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Thursday, May 4, 2017 Vol. 12 No. 203

Palace to resuscitate moribund steel industry M $3B By Catherine N. Pillas

AQUINO ALLOWED MINING AREAS TO EXPAND BY 6% DESPITE MORATORIUM By Jonathan L. Mayuga @jonlmayuga

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he Aquino administration allegedly violated its own moratorium on new mining deals when it allowed the areas covered by Mineral Production Sharing Agreements (MPSAs) to increase by about 6 percent at the tail end of its term. Some of the MPSAs that got area expansion were among those subsequently canceled by Environment Secretary Regina Paz L. Lopez in February for being within or near watersheds. Most of the MPSA area expansions were approved in the first six months of 2016, or before the election and subsequent takeover of the Duterte administration. A study conducted by the BusinessM irror revealed that 16 companies engaged in ore extraction, cement production and quarrying were able to expand their mining areas through amendments of their existing MPSAs. With this, mining areas grew by a total of 35,067.35 hectares, the bulk of the expansion happening in May and June 2016. There are 317 existing MPSAs covering a total of 603,158.21 hectares as of April 30, 2017, according to the Mines and Geosciences Bureau’s (MGB) web

35,067 ha The size of mining sites that were annexed to existing MPSAs since 2016

site. Some of the MPSAs have expired, consolidated, or canceled, but with some still under appeal. The expansion of mining areas was done through “annexation” of areas covered by existing MPSAs, ironically despite the ban on new mining projects and the processing of mining application following the signing of Executive Order (EO) 79 by former President Benigno S. Aquino III in July 2012, which sets the policy framework that will guide the government and other stakeholders in the implementation and operationalization of mining laws, rules and regulations. The annexed areas are covered by separate mining-permit applications, including exploration. A former MGB official consulted by the BusinessMirror said the amendment of MPSA to effect expansion of mining tenement is suspicious, especially since most happened with the ban on new See “Aquino,” A2

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DO 174 and the decline of unionism

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alacañang is now considering two options to revive the country’s flagging steel industry: temporary tariff protection and operation of an integrated steel plant. These were the recommendations put forward by Presidential Adviser on Economic Affairs and Information Technology Communications Ramon Jacinto. Jacinto said the government may reopen the mothballed National Steel

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Corp. (NSC) or pursue a “greenfield steel project”. “If it makes sense in the studies being conducted to revive NSC, then we’ll do it. If not, we’ll put up another one,” he told reporters in an interview. To recall, the Jacinto family has

The estimated cost of constructing an integrated steel plant

long been a prominent player in the steel industry, with the patriarch Fernando P. Jacinto once an equity investor in what was known as Iligan Integrated Steel Mills Inc. Continued on A2

Rene E. Ofreneo

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LABOREM EXERCENS

he issuance by Labor Secretary Silvestre H. Bello III of Department Order (DO) 174 has failed to still the intense agitation of the various trade-union groups against what they bitterly call as the “contractualization” of the labor-hiring system. A number of the trade-union federations are even calling for the resignation of the good secretary for his alleged failure to heed President Duterte’s election promise to stop contractualization within three months of the Duterte administration. Continued on A11

PHL shows populism still a boon for equity markets I

f the last two decades of antiestablishment rule are any g uide, the world may be on the brink of some monster stock rallies as it takes a turn toward populism. A look at 10 of the 21st century’s most recognized populist leaders shows that in the three years after their election, local equities soared an average of 155 percent in dollar terms. And the rallies often continued as long as a decade after the vote. The explanation, according to Satyen Mehta, a money manager at Neon Liberty Capital Management who has researched the phenomenon, is that populists often create short-term stimulus that supports growth even as the nations’ debt burdens swell. (Their foreign bonds, it should be noted, tend not to perform nearly, as well.) Market performance under populist leaders is an issue front and center for investors, as firebrand leaders who promise to put their people first go on the march from the US to India to Turkey and

the Philippines. Though economists say policies, such as cracking down on imports, championing local industries and raising government spending, will stifle growth in the long term, data compiled by Bloomberg show that stock buyers

can do quite well for years after a populist comes to office. “While conventional wisdom sug gests investors should be wary of populist leaders, equity markets were actually much more resi l ient when t heir pol icies

turned out to be more benign than initially feared,” Mehta said. The Philippines seems to offer a textbook example of the policies that have led in the past to outsize gains. See “Populism,” A2

n japan 0.4471 n UK 64.7799 n HK 6.4331 n CHINA 7.2579 n singapore 35.9274 n australia 37.7157 n EU 54.7240 n SAUDI arabia 13.3481

Source: BSP (3 May 2017 )

A2 Thursday, May 4, 2017

BMReports BusinessMirror

Palace to resuscitate moribund steel industry Continued from A1

Last December the Iligan City government has reportedly put up for auction the NSC assets due to tax delinquency. But the property was forfeited to the local government after it failed to secure bids. According to Jacinto, the government would have to encourage the participation of foreign investors in the construction of

Lopez. . .

Continued from A12

anchored on social justice. Aside from the closure and suspension orders, Lopez also canceled 75 Mineral Production Sharing Agreements (MPSAs) whose mining tenement is situated within or near watersheds to protect the country’s water resources. Days before the CA resumed hearing on May 2, Lopez announced a new policy banning prospective open-pit mining.

‘Rule of law prevailed’

Ronald Recidoro, vice president for legal and policy of the Chamber of Mines of the Philippines (COMP), said her rejection is not a victory for the mining industry, but a “victory of the rule of law”.

Populism. . .

Continued from A1

President Duterte is boosting spending on infrastructure, cutting taxes and enjoying the region’s fastest economic growth, even as he comes under intense criticism for human-rights abuses. And foreign stock traders are turning bullish, putting $198 million to work in the country’s stock market last month after withdrawals in February and March. “Investors can’t afford to be off the train, for they could be missing out on a potentially sharp rally,” said Noel Reyes, who helps manage $1.2 billion as chief investment officer at Security Bank Corp. outside Manila. “He’s been pursuing the reforms to sustain growth and he remains popular despite criticisms on his leadership style.” Investors in the Philippines willing to look past the extrajudicial killings that have earned Duterte the nickname “The Punisher” while drawing condemnation from Human Rights Watch and Amnesty

an integrated steel plant as construction could cost $3 billion. He said the government’s vision is not to be completely dependent on locally made steel but to augment cheaper imports with those made in the Philippines. “Even if [imported steel] is cheap we should have our own. Steel is the rice of the industry sector,” he said. While the local steel industry is being built

up, Jacinto said the government may have to impose high tariffs for steel products. Trade Undersecretary Ceferino S. Rodolfo, in an interview earlier, said iron and steel products have been edged out by cheaper imports from China. “Every country that has built its own steel industry has had tariff protection for a while, maybe 10 years until it matures, but, of course, we have the commitments

for tariff elimination. But if it’s a matter of national policy, we might be an exception,” Jacinto said. SteelAsia Manufacturing Corp., the largest reinforced steel bar maker in Southeast Asia and the Philippines, has formally offered to acquire the NSC in March from the National Development Corp. If the proposal materializes, Iligan will be SteelAsia’s seventh steelworks.

“The Chamber of Mines is thankful to the commission for the speedy resolution of Ms. Lopez’s nomination. This is not the end, but rather the beginning of a new chapter for the mining industry,” Recidoro said. He said the mining industry would have to work “doubly hard” to uplift the industry. “We reiterate our commitment to work with the DENR and the next secretary to protect the environment and promote the responsible use of our natural resources,” Recidoro said. “We can’t really be ecstatic about this. But we remain committed to working with the DENR and the next environment secretary. We look forward to a more harmonious relationship with whoever will be appointed,” he added. Recidoro also said COMP will ask the next DENR chief to review the policy pro-

nouncements made by Lopez. “If there’s no legal basis, then we will ask for a reversal of the policy.” According to Recidoro, the mining industry’s experience with Lopez is not really “a victory but more of a victory of due process”. “The fight for responsible mining continues even if Lopez has been rejected. In fact, it is a challenge for the industry to work even harder so that there will be no repeat of what happened in the last 10 months,” he said. While miners hailed the decision of the CA, environmental groups expressed dismay over Lopez’s rejection. In voting for Lopez’s rejection, Jaybee Garganera, national coordinator of Alyansa Tigil Mina (ATM), said the members of the CA panel, headed by Manny D. Pacquiao, “rejected change”. Garganera also noted that the endorse-

ment of Duterte and the public’s clamor, as manifested in social media and in a recent survey for the confirmation of Lopez, were “no match” against the lobby of the mining industry. In a telephone interview, he said Lopez’s rejection is “a tragedy” for the environment, as well as for the rights and welfare of our people. “Lopez’s rejection is a betrayal of the people, specifically of mining-affected communities who are protecting their lives and livelihoods by resisting destructive largescale mining,” Garganera said. He added it was “pretty clear” that the mining industry wanted to block the confirmation of Lopez. ATM Chairman Ben Molino said people suffering from the ill effects of mining began to see hope when the DENR, under Lopez’s leadership, issued cancellation orders.

International have seen stocks climb to a seven-month high. Nomura Holdings Inc. recently initiated coverage of 15 Philippine stocks, citing the tax cuts’ potential boost to the banking, property and retail sectors.

can happen when you discount a populist. In the run-up to South Africa’s 1994 presidential election, he took an underweight position on the nation’s stocks amid concerns the ANC party and its revolutionary anti-apartheid candidate Nelson Mandela would nationalize assets and not pay the owners fair compensation. Money managers quickly realized that Mandela wasn’t only a populist peacemaker, but a champion of capital markets. South African stocks ended up gaining 41 percent in the three years after his election as the nation’s top trading partners dropped apartheid-era sanctions and the economy rebounded from a recession and crippling drought.

America specifically because it’s an outlier, seemingly turning away from populism. Jan Dehn, the head of research in London at Ashmore Group, which oversees about $52 billion of assets, said that, while stimulus policies from populists often lead to a bounce in the stock market, the gains come at the expense of the country’s future. “You may get a warm fuzzy feeling short term, but long term you are definitely worse off than if you had not done it in the first place,” he said. In the bond market, the pain appears much earlier. Hungary’s five-year dollar bonds lost 28 percent in the year after Viktor Orban’s 1998 election, while similar maturity notes from Thailand lost 24 percent after Thaksin Shinawatra was elected in 2001. Philippine dollar bonds are down 1.4 percent since Duterte’s election last May. Strangely enough, data show that dictatorships tend to produce outsize returns for emerging-market debt investors.

Triple-digit returns

The pattern of outsize returns for countries run by populists has been seen from Brazil’s Luiz Inacio Lula da Silva to Russia’s Vladimir Putin, as well as in Poland, Egypt and India. Under leaders generally considered leftist, equities have done particularly well, producing 221-percent returns in three years. Right-wing heads of state saw 122-percent gains over the same period, according to data compiled by Bloomberg. The numbers get a little trickier longer term, but for countries where there’s available data stock investors saw returns of 355 percent in the populist countries over five years and 442 percent 10 years down the road. Mehta, who helps oversee $1.5 billion of emerging-market assets at Neon Liberty Capital, knows from experience what

New age of populism

To many investors, populism remains a dirty word. In March Ray Dalio, founder of Bridgewater Associates, sounded the alarm on its global rise: by his count, at the highest level since the 1930s. Bond gurus, like Franklin Templeton’s Michael Hasenstab, have flocked to Latin

Populists pay

Venezuela has expropriated more than a half dozen foreign companies and is by some estimates caught in its own period of hyperinflation. Yet, it continues to make good on foreign debt payments and boasts the world’s top stock index. (Caveat: most traders are locals desperate to hedge against the bolivar’s record collapse in the black market, and international investors would have almost no chance of getting their money out of the country at the official exchange rate.) The cases of Venezuela under Hugo Chavez and Argentina under Nestor Kirchner also highlight how, at times, a surge in inflation and limits to capital mobility can stimulate positive stock returns. While not the ideal solution long term, capital controls may foster financial stability by keeping investments in the domestic market, economists, including the Inter-American Development Bank’s Andres Fernandez, wrote in a 2013 paper published by the National Bureau of Economic Research. Poland, home to this year’s second-best stock rally, has a populist president of its own: Andrzej Duda. While his heavyhanded methods have aroused protests, including formal declarations from the EU, Duda’s party remains widely supported by Poles, largely due to the nation’s steady economic growth. “Populist leaders tend to, by definition, do things that are popular with the masses, often by way of giveaways,” Tony Hann, the head of equities at London-based Blackfriars Asset Management Ltd., who is overweight the Philippines. “This leads to improved sentiment and stronger consumer spending, which can be powerful drivers of markets.” Bloomberg News

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Aquino. . .

Continued from A1

mining projects, during which processing of applications of mining permits were also put on hold. The source, who spoke on condition of anonymity, also said upon review of MGB data, which was also posted on its official web site, indicated that some of the annexed areas are subject of different mining-permit applications in other areas. “The annexed area are subject of different mining applications, hence, they should be treated as a separate mining application. Some of the areas annexed are for exploration permits,” said the source, who is a lawyer now working in the mining industry. He added he is also not aware of any procedure wherein a mining company can apply for “annexation” of a prospective mining area into an existing MPSA. The mining companies, whose MPSAs were amended for area expansion, was able to skip bureaucratic procedures. Mining companies are required to submit several documents indicating the successful conduct of exploration before they can move to the next phase, or the development and construction phase. “This scheme is not illegal per se, but the timing is highly suspicious,” the source told the BusinessMirror. “You can consider this as midnight deal because they happened two months before the new administration took over. They were able to circumvent the law to expand their mining tenement,” he added. According to the source, the amendment to the MPSA could not have happened without the approval of the MGB director and the secretary of the Department of Environment and Natural Resources (DENR). Interviewed by the BusinessMirror, former MGB Director Leo L. Jasareno said amendments to the MPSAs are allowed under EO 79 and its implementing rules and regulation. It was during Jasareno’s watch that the amendments of the MPSAs to allow area expansion happened. Jasareno is currently acting as Lopez’s mining consultant. “The expansion is allowed under EO 79,” he said. The expansion, he added, was allowed by the Mining Industry Coordinating Council (MICC). He admitted that the MICC allowed the annexation of a prospective mining area to an existing area, even if they are situated in two different towns or provinces. “It’s in the EO 79 and its implementing rules and regulation and the expansion were allowed by the MICC. These are legal because EO 79 allows the operations to continue for existing MPSA. Some companies, like cement plants, requested the MICC to expand their area because the moratorium prevents the issuance of new MPSAs. Other metallic mining companies have pending applications, too. Because of the moratorium on new mining projects, some prospective mining areas were annexed to existing areas,” he said. The process, he said, involves the company writing a letter to the MGB. The MGB then validates the request subject to the “no-go zone” scheme, as prescribed by EO 79. The MGB, he said, only recommends and the final approval is with the environment secretary. “The MICC, meanwhile, makes recommendations. The MICC acts as an oversight to ensure that such provision is implemented. This happened when Holcim cement wrote to the MICC invoking the provision of EO 79, which allows area expansion,” Jasareno explained. The amendment of MPSA to expand a mining area is a mechanism that allows a mining company to continue their operations after the total estimated mineral deposits in their mining area has been depleted or has been mined out. The area to be annexed or added to its mining tenement may or may not be within, near or adjacent to the area covered by the MPSA. Section 7, which provides for the Grant of Mineral Agreements Pending New Legislation of DENR Administrative Order 2012-07 issued on September 10, 2012, or the Implementing Rules and Regulation of EO 79, allows expansion of existing contract areas provided that they do not exceed the maximum hectarage per province set by the Philippine Mining Act of 1995. The same provision also allowed the DENR to continue to grant and issue Exploration Permits (EP) and other forms of mining permits, such as Mineral Permits, Government Seabed Quarry Permits, Special Mineral Extraction Permit, Industrial Sand and Gravel Permits under the mining law. Among the companies whose MPSAs were amended to expand their mining tenements is Sinophil Mining and Trading Corp., which is currently operating a 423-hectare mine site in Bunawan and Rosario, Agusan del Sur. The company’s MPSA was cancelled by the DENR, along with 74 other mineral process sharing contracts.

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Editor: Dionisio L. Pelayo • Thursday, May 4, 2017 A3

Mining company files graft charges vs Lopez

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By Marvyn N. Benaning | Correspondent

ommission on Appointments-rejected Environment Secretary Regina L. Lopez was slapped with a graft complaint by a mining company for allegedly trying to extort P130 million for the benefit of a non-governmental organization (NGO) she controls.

Administrative charges were also lodged against her by Citinickel Mines Development Corp. (CMDC) before the Ombudsman on Wednesday. In the 41-page complaint, CMDC officials alleged that Lopez used her position to impose additional requirements on them, after she froze their ore shipments. These requirements, CMDC claimed, were not only unreasonable, but unlawful, as well, since they do not have any legal basis and go beyond the mandate of the Department of Environment and Natural Resources (DENR). Through its legal counsel Lorna Kapunan, CMDC said Lopez not only disregarded the company’s duly-entered 25-year Mineral Production Sharing Agreement (MPSA) with the DENR when she ordered the suspension

of its operations. The complaint said Lopez also threw in hindrances that effectively scuttled the MPSA. “Secretary Lopez is not only unaware of the limits of [her] office; she, likewise, displays a propensity to be a tyrant who cannot be reasoned out with. She imposes restrictions without regard to the law and the property rights of the public, which she serves,” the complaint said. Charges of violations of Sections 3(a), (e) and (f) of the Antigraft and Corrupt Practices Act, Illegal Exaction, Violation of the Code of Conduct and Ethical Standards for Public Officials and Employees and Violation of the Red Tape Act of 2007 were filed against Lopez. Kapunan said when CMDC was ordered suspended by Lopez in July 2016, they subsequently filed for a

Mineral Ore Export Permit (MOEP) with the Mines and Geosciences Bureau (MGB) to enable them to remove and transport their alreadymined ores from the area, so as not to endanger the environment. The same was immediately granted by the MGB in November 2016, but CMDC was surprised when Lopez issued a memorandum on January 30, 2017, imposing additional requirements for the issuance of MOEP. This included the establishment of a trust fund in the amount of P2 million per hectare of disturbed land. Kapunan said CMDC appealed the memorandum, saying the imposition of the trust fund is superfluous, as it is already being covered by two trust funds set under the Philippine Mining Act. CMDC was alarmed with regard to the new requirement of setting up of a trust fund for P2 million per hectare of disturbed land. This is because CMDC has already been depositing to two similar funds for the same purpose, pursuant to the same law, Kapunan said. On February 17 CMDC said it received another set of more onerous conditions from Lopez for the granting of the MOEP—they were being ordered to secure a performance bond of P130 million and to use BioChar as a means of rehabilitation in their mined areas to ensure a healthy watershed. Former Environment Undersec-

retary Philip Camara is the current president of BioChar. Despite their misgivings on the add itiona l requirements, Kapunan said CMDC referred its concern to Camara, who was then Lopez’s undersecretary. However, things turned from bad to worse when Lopez, through Camara, imposed additional requirements for the MOEP, which included organizing an NGO called the Espanola Community Administration Services Inc. (Ecasi) for the purpose of financing the Green Economy Transitioning Area Development Plan and Program for Narra and Española, Palawan. Lopez, through Camara, also demanded that, aside from the P2 million per hectare of disturbed land and the P130-performance bond, CMDC should deposit P1 million per vessel used to ship the mineral ores to Ecasi. CMDC was also required to deposit the P130-million performance bond to Ecasi’s bank account, Kapunan said. While the incorporators of Ecasi will be from CMDC at the outset, people active in the so-called community enterprises will eventually become shareholders and a private lawyer recommended by Camara will ensure that Ecasi will comply with all the directives of Lopez. CMDC said none of these new requirements had any legal basis to support them. Kapunan said Lopez, through her directives and letters to CMDC,

violated Sections 3(A), (E) and (F) of Republic Act (RA) 3019, or the AntiGraft and Corrupt Practices Act. K apunan said Section 3(A) specifically refers to any official who persuades, induces and inf luences another public officer to perform an act constituting a violation of rules and regulations duly promulgated by competent authority. Lopez’s act of somehow influencing, persuading or inducing the MGB not to issue MOEP to CMDC, despite the latter’s inclination to issue the same as they had said in November 2016, are beyond her mandate (and) comes within the purview of a corrupt practice, she said. She stressed that Lopez’s act of imposing additional requirements on their MOEP was made without any authority, because the power to do so lies with the MGB under Section 53 of the Mining Act. Kapunan also stated that Lopez’s acts against CMDC caused undue injury to the company. Lopez’s negligence in declaring CMDC’s mining area a functional watershed, despite the Philippine Forestry Code requirement of a prior declaration from the president of the Philippines, also harmed the company. By doing so, Lopez lumped CMDC together with mining companies that are actually working within duly declared watersheds, effectively tarnishing CMDC’s reputa-

tion of being a responsible mining company, Kapunan said. She added Lopez should also be held liable for violation of Section 3(e) of R A 3019 for her refusal to answer the inquiry from CMDC on the possibility of using the money from existing trust funds executed in favor of the government. These elements are clearly in sync with Lopez’s acts as a public officer who has refused and/or neglected to act on the above stated matters, despite the ample length of time given to her, she said. Aside from the graft charges, Kapunan said Lopez should also be held liable for Illegal Exaction for requiring CMDC to set a trust fund of P130 million for Ecasi, which has no basis under the law. For her utter neglect of duty and misconduct, Kapunan said Lopez should also be administratively held liable. “She exceeds the powers vested in her office by arbitrarily imposing new restrictions in the mining industry, which, to repeat, is not found under existing laws.” “Based on the foregoing, it is crystal clear that Secretary Lopez is not only unaware of the limits of her office, she, likewise, displays a propensity to be a tyrant that cannot be reasoned out with. She imposes restrictions without regard to the law and the property rights of the public that she serves,” Kapunan also said.

President’s son backs Bohol residents get windfall Illegal drugs a national security threat–PDEA chief Salazar amid ERC row for leading cops to Abu lair

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LLEGAL drugs have become a national security threat, Director General Isidro Lapeña of the Philippine Drug Enforcement Agency (PDEA) said. Speaking at the “RealNumbersPH” anti-illegal drugs forum in a hotel in Quezon City, Lapeña said the effects on the country of the P120-billion-ayear illegal-drugs industry should not be trivialized. He noted the contagious effect drug users or pushers have on their family and community members. Lapeña said drug addicts or users could easily influence other people to get into drugs, who, in turn, influence other people at an exponential rate. He said it was when the problem reached such a magnitude that not only the country’s peace and order will be affected, but the economy, as well. He added that on the subject of real numbers, President Duterte’s oftenmentioned figure of 4 million drug users in the country is actually incorrect, as the real number is closer to 4.7 million. At the same forum, the Department of Health (DOH) said donors play a big role in its efforts to increase its rehabilitation facilities to accommodate drug users who need rehabilitation. “So far, aside from the Mega Treatment and Rehab Center in Nueva Ecija, we have eight upcoming projects for the Treatment and Rehab Center,” Heath Secretary Paulyn Jean B. RosellUbial said. Ubial added ongoing construction of the said facilities was made possible by donations from various individuals and agencies. “The facility in Pilar, Bataan, will be donated by the San Miguel Corp. Foundation; the one in Camp Sikatuna in Bohol is donated by a non-governmental organization [NGO]—the Kausaban Foundation; the one in Camp Bagong Diwa [in Taguig, Metro Manila] wherein we already have a treatment and rehab center...but Mega World Corp. is donating another building that can house 500 patients,” Ubial added. She said another one is being constructed in Malaybalay, Bukidnon, which were from a donation of Friends of the Philippines, a Chinese group and NGO, and inauguration on March 25.

Other projects were in Trece Martires City which was donated by Japan International Cooperation Agency (Jica), in Agusan del Sur by the Chinese government; and in Central Mindanao, particularly in Sarangani province, another facility to be donated by government of China; and in Davao, which was inaugurated in December 2016 in Calinan, Davao City, to be donated by Resorts World to the local government of Davao. “So, the DOH, as the nation’s leader in health care, provides coherence and direction in enhancing the operational effectiveness of local health systems toward improved health status in the local community,” Ubial said. She added one of the pillars of the Philippine Health Agenda focuses on protecting Filipinos from the triple burden of diseases. “So the first burden is infectious diseases. The second burden is noninfectious diseases. The third burden is the diseases of modern-day living and rapid urbanization. These include mental-health problems, bodily injuries and also, drug abuse,” she said. She said the DOH has a comprehensive program on the levels of prevention and the levels of addressing the mental- health issues of this country, including drug dependence. Other efforts of the agency as part of addressing illegal-drugs use and handling the rehabilitation of addicts is continuous training of city and municipal health officers in order to enable them to assess patients whether they are qualified for community-based rehabilitation only or there is a need for them to be placed in rehabilitation facilities. This effort is complemented by the Department of Social Welfare and Development (DSWD), which also help in the community-based rehabilitation along with other groups for the aftercare program. Like the DSWD, which is the heart of government service for the poor and vulnerable, the agency provides care to the drug users in order to reform them and give them chance to be healed from the drug menace that victimizes them and become “assets” of the country too. PNA

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residential son Paolo Duterte is backing reforms in the electric power industry, is encouraging Energy Regulatory Commission (ERC) Chairman Jose Vicente B. Salazar not to back down amid harsh criticisms, false accusations and intense pressure thrown his way. Duterte said in an Instagram post with Salazar in the photograph: “Karon kabalo nako sa mga hawsiaw sa kuryente sa Pilipinas luoya sa Pinoy oi. Kanang ga kitkit salazar sa dalunggan sa Presidente muabot ghapon ang panahon nga madunggan ni sa Presidente…” [I am now aware of the illicit practices and arrangements in the power sector. I feel bad for the Filipino people. To those nibbling (whispering) in the ears of the President, the time will come when the information provided by the chairman will reach the President]. The two met last week in Davao City shortly after Salazar’s arrival from an overseas family trip. Before taking his personal leave, Salazar designated lawyer Ronaldo Gomez, as the officer in charge of the agency’s Office of the Executive Director, a move that is being blocked by the four other sitting ERC commissioners. Gomez is the chief regulatory officer from the ERC Mindanao field office in Davao City and has been with the agency for seven years. Last week, while Salazar was on leave, Commissioners Gloria Yap-Taruc, Alfredo Non, Josefina Magpale-Asirit and Geronimo Santa Ana called a general meeting at the ERC to question office orders issued by Salazar. They also issued a resolution on April 18 purporting to reverse Salazar’s administrative actions. This was problematic because Salazar, in his capacity as CEO, has the sole authority to run the agency’s administrative affairs, as earlier admitted by the commissioners during the House of Representatives hearings investigating the ERC. During their meeting, Salazar briefed Duterte on some of his initiatives since taking the helm at the ERC in August 2015. These include the implementation of two policies that had stalled for years at the agency—the competitive selection process (CSP) and the retail competition and open access (RCOA). CSP requires distribution utilities (DUs) to subject their power supply agreements (PSAs) to an open, competitive bidding to ensure least cost power to Filipino consumers. RCOA is supposed to be the centerpiece reform program of the Electric Power Industry Reform Act (Epira), but was stalled for more than 15 years, enforces a mandatory migration of big power consumers from the captive market to the competitive retail electricity market so that household consumers may freely choose their suppliers within several years, a move that would encourage competition and ultimately drive down power costs. The mandatory migration of consumers failed to happen last February, however, because the Supreme Court issued an indefinite injunction.

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HREE Bohol residents were rewarded by the government for tipping off authorities on the whereabouts of Abu Sayyaf Group members, resulting in the death of Joselito Melloria alias Abu Alih and three others. The three civilians, whose names have been withheld for security reasons, were rewarded by the Duterte administration for helping the police and the military in locating the bandits who were hiding in the caves of barangay Bacani, Clarin, Bohol.

 This after President Duterte went to Bohol weeks earlier to attend a security briefing during the Association of Southeast Asian Nations (Asean) meetings there and promised reward money to those who can point to the whereabouts of Abu Sayyaf bandits trapped in the said area. Military and police personnel involved in the operations were also remunerated for their efforts. A total of P4 million cash reward, as promised by the President, was given through the Armed Forces Central Command.
 The tipsters turned in information

MENTAL HEALTH oN THEIR MINDS

to the Special Investigation Task Group (SITG) and Light Reaction Company (LRC) after noticing foot trails leading to one of the caves. Government troops attacked the caves and an encounter ensued between opposing sides, which resulted in the death of Abu Alih and the recovery of his M16 rifle with an attached M203 grenade launcher.

 Another Abu Sayyaf bandit was also spotted, buying bread in another part of town, giving the authorities an idea on the possible entry points of the rebel group’s hideout. 

 The bandits hiding in barangay Bacani were reportedly remnants of the 11-man Abu Sayyaf band under subleader Moammar Askali alias Abu Rami, who was killed on April 11 in Barangay Napo, Inabanga town. Rami was responsible for the beheading of several hostages, including foreigners. “Tip lang ang ibigay mo sa pulis pati military,” Duterte said, following Abu Rami’s neutralization. “No questions asked. Do not even give your name. Sabihin mo lang saan sila at gobyerno na ang bahala.” PCOO-PNA

Mental-health advocates, led by Miss International 2016 Kylie Verzosa (right), take pictures with Sen. Ana Theresia Hontiveros-Baraquel (second from right) along with actress Antoinette Taus and Jerika Ejercito (left) at the Senate Building in Pasay City. The Senate has approved on third and final reading a bill that seeks to integrate mental-health services into the national health system to make it more accessible, affordable and equitable. PNA

Economy

A4 Thursday, May 4, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

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Govt dangles financial aid to jeepney drivers, operators to modernize PUJs

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By Aerol B. Pateña | Philippines News Agency

he government will implement a financial assistance program for public-utility jeepney (PUJ) operators and drivers, in line with efforts to modernize the country’s public transportation system.

Tr a n s p or t at ion S e c re t a r y Arthur P. Tugade, Land Transportation Franchising and Regulatory Board (LTFRB) Chairman Martin Delgra III, Finance Secretary Carlos G. Dominguez III and Land Bank of the Philippines President Alex Buenaventura signed a memorandum of agreement (MOA) to establish a financing program for jeepney modernization in a ceremony held in Davao City on April 30. “Perhaps, it is providential indeed that we sign this memorandum of agreement.... This financing program is a gift from the President through the Department of Finance and LandBank for jeepney operators and drivers,” Tugade said in a news statement.

220,000 The total count of jeepneys nationwide, 90 percent of which are 15 years old and above. Jeepneys are said to be the biggest source of CO2 emission, resulting in 5,000 deaths annually.

The LandBank’s Special Environment-Friendly and Efficiently Driven Jeepney program will provide a credit facility to individual drivers and operators to enable them to replace their PUJs in compliance with the government’s

public-utility vehicle (PUV)-modernization program. Through this program, an initial budget of P1 billion for individual loans will be awarded to 650 PUJ operators and drivers in Metro Manila to enable them to acquire a jeepney with a minimum requirement of Euro 4 engine or better. “The lending packages are very generous. It offers low equity, longer payment period and very low interest rates,” Delgra said. He explained the modernization program is an effort to overhaul the country’s transportation system—from the quality of units on the road to the drivers. According to Delgra, the government intends public transportation to be adequate, safe and comfortable to passengers. “We’re looking at a travel time that is predictable. We’re looking also at PUV drivers who are disciplined, competent and mindful of the common good,” he said. Dominguez, who is concurrent LandBank chairman, appealed to drivers, operators and commuters to support the initiative. “We must convince jeepney drivers and operators that this is the way to go. They must understand that the financing package will make the shift affordable. T he publ ic must underst a nd

that our inefficient dinosaur, the PUJ, must now be relegated to the museum. It is dirty, inefficient, unhealthy and unsafe for commuters. It is time we bring our public transport to the 21st century,” he said. For her part, LTFRB Board member Aileen Lizada said, “Do not worry. Trust us that what we are doing is for the development of our country, which is also for your welfare and for the upliftment of the socioeconomic status of your respective families.” The program aims to modernize jeepneys plying the road though a low-carbon and low-emission vehicle technology by imposing a 15-year limit on PUJs. Standards on carbon emission and fleet management and maintenance would also be imposed to ensure passenger safety and improve air quality. More than 220,000 PUJs are registered nationwide, 90 percent of which are 15 years old and above. They are the biggest source of CO2 emission, resulting in 5,000 deaths annually. More specific details of the financing program is already being worked out by the transportation department and LandBank, and will soon be made available to the public for guidance.

Nimble and strong

A worker assembles the steel frame that will serve as the foundation of a skyscraper undergoing construction at the Bonifacio Global City (BGC) in Taguig City. BGC has chalked a marked increase in construction activities this summer season. ALYSA SALEN

ADB, Amro ink ADB reaffirms support to Asean trade facilitation crisis-prevention By Cai U. Ordinario

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@cuo_bm

OKOHAMA, Japan—The Asian Development Bank (ADB) will support any effort to open and facilitate trade in the Asean region, including the removal of nontariff measures (NTMs). In a briefing here on Wednesday, ADB Economic Research and Regional Cooperation Department Chief Economist and Director General Yasuyuki Sawada said more open trade helps improve intra-Asian trade, which has been on a decline. Last week Asean leaders called for the removal of the NTMs to help the region achieve food security and lick poverty. “Regional cooperation is one of the most important mandates of the ADB. Whether in trade facilitation or other respects, the ADB has been supportive,” Sawada said. In the Asian Development Outlook (ADO) 2017, ADB said if trade will be less open, there is a risk the entire region could suffer from slower economic growth. W hile there was no mention of NTMs, Trade Secretary Ramon M. Lopez earlier told reporters that informal talks have focused on the removal of NTMs in the region. NTMs could become barriers to trade preventing the free f low of goods in the region. These include sanitary and phytosanitary measures, technical barriers to trade, taxes and other similar trade regulations. “In general, developing Asia’s outlook would be undercut if trade became less open, but real impact from any policy changes is unlikely to materialize until the second half of 2018,” the ADO stated. These are some of the economic risks mentioned by Sawada that could threaten the upbeat economic outlook in the region. These risks include the “normalization” of the US federal reserve rates, which are expected to increase three times this year and four times next year. Sawada also said uncertainties surrounding policies of Asia’s largest trade partners, such as the US

and those in the euro zone. Further, the rise in commodity prices will dampen domestic consumption in many countries. The Philippines could be affected, since it remains to have a consumptiondriven economy. Among the key measures to counter these risks is to increase infrastructure funding. The Philippines is investing heavily on infrastructure under the Duterte administration. The government aims to increase its spending to 7.4 percent of GDP on infrastructure by 2022. In order to assist in these efforts, the ADB has just approved the extension of a technical assistance for a public- private partnership (PPP) project in Cebu City. The ADB said the technical assistance will help improve and modernize solid-waste management in that city. The assistance will be obtained from the Asia-Pacific Project Preparation Facility (AP3F), a multidonor trust fund managed by the ADB for PPP project preparation. “ADB’s assistance to Cebu City will fund a prefeasibility study involving review of economic, legal, technical, social and environmental aspects,” the ADB said. The study will help city authorities prepare a strong project concept, with the private sector expected to design, build, finance, operate and maintain the project. “PPPs will play a critical role for urban areas in Asia and the Pacific to improve infrastructure delivery and quality of life for residents,” said Ryuichi Kaga, head of ADB’s Office of PPP. Based on the ADO 2017, ADB projects the Philippines to post a growth of 6.4 percent this year and 6.6 percent next year. The Manila-based multilateral development bank said the Philippines will be the only country in Southeast Asia to have slower growth this year compared to last year. The ADB forecasts GDP growth in Asia and the Pacific to reach 5.7 percent in 2017 and 2018, a slight deceleration from the 5.8 percent registered in 2016.

and management pact in Japan

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OKOHAMA, Japan—The Asian Development Bank (ADB) and the Asean+3 Macroeconomic Research Office (Amro) have signed a memorandum of understanding (MOU) for crisis prevention and management. In a news statement issued a day before the ADB Annual Meeting here, the MOU between the ADB and Amro aims to strengthen cooperation between the two institutions to support Asean member-countries, China, Korea and Japan. “Asia and the Pacific has made tremendous progress in improving its financial resilience and strengthening its surveillance capabilities. Amro has been an essential part of this development,” ADB President Takehiko Nakao said. “Through this MOU, the ADB and Amro will work closely together on issues that are essential to the region’s future growth and financial stability,” he added. Through the partnership, the ADB and Amro will collaborate to support efforts and policies focused on economic growth, greater financial stability, and improved cooperation and integration in the Asean+3 region. The MOU will help enhance the two institutions’ support to further strengthen the region’s macroeconomic surveillance, as well as its crisis prevention and management capabilities. Worth noting is that the MOU was signed on the 20th anniversary of the Asian Financial Crisis (AFC) of 1997, which changed the financial and monetary landscape of the region. In this year’s annual meeting, the city of Yokohama sponsored a seminar on the anniversary of the AFC, its achievements and ways to move forward. “The MOU marks an important step forward in our ongoing collaboration with the ADB, an important partner in the region,” Amro Director Junhong Chang said. Cai U. Ordinario

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Editor: Efleda P. Campos • Thursday, May 4, 2017

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Security escort urged for Celebes Sea vessels By Manuel T. Cayon

@awimailbox Mindanao Bureau Chief

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IPATA PORT, Surigao City—The business community in Mindanao plans to petition Malacañang to make the Navy and the Coast Guard to make escorting cargo vessels and cargo on rollon, roll-off (Roro) trips a regular or routine service in the Celebes Sea. Several business leaders from the Davao and Caraga regions wanted to ask President Duterte for a regular escort along the route, after he and Indonesian President Joko Widodo launched on April 30 the Roro cargo shipping plying the Mindanao cities of Davao and General Santos and crossing the Celebes Sea to

connect them with Bitung, an international gateway of Indonesia on the northern Sulawesi region. The leaders were unable to talk with the President but told reporters the unsolved sea piracy engaged by the Abu Sayyaf Group (ASG) is taking place to the west of the route in the Sulu Sea.

Globe, UC hold PRISM digital learning program for private school teachers in Visayas By Charles R. Pepito

Correspondent

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LOBE Telecom, in partnership with the University of Cebu (UC), recently held the culminating activity for the Visayas leg of PRISM, a digital literacy-training program designed to equip private-school teachers with technological skills for effective classroom teaching. This is in line with Globe Telecom’s sustainability commitment to empower every Filipino with world-class learning through technology in response to United Nations Sustainable Development Goal 4 to “ensure inclusive and quality education for all and promote lifelong learning”. “These days, it is imperative for teachers to learn how to use information and communications technology [ICT] tools in the classroom if they want to motivate students to learn and to help increase their skills for entrepreneurship and employment. The changing times mean teachers need to continuously adapt to their evolving role. Through this program, we are assisting the teachers in discovering new ways in which they can foster creative and critical thinking among the students,” Michelle Tapia, Globe advisor and head of education strategy and innovation, said in a statement. The partnership with the UC has proven to be a natural fit, sharing the same vision in technology’s critical role in the 21st century. “We are happy to host the Visayas leg of PRISM. UC, one of the leading universities in the region, continues to democratize quality education guided by the core values of innovation, camaraderie, alignment, respect and excellence [ICARE]. As education becomes increasingly competitive, UC believes that ICT is a catalyst to respond effectively to society’s demands.

“This challenge has steered the university to implement a number of initiatives related to ICT. Our mission is to equip our teachers with knowledge, skills and desirable attitudes on technology utilization, which will benefit the educational system. We firmly believe that if we train and develop our people, this will reflect in the quality of graduates that we produce” said Dr. Anna Liza B. Son, vice chancellor for academic affairs of UC. The pressing need for digital-learning skills prompted Globe early this year to reach out to 1,000 educators from all over the country. Of the number, 140 teachers came from the Visayas region. The program was participated in by representatives from the UC, Cebu International School, Holy Name University, Negros Mission Academy, Sacred Heart SchoolAteneo de Cebu, Sacred Heart SchoolHijas de Jesus, Santa Isabel International School, Saint Joseph College, University of Negros Occidental-Recoletos, University of San Carlos, University of Saint La Salle Saint Paul University Dumaguete and Silliman University. Through PRISM, the selected teachers underwent a three-week professional development program conducted by Globe. It included a two-day immersive bootcamp, distance project-based learning, and personalized coaching. A key component of the program is the Brightspace Integrated Learning Platform, where the teachers underwent distance learning for three weeks with access to the global Brightspace Community and multimedia resources to guide them through the learning process, as well as a seamless platform to collaborate with learning coaches and teachers in real time. For the culminating activity, the teachers were invited to showcase various projects on technology-enabled instruction and content development.

Catanduanes governor charged with murder of local journalist

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ATANDUANES Gov. Joseph Cua and other suspects were charged with murder before the Department of Justice in the killing of journalist Larry Que. Que exposed the involvement of the governor, some local officials and personalities in the worsening illegal-drugs trade in the province of Catanduanes. The National Press Club accompanied Que’s common-law wife Edralyn Pangilinan last Tuesday, May 2, in the filing of the murder case against Cua, his aide Prince Lim Subion, Vincent Masagca Tacorda and other “John Does”. Tacorda, a former police officer in Catanduanes, was said to have admitted he was inatructed to kill Que under the guise of “Operation Tokhang” by Cua through Cua’s right-hand man Lim Subion. Tacorda resigned from the Philippine National Police (PNP) several days ago. In November 2016 the PNP raided a “mega” shabu laboratory, the biggest discovered in the country, so far, in Barangay

Palta, Virac, Catanduanes. The House of Representatives then began a Congressional investigation and hearings on the “mega shabu lab” in February. Also, earlier this year, Cua, Virac Mayor Samuel Laynes and Hilario Sarmiento, barangay captain of Palta, Virac, were charged before the Office of the Ombudsman for graft, grave misconduct and other charges. Pangilinan lodged the complaint in the Office of the Ombudsman. Que was shot in the head by a gunman in December last year as he was about to enter the building where his insurance business was located. He died later in the hospital. The killing happened just two weeks after he launched his newspaper Catanduanes News Now and after his drug-related expose against the governor was published in the newspaper. Pangilinan said Que received death threats from Lim Subion prior to Que’s murder, the first media-related killing under the Duterte administration.

The ASG recently climbed a Korean commercial ship early this year and kidnapped the Korean captain and his Filipino aide. They were released later. Two Navy and one Coast Guard ship escorted the cargo ship that launched the route on Sunday. Trade and Industry Assistant Secretary Arturo Boncato Jr. said the shipping owner agreed to mount at least five runs for

its maiden voyage to determine how the market responds. One Aboitiz food subsidiary, the Pilmico Foods Corp., shipped five twenty-footer container vans on that inaugural voyage and intimated to Boncato it would continue shipping flour and animal feeds at bigger volumes, “probably at 120 container vans per run”. Duterte and Widodo earlier saw the pos-

sibility of the sea pirates pouncing on the Roro ships with their fast craft usually outdistancing the Navy vessels. Duterte also announced in previous press briefings that Philippine Navy and maritime craft would regularly provide naval security on the route. No incident has been reported so far, after the inaugural launch from the Mindanao side going to Bitung.

TheBroad

Business

A6 Thursday, May 4, 2017

Philippines continues

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By Jasper Emmanuel Y. Arcalas

T the end of the day, things boil down to economics. And how a country addresses issues related to economics is a measurement of the boiling point. One of those issues involves nontariff measures, such as quantitative restriction (QR). No other QR has caught the imagination of the country and fellow members at the Association of Southeast Asian Nations (Asean) than that on rice.

The Philippines imposes QRs to protect its local industries from unfair foreign competition. For one, the Philippines has been instituting a QR on rice for more than two decades now to “seal” farmers from competition with cheaper rice produced abroad. “You’re sealing Filipino farmers from foreign competition,” Agriculture Undersecretary for Policy and Planning Segfredo R. Serrano told the BusinessMirror in an earlier interview. “We all know that the [global] trading environment is full of distortions. Do you think international markets are perfectly functioning?” According to Serrano, countries like Vietnam, the United States and those in Europe are imposing subsidization, or what the Organisation for Economic Co-operation and Development (OECD) calls market-price support. “If the foreign trade environment is like that—full of trade distortions—why will you not help the local farmers?” Serrano posited. “Trade must be fair.”

Tariffication

UNDER the General Agreement on Tariff and Trade (GATT), all forms of quantitative restrictions must be eliminated by member-countries of the World Trade Organization (WTO). The elimination meant that WTO member-countries shall convert their respective nontariff measures into tariff rate equivalent that afforded the same level of protection, or a process known as tariffication. Some forms of QRs include import prohibition, quota allocation, nonautomatic licensing, minimum price-based QR, “voluntary” export restraint, seasonal restriction of QRs and export restrictions, according to the WTO. However, Philippine Institute Development Studies (Pids) senior research fellow Roehlano M. Briones explained that converting a nontariff measure to a tariff rate equivalent will not really result in the same level of protection. Briones said the difference between the two measures lies in their ability to respond to changes in demand and supply. “Tariff is an automatic mechanism to make the adjustments because you leave the decision to import in the hands of the importers and traders,” Briones explained in an earlier interview. “You just give them a parameter, called a ‘tariff’, and they make the choice if they are willing to pay the price in bringing in imported goods— whether it’s a million or a zero.” According to Briones, however, “a quota doesn’t have that”. “A quota is a quota,” Briones added. “When the demand surges or the supply falls short domestically, and there’s a need to reconsider whether more imports are needed that option is gone…pre-

cisely because of the structure of the policy which is a quota.”

NFA

THE case is true with the power vested on the National Food Authority (NFA). Under domestic laws, the NFA is the sole government authority mandated to regulate the importation and exportation of agricultural goods, particularly rice and corn. The NFA implements the minimum access volume (MAV) commitment of the country to the WTO. The NFA determines whether it will be the private sector or the government that shall utilize the MAV allocation. Furthermore, under Republic Act (RA) 7607, or the Magna Carta of Small Farmers, the government prohibits all importation of agricultural products produced locally in sufficient volume. This means that the country could only import agricultural goods whenever there is an established “shortage” for a certain commodity, according to Briones. Such import restriction applies in the case of the local onion output. The usual planting season for onion in the country starts in September and ends in May of next year. The government, through the Bureau of Plant Industry (BPI), regulates importation of onion in the country by determining if there is a shortfall in production in relation to the local demand. The BPI does this through meeting with onion industry stakeholders and farmers after the harvest season to evaluate if the total harvest would be sufficient to meet the country’s requirement throughout the year. If the BPI and the industry stakeholders agree that local supply will not be enough for local demand, then that’s the time that the government allows the private sector to import onion.

Rice

FOR non-governmental organization Rice Watch and Action Network (R1), the imposition for more than two decades of QR on rice did not serve its purpose. “The imposition of QR is supposed to be a transitional mechanism while we pursue the more strategic objective of raising competitiveness of our local rice industry, ensuring highest productivity of our farmers and increased incomes for them,” R1 Executive Director Hazel Tanchuling told the BusinessMirror in an earlier interview. R1 explained that the imposition of QR on a commodity was meant to protect local producers who would negatively be affected by competing imported products. “If a QR is in effect, countries normally import the volume that they only need, because too much

Serrano: “You’re sealing Filipino farmers from foreign competition. We all know that the [global] trading environment is full of distortions. Do you think international markets are perfectly functioning?”

imports can depress local prices and, thus, negatively affect our farmers,” Tanchuling said. If Tanchuling is the one going to be asked whether the 22 years of imposing rice QR were enough to prepare the Filipino farmers to go head to head against their counterparts at the Asean, she would say: it should have been. “In terms of productivity per hectare, we would argue that the Filipino farmers have actually pushed its limit,” she said. “We are not actually lagging behind in

terms of yield per hectare with other countries in rice production.” Still, Tanchuling admits the cost of production is still high. “Credit, irrigation, labor and [other farm] inputs are costs borne by the Filipino rice farmer. In other countries, credit and inputs are subsidized, and irrigation is free. It is only now that the government is thinking of making irrigation free for farmers,” she added. “These all add up to our ‘uncompetitiveness’. We could have done all these support mechanisms earlier.”

Exports

THE government also imposes export restriction, particularly in rice and corn. The NFA oversees the regulation and stabilization of grains prices and supply in the country. Before farmers could export grains, such as corn, the interagency NFA council must first declare that there’s a surplus, according to Presidential Decree (PD) 4. “In the exercise of this power,

the Authority shall directly undertake the exportation of rice, corn and other grains and/or their substitutes and/or by-products/ end-products whenever there is an excess in production and/or supply, or it may allocate export quotas among certified and licensed exporters,” PD 4 read. “Provided, however, that the council shall first certify after to such excess production and/or supply after proper consultation with the Office of the President.” The Philippine Maize Federation Inc. (Philmaize) has been lobbying for years now to allow the local corn sector to export its produce without the need of the state grains agency’s certification of surplus.

Unfair

PHILMAIZE President Roger V. Navarro said it is “unfair” that the local corn industry is not allowed to export its produce, while the entry of corn and corn substitutes into the country has

been liberalized long ago. “The local farmers are not empowered in the sense that they are restricted to export, but the country is liberalized to corn imports and corn substitutes,” Navarro told the BusinessMirror. “The farmers could not benefit from what they call international parity price of corn.” Navarro argues that if the exportation of corn is liberalized, then local farmers have a “trump card” on situations wherein they could capitalize on the higher price of corn in the market. “For example, the demand in the international market is high and the Philippines has a surplus of corn production, meaning farmers will benefit from such scenario. So everybody has a trump card, we have that option whenever it is needed,” he said. “Because imports are being used as leverage today by importers so that they can depress the price of corn during harvest season. So if we can export, we can also leverage if the price in the

derLook

sMirror

www.businessmirror.com.ph | Thursday, May 4, 2017

es to reckon with QR Cash Transfer [CCT] Program, which is P15,000 for three children,” the researchers said. “Note that compensatory payments can be received simultaneously with the CCT.” Asked whether the QR has served its purpose for more than two decades the rice sector was under such regime, Briones said: Yes, but on the perspective of price stability. “I think that to a great extent, especially during normal periods and assuming that the objective of the QR was to maintain stable prices,” Briones told the BusinessMirror. “So we don’t want farmers to experience falling prices because we allow imports to come in.” “Then, QR combined with other policies of the NFA, such as the retail rice subsidy, etc., looking at the objective of price stability, by and large, most of the time that was followed,” Briones added. “Excluding some outliers during the years under QR, the prices have been kept stable. So QR has served its purpose.” However, Briones noted that the stability of prices that the country achieved had drawbacks, such as the high price of rice. “You stabilize price at a very high price that penalizes the poor— penalizes the food security of the poor. So was that stability worth it?” Briones said. “If you could have given them a more volatile price but a lower level, I’ll take the lower prices any way and let it fluctuate at around P20 to P22 versus stable price at P38 or fixed at P38.”

Goodolga | Dreamstime.com

Post-QR

NAVARRO: “The local farmers are not empowered in the sense that they are restricted to export, but the country is liberalized to corn imports and corn substitutes.”

international market is up and the price of local market is down.”

Disputes

BRIONES said settling a dispute case before the WTO Dispute Settlement Body (DSB) would cost both parties—the plaintiff and defendant—a few hundred thousand dollars to million dollars. The amount would cover the cost of sending representatives and trade and international lawyers to Geneva throughout the process, Briones added.

Serrano, one of the country’s veteran trade negotiators, said the government “stands to face trade disputes immediately” after the country’s waiver expires. In a bid to evade disputes filed by trading partners against the Philippines before the WTO, the government sought for viable options, while the amendment of RA 8178 is ongoing. It was RA 8178, or the Agricultural Tariffication Act, that sealed the Philippines’s accession to the WTO. The law mandates the conversion to tariffs of all QRs on agricultural commodities except for rice. Since then, the Philippine government has eyed to achieve rice self-sufficiency by exploring various programs to improve the rice sector’s competitiveness. These attempts range from distribution of high-yielding rice varieties, mechanization of rice sector, improvement of irrigation systems, construction of farmto-market roads and establishment of postharvest facilities.

Despite these, the government failed to achieve the ambitious rice-sufficiency target. The consecutive failures in preparing the rice sector to become competitive to its Asean counterparts resulted in the extension of the Philippines’s right to QR before the WTO. One of the options considered by the government, particularly by the Committee on Tariff and Related Matters (CTRM), is to retain the concessions made by the country in securing the waiver in 2014.

Zeroing in

VARIOUS economists and experts have also zeroed in their opinions on a post-QR regime. In a policy note, titled “Compensatory Payment Scheme for Rice Farmers After Tarrification,” Briones and research analyst Lovely Ann C. Tolin said the removal of the rice QR is expected to boost government revenues due to more rice imports. At a tariff rate of 35 percent, the government is expected to gen-

erate P27 billion to P28 billion in duties from rice imports, which could reach as much as 2.26 million metric tons (MMT) a year. “Earmarking the rice-tariff revenue to pay for the compensation scheme is a feasible funding strategy,” the authors said in their report published last year. “Residual money from the tariff revenues could be used for other product-enhancement measures for rice farmers.” The influx of rice imports, the study stated, will lower paddy-rice prices by P4.56 and P6.97 per kilogram at the farm gate and retail level, respectively. The impact on farmers’ incomes of the removal of the QR, the researchers said, should compel the government to compensate them. Farmers cultivating 2 hectares of irrigated land should receive around P19,000 a year, according to the study. “This is greater than transfer per household from the Conditional

FOR economist and Virginia Polytechnic Institute and State University senior research fellow Caesar Cororaton, the Department of Agriculture (DA) should provide assistance to rice farmers who will shift to other crops, as this would help boost the farm sector’s productivity. “That’s actually good, if they [rice farmers] move out of rice production and then use the money, amounting to some P24 billion, to train those who are willing to shift to other crops, which are more profitable,” Cororaton told the BusinessMirror. In their paper, titled “Poverty and Distributional Impact of Alternative Policies in the Philippines”, Cororaton and De La Salle University School of Economics Associate Professor Krista Danielle Yu said the removal of the QR on rice would cut land use for palay production by at least 10.02 percent. They suggested that the government put in place a post-QR regime scheme wherein rice tariffs will be gradually reduced to 25 percent in 10 years. The revenues from rice imports should be given as cash transfer to poor families. “The amount of money to be plowed back [to farmers] is more than enough to support their displacement and would result in improvements,” Cororaton said. Under their suggested postQR regime scheme, land use for palay production would decline by only 1.5 percent. Cororaton added the 1.5-percent decrease in palay land use, however, would result in higher land utilization for other high-value crops. For instance, land use for corn production would increase by 1.83 percent, while land use for coconut and sugar production would expand by 1.41 percent and 1.43 percent, respectively. They also noted that there would be a 2.02-percent hike in the production of other crops. Under their suggested postQR scheme, Cororaton said the income of households, particularly the poorest 10 percent of the country, would increase by at least 23.8 percent due to cheaper rice prices.

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Cororaton added this would result in a 9.12-percent decline in the country’s poverty incidence and a 26.77-percent cut in poverty severity, or the degree of inequality among the poor. “The results indicate that the control on rice imports is highly regressive because it increases the domestic price of rice and puts significant burden on poor households,” their paper read. “Retaining the protection on domestic palay production through tariffication and earmarking the revenue generated as cash transfer to poor households will reduce poverty considerably by 4 million in 10 years.”

Unreliable

SERRANO has slammed the pronouncements of some economists—whom he described as thinking in neoclassical economics—who said purely lifting the rice QR would result in a drastic change in the socioeconomic status of Filipinos. “So let’s say under a free market, cheaper imported rice will enter the market, say it’s about P20 per kilo,” Serrano said. “Now, according to some of our economists, immediately millions will be lifted from poverty.” In the vernacular, he said this is a simplification of the issue of poverty and its cause. “Eh, kung ganoon, simple lang pala ang solution sa kahirapan. At ang paghihirap ng mamamayang Pilipino ay dahil lang sa bigas.” “You can have your sleek economic analyses and probably tell you such [outcome] but that doesn’t really mean that the elements of the socioeconomic environment—in a way you assume— are insignificant,” he added. Serrano said not everyone would benefit from cheaper price of commercial rice in the market assuming that the importation of rice would drag down the current price market. “If you are a consumer and believe those ‘neoclassical’ pronouncements and expect prices to go down in the next four years, then you [would] probably be happy because rice will be cheaper according to them,” he said. “But do you think many in the rice-trading business who have experienced high price will pass ‘cheap’ rice cheaply?” He noted that the right price of imported rice in the commercial market should be about P20 per kilo “because their production cost is lower than ours”. “Do you think rice traders will pass it as P20 per kilo? Yes, eventually it will go down, but not immediately,” he added. “There would be profit-taking at first, given the rigid elements in the market.” Should the price of commercial rice in the local market decline due to influx of imported rice, the agriculture undersecretary noted there’s no assurance that the said price level would be maintained, given the volatility of the global rice market. “For example, the estimates of some economists that there would be an increased local demand of 3 MMT to 5 MMT of imported rice—which would put pressure in the international market—do you think prices will stay?” Serrano explained. “Do you think that even if you have increased your demand internationally, and you still import, the local price would remain at P20 per kilo? What could happen is that the current price of rice in the commercial market today would be eventually the price in a post-QR regime, due to increased price in the international market,” Serrano added. According to him, the country will “end up in a situation that you are now totally dependent on the international market, which is unreliable.”

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The World BusinessMirror

Thursday, May 4, 2017

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

Trump, Putin agree to a Syria cease-fire

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ASHINGTON—President Donald J. Trump reopened direct communications with President Vladimir Putin of Russia on Tuesday and sought to reignite what he hoped would be a special relationship by agreeing to work together to broker a cease-fire in war-torn Syria. In their first telephone conversation since the US launched a cruise missile strike on Syria’s Moscow-backed military to retaliate for a chemical weapons attack on civilians, Trump agreed to send a representative to Russian-brokered cease-fire talks that start on Wednesday in Astana, Kazakhstan. He and Putin also discussed meeting each other in Germany in July. But American and Russian officials offered divergent accounts of their interest in establishing safe zones in Syria to protect civilians suffering from a relentless, six-year-old civil war. A White House statement said the two leaders had discussed such zones “to achieve lasting peace for humanitarian and many other reasons”. The Kremlin statement made no mention of safe zones, and Putin’s spokesman said they had not been discussed in detail. Still, at the talks in Astana, Putin’s envoys plan to propose that Russia, Iran and Turkey act as buffer forces separating government and rebel forces in some areas of Syria. The government of President Bashar al-Assad is skeptical of the plan, according

6

The number of years the civil war in Syria has been existing

This frame grab from video provided by the Hawar News Agency shows people wounded in an attack by the Islamic State group receiving treatment at a clinic in Hasakeh province, Syria, on May 2. Islamic State militants staged a surprise attack early on Tuesday at a crossing frequently used by Iraqi and Syrian civilians seeking safety in northeastern Syria, killing at least 37 people, most of them civilians who had fled fighting in areas held by the extremist group, Kurdish officials and activists said. Hawar News Agency, via AP

to diplomats and analysts, seeing it as the first step toward a partition of the country. The call between Trump and Putin was aimed at getting past the rupture of recent weeks and beginning to forge a more collaborative relationship. Trump came to office praising Putin and making it a priority to draw closer to Moscow, but his goal has been hobbled by multiple investigations into Russian meddling in last year’s election and the clash over Syria’s use of chemical weapons against its own people. The initial optimism on both sides has given way to a sour and uncertain mood as geopolitical gravity has pulled Trump and Putin in opposite directions and lowered expectations.

While a grand bargain now seems out of reach, the two leaders appeared intent on finding areas where they could agree while managing areas where they did not. “Still some hopes, disappointment and caution,” Vladimir Frolov, a prominent foreign policy analyst and columnist, said of the atmosphere in Moscow. “And apprehension. They are apprehensive about the way that the Trump administration behaves internationally, the unpredictable, unilateral nature of their steps. But they are still hoping for some agreement.” Trump never gave up, even after he said relations between the United States and Russia “may be at an all-time low”. While senior members of his team excoriated

Moscow for enabling the Syrian government to use nerve agents against civilians, the president tempered his language, making sure not to criticize Putin personally and later expressing optimism that “things will work out fine between the US and Russia”. When Trump met with ambassadors from the UN Security Council last week, he told them, “The future of Assad is not a deal breaker,” a Russian diplomat said afterward. And last weekend, he returned to his past equivocation on whether Russia hacked Democratic servers last year, saying it “could’ve been China, could’ve been lots of groups”. Tuesday’s phone call was the third between Trump and Putin since the American inauguration

in January. Both sides offered positive assessments, with the White House characterizing the conversation as “a very good one” and the Kremlin calling it “businesslike and constructive”. Neither side mentioned the dispute over the chemical attack and cruise missile strike. “President Trump and President Putin agreed that the suffering in Syria has gone on for far too long and that all parties must do all they can to end the violence,” the W hite House statement said. T he K remlin said Secretar y of State Rex W. Tillerson and Foreign Minister Sergey V. Lavrov would “ intensif y” their dialogue to “search for options” in Syria. “It was a very constructive call

that the two presidents had,” Tillerson told reporters. “It was a very, very fulsome call, a lot of detailed exchanges. So we’ll see where we go from here.” In a sig n of t he domest ic pressure sur round ing a rap prochement, Democrats seized on Trump’s phone call with Putin to paint him again as a puppet of the Russian leader. “Trump’s bromance with Putin appears to be back on track,” Adrienne Watson, the deputy communications director of the Democratic National Committee, said in a statement. “Instead of sending Putin a tough messaging on backing Assad’s brutal regime, Trump appears to be opting for a strategy of appeasement.” Trump’s effort to ease tensions coincided with a visit to Russia by Chancellor Angela Merkel of Germany, who met with Putin in the southern resort city of Sochi. At a news conference before his call with Trump, Putin emphasized that cooperation with Washington was critical to settling the Syria conflict. “Certainly, without the participation of such a party as the United States, it is also impossible to solve these problems effectively,” Putin said. “So we are and will continue to be in contact with our American partners, and I hope that we will attain understanding there regarding joint steps in this very important and sensitive area of international relations today.” Asked whether he had the influence to sway Assad, Putin said that Russia, in tandem with Turkey and Iran, was trying to “create the conditions for political cooperation from all sides.” New York Times News Service

US considering new Hamas leader trying to lift group’s pariah status Venezuela sanctions D

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he US may consider new sanctions against Venezuela in response to President Nicolas Maduro’s announcement that he will seek to rewrite his country’s Constitution. The Venezuelan government has “decided once again to change the rules of the game in mid-play,” Michael Fitzpatrick, US deputy assistant secretary for Western Hemisphere Affairs, said on Tuesday on a reporter call. “The actions that were taken yesterday [Monday] may well give us new reasons for considering additional individualized sanctions under the Venezuela Democracy Act of 2014.” Maduro on Monday called for a citizens assembly to draft a new constitution, in a move that was internationally condemned as an “illegal power grab” to circumvent the opposition-led National Assembly legislature. The announcement came after another day of anti-government protests in Caracas that have claimed at least 30 lives over the past month. The US urged the protesters to express themselves nonviolently. Fitzpatrick said the US wants Venezuela to hold free and fair elections. Fitzpatrick said the US is still trying to figure out potential mediation efforts to bring the government and opposition-led parties back together. Getting the two sides to talk is “what’s going to bring Venezuela out of its crises one way or the other,” he said. “At some point there will have to be dialogue.”

Past sanctions

While the US has so far avoided wide-ranging sanctions on the South American country or its economy, it has targeted individuals for drug trafficking and

human-rights violations stemming from anti-government protests in 2014. State oil company Petroleos de Venezuela SA has also seen minor sanctions over trade with Iran. In Februar y Vice President Tareck El Aissami became the highest-ranking Venezuelan hit by US sanctions under the Foreign Narcotics Kingpin Designation Act for alleged ties to drug trafficking and one of the most-senior government leaders of any country listed by the Treasury Department under its various sanctions authorities. Earlier that month, a bipartisan letter from US Rep. Ileana Ros-Lehtinen, Sen. Bob Menendez and 32 other lawmakers called on President Donald J. Trump to sanction Venezuelan officials who have allegedly profited from the country’s chronic food shortages. In March 2015 former President Barack Obama expanded US sanctions against Venezuelan officials and declared worsening relations with the South American nation to be a national emergency. “The threat from the international community focuses on whether the US escalates from individual specific sanctions to country-wide sanctions,” Siobhan Morden, head of Latin America fixed-income strategy at Nomura, said on Monday in an e-mailed note. “Although not a risk-free approach for the Trump administration as the US would have to redivert imports, we cannot rule out this alternative with Venezuela much more dependent on the US in terms of bilateral trade flows.” Trump called the situation in Venezuela “a mess” and “very sad” after he met with his Argentine counterpart, Mauricio Macri, on April 27. Bloomberg News

OHA, Qatar—In the violent flux of the Middle East, Khaled Meshal is one of the great survivors. Down the years other senior figures in Hamas, the Islamist militant group that violently resists Israel, have died in hotel rooms at the hands of Israeli assassins or been crushed by laser-guided missiles during the wars in Gaza. Meshal, who spent his career shifting from one Arab capital to another, had his own close scrape: In 1997, a year after he became the leader of Hamas, Israeli spies sprayed poison into his ear on a street in Jordan, sending Meshal into a coma and setting off an angry diplomatic showdown between Jordan and Israel that ended with the delivery of a lifesaving antidote. Now Meshal is stepping down as the senior leader, ending a 21year reign during which Hamas grew into a formidable military force and also joined politics to rule Gaza for the past decade. Yet it has become an international

pariah for its attacks on civilians. Meshal’s parting shot is a new political document, released at a luxury hotel in Doha on Monday, that he is pitching as an attempt to pull Hamas from its isolation by presenting a friendlier face to the world. A big part of that is its watering down of the anti-Semitic language of the original Hamas charter in 1988, with its talk of war between Arabs and Jews. “We are making it clear that ours is a liberation project—not about religion or the Jews,” Meshal said in an interview on Tuesday in Doha, his latest home. His offer found few takers. Prime Minister Benjamin Netanyahu of Israel immediately rejected the overture as an exercise in insincerity. “Hamas is attempting to fool the world, but it will not succeed,” his spokesman said on Monday. Hamas is loathed in Israel for bombings and rockets launched indiscriminately into civilian areas, and critics say the group

spends too much money preparing for war and not enough on Gaza’s besieged residents. The document was also greeted with silence by Western countries, a reflection of the fact that Hamas failed to bend on any of the factors that have caused it to be branded a terrorist organization—and has not even formally repudiated the 1988 charter, with its talk of “obliterating” Israel and creating an Islamic State on “every inch” of historic Palestine. The failure to achieve even that cosmetic gesture offers a telling indication of how Hamas is hamstrung by its own deep-seated ambivalence toward reform, said Nathan Thrall, an analyst with the International Crisis Group who is based in Jerusalem, who noted that the original charter has long been a source of quiet embarrassment among more reform-minded Hamas leaders. “On one hand, they are attempting to appeal to hard-liners by not giving up their core principles,” said Thrall, the author

of a forthcoming book on the Israeli-Palestinian conflict, The Only Language They Understand. “On the other, people like Meshal were hoping the document could lead to openings with Sunni Arab states and the West. It attempts to please everyone, and in so doing pleases no one.” Yet, the attempted rebranding of Hamas comes at a moment of sudden change in the Middle East. Mahmoud Abbas, the leader of the rival Palestinian Authority, is due to meet with President Donald J. Trump in Washington on Wednesday. Trump has spoken of his desire to solve the Israeli-Palestinian conflict, but his interlocutor, Abbas, 82, is seen as politically depleted, and his rivals have started maneuvering to succeed him. Hamas is changing, too: Secret elections now under way will decide who succeeds Meshal as leader in the next two weeks. That, in turn, raises the question of what Hamas might become. New York Times News Service

Macron may need Bill Clinton’s debate strategy

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rance’s presidential front-runner Emmanuel Macron may need to study Bill Clinton’s 1992 campaign war-room board before his face-to-face television debate with rival Marine Le Pen on Wednesday. Clinton’s strategist James Carville put down four winning rules in the now-famous sign at his Little Rock, Arkansas, campaign headquarters. One of them read: “The Debate Stupid.” Clinton, a Rhodes Scholar at Oxford University, worked on conveying his ideas in folksy, accessible terms, using short sentences and gestures for emphasis—skills that not only got him elected, but make him a prized speaker even now. Macron, who faces the far-right candidate

Le Pen in their first and only face-to-face debate on May 3, may need to take a leaf out of Clinton’s playbook. The centrist candidate’s technocratic vocabulary and verbose, long-winded sentences may make it hard for him to win over voters, especially as he faces a populist rival who speaks in emotionally charged sound bites. Le Pen, who has already called Macron the“ candidate of oligarchs” and bankers, is likely to slam him for what she says is his incapacity to connect with ordinary people. “Le Pen can attack Macron on the elitist aspects of his candidacy,” said Philippe Moreau Chevrolet, a communications consultant and professor at SciencesPo in Paris. “She does better with the working

classes, he is by far better among the welleducated. The risk is that the debate turns into a confrontation between globalization and antiglobalization in which victory isn’t sewn up, meaning there can still be a surprise on Sunday.” Although he has a lead of about 20 points over Le Pen, the stakes are high for Macron. The two candidates are going head-on, letting about half the electorate that didn’t vote for either of them in the first round make their decisions for the runoff on May 7. The two-and-a-half-hour television debate will be used by the two candidates to showcase their differences—of which there are many. While Le Pen wants France to close its borders and turn its back on the euro and

the European Union, Macron sees the country well ensconced in Europe and is confident of its ability to thrive in a globalized world. Viewers, however, may focus less on what is said—since the candidates’ stands are well known—than how it’s said. That’s Macron’s challenge. “When he speaks, I just don’t understand him,” said Isabelle Suplisson, 48, a hairdresser in Paris’s working-class 20th arrondissement, who voted for François Fillon in the first round and may abstain on May 7. “Maybe I’m too stupid for Mr. Macron.” France’s presidential debates—inspired by the first US one between Richard Nixon and John F. Kennedy in 1960—have often delivered the iconic moments of election campaigns. Bloomberg News

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

The World BusinessMirror

Thursday, May 4, 2017

A9

Trump: US needs ‘shutdown’ In Sept to fix Senate ‘mess’

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ASHINGTON—President Donald J. Trump tweeted on Tuesday that the nation “needs a good ‘shutdown’ in September” to fix a “mess” in the Senate, issuing contradictory messages ahead of key votes on a spending plan to keep the federal government running. Part of Walsall town commercial area Bloomberg

Brexit’s forgotten towns hold key to May’s election gamble

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n the urban sprawl of the English Midlands, the town of Walsall is famous for making leather goods and little else. It’s in these anonymous places in former industrial heartlands where Britain’s desire to leave the European Union was strongest, and where Prime Minister Theresa May’s decision to send her country back to the ballot box less than a year later will turn out to be masterful or reckless. Walsall has been a bastion of Labour, the party of government less than a decade ago, yet whose disarray led Conservative leader May to call the election. Not since the 1980s has the countr y been so socially and politically torn, and towns like this must reconcile their ardent support for Brexit with that for May’s opponents. “I voted to leave, and this year, I’ll vote Conservative,” said Alan Smith, 61, as he walked with his wife next to the canal in Walsall, part of a network developed during the Industrial Revolution in the late 18th century. “ The key for me is Europe. The Conservatives want to leave, and Labour want to stay in. Labour [members] say they will leave, but I don’t believe them.” Maureen Lewis, 53, a community worker for Walsall Black Sisters Collective, an organization that has received funding from the EU, said she voted for Brexit because she wants Britain to run its own affairs. But she will be sticking with Labour to defend the interests of “everyday people”. “Unemployment’s high, there’s no jobs, young people have got no opportunities,” Lewis said as she prepared to pick up a group of children for an after-school club.

Thatcher’s handbag

While the Launer leather factory in Walsall produced handbags for former Conservative Prime Minister Margaret Thatcher, the town never embraced her politics. But Walsall has become a microcosm of how the clash of views might play out for May, and indeed, Britain, after the EU set out its united position on Brexit last weekend. By calling the June 8 elect ion, May’s stated a im is to st reng t hen her m a nd ate for what both sides say will be tough and protracted negotiations. The Conservative campaign has majored on the threat of Labour backsliding over Brexit. Opinion polls show Labour under leader Jeremy Corbyn trailing by as much as 20 percentage points. The question in the election is how much of Labour’s support will collapse, and what happens to the votes for the UK Independence Party (Ukip), whose flagship policy is to leave the EU. Now that’s happening, May’s Conservatives are expected to benefit. Research by University

of Kent academic Matthew Goodwin shows 31 Labour districts are at risk if just half of Ukip’s voters switch to May. Wa lsa l l voted to leave the world ’s l a rgest t r ad i ng bloc by 68 percent to 32 percent. Its t wo law ma kers, both Labour and opposed to Brexit in the referendum last year, are defending major ities that are any thing but unassailable. In the Walsall North district, Labour’s David Winnick, 83, won by fewer than 2,000 votes at the last election. While he has held the seat since Thatcher won office in 1979, May needs just a quarter of Ukip voters to switch to take the seat. Valerie Vaz, 62, in Walsall South has a bigger cushion, with the Conservatives needing a swing of just over 3,000 votes.

‘Down, down, down’

Walsall was built up as a center for craftsmen in the 1800s, and provided saddles, harnesses and leather goods to armies and royalty around the world. It has felt the effects of globalization and increased unemployment, factors that helped drive the vote for leaving the EU. “Overall, the economy for 10 years...it’s been bad—everything’s gone down, down, down,” Mohammed Ishtiaq, 50, said at the fastfood outlet he runs in the town. The closure of a nearby bakery, which employed 400 people, hit his business, and he voted to quit Europe in the referendum last year. “Rich people did well out of Europe, not ordinary people,” he said. Like up and down the rest of England, the biggest threat to both Labour and the Conservatives could be apathy. This will be the third major vote in Britain in about two years. May has repeatedly warned against complacency, and Labour is appealing to party members to help get out the vote. Brian Cornfield, 79, who has a job making cardboard boxes after spending most of his working life in the leather trade, was a lifelong Labour voter —until now. He also wants to restore the death penalty. “This time I won’t bother. I can’t see what’s being done,” he said. “They won’t do what I want anyway, I want to bring the hanging back. I don’t know what to think of any of them.” Outside the Launer factory, where handbags are still made for Queen Elizabeth II, Mandy Amos, 46, said she will be busy doing other things on June 8. She doesn’t like May. “To me she’s like a female version of Donald Trump,” Amos said as she passed by with her daughter and grandchild. “They all offer promises and dreams for the public, and I like to live on my own promises and my own dreams.” Bloomberg News

Trump’s embrace of a government shutdown came days after he accused Senate Democrats of seeking a shutdown and obstructing majority Republicans during recent budget negotiations. Lawmakers announced on Sunday they had reached an agreement to avoid a shutdown until September—a deal that does not include several provisions sought by Trump, including funding for a border wall. Congress is expected to vote this week on the $1.1-trillion spending bill to fund the gover nment through September. The W hite House on Monday praised the deal as a win for the nation’s militar y, health benefits for coal miners and other Trump priorities. The House is also considering a possible vote this week on a health-care overhaul that would repeal and replace the socalled Obamacare law. Kicking off the day, the president tweeted on Tuesday from his Twitter account, “The reason for the plan negotiated between the Republicans and Democrats is that we need 60 votes in the Senate, which are not there!” He added that we “either elect more Republican Senators in 2018 or change the rules now to 51 [percent]. Our country needs a good “shutdown” in September to fix mess!” About an hour later House Speaker Paul Ryan of Wisconsin

$1.1T

The amount of the spending bill that US Congress is expected to vote on this week to fund the government through September

defended the budget plan, telling reporters, “No longer will our military be held hostage for domestic spending.” He said the spending package was an “important first step in the right direction” that included a “big down payment” on border security and the military. Senate Majority Leader Mitch McConnell of Kentucky said the funding bill is the product of bipartisan negotiations, and that it “delivers some important conservative wins, including critical steps forward on defense and border security”. White House Budget Director Mick Mulvaney also praised the budget deal in a conference call with reporters. Asked to explain Trump’s advocacy for a shutdown, Mulvaney said, “Right now I’m not worried about September, I’m worried about this deal that’s in front of us.” “I think the president’s tweet

President Donald J. Trump walks with aide Keith Schiller to the Oval Office of the White House in Washington on May 2. AP/Evan Vucci

was that we might need a shutdown at some point to drive home that this place, that Washington, needs to be fixed. I think that’s a defensible position, one we’ ll deal with in September. The truth of the matter though, is now we’ve averted a government shutdown in a way that allows the president to fund his priorities,” Mulvaney said. But the presidential tweets displayed a contradictory message on the budget deal. Last Thursday Trump had tweeted that Democrats were threatening to close national parks as part of the negotiations “and shut down the government. Terrible!” He also tweeted at the time he had promised to “rebuild our military and secure our border. Democrats want to shut down the government. Politics!” Democrats said Trump’s shutdown suggestion sent the wrong message. “President Trump may not like what he sees in this budget deal, but it’s dangerous and irresponsible to respond by calling for a shutdown,” said Sen. Patty Murray, Democrat-Washington. Trump’s Tuesday tweets about Senate procedures came after Sen ate R e publ ic a ns recent ly triggered the “nuclear option” to eliminate the 60-vote filibuster threshold for Supreme Cou r t Ju st ice Nei l Gorsuc h. That change allowed the Senate to hold a final vote to approve Gorsuch with a simple majority,

an approach that has not been used for legislation. McConnell has said he’s not inclined to change Senate rules on the filibuster and legislation, something that has been echoed by other Republicans. McConnell said in April, “Who would be the biggest beneficiary of that right now? It would be the majority, right?” McConnell told reporters. “There’s not a single senator in the majority who thinks we ought to change the legislative filibuster. Not one.” Any future shutdowns would likely cost the federal government billions of dollars. The 16-day partial government shutdown in 2013 cost $24 billion, according to Moody’s and Standard & Poor’s. That included lost revenue for the national parks. The White House and congressional Republicans put on a fullcourt press to reverse a Washington narrative that the catchall bill was a win for Democrats. Mu lva ney c ited a $15 -bi llion infusion of defense spending—about ha lf of what Tr ump asked for in Ma rc h—as a huge w in for Tr ump. He also claimed c red it for $6 bi l l ion i n w a r f u nd ing approved by for mer President Ba rac k Oba ma as a Tr u mp w in. He a lso c ited $1. 5 billion in emergency money for border sec u r it y. Another item Mulvaney cited as a big win was retention of longstanding prohibitions against federal funding of abortion called the Hyde amendment. But Mulvaney correctly noted the pending measure was a victory for Republicans, because the administration succeeded in breaking the link—forged over several Obama-era spending deals—that required that any increases in defense spending be matched by an equal, dollar-for-dollar increase for nondefense programs. “The American people won, and the president negotiated that victory for them.” AP

Big summer shutdowns loom for US auto plants as sales sputter

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uto workers may be getting some extra time off a rou nd I nd e p e nd e nc e Day, but they won’t be celebrating. They’ll know it means sales are weak and that profits—and profit-sharing checks—could be shrinking. Manufacturers used to shut plants for a week or two in July for maintenance and to keep inventories in check. As sales boomed in recent years, most factories cranked out cars without a break. This summer, widespread closures may be back, and for weeks longer than before. The reason: four straight months of declining sales and little expectation the trend will reverse anytime soon. It’s probably not what President Donald J. Trump wants to hear. He has admonished Ford Motor Co., General Motors Co. (GM) and Toyota Motor Corp. for building factories in Mexico and demanded more US jobs be created—taking credit for some new investments in the US that had been long in the planning. “You see what’s going on with the car companies,” Trump said in an interview on Monday with Bloomberg News. “They’re all talking about building in the United States because of me.” The reality isn’t so upbeat, with automakers aiming to draw down bloated inventories by ratcheting back output. “We’re not seeing the same picture as the president,” said Michelle Krebs, a senior analyst

with Cox Automotive. “We are not seeing any new plants being built in the United States, or increases in production. The fact is, we have passed the sales peak, and we’re now seeing decreases in production.” None of the major automakers would discuss plans for factory intermissions this summer, saying it was too early to tell what closures might be necessary. But Erich Merkle, head of US sales analysis at Ford, said with the company’s inventories at 83 days worth of vehicles, it may not need to add downtime if the market stays where it is.

Slow sellers

Even if that happens, weeks of production suspension seem almost certain to be on tap for the industry, said Mark Wakefield, managing director and head of the automotive practice at AlixPartners. He said automakers have aggressive plans for temporarily shuttering assemblies that make slow-selling sedans and small models. “For certain plants, we’ll see three or four summer shutdowns for the tougher-selling products,” Wakefield said. Right now automakers “are a little less worried about inventories because they know they’ll be taking the plants down more”. The weak start to the year raised doubts about the idea that sales had just leveled off at close to historically high levels. AlixPartners

forecasts they’ll fall by more than 1 million vehicles by 2019, down from its projected 17.25 million in 2017. Last year a record 17.6 million new vehicles sold in the US In April the annualized pace was 16.9 million—the second month in a row that it came in under 17 million. “People are starting to see that this is not necessarily a plateau,” Wakefield said. “It’s a meaningful reduction, and they’re starting to make plans around that.”

Reality adjustment

At GM, retool i ng dow nt i me scheduled at plants this year will reduce output by about 60,000 vehicles, Chief Financial Officer Chuck Stevens said last week. Discussing the chance that big cutbacks might be necessary, he said during a call with analysts on Monday that about 30 percent of GM’s factory workers are ‘‘short term” and not eligible for unemployment compensation. The six biggest automakers missed analysts’ estimates and reported US sales declines in April. Ford and Honda Motor Co. suffered the steepest decreases. Beyond possible plant shutdowns, another month of weak sales raises the prospect companies will need to boost discounts and cut output to address swelling supply on dealer lots. Ford and GM joined auto parts and dealer stocks leading some of the S&P 500 Index’s biggest de-

clines in Tuesday trading. Not everyone subscribes to the notion that the industry is headed for annual sales of under 16 million over the next couple of years. The economy is strong enough to keep deliveries up, said Maryann Keller, an industry consultant in Stamford, Connecticut. Carmakers will simply have to adjust to the reality of the number slipping away from last year’s 17.6-million record. One reason is that sales had, until recently, been roaring, so there are plenty of newer models in driveways. Another is that new cars have gotten more expensive, and lenders are getting tighter with credit terms, sending more shoppers to the used-car market. “Some people can’t get f inanced, or it’s very expensive,” Keller said. “It’s people w ith prime and near-prime credit that are buying new cars. That’s why we’re seeing some of the decline.” It’s happening even as automakers boost discounts. Spending on incentives last month through April 16 reached a record for the month of $3,499, according to J.D. Power. One silver lining: Many passenger cars are now made outside the US, and that’s where the big output cuts would probably take place, Cornell University labor professor Art Wheaton said. “I think it will hit Mexico and Canada more than the US,” he said. “We don’t build a lot of cars in the US.” Bloomberg News

A10 Thursday, May 4, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

World leaders admire Duterte

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resident Donald J. Trump last Saturday invited President Duterte to visit Washington, during a call that the White House described as “a very friendly conversation”. In an instant, Trump’s friendly invite virtually ignited a firestorm, especially after Duterte shared details of their conversation. It was the second time the two leaders talked over the phone. In a brief phone call last December, Trump endorsed Duterte’s war on drugs, saying he was doing it the “right way”, according to the Chief Executive’s account of his first conversation with Trump. Democratic lawmakers slammed Trump’s initiative, saying, “President Trump weakens American values when he fails to stand up for human rights. By welcoming Duterte to meet with him in the White House, Trump risks giving Duterte’s actions—and his brutal humanrights violations—an American stamp of approval.” Republicans, however, defended Trump, saying the pushback by Democrats seemed a little hypocritical. “Where was the criticism from all of these Democrats when the Obama administration sent John Kerry to the Philippines to meet with Duterte nine months ago?” Republican National Committee Spokesman Michael Ahrens asked. However, American foreign-policy experts say having a working relationship with the Philippines is far different than showering praise on it and could have serious repercussions down the line. In other words, they are saying the US is a key economic and military ally for the Philippines. But that allegiance has been fraught since Duterte’s election. It could be recalled that Duterte once told former President Barack Obama to “go to hell” for criticizing his war on drugs. And during Obama’s last few months in office, Duterte sought closer economic ties with China and Russia while repeatedly threatening to cut military ties that had been in place for years with the United States. As far as the Republicans are concerned, there’s a need for Duterte and Trump to meet. Taking note of the two leaders’ apparent closeness on the phone, a White House statement said the alliance between the two countries is “now heading in a very positive direction”. Trump’s chief of staff, Reince Priebus, defended Trump’s invitation, saying “the US needs to deal with Duterte, despite his human-rights records, in order to help calm escalating tensions in North Korea.” The State Department said a “constructive relationship with the government of the Philippines is critical to supporting the frank and open communication that characterizes our longtime alliance”. Flattered as he is with Trump’s invitation, Duterte expressed concerns about not being able to fit in a visit to Washington. “I am tied up. I cannot make any definite promise. I am supposed to go to Russia, I am supposed to go to Israel,” he said. In a changing world order, it is refreshing to note that powerful leaders, like Trump, Vladimir Putin, Xi Jinping and Shinzo Abe, among others, want to be friends with Duterte. Clearly, these leaders are not shy to let the world know that they like and respect our President. Since 2005

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‘Interesting’ may become ‘dangerous’ John Mangun

OUTSIDE THE BOX

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hese are certainly extraordinary times and that may be an understatement. You can look at the situation on the Korean peninsula and maybe shake your head that it has come to this point. But you can also find an article from the American “progressive” news web site, “The North Korean economy is actually growing despite sanctions”. The Korea correspondent for The New York Times—Choe Sang-hun— chimes in with “The economy in North Korea is showing surprising signs of life”. Both pieces acknowledge that the authors have no idea about the actual economic output. But (from Choe) “there are now enough cars on its [capital Pyongyang] once-empty streets for some residents to make a living washing them”. He does not indicate whether these “car washers” will ever be allowed to own one. Apple Corp. just reported earnings and has cash holdings of $256.8 billion, more than the total

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T. Anthony C. Cabangon Jun B. Vallecera

guy named Galileo was threatened with torture when he disagreed with “98 percent of all scientists” and wrote that the sun did not go around the Earth. A visiting professor from Ireland —a woman and a genuine degreed scientist by the way—at a US university was called a “Goddamn idiot” for suggesting that washing machines were more liberating for women than the birth-control pill. Apparently, her critics send their clothes to a laundry—maybe operated by Chinese people—to have more time to enjoy the liberating benefits of their birth-control pills. There are going to be a whole lot of people totally burned out when the real Zombie apocalypse comes. Having written repeatedly about the coming together of several economic and political cycles, the intensity of the rhetoric and the behavior behind it is going to increase going into 2018. The problem is that “interesting” can turn into “dangerous” without warning. 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.

Choice of new BSP governor in Duterte’s hands

✝ Ambassador Antonio L. Cabangon Chua Publisher

economic output of New Zealand. But it is really not “cash” if us ignorant folks thought Apple keeps it in their “savings or current” account. It is really “in long-term marketable securities”, which is considered “cash”, but not “real” cash. We celebrated Labor Day in the Philippines. Everywhere else that the day is observed, it is “May Day”. The “holiday” was started as the “International Worker’s Day” in the US by the Communist and Socialist parties “to demonstrate energetically on the First of May for the legal establishment of the eight-hour day, for the class demands of the proletariat and

for universal peace”. And the demonstrations turned to rioting with the destruction and burning of public and private property in France and Portland, Oregon. “Universal peace” must have many meanings. It is not just the events that are interesting. Something else is going on. Alexander van der Bellen, Austrian president, says, “It is every woman’s right to always dress how she wants.” But then he says, “There will come a day where we must ask all women to wear a headscarf [the hijab]— all- out of solidarity to those who do it for religious reasons.” Am I the only one that thinks those ideas do not make any sense together? Look at the global press, the media and social media and the intensity of emotion on so-called issues is somewhat unprecedented and a little frightening. Brexit, Duterte, Donald J. Trump, Marine Le Pen in France and a host of other people and “causes” have taken discussion far beyond anything we would have normally considered rational. US scientist want-to-be and television host Bill Nye says he is openly favorable to the idea of jailing “global warming” skeptics at The Hague as “war criminals”. I thought we got past that thinking after an Italian

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f we go by the earlier pronouncement of Malacañang, we should have had a new governor of the Bangko Sentral ng Pilipinas (BSP) by now.

But, I guess, intervening circumstances, such as the country’s hosting of the Asean Summit, must have temporarily placed in the back-burner President Duterte’s final choice on who will replace BSP Governor Amando M. Tetangco Jr. Reports reaching BusinessWise reveal that Finance Secretary Carlos G. Dominguez III has submitted two names for the President to choose from. However, the President’s inner circle also endorsed two more, bringing the shortlisted nominees to four. Our sources are saying the President is still in the process of vetting each nominee, thoroughly checking their respective backgrounds. It will be interesting to see where the President will pick the right man for the job. Will he choose from among the names Dominguez submitted, or will he be swayed by the intense lobbying being mounted by people with whom he shares political affiliations? The central bank has, by tradition, kept its independence from the powers of Malacañang, and has rightly gotten the respect due it from past presidents.

To her credit, former President Corazon C. Aquino retained the late Jose Bartolome Fernandez Jr., the country’s sixth governor and widely seen as a close associate of the deposed dictator Ferdinand E. Marcos, from whom she wrestled the presidency through the peaceful and now globally acclaimed People Power revolution. She has chosen continuity over those who were being pushed by people close to her. Continuity was also the theme in the case of the late Rafael Carlos Baltazar Buenaventura who served as BSP governor from 1999 to 2005 under two Philippine presidents during one of the most riotous political changes in the country’s history. Known for his ferocious independence, Buenaventura was a regular target for removal from public office throughout his six-year term. His shrewd handling of both his detractors and supporters gave him the elbow room to accomplish key policy modifications at a time when political cataclysms were disrupting the country’s economic growth. By the end of his term, he had

managed to direct the financial system closer to global standards. Governorship of the central bank is a non-Cabinet position. It is not and should not be given as a favor or accommodation, and should similarly not be accepted just to kowtow to appointing authorities. As an institution, the central bank is a symbol of stability. In it rests the country’s economic future, and serves as the foundation of a stable and prosperous country. It will be a feather to Duterte’s cap if he chooses someone who will seamlessly continue the gains the country was able to achieve during Tetangco’s leadership. Tetangco has consistently pushed for someone from within the BSP ranks to inherit his mantle. Our sources are saying there are four nominees who have been shortlisted: insiders and deputy governors Nestor A. Espenilla Jr. and Diwa C. Guinigundo; former trade and industry chief and ex-Monetary Board member Peter V. Favila; and East West Bank President Antonio C. Moncupa Jr. Moncupa is with the ruling party’s PDP-Laban Research Planning and Development Institute and is also closely indentified with the Akbayan party-list, the Liberal Party’s ally in Congress. Of the four, my choice is Espenilla, the unsung central bank workhorse. I hope that the appointing authority sees through Espenilla’s low-keyed, but genuine, achievements. Under the media’s radar, he has proven to be an adept regulator and an economist who has strengthened the Philippine banking system such that the country’s banks are now considered to be among the fittest in the Asean. Our banks today have robust capitalization position, affording them

the resilience to absorb unforeseen shudders to the economy and bank customers. Espenilla graduated magna cum laude (Bachelor of Science in Business Economics) from the University of the Philippines. He has sculptured the country’s macroeconomic policy by transporting his exclusive viewpoint as the BSP’s main bank regulator to the decision-making process of the high-level BSP Advisory Committee on Monetary Policy. For instance, he has perfected BSP policies by connecting his path-breaking efforts in financial supervision to the promotion of an effective and efficient monetary policy at the backdrop of a rapidly developing financial system. As the chair of the bank supervision policy committee—the main platform for dialogue with various banking industry associations—he has established a culture of participation and feedback to aid in the crafting and communication of sound and efficacious bank regulations initiatives. After joining the BSP in 1981 and continuing as a working student in 1982, he steadily rose through the ranks until he was eventually appointed deputy governor in 2005. Along the way, he was able to accumulate more than 35 years of active operational engagement in all key facets of modern Philippine central banking—monetary policy, banking supervision and financial regulation, payment system oversight, capital markets development, currency management, consumer protection and financial inclusion advocacy—a feat that no other senior BSP official can claim.

For comments and suggestions, e-mail me at mvala.v@gmail.com

Opinion BusinessMirror

opinion@businessmirror.com.ph

Can President Duterte reverse the situation? Cecilio T. Arillo

database

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t’s embarrassing that after 50 years—20 years of President Ferdinand E. Marcos administration and 30 years of his successors, President Corazon C. Aquino, her favorite son Benigno S. Aquino III and the three other presidents between them— the Philippines still remains at the bottom of the five original countries of the Asean. By the way, Marcos spent in 20 years a total of P486.42 billion while his five successors splurged more than P35 trillion in 30 years of accumulated budgets. By comparison, Marcos, warts and all, had more to show in terms of economic infrastructure developments, including roads, bridges, irrigation, schools, housing, hospitals, electricity, potable water and other tangible and intangible accomplishments than any of his successors, or all of them combined. Based on the latest International Monetary Fund (IMF) data, here’s the per-capita income scoreboard in US currency: Singapore, $52,888; Malaysia, $9,501; Thailand, $5,742; Indonesia, $3,362; and the Philippines, $3,002. Of the five other Asean members, Brunei Darussalam remains at the top with $30,993; followed by Vietnam, $2,088; Laos, $1,787; Myanmar, $1,212; and Cambodia, $1,144. Consumer Price Index uses the US dollar as a reliable yardstick to measure the average income of people in one country compared with others, and is often used to determine a country’s standard of living and helps ascertain its GDP status. The question is why is the Philippines in this distressing condition compared to the four other progressive Asean countries? The answer is simple: the four countries care more about economics than they do of politics, have pursued rapid industrialization, research and development, independent foreign policies and took serious stand against corruption, insurgency, terrorism, drug abuse, smuggling and other crimes. While they were busy expanding their economic reach in the regional and global markets, the Philippines remained agrarian and feudal, and its highly adversarial politics further divided the country, spawning oligarchy, insurgency, separatism, terrorism and the worst drug-abuse problem in the region. When the five originally founded the Asean in August 1967, not one of them was an industrialized country. Today, the Philippines is the only one trapped in the preindustrial age, content as the biggest supplier of raw materials and contract workers to many advanced countries. Economists Pitou van Dijck, Harmen Verbruggen and Hans Linnemann discussed in detail the economic situation of the Philippines on a timeline of events in their book, Export-Oriented Industrialization in Developing Countries: “From 1950 onward, import substitution has been the principal policy

to promote industrialization in the Philippines. Initially, this strategy relied on a strict regime of controls on imports to relieve the pressure on the balance of payments. The import regime was aimed at a sharp import reduction of so-called nonessential products, identified as nondurable consumer goods. Hence, the high average annual growth rate of manufacturing production of 12.1 percent from 1950 to 1955 was mainly realized by the domestic production of substitution for consumer goods. “By the late 1950s, the domestic market started to impose serious limitations on further expansion. As a result, the manufacturing growth rate slowed down to 7.7 percent per annum from 1955 to 1960. In addition to the sluggish manufacturing growth, once again, the Philippines was faced with severe balance-of-payment problems in the late 1960s. “Faced with this predicament, the government devised policies to intensify industrial efforts and actively promoted exports. The Industrial Incentives Act of 1967 provided incentives mainly in the form of tax privileges for industrial investments, aimed at boosting export production. “The Act also extended other extra fiscal benefits, such as tax and dutyfree importation of materials, with the purpose of reducing the cost of inputs and increasing competitiveness for exports. As a consequence of the export promotion program, the level of protection for the domestic market was relatively high.” The authors further observed: “The shift to a more export-oriented strategy of industrialization in the early 1970s marked again the beginning of a decade of better growth performance. During the 1970s the manufacturing sector showed again a stronger performance with an average annual growth rate of production of 7.0 percent. The pattern of effective protection in 1974 favored manufacturing over agriculture and mining. Until the early 1980s, the industrialization and trade strategy remained essentially intact.” When Mrs. Aquino took over the presidency in 1986, she abolished the 1973 Constitution, demolished the Supreme Court, the parliament, deregulated the economy, adopted the policy of privatization and, thus, saw the country continued to retrogress until today, the 50th Asean anniversary. Can President Duterte reverse the situation?

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

The Shepherd-gate Msgr. Sabino A. Vengco Jr.

Alálaong Bagá

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raditionally known as “Good Shepherd Sunday”, the fourth Sunday of Easter portrays Jesus in his mission as both the shepherd and the gate of the sheepfold (John 10:110), looking after the welfare of the sheep. He has come that they may have life and have it in its fullness, a life in the peace and communion of God.

The true shepherd IN John, the gospel for the Fourth Sunday of Easter corresponds to the gospel of the Fourth Sunday of Lent. With the healing of the man born blind (John 9:1-41), the rejection of Jesus by the Pharisees became outright. The Jews, who claimed to see but were actually blind, judged the light, pronouncing that they did not know “where this one is from”. The man born blind saw and experienced Jesus in his compassion and believed in the Son of Man. In an immediate follow-up, the evangelist portrays Jesus in his mission of love and self-sacrifice as the Good

Shepherd, even as the biting contrast with the Pharisees refers to them as thieves and robbers who come only to steal and slaughter and destroy. The incomparable character of the mission of Jesus comes out in his encompassing and dedicated service to the flock entrusted to him by his Father. He is the true shepherd. He does not break into the sheepfold; he enters by the gate, unlike the thieves who try stealthily to get inside. The gatekeeper of the communal pen knows him and opens the gate for him. And his sheep, hearing his voice and as he calls them by name, readily follow

Tax Law for Business

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aivers of the defense of prescription in tax cases has been consistently characterized by jurisprudence as a derogation of a taxpayer’s right, and must, therefore, be strictly construed against the government. This has lead the Courts to invalidate waivers that do not strictly conform to the requirements mandated by the law and by Bureau of Internal Revenue (BIR) rules.

The advent of the case of Next Mobile v Commissioner of Internal Revenue, GR 212825, changed the complexion

of how defects in waivers have been appreciated by the Courts. In the case mentioned, the Supreme Court

him when he collects them from among the other sheep and leads them out, just as they would shy away from any stranger whose voice they do not recognize. As the legitimate shepherd, Jesus (compared unfavorably with Moses by the Pharisees—cf. John 6:30-33) leads all sheep out like a Moses in a new exodus for the good of God’s flock.

and disguised like a shepherd but out to steal and plunder the flock and bring destruction to the sheep. Completely unacceptable to Jesus would be “false prophets” who come in sheep’s clothing but actually are ravenous wolves underneath (Matthew 7:15). The evangelist notes that the Pharisees did not realize the point Jesus was making as he contrasted himself and them.

The gate of guarantee

Alálaong bagá, Jesus’ clear condemnation of those who do harm to the flock is together with the invigorating promise that as the gate guaranteeing the well-being of the flock, he gives the assurance to all that “whoever enters through me will be saved, and will come in and go out and find pasture.” Anyone who has communion with him and follows him is sure of belonging to God’s flock and shares in the salvation for which the crucified and risen Lord is the gate. But do we follow other voices today? Are we deceived by those who come to slaughter and destroy, leaders with messianic posturing too blind to see the right path? Join me in meditating on the Word of God

TO avoid any ambiguity, Jesus explicitly states “I am the gate for the sheep.” The shepherd is now the gate. This is not a mix-up in metaphors and figures of speech; the continuity of concept is obvious: the good shepherd literally becomes the gate as he posts himself at the entrance to the sheepfold to ensure the welfare of his flock. Jesus is not only the shepherd-leader sent by God like Moses who brings out the sheep to the needed pasture, he is the very “gate” guaranteeing the sure way for the flock. He is the only way to salvation. Jesus came so that we “might have life and have it more abundantly”. Anyone else before him or after him trying to fill up this role of necessary mediator would be an impostor, a thief pretending

DO 174 and the decline of unionism Dr. Rene E. Ofreneo

LABOREM EXERCENS Continued from A1

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EPARTMENT Order (DO) 174 is a product of a nine-month series of Department of Labor and Employment (DOLE) workshops on what should be the appropriate regulatory framework on job contracting based on the basic laws outlined in Articles 106-109 of the Labor Code. The DO raises the registration and capital requirements that legitimate manpower agencies must meet ostensibly to weed out the fly-by-night agencies. The DO also calls for the strengthening of the labor inspectorate system to enable DOLE to monitor labor abuses associated with the contracting out of work by principals to these third-party agencies. However, the DO has given legitimacy to “manpower cooperatives” by prohibiting the operations of “in-house cooperative”, one that is set up and/or managed by a principal; hence, the so-called cooperatives run independently by outside entities are presumed to be legit. Why are the unions so angry against DO 174? The answer is not difficult to find. The trade unions are adamantly opposed to any form of job outsourcing and labor contracting, which they blame for their thinning union ranks and eroding bargaining power. They also claim that the twin practices of job/work outsourcing to outside subcontractors and suppliers and the contracting of the services provided by third-party manpower agencies have caused widespread abuse of workers’ rights, such as the nonregularization of workers doing “regular and necessary” jobs; nonpayment of correct wages and benefits; nonobservance of labor standards, such as health and safety standards; and nonremittance of mandatory employee contributions to the government-run Social Security

System (SSS), Pag-Ibig Fund (housing insurance) and Philippine Health Insurance Corp. Employers, on the other hand, argue that business can not survive and grow in a competitive and globalized economic environment if they do not have the flexibility to outsource work and maintain a lean organization, including their ability to reduce the work force when needed. The demand for products and services fluctuates in the market, and so is their requirement for manpower. Employers cannot afford to have a big pool of regular or permanent workers, who are often difficult to downsize or separate from the service during economic downturns. The third actor in the industrial relations (IR) system—government—is naturally caught in the middle. The DOLE tries to maintain a balancing act

Defects in waivers: The general rule and exception Atty. Jared C. Vicencio

Thursday, May 4, 2017 A11

refused to invalidate the waivers of the defense of prescription, reasoning that the taxpayer in this case is as much to blame for the defects as the BIR. The Supreme Court (SC) also held the taxpayer accountable as it had continued to deal with the BIR despite causing some of the defects in the waivers. In other words, the SC applied the doctrines of in pari delicto and estoppel to the issue of the validity of waivers. Despite the explicit pronouncement from the High Court that the ruling embodied in the Next Mobile case is an exception, the doctrine found widespread application in the lower Courts. This had the effect of holding the defense of defects in waivers to higher standards. So long as taxpay-

ers failed to point out the defects to the BIR, the Courts continued to uphold the validity of the waivers, even if taxpayers had no participation in the defects themselves. A seemingly contradictory conclusion was reached by another recent SC decision in the case of Commissioner of Internal Revenue v Philippine Daily Inquirer, GR 213943, dated March 22. In the said case, the SC has struck down waivers of the defense of prescription for failure to conform to the requirements of law and the rules. In the said case, the High Court reiterated the time-honored principle that the BIR may not invoke the principle of estoppel to justify its lapses in the execution of waivers. The SC also reinforced the concept that waivers are a

every Sunday, from 5 to 6 a.m. on dwIZ 882, or by audio-streaming on www.dwiz882.com.

by declaring that, while it recognizes the employers’ prerogatives to outsource work and engage the services of manpower agencies to do noncore jobs, it also reaffirms all the basic rights of the workers under the Labor Code, including the right to tenure, due process and various mandated benefits, such as the minimum wage. The problem then is—how does one strengthen labor protection and institutionalize at the same time a regulatory framework on outsourcing and service contracting based on the declared DOLE policy of balancing the needs or interests of the two polarized industrial relations actors? The unions have been denouncing the extensive growth of labor or service contracting in the last three to four decades in the industrial, service and even agricultural (based on the formal wage system, e.g., plantations) sectors. This growth means the proliferation too of the “manpower agencies”, which provide a whole range of services within the company (or principal’s) work or business premises, ranging from the janitorial, security and catering (now all considered “justiciable” by the Supreme Court or noncontestable labor-contracting arguments) to virtually all areas of work—administrative, line production, packaging, messengerial, delivery, legal, infromation-technology, etc. In the 1980s and 1990s, the decision of firms on outsourcing was defined by the question: is it core or peripheral to the business? Today, it is difficult to distinguish whether the activity being outsourced is core or peripheral—because everything is virtually outsourceable, including marketing and HRD. Why the phenomenal growth of labor or service contracting? Economic globalization is the answer given by Dr. Bach Macaraya, a professor of the UP School of Labor and Industrial Relations. According to Macaraya, the Labor Code is “centered on the promotion of the

welfare of regular employment”, and yet, the reality under globalization is that regular employees are now a distinct minority and are getting fewer and fewer. There has been the widespread use by formal enterprises of labor contracting or job/service contracting to downsize regular employment so that these enterprises can respond more nimbly to the challenges of global competition. Most of the agency hires are classified as nonregulars—either deployed as “project workers” or as “5-5 workers” or endo rotated in different work sites. This is the basis of the union lament—agency hiring is an instrument for casualization or “contractualization” of the work force. In turn, the growth of agency hiring contributes to the decline of unionism. According to a 2016 study by the Labor Education and Research Network, “union density” has “declined significantly from 26.2 percent in the 1980s to 8.5 percent in 2013”. Union decline is notably felt in terms of collective bargaining coverage—600,000 workers covered by CBAs in the first half of the 1990s to around 300,000 or less despite the growth of the labor force. So what can be done to arrest the decline of unionism and strengthen the right of workers to form associations freely and engage in concerted activities to advance their collective interests? Obviously, this is not easy to answer, given the realities in the labor market and the economy today. However, the Constitution, under Section 3, Article XIII, is quite clear: all workers, regular or nonregular, formal or informal, have equal rights in the enjoyment of basic freedoms. No exceptions. These include the right to form associations for self defense and advance their common interests. Formulating the enabling laws and regulations so that all workers can enjoy these universal rights is a government task still waiting to be fulfilled.

derogation of the rights of a taxpayer, and, thus, must be construed strictly against the government. A closer examination of the doctrines as embodied in the Next Mobile and the Philippine Daily Inquirer cases will show that the two do not necessarily clash. As mentioned earlier, the SC explicitly mentioned that its decision in the Next Mobile case applies pro hac vice, that is, the ruling therein applies, given the particular set of facts in the said case. On the other hand, the Philippine Daily Inquirer case reinforces the oft-repeated principle that waivers of the defense of prescription is to be strictly construed against the government. In other words, the Philippine Daily Inquirer is a reiteration of the general

rule that waivers must faithfully comply with requirements under the law and rules. Being of recent application, it frames the doctrine found in the Next Mobile case in proper perspective: as an exception applicable only to a strict set of circumstances.

The author is a junior associate of Du-Baladad and Associates Law Offices (BDB Law), a memberfirm of WTS Global. The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported, therefore, by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at jared.vicencio@ bdblaw.com.ph or call 403-2001 local 370.

2nd Front Page BusinessMirror

A12 Thursday, May 4, 2017

www.businessmirror.com.ph

Lopez blames ‘business interest’ for CA rejection

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By Butch Fernandez By Jonathan L. Mayuga

@butchfBM @jonlmayuga

he Commission on Appointments (CA), voting 16-8 on Wednesday, thumbed down President Duterte’s nomination of environmentalist Regina Paz L. Lopez as secretary of the Department of Environment and Natural Resources (DENR). Facing reporters following her rejection by the lawmakers sitting in the CA, Lopez suggested that Duterte instead take over the DENR in concurrent capacity to confront powerful “business interests” de-

stroying the environment. “It is the constitutional right of every Filipino to have a clean env ironment,” she sa id. “My choice for the [now vacant] DENR post is President Duterte...he

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The number of CA members who voted to reject Lopez’s confirmation as DENR chief has the authority.” Lopez added: “I can not think of another person for the DENR post... it needs total tapang because you step on business interests.” She continued to justify her controversial imposition of additional fees on mining companies despite the absence of an enabling law. “What’s wrong setting aside P2 million for people affected by

mining operations?” In parting, the rejected Cabinet nominee also took a dig at the 16 CA members who voted against her confirmation. “If lawmakers are influenced by business interests, that is wrong.” One of her supporters, Sen. Franklin M. Drilon (LP), told reporters the Liberal Party members sitting in the CA voted for Lopez but fell short of mustering enough votes to confirm her nomination. “The LP contingent voted as a bloc to confirm her, unfortunately [it was not enough],” Drilon said. He conceded that Lopez would have to step down and give up the post to another nominee. “She can no longer be reappointed to the same post because the CA rejected the appointment,” the senator

ADB commits to finance $770M worth of water projects in PHL By Cai U. Ordinario

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@cuo_bm

OKOHAMA, Japan—The Asian Development Bank (ADB) will extend $770 million worth of financing for waterrelated projects in the Philippines for the period 2017-2019. In a briefing here on Wednesday, ADB Sustainable Development and Climate Change Department Deputy Director General Amy S.P. Leung said these projects are part

of the bank’s efforts to increase its water financing starting this year. Leung said the ADB will hike its financing to $4.2 billion in 2017, from $2.4 billion in 2016. The Manila-based lender aims to extend $13.27 billion worth of financing for water projects across all its developing member-countries between 2017 and 2019. “Our focus for this year is to scale up and expand our water projects. We will continue to promote more innovative and trans-

formative technology in water projects,” Leung said. The ADB will finance five projects, including the $100-million Mindanao Development Program (formerly Bangsamoro Development Program) this year, as well as the $70-million Solid Waste Management Sector Project and $100-million Metro Manila Water and Sanitation Program (formerly Metro Manila Wastewater Improvement Project) in 2018. For 2019, the ADB will finance

the $100-million Angat Water Transmission Improvement Project, Phase 2 and the $400-million Lake Laguna Flood Management/ Integrated Water Resource Management Program. For 2017, the bu l k of the ADB funding will be allocated for irrigation and drainage at $1.5 billion, or 38 percent of the total, followed by water supply, sanitation and waste management at $1.4 billion, or 35 percent of the total. The amount will also cover financing for hydropower generation at $530 million, or 13 percent of the total; water resources management, wetlands and watershed protection, $365 million, or 9 percent; and flood management, $256 million, or 6 percent. “The growth is very encouraging. We are also supporting private-sector investment in water so there are a number of really interesting water projects,” Leung said. Based on the ADB’s Asian Water Development Outlook (AWDO) 2016, the Philippines remains water insecure and, as such, stands to lose as much as 2 percent of its GDP every year because of this dilemma. The Philippines is considered one of the most water-insecure countries in the Asia and the Pacific region, with an overall score of only 40.4 out of 100. Ensuring water for all is Goal 6 of the Sustainable Development Goals (SDG). The goal aims to achieve universal and equitable access to drinking water by 2030, among other targets. The AWDO 2016 uses the latest available data to assess water security in five key dimensions (KD), namely, household access to piped potable water and improved sanitation, where the country scored 9.3 out of 20; economic water security, 11.4 out of 20; and providing better urban water services to build more livable cities, 5 out of 20. The key dimensions also include restoring healthy rivers and ecosystems, where the country scored 8 out of 20, and resilience to waterrelated disasters, 6.6 out of 20. The report stated that Philippine cities are among those in the region that face the most challenges in providing water to its residents. Due to poor supply, the Philippines is among the countries that have the lowest urban water-security scores in the Asia-Pacific region, along with Vietnam, Bangladesh, Pakistan and Myanmar. Ensuring sufficient supply of clean water in cities is also crucial in achieving, SDG 11, which aims to make cities and human settlements inclusive, safe, resilient and sustainable.

said, even as he clarified all is not lost for the rejected Cabinet nominee. “This is not a perpetual disqualification because Lopez can still be appointed to another Cabinet post.” Apart from Drilon, other CA members who voted for Lopez losing bid for the DENR post were: Sens. Francis N. Pangilinan, Ralph G. Recto, Paolo Benigno A. Aquino IV, Loren B. Legarda, Joseph Victor G. Ejercito and Vicente C. Sotto III, and Rep. Rosenda Ann Ocampo of the Sixth District of Manila. Lopez, an environmental advocate, is the second Cabinet secretary of Duterte rejectedby the CA after Perfecto R. Yasay Jr. whose appointment as Secretary of the Department of Foreign Affairs was rejected for lying about

his dual citizenship. The DENR chief is strongly opposed for being strict against mining operations, for ordering suspension and closure orders while ignoring alleged “slap-in-the-wrist” penalties recommended by her own audit teams. Several companies resent her policy pronouncements to promote social justice, stop environmental degradation and prevent people in mining communities from suffering as “biased against mining industry, lacking due process and an abuse of power and authority”. The mine audit ordered by Lopez last year subsequently caused the closure and suspension of 28 operating mines for failing environmental standard based on a criteria See “Lopez,” A2

GRADUATES OF METRO MANILA-BASED SCHOOLS ABSENT IN BAR’S TOP 10 By Joel R. San Juan @jrsanjuan1573

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OR the first time in the history of the Bar, none of the graduates of the top law schools based in Metro Manila landed in the top 10, the 2016 bar examinations results released on Wednesday showed. Bar Examinations Committee Chairman Associate Justice Presbitero J. Velasco Jr. announced that Karen Mae L. Calam, a graduate of the University of San Carlos, topped this year’s bar examinations with the highest overall rating of 89.05 percent. “I am still shocked and very thankful. I didn’t expect I’m really the top 1, although I prayed for it from God. I don’t have any plans yet. I’m considering going to private practice,” Calam said. A total of 3,747 of the 6,344 law graduates that took the 2016 bar examinations passed. This translates to 59.06-percent passing rate, almost doubling the 26.21percent passing rate in the 2015 bar. For mer Busin e ssMirror reporter David Ricardo S. Cagahastian, who covered the Malacañang beat, was among those who passed. Bar Confidant lawyer Christina Layusa noted “it is the first time that not a single Metro Manila-based school placed in the top 10”. University of San Carlos had four graduates in the top 10, while Silliman University had three. Others who made it to the top 10 were Alanna Gayle Ashley B. Khio, (Silliman University, 88.95 percent); Fiona Cristy D. Lao (University of San Carlos, 88.8 percent); Athalia B. Liong (Andres Bonifacio College, 88.8 percent); Allana Mae A. Babayen-On (University of San Agustin, 88.75 percent); Justin Ryan D. Morilla (Ateneo de Davao University, 88.4 percent); Mark Dave N. Camarao (Northwester n Universit y, 88.1 percent); Anne Margaret E. Momongan (University of San Carlos, (87.8 percent); Jefferson L. Gomez (University of San Carlos, 87.7 percent); Nia Rachelle M. Gonzales (University of Batangas, 87.5 percent); Marie Chielo H. Ybio

(Siliman University, 87.5 percent), and Andrew Stephen D. Liu (Siliman University, 87.45 percent). Velasco also announced that the oath taking of the successful bar candidates will be held on May 22 at 3 p.m. at the Mall of Asia Arena. The bar examinations are given only once a year at a designated venue under the supervision of the Supreme Court (SC), which designates an incumbent Justice to chair a committee consisting of eight examiners, one for each bar subject. Under Rule 138, Section 9 of the Rules of Court, the coverage of the bar examinations includes the following subjects: political law and public international law (15 percent); labor and social legislation (10 percent); civil law (15 percent); taxation (10 percent); mercantile law (15 percent); criminal law (10 percent); remedial law (20 percent); and legal and judicial ethics (5 percent). T he c h a i r m a n o f t he Annual Bar Examinations is given the discretion by the SC to choose the eight bar examiners who are considered as experts in their particular fields and, during the entire duration of the bar examinations, are bound by strict confidentiality. Of the 6,831 admitted to take the exam, 477 examinees did not show up on the first Sunday of the bar, leaving 6,354 who actually took the exams on the first Sunday. After the fourth Sunday of the bar, only 6,344 examinees completed the examinations conducted in the four Sundays of November. This is the highest since 2000. It also showed that since 2000, the highest passing rate was in 2011, when 31.95 percent of those who took the exams passed, with Ateneo de Manila’s Raoul Atadero topping the bar. In the 2015 Bar exams, a total of 1,731 passed, representing 26.21 percent of the total of 6,605 candidates who completed the exams. A graduate of the University of the Philippines College of Law topped the 2015 bar exams with a rating of 87.4 percent. The SC lowered the passing rate from 75 to 73 percent in the 2015 bar exams.