to the public and to the legitimate pharmaceutical industry. We hope that the proposed congressional investigation into that cruel cut on the FDA budget would materialize. A congressional probe would help shed light on the reason behind Ubial’s move. Our solons can also help the public understand better the problem of drug counterfeiting in our country and how this evil affects their health and well-being. We believe that Ubial herself would welcome this proposed probe. This would give her the chance to dispel the growing speculation that the budget cut has no solid basis. Let’s hear it directly from her.

E-mail: ernhil@yahoo.com.

Tuesday, May 2, 2017 A11

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he threat of nuclear confrontation hangs dangerously over the Korean Peninsula between a nuclear-armed North Korea and the smart war weaponry-laden US.

Unperturbed by the prospect of heavy sanctions, the supreme leader Kim Jong-un has kept the development of a full nuclear arsenal as a central objective of his regime since assuming power in 2011. Starting from February this year, North Korea has been conducting missile tests, although most of them have reportedly failed. Experts still say the hermit country is inching closer toward locally producing intercontinental ballistic missiles that could reach the US and even some parts of Europe. North Korea’s nuclear capability appears to be growing as well. The New York Times recently reported

that based on a growing body of expert studies and classified intelligence reports, the country now seems to have the capability to produce a nuclear bomb every six or seven weeks. According to satellite images from US-based monitoring group 38 North, North Korea looks to be preparing for another underground nuclear test—which will be the sixth since 2006. The explosions of the last three had already matched those of Hiroshima and Nagasaki during World War II. The Trump administration has used some blunt words in response to North Korea’s recent actions. In

February US Defense Secretary James Mattis warned that North Korea would be met with an “effective and overwhelming” response if it used any nuclear weapon. In March US Secretary of State Rex W. Tillerson ruled out direct negotiations with North Korea, saying the US might be forced to take “preemptive action” if North Korea elevates the threat of their nuclear weapons program to an unacceptable level. The warning has been backed up by action. An entire armada led by the aircraft carrier USS Carl Vinson was sent to naval positions within striking distance of North Korea. Last week the US began setting up in the area a Terminal High-Altitude Area Defense system—a sophisticated antimissile defense system meant to protect US soldiers and allies South Korea and Japan, from any North Korean attack. As both sides point their weapons at each other, millions of lives are at risk. No less than Pope Francis urged the US and North Korea to defuse the tension and pursue diplomatic avenues, as he emphasized to reporters that any widespread

war would destroy “a good part of humanity”. The pontiff also said a third country like Norway could mediate, and called on the UN to reassert its leadership in world diplomacy. In a phone call with President Donald J. Trump, Chinese President Xi Jinping urged restraint while he tries to mediate the conflict. And while Trump has lauded President Xi for “trying very, very hard” to end the crisis, the Chinese leader seems unable to restrain the bellicose behavior of the once-obedient dependency North Korea. As a consequence, the whole of East Asia is on red alert, their peoples sitting on knife’s edge. Even President Duterte expressed deep concern over the tensions, saying at a post-Asean Summit press conference that “one explosion there that would hit somebody would cause a catastrophe”. We fervently pray that the efforts of the Pope and Xi at mediating the crisis will succeed. E-mail: angara.ed@gmail.com, Facebook and Twitter: @edangara

Aipa vows to push peace and stability in the Asean region Cecilio T. Arillo

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EMBERS of the Association of Southeast Asian Inter-Parliamentary Assembly (Aipa), representing more than 600 million people, have resolved to make it an effective organization to promote and maintain peace and security in the region in addressing terrorism, illicit drug trafficking, maritime issues and promotion of migrant workers’ rights, among others.

Speaker and Aipa President Pantaleon D. Alvarez delivered the Aipa commitment in his remarks at the Asean heads of states and Aipa parliamentarians held at the Philippine International Convention Center. “We resolve to make the Aipa an effective vehicle to promote and maintain peace and stability in the region. We will work closer with the respective legislatures of other Asean member-states—Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Vietnam, Thailand and Singapore—to elicit greater participation of the people in implementing Asean initiatives and programs,” Alvarez said. The message initially states that the Aipa expressed support for the Philippines’ core message for positive changes in the community and Asean unity, along with the realization of its six priorities: people-oriented and people-centered Asean; peace and stability in the region; maritime security and cooperation; inclusive and innovation-led growth; the Asean’s resilience; and the Asean as a model of regionalism and a global player. “We proudly recognize the chairmanship of the Philippines of Asean

under the theme “Partnering for Change, Engaging the World”, as the Asean celebrates its 50th Anniversary. We are also pleased to note that the Aipa marks its 40 years of bringing the Asean closer to the people. On the third Asean Parliamentarian Meeting held here in Manila in September 1977 Asean Inter-Parliamentary Organization [Aipo] was formally launched, which later evolved into Aipa in 2007,” Alvarez said. “Aipa and Asean shall protect and preserve its own cultures, traditions and laws. The voices of Member States with more than 600 million people in the region speaking as one, have a more effective voice that cannot be ignored,” said Alvarez, adding that: “As kin, we ought to look out for each other and, with the collective gains of our Asean brothers and sisters, build a future that is worthy of our shared history. It’s about time we build and focus on our region,” the speaker emphasized. In its commitment message, the Aipa reaffirmed its support for the Asean Political-Security Community Blueprint to provide a solid foundation for regional dialogue. “Multifaceted security challenges

“We resolve to make the Aipa an effective vehicle to promote and maintain peace and stability in the region. We will work closer with the respective legislatures of other Asean member-states to elicit greater participation of the people in implementing Asean initiatives and programs,” Alvarez said.

such as terrorism, migration and humanitarian crises, among others, remain as major regional concerns. We cannot underscore enough the need for a culture of peace, respect and dialogue to bridge differences, diffuse tension and counter extremism. Asean must strengthen its cohesiveness to build a more democratic, rules-based and inclusive community that shares the values of tolerance and moderation,” Alvarez said. The Aipa also underscored the importance of maintaining the South China Sea as a sea of peace, prosperity and cooperation. “We support the solution of territorial and jurisdictional disputes by peaceful means, and to exercise self-restraint in accordance with universally recognized principles of international law, including the 1982 UN Convention on the Law of the Sea [Unclos],” Alvarez said. Likewise, the Aipa also recognizes the importance of maritime security, and called for cooperation and constructive dialogues on maritime issues of common interest and concern, including crimes at sea, search and rescue, maritime scientific research and unreported and unregulated fishing. The Aipa also recognized that one of the biggest marginalized sectors in the Asean are the migrant workers who have contributed to the region’s economic gains. Migrant workers from the Asean number about 14

million in 2014, which accounted for six percent of the global total. They sent almost $50 billion in remittances to the whole region, making overseas employment among the most important sources of export earnings according to the Aipa. The Asean and the Aipa therefore should work closely on the following agenda: 1) Creating policy and legal framework to promote the rights of migrant workers, eliminating all kinds of abuse and discrimination in the workplace; 2) Facilitating access to information, training and education, justice and social welfare services; 3) Promoting fair and appropriate employment protection, payment of wages and adequate access to decent working and living conditions; and 4) Facilitating the exercise of consular functions or diplomatic authorities of States of origin when a migrant worker is arrested or detained in any other manner, under the laws and regulations of the receiving State and in accordance with the Vienna Convention on Consular Relations. The Aipa also called on the Asean to take more proactive measures to promote inclusive growth, and reduce social disparities and narrow development gaps within and outside the region. Lastly, the Aipa urged the Asean to strengthen and continue the Asean vision beyond 2017. From a parliamentary perspective, legislative support remains crucial to the implementation of Asean agreements and commitments. As such, the Aipa pledges its commitment to continuously support the enhancement of Asean-Aipa cooperation at operational level.

To reach the writer, e-mail cecilio.arillo@ gmail.com.

Effective governance key to improving the quality of Asia-Pacific economic growth By Shamshad Akhtar

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he Asia-Pacific region’s high and steady economic growth has been an anchor of stability for the struggling world economy in recent years. Developing economies of the region now account for almost a third of global GDP, slightly less than the combined output of the developed economies of North America and Western Europe. If the region continues to grow at the current pace, it would account for more than half of the world economic output by 2050. With its increasing importance, the role of traditional “success factors”, such as education, high investment and savings rates, reliance on world markets through exports, is likely to evolve as well. Future economic growth will need to rely more on productivity gains, which, in turn, require effective institutions and better governance, in both public

and private spheres. Importantly, the policy focus will have to be more on the quality of economic growth, to cater for social and environmental aspects as well. Decades of rapid Asia-Pacific economic growth have come at a high cost to people and the planet in the form of rising inequalities and environmental degradation. The bulk of countries in the region still have significant poverty levels, with a heavy concentration of wealth at the top. The majority of its population is not yet “middle class”, but rather, “transitional class”, and therefore vulnerable to falling back into poverty. Wide income inequality undermines social cohesion, and hurts longterm economic growth by reinforcing inequality of opportunities. On average, developing Asia-Pacific economies use twice as many resources per dollar of GDP than the rest of the

world. Environmental degradation and carbon emissions, not captured in GDP, undermine the sustainability of economies and affect intergenerational equity. This is why, in the second year of the adoption by world leaders of the transformative 2030 Agenda for Sustainable Development, Economic and Social Commission for Asia and the Pacific (Escap) is calling for a sharper focus on the quality of regional economic growth by addressing simultaneously, the economic, social and environmental challenges that are at the core of the 2030 Agenda. The Escap flagship report, Economic and Social Survey of Asia and the Pacific 2017 (Survey 2017), advocates effective governance as critical for the quality of economic growth. Specifically, it identifies fiscal management as the transmission mechanism through which governance can support achievement of the 2030 Agenda.

Governance has a big role in effective mobilization and efficient allocation of fiscal resources for productive investments in infrastructure, social protection and resource efficiency. The quality of governance affects the composition and efficiency of public expenditure and the tax morale. Moreover, effective governance can reduce intraregional development gaps by enabling poorer countries to benefit more from regional economic cooperation and integration. Fiscal policy can tackle inequality, both in the short-term, through redistributive policies and provision of social protection, and in the medium and long run, by reducing inequality of opportunity. The quality of governance is vital for ensuring fiscal sustainability through comprehensive tax reforms and effective debt management. Governance quality is also crucial for undertaking successful productiv-

ity-enhancing structural reforms to complement fiscal policy. Given the diversity of economies in the region, a sequential targeting of the binding constraints to productivity is a more prudent approach than a “one-size-fitsall” and “big bang” approach. Effective governance can reduce the burden of noncommunicable diseases in the Pacific, promote economic diversification in North and Central Asia and the creation of decent jobs in South and Southwest Asia, reduce development gaps in Southeast Asia and accelerate ecological innovation in East and Northeast Asia. How societies invest, innovate and ensure no one is left behind is largely dependent on the quality of governance, and by how much trust and confidence people have in their institutions. Governance is crucial for effective resource mobilization, public expenditure effi-

ciency and structural reform. When institutions are weak, inequalities tend to increase, and the pace of poverty reduction declines. The quality of governance is also important for environmental outcomes, as reflected, for instance, in the capacity to make and apply environmental rules and safeguards. As countries in Asia and the Pacific continue to undergo large structural transformations, the region is on the cusp of providing global leadership toward a more holistic and transformative development. Effective governance will play an increasingly important role in ensuring that the region’s trust with its future is not hampered by growth that is not inclusive and sustainable in the long run.

Dr. Shamshad Akhtar is an under-secretarygeneral of the UN and the executive secretary of the Economic and Social Commission for Asia and the Pacific.

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Duterte sending mixed signals to labor movement, experts say N By Elijah Felice E. Rosales

@alyasjah

OTABLE, but not enough. This was how political analysts preferred to illustrate President Duterte’s approach in addressing the plight of workers, saying there was effort to resolve labor issues, but it was insufficient. Political analyst R amon C. Casiple of the Institute for Political and Electoral Reform said Duterte has to directly interfere in discussions between labor groups and the Department of Labor and Employment (Dole) to ensure his election promises to workers are fulfilled. “As it is, workers did not see

any significant gains so far [under the administration],” Casiple told the BusinessMirror. For economist Emmanuel A. Leyco of the Asian Institute of Management, Duterte could be more decisive in scrapping all forms of contractualization. He reiterated job security was and will always be a serious problem

Why not [enter into] a social compact with the top 100 companies to stop all forms of labor abuse and bad hiring practices?” —Ofreneo confronting workers if the country’s Chief Executive continues to evade the issue. “The latest [department] order from [the] DOLE was opposed by almost all workers’ organization, because it allowed loopholes,” Leyco said in a text message to the BusinessMirror. Labor Secretary Silvestre H. Bello III issued Department Order (DO) 174 in mid-March to impose tighter rules on contractual arrangements. However, instead of drawing praise, Bello received f la k f rom both labor g roups and economists. The order prohibited the practices of labor-only contracting,

farming of work through cabo contracting out of jobs through an in-house agency and contracting out of jobs due to a strike or lockout, whether actual or imminent, among others. On one hand, labor groups, including the Trade Union Congress of the Philippines and the Kilusang Mayo Uno, called on Duterte to scrap DO 174, arguing the prohibitions stated under the order were already banned by existing laws. Economists, on the other hand, said the government will have difficulty implementing the order. Likewise, they said the State should avoid reducing the labor

market into a sphere involving only firms and workers. While painting Duterte as a “well-intended leader”, industrial-relations expert Rene E. Ofreneo of the University of the Philippines said the President was caught in the conflicting interests of unions demanding job security and managements maintaining business flexibility. “He can be bolder,” Ofreneo told the BusinessMirror. “Why not [enter into] a social compact with the top 100 companies to stop all forms of labor abuse and bad hiring practices? Why not [enter into] a social compact with all stakeholders on rebuilding jobs, industry and agriculture?” In spite of all these drawbacks, Duterte’s labor thrust was of notable effort, Casiple said, citing the enactment of significant social reforms under the administration, such as the P1,000 pension hike for beneficiaries of the Social Security System. He also forecasts relationship between Duterte and labor groups

can be a walk in the park, if the former can offer benefits to the latter within the context of a thriving economy. Leyco added what is more important was that competition and new arrangement in business are established, where value addition/ creation was given emphasis over low-cost production, “which almost always means cheap labor”. “Enterprise value should be created by how and what they offer as new or added value to their products and/or services that the markets require,” eyco said. “Essentially, the administration should provide incentives [to businesses] to push for national industrialization and modernization of agriculture that create new values for both consumers and producers, not just for the latter.” Duterte heavily banked on an anticontractualization campaign during the election trail, earning the support of mostly left-leaning groups advocating for radical labor reforms.

The market of political influence and access Continued from A1

zip lining over islets The Hundred Islands in Alaminos, Pangasinan, remains the most famous destination in the province. It is a favorite swimming spot for vacationers. Visitors relish the idea that one can zip across one of these islands on a line that offers a spectacular view of the green waters below. NONIE REYES

Piatco asks CA to reverse $6-M lawyers’ fee ruling By Joel R. San Juan

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@jrsanjuan1573

HE Philippine International Air Terminals Co. Inc. (Piatco) has asked the Court of Appeals (CA) to reconsider its decision ordering the project company to pay the government $6 million, or almost P300 million, representing the cost of the arbitration proceedings before the International Chamber of Commerce International Court of Arbitration. In its 48-page motion for reconsideration, Piatco asked the CA to reverse its earlier ruling, because of the alleged patent violation of Philippine laws and public policy committed by the government. Piatco assailed the payment of

To rule in favor of the GRP would result to grave injustice.” —Piatco

attorneys’ fees to the lawyers hired by the Department of Transportation (DOTr) and the Manila International airport authority (Miaa) amounting to $6,009,351.66. “To rule in favor of the GRP would result to grave injustice on the part of Piatco. Surely, this honorable court is not a court of mere

convenience but a court of law and equity,” the motion read. In the ruling penned by Associate Justice Marlene GonzalesSison, dated January 20, 2017, which was concurred by Justices Ramon Cruz and Henry Jean Paul Inting, it granted the plea of the Office of the Solicitor General for the payment of the legal fees for all the legal counsels hired by the Philippine government. The appellate court set aside the ruling issued by the Regional Trial Court in Mandaluyong City, Branch 213 on August 29, 2014, and May 4, 2015, which held that the final award is not enforceable under Philippine law for being contrary to public policy. The lower court ruled that the

country’s procurement law was violated when the government tapped foreign counsels and legal consultants without conducting a public bidding. In reversing the lower court’s ruling, the CA granted the petition for review filed by the DOTC and Miaa seeking to nullify the decision issued by the RTC Mandaluyong. The CA held that no public policy was violated when the government is the one receiving money duly awarded by an arbitral tribunal. “Assuming arguendo that the government violated all the pertinent laws regarding public bidding, procurement and disbursement, will the recovery of the government of $6,009,351.66 result in See “Piatco,” A2

To date, theoretical models of lobbying have assumed a simple transaction between policymakers and lobbyists, and have not yet explained why lobbying is largely conducted through repeated interactions between polic y-ma kers and lobby ists, why the lobbying industry is so focused on building relationships, and what value is added by lobbying intermediates. T he literature on politica l influence activities spans separate field of economics, law and political science, and has largely focused on lobbying activities as a form of market exchange between special interests and policy-makers. There are three broad theories that describe these markets for political influence and access. The first—rather cynical—theory assumes that special interest groups offer resources (such as campaign contributions, political endorsements, vote campaigns, campaign support, or future career opportunities) to policy-makers in exchange for policy favors. Tw o a lt e r n at i v e t he or ie s focus on the informational character ist ics of lobby ing. Spe cial-interest groups approach polic y-ma kers w ith a mi x of private information and financial resources, where the latter does not buy policy, per se, but instead signals the credibility of their information. Contrary to public misconception, the daily life of firm lobbyists is not filled with glamorous parties and smoke-filled backroom politicking, where lobbyists engage in quid pro quo transactions of money for policy. Rather, these firm lobbyists focus their professional attention on honing the fine art of building relationships, primarily with members of Congress and their staffs, but also with potential clients, coalitions, and other individuals and organizations re-

lated to their clients and issue areas. The focus on relationships is reflected in the practices that fill their daily lives, as they build, preserve and then commodify these relationships. Distinguishable from stereotypical quid pro quo arrangements of goods for policy outcomes, lobbyists would provide support to policy-makers and their staff as “g if ts”—i.e., a imed at bu i lding solidarity and without any clear valuation or expectation of reciprocation. Rather, lobbyist participants engaged in extensive formality to frame support as gifts between political and legislative allies and friends. The general sense is that providing support in small amounts, at the “right” moments, served to build trusted relationships over time to offset any inconvenience caused by taking the policy-maker’s time. Fostering a gift economy, lobbyist participants would carefully provide each form of support—electoral, legislative and personal—in order to maximize the likelihood that the support was received as a gift, and minimize the appearance of a quid pro quo transaction. In conclusion, it is demonstrated how in a “relationship market” policy-makers have an incentive to provide greater access to citizen-donors and lobbyists with whom they have a relationship. Recognition of the relationship market has the potential to modernize the traditional models of lobbying that envisioned lobbying as a simple quid pro quo transaction or subsidy, by incorporating the dynamics of the growth of the contract lobbyist market and including the incentives of policy-makers, citizen-donors and lobbyists as repeat players. In other words, there is a fine line between lobbying/advocacy work and corruption. At the Integrity Initiative, we have to watch carefully that this “fine line” is not transgressed.