Businessmirror may 04, 2018

‘Biwc customers don’t need discharge permits’

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By Ma. Stella F. Arnaldo | Special to the BusinessMirror

PHOTO by brix Villaruel

HE Department of Environment and Natural Resources (DENR) clarified that establishments on Boracay Island don’t need to secure a discharge permit from the agency if they are already connected to the island’s main sewer line. Continued on A2

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Sameer Khatiwada and Elisabetta Gentile, economists at the Economic Research and Regional Cooperation Department, Asian Development Bank, brief the members of the press on the “Asian Development Outlook 2018: How Technology Affects Jobs” at the 51st ADB annual meeting. NONOY LACZA

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Friday, May 4, 2018 Vol. 12 No. 202

Bernard Woods, director, SPRA, ADB; Cristelle Pratt, deputy secretarygeneral, Pacific Islands, Forum Secretariat; and Ernesto Pernia, secretary of socioeconomic planning, National Economic and Development Authority, at the forum on “ADB’s Performance in Transition to Strategy 2030: The 2017 Development Effectiveness Review.” NONOY LACZa

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AMRO Director Junhong Chang and Bangko Sentral ng Pilipinas Governor Nestor A. Espenilla Jr. at the Amro-BSP joint seminar “Asia’s Emergence in the New World Order: Growth, Integration and Resilience.” Nonie Reyes

NATIONS URGED TO HIKE INVESTMENTS IN INNOVATION

AT the joint seminar of the BSP and Amro are (from left) Diwa C. Guinigundo, Central Bank deputy governor for the monetary stability sector; Dr. Hoe Ee Khor, Amro chief economist; Mitsuhiro Furusawa, deputy managing director of the International Monetary Fund; and Yasuyuki Sawada, chief economist of the ADB. Nonie Reyes

Aging Asians to slow I region’s growth–ADB A ASIAN UNITY URGED VS. What happened to Davidson Bangayan a.k.a. David Tan?

Dr. Jesus Lim Arranza

By Cai U. Ordinario

@cuo_bm

rapidly aging population does not bode well for Asian economies, according to the Asian Development Bank (ADB). This is also true for the Philippines, which is currently enjoying the benefits of having a young population.

In a report, titled “Tapping Technolog y to Ma x imize the Longevity Dividend in Asia,” the ADB said even countries like the Philippines should already start preparing for the increase in older populations. The report indicated that the increase in the number of elderly Filipinos by 2021 to 2030 would have an adverse impact on economic growth.

PESO exchange rates n US 51.8670

“ This is an issue for every country globally and especially in our region. And the way it will play out, some of the countries like China, Singapore, Thailand, Vietnam and Sri Lanka will face this difficult [challenge],” ADB Chief of the Social Development Thematic Group Wendy Walker said in the forum, “ADB Insights Adapting to An Aging Asia: Building Opportunities to Support the Longevity Revolution,” held on Thursday in Manila. “Others will take longer, such as Indonesia, but they will have larger older popu lations and that it will be a challenge going for ward,” Walker added. T he rapid ag ing in A sia, Wa lker told the BusinessMirror, could be traced back to the re produc t ive -he a lt h pol ic ies implemented in var ious countr ies in the reg ion. A rapid ly ag ing China, she noted, was cer tainly brought about by its one-child polic y. This is the reason University

of Asia and the Pacific (UA&P) School of Economics Dean Cid Terosa said it is no longer advisable for the Philippines to continue cutting its fertility rate. T h e Ph i l i p p i n e St at i s t i c s Authority (PSA) said fertility refers to the average number of children that would be born alive to a woman—or group of women—during her lifetime if she were to pass through her childbearing years conforming to the age specific fertility rates of a given time period. The National Economic and Development Authority (Neda) said the country’s total fertility rate has declined to 2.7 children in 2017, from 3 children in 2013. “L ower popu l at ion g row t h a nd fer t i l it y rate w i l l hasten t he ag i ng of t he popu l at ion a nd c ut t he econom ica l ly act i v e p o p u l at i o n , w h i c h c a n negat ively a f fect product ion in t he long r u n,” Terosa told t he BusinessMir ror . See “Aging,” A2

must have been so preoccupied with my various advocacies and work that I didn’t even notice the years that passed since I appeared in one of the Senate Committee on Agriculture hearings on rice smuggling, where I identified a certain Davidson Bangayan as the same person as David Tan, the alleged big-time rice smuggler, after government investigators on the rice-smuggling issue practically faced a blank wall on the real identity of David Tan. Continued on A9

U.S.-CHINA TRADE WAR By Bianca Cuaresma @BcuaresmaBM

& Elijah Felice E. Rosales @alyasjah

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REATER openness and cooperation among Asian nations could protect the world’s food bowl from fallout in the trade tiff between the two largest economies of modern civilization. Industry leaders and economic stakeholders are adamant to keep the region’s trade flow open to the world. They are now looking to strengthen intra-regional trade and further boost openness to protect the bloc from protectionism advances, particularly from the United States. Continued on A2

Asian Development Bank (ADB) President Takehiko Nakao answers questions at the 51st ADB annual meeting. NONOY LACZA

n japan 0.4722 n UK 70.4354 n HK 6.6077 n CHINA 8.1514 n singapore 38.8168 n australia 38.8691 n EU 61.9966 n SAUDI arabia 13.8304

Source: BSP (3 May 2018 )

BMReports BusinessMirror

A2 Friday, May 4, 2018

Workers demand safeguards in ADB-funded infra projects By Elijah Felice E. Rosales

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@alyasjah

EMBERS of the Building and Wood Workers’ International (BWI) always knock on the proverbial wood.

Most of them do so, so that laborers for infrastructure projects funded by the Asian Development Bank (ADB) would remain safe and secure in their jobs. On T hursday their leaders knocked on the doors of Takehiko Nakao, president of the multinational financial institution. In that consultation, they remained adamant that the ADB institute mechanisms to safeguard laborers employed in ADB-financed infrastructure projects. In an interview with the BusinessMirror, BWI’s Apolinar Z. Tolentino said they are pressing the ADB to issue an operational manual explicitly recognizing basic labor rights. “We would like to have a distinct labor safeguard,” said Tolentino, regional representative of the Geneva-based BWI. “It is extremely important for the ADB to have it adopted because it will be relevant to workers employed

by the ADB-funded projects in many places in the region, such as Pakistan, Nepal and Bangladesh.” He labeled these countries as having national laws on labor rights that are “very weak,” both on paper and on enforcement. This, for his group, is reason enough for the ADB to put on paper a manual indicating labor safeguards it can guarantee to laborers working on its projects. “ T hese countr ies are chall e n g i n g e s s e nt i a l l y b e c au s e their nationa l laws on labor rights are very weak, even the enforcement. This is a platform for workers and trade union organizations like us to rectify the violations of fundamental workers and trade union rights on basic provision from personal protective equipment, hard-hat helmets, harness, to coverage on minimum wage and social insurance of these countries,” Tolentino said.

“The more important thing is to guarantee their rights to exercise self-organization and collective bargaining. If the ADB will have this very explicit based on the international core convention, then it will be good for the welfare and interest of workers,” he added. Tolentino explained that the g uidelines for workers’ r ights can be enshr ined in t he soonto-be issued Strateg y 2030, the ADB’s long-term framework for economic development. However, he sa id it w i l l be more encompassing if t he A DB issues a stand a lone operationa l manual that indicating the severa l r ights of workers and t he bank ’s commitment to g rant basic labor r ights. According to the labor leader, his group recorded several violations of workers’ rights in Bangladesh, India, Mongolia and Nepal. In the Philippines he said there are communities that were displaced due to ADB-bankrolled infrastructure, but “we don’t have yet a new case of workers’ rights violated.” T he Federation of Free Workers (FF W ), one of BW I’s Ph i l i p p i ne a f f i l i at e , s h a re d t he sentiment of its associate organization. FFW’s Danilo A. Laserna said they have long been urging the

ADB to integrate international labor standards in all its financed projects, from the simplest—such as health and safety of const r uc t ion workers —to the most radical—right to collective bargaining, granting of minimum wage. “Right now, because the labor movement’s dialogue with the ADB is continuing, we are informing them of isolated cases of labor violations in their projects. However, it is a fact that safety standards in ADB-financed construction projects are not observed. Workers are also denied the right to self-organization and collective bargaining because they are just contractuals,” Laserna, in English and Filipino, told the BusinessMirror. Laserna, FFW vice president for Education and Training, advised the ADB to implement a more stringent monitoring of contractors it hires in its projects. He said some of these contractors pay workers less than the minimum wage and does not provide them with personal protective equipment. The sad part for the Laserna is that their call for ADB to adopt safety regulations and recognize workers’ rights seems to fall on deaf ears. He said he hopes in the coming days, things will be a little different.

‘BIWC customers don’t need discharge permits’ Continued from A1

In a text message to the BusinessMirror, DENR Undersecretary Maria Paz G. Luna, officer in charge for Manila Bay Concerns and Related Water Concerns, said, “As long as they [the establishments]have no other discharge, then no more [they don’t need a discharge permit].” This was echoed by Acs Aldaba, operations manager of the Boracay Island Water Co. (BIWC), which provides the main water and sewerage system on the island. “Nope [they don’t need a discharge permit]. Their certificate of connection from us will suffice.” She admitted that BIWC customers are also confused by the recent pronouncements made by the DENR. “Even if they are already connected to [our sewer line], they are being told to apply for a discharge permit,” she said.

Aging. . .

Continued from A1

The UA&P economist also said that instead of spending for the spread of contraceptives, the government should invest in education, particularly of women. He said studies have shown that “education is a natural way

The confusion arose after DENR Undersecretary Jonas R. Leones said in an interview that even if a company is connected to a sewer line, it still needs to secure a discharge permit. (See, “Violators of environmental laws must show evidence of innocence,” in the BusinessMirror, April 30, 2018.) As this developed, the Department of the Interior and Local Government (DILG) has formed inspection teams to conduct a more comprehensive examination and assessment of all establishments on Boracay Island. In a text message, DILG Assistant Secretar y Epimaco V. Densing III assured owners of resorts and other commercial establishments on the island of more orderly and streamlined inspections, after many complained of confusing and sometimes differ ing requirements

asked of them by the DENR. “ The team has already a system in place. There were three teams that had workshops in Boracay [on how to conduct the assessments]. At the end of the exercise, if the establishment hasn’t violated any rules, a tarp will be hung on their establishment that says ‘I saved Boracay.’” He said the inspection teams will also include representatives from the DENR but, “the inspections will be more comprehensive and will include BIR [Bureau of Internal Revenue] registration. The permit from the DENR is just one aspect.” Other members of the inspection teams will include representatives from the DILG, as well as the local government units, including the Bureau of Fire Protection, to check that each establishment has the necessary permits required to operate their

businesses, he said. This includes environmental clearance certificates, business permits, sewer line connection certificates and fire safety inspection certificates, among others. Members of the interagency Task Force Boracay have hinted that Boracay could be reopened in four months if certain milestones will be met. But Tourism Undersecretary for Public Affairs and Special Projects Katherine S. De Castro said in a news conference, “Before we can even consider a hotel open for soft opening, they should undergo DOT accreditation first, that’s very, very important.” She added, “We will be also i nv it i n g m ay b e a m i n i mu m number of tourists to come to the island,” for the soft opening. But, she said, the DENR has to first announce the carr ying capacity of Boracay.

of managing the population since educated people usually weigh the costs and benefits of decisions to have children.” However, Neda Undersecretary Rosemarie G. Edillon told the BusinessMirror that while it is true that an aging population can slow down growth in the country, the Philippines is far from becoming an aging society.

Edillon said this means there is still a need for a reproductive health program that can help families better provide for their children moving forward. Earlier, Socioeconomic Planning Secretary Ernesto M. Pernia said that if the reproductive health law is fully implemented, the government can help mothers limit the number of their children to the desired number of three. In terms of poverty reduction, making this happen for the poorest 20 percent of women or mothers, poverty incidence could decline by 1.5 percentage points in just one year. Pernia said that if the poorest 40 percent of women and mothers are able to bring down the number of their children to 3, the reduction in the poverty rate could be close to 3 percentage points. “We want to be able to invest adequately in the quality of human capital. However, the primary responsibility falls on the parents. We think that their capacity to adequately care for their children is reflected in their desired number of children. And the government intends to help them meet this re-

sponsibility,” Edillon said. The ADB report disclosed that the share of senior population aged 65 and over will almost double to 18 percent in 2050, from 9.2 percent in 2020. The ADB said some countries will experience a drastic reduction of its working-age population (ages 15-64), as well as the aging of the current workforce. The report noted that countr ies can help senior citizens continue being productive and extend their longevity by turning to technology. This means governments in the region must increase their investments in technological innovations. ADB experts also said countries must explore the possibility of introducing changes in their labor markets, such as hiring more seniors. But countries must ensure that they are given safety nets, such as health-insurance coverage, whichh does not only cover acute d iseases but a lso chronic diseases. The forum was held during the 51st Annual Meeting of the ADB Board of Governors, which kicked off on Thursday.

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ASIAN UNITY URGED VS. U.S.-CHINA TRADE WAR Continued From A1

Trade protec tionism, par ticularly the barriers put up by the US in recent months, is a central theme in the 51st Asian Development Bank (ADB) Annual Meeting on Thursday and has been flagged as one of the “most pressing risks” to the entire region’s economy in the near term. The push and pull between the two largest economies in the world is seen to inevitably effect collateral damages on the emerging growth of the Association of South East Asian Nations (Asean), including China, Japan and Korea (Asean+3), according to a simulation made by Asean+3 Macroeconomic Research Office (Amro). The Singapore-based think tank’s representatives said in one of the sessions in the ADB Annual Meeting that the dawn of the economic powerhouses’ trade war will inevitably cause losses in the trade within Asia; with the level of importance of the US market for the region dwindling.

Growth reduced

AMRO Director Junhong Chang said more advance economies in the Asean+3, which are more skewed toward export-driven growth, will likely see a 0.4-percent to 0.8-percent reduction in overall growth. Chang added that emerging market economies in the region may also see their growth scaling down by as much as 0.5 percent should the currently proposed trade barriers set up by China and the US come into fruition. “For the affected economies, the absolute size of the expected loss in trade to China and the US and its multiplier effects are crucial,” the Amro said in its report. “Although China’s exports to the US are a relatively small share of its own GDP and similarly for the US, the size of the ‘collateral damage’ could be much more significant for other smaller countries relative to growth.” Aside from slower growth, closed trade pathways could also hike capital goods prices due to higher tariffs and, thus, introduce greater investment uncertainty. Disorderly adjustments in trade relations are also seen to have adverse implications on the region’s employment figures.

Export hit

THE Philippines would take the most damage in its export market in the next months if the trade conflict between the US and China escalates, an international financial analyst told the B usiness M irror. This, in spite of the strong relations the country has with the two superpowers and its existing free-trade deals. In an interview, DBS Bank Managing Director and Chief Economist Taimur Baig said developing countries in Asia is at risk of taking collateral damage from the looming trade war between the US and China. He cited as example the Philippines, which is heavily exporting and importing from the world’s two largest economies. “The Philippines is not heavily embedded into the regional supply chain, so it will remain largely unscathed in the US-China trade war,” Baig told the B usinessM irror. “At the same time, if the trade war lead to some sort of a negative impact on global growth, given that [the Philippines] is a fairly open economy, it will be impacted.” Similar to exporters’ concern, Baig said Manila may see its exports get hurt if an all-out trade conflict escalates between Washington and Beijing. “I remain worried about the overall negative impact trade-related friction all emerging market-economies, the Philippines being one of them given its open nature,” he added. Exporters, particularly the semiconductors industry, are worried of a fallout given that the US and China are top export destinations for the country’s electronic products. Baig said if the US carries on with its barriers race, the Philippines might lose one large market for its top export product—and, alarmingly, might not find an alternative destination.

Little consolation

IF there is one hope for free trade, Baig said it is the continued respect of the US of the multilateral trading system and the possibility it might not carry on with its plan to lean toward protectionism. He explained Washington’s imposition of stiffer tariffs on steel and aluminum products does not signal the fall of the trading system promoted by the World Trade Organization (WTO). “I think, even as far as the US is concerned, they will use bilateral in certain areas and

multilateral in certain other areas. For example, on the issue of subsidizing stateowned enterprises, which is something the Americans want to push through against the Chinese, they have the Europeans and the Japanese on their side. They will probably bring measures to the WTO,” the economist said. He added this is the hope for the free-trade world, that the US will revert to multilateral trading system and abandon protectionism. “After all, there are no gains under a protectionist system,” Baig said.

Closeness, connections

BANGKO Sentral ng Pilipinas (BSP) Deputy Governor for the Monetary Stability Sector Diwa C. Guinigundo said the Philippines, in particular, will be hit with ongoing trade wars due to its traditional closeness with the US and its growing connections with China. In particular, Guinigundo made mention of the Philippines’s exports to the US accounting for 15 percent of the total, while exports to China account for 11 percent. Imports, meanwhile, is at 8 percent from the US and 18 percent from China. Th e d e p u t y g ove r n o r a l s o s a i d international financial institutions should weigh in on the issue and that they should make a stand in the issue. As for the Philippines’s individual growth, Guinigundo said the country is looking to rev multiple engines of growth to further mute the effects of trade issues to the overall growth of the local economy—particularly beefing up the services sector and banking on the gains from the infrastructure reform boost.

Bucking the trend

THE Amro report reflects Baig’s views: Asia won’t win in the protectionist tack of the US. And based on the report, the region is certain it will not follow suit and keep its doors open to global trade. “The region should resist any form of trade protection and should remain open and integrate,” Amro Chief Economist Khor Hoe Ee said. “The region has always been very open and I think the region is committed to being open.” Chang also said that while opening trade seems to be a vulnerability in recent times, the region is continuously reminding itself of the importance of free trade and its ability to spur economic growth in several economies.

New strategies

POLICY recommendations given in the ADB Annual, Meeting include the strengthening of intra-regional trade as this could cushion the protectionist challenge. Amro in particular said that as a region, their key recommendation is to strengthen intraregional connectivity and integration. “Strengthening intraregional connectivity through improving physical infrastructure and trade facilitation would improve the competitiveness of global value chains that have already formed within the region. This would make the whole network of intraregional value chains more resilient against shocks,” the think tank said adding that this is important to leverage on with he rise of demand within the growing region. Specific policies toward this include reducing costs of impor ted inputs, establishment of special economic zones improving infrastructure and invest in connectivity in the region.

Nakao’s recommendations

IN his only news briefing at the ADB Annual Meeting on Thursday, ADB President Takehiko Nakao also expressed openness and unity as the Asian way in the face of the US and China trade war. Nakao told reporters that an open regime in terms of trade and investment has been the driving force behind Asia’s economic success. To avert any negative impact, Nakao said the region’s efforts should be geared toward opening trade and investment, as well as concluding discussions for the Regional Comprehensive Economic Partnership (RCEP) and/or the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). “Of course trade disputes [will have a] negative impact, [especially] if it is escalating,” Japan’s former Vice Minister of Finance for International Affairs said. “So it’s very important for the countries to continue to have utmost effort to make their economies open in terms of trade and investment and also to make cooperation to further the trade arrangement like RCEP or TPP or so on and so forth,” Nakao added. With Cai U. Ordinario

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Editor: Vittorio V. Vitug • Friday, May 4, 2018 A3

No basis for Cayetano to give up post–senator

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By Butch Fernandez

@butchfBM

enate President Pro Tempore Ralph G. Recto took up the cudgels for a former colleague, beleaguered Foreign Secretary Alan Peter S. Cayetano, amid a brewing controversy ensuing from a Department of Foreign Affairs (DFA) team’s successful rescue of distressed overseas Filipino workers (OFWs) detained in Kuwait. “There is no basis to call for Secretary Cayetano’s resignation,” Recto said, adding, “It is wrong to call for his resignation. It undercuts our current posture of being more assertive in helping our OFWs,” he added. In a news statement issued on Thursday, Recto wondered why Cayetano is being asked to resign. “His [Cayetano’s] men rescued two Filipinas in distress. He didn’t bomb a country, nor did he invade another,” Recto said, pointing out that “at a time when countries use might to enforce their will, the worst that the rescue inflicted was a pinprick on diplomatic niceties.” While Recto acknowledged that it was “improper” to officially upload the video of the OFW rescue mission, he asserted “it is equally wrong to equate it as a major diplomatic faux pas” that would warrant Cayetano’s resignation. The Senate leader notes that Cayetano, in pursuing the Philippines’s interests, has “mastered the art of stepping on toes—with the other person thinking that he is playing footsies.” But, Recto added, there are times when Cayetano and his men have to “kick down some doors, especially if these block the path to freedom for our compatriots.”

Recto also clarified that the “aggressive defense of our abused countrymen is no vice; it is a virtue.” “When thousands of our OFWs await repatriation, when thousands of them have sought sanctuaries from abuse, when almost 5,000 of them are behind bars or facing charges, some audacity in representing them is needed,” the Senate President Pro Tempore said, even as he acknowledged “there are times when diplomats pretend to be doormats, [and] there are times when they have to be matadors.” Philippine Ambassador to Kuwait Renato Villa flew in from Kuwait to Manila on Wednesday night after being declared “persona non grata” by the host government. Kuwait was apparently offended by a video that went viral on social media and released by Philippine government officials showing the rescue of distressed Filipina domestic helper. Villa was welcomed at the premier

airport by Cayetano before midnight after disembaking from a Philippine Airlines Flight PR 699 from Kuwait. Villa said he has done “an appropriate action” to save the life of a Filipina domestic helper from the hands of her abusive employer. The rescue for the distressed Filipina domestic helper, who was reportedly being abused and maltreated by her employer, was caught on video and went viral on Facebook last month. The Kuwaiti government retaliated by declaring Villa persona non grata over what it called “inappropriate behavior” by the Philippine diplomatic staff who was shown in the video conducting a rescue of an overseas Filipino worker being abused by her employer. Cayetano said that the rescue operations were appropriately coordinated with Kuwaiti authorities. Cayetano later apologized to the Kuwaiti government, saying that the country’s actions were done “in the spirit of emergency to protect [a distressed] Filipina domestic helper.” Villa said a group of Filipino workers saw him before he left as the oneweek deadline set by Kuwait ended. President Duterte has canceled the deployment of Filipino workers to Kuwait following the murder of a Filipina domestic helper, whose body was found inside the freezer of her employer. The Syrian couple have been arrested and sentenced to death and have reportedly offered “blood money” for their release. The family of the slain domestic helper, however, refused the offer, saying they wanted justice for their family member. With Recto Mercene

There are times when diplomats pretend to be doormats [and] there are times when they have to be matadors.”—Recto

Ex-DOT chief, four others face graft Sereno sees ‘dictatorship’ after filing rap over ₧1.2-B ad campaign project of quo warranto petition against her F By Ashley Manabat Correspondent

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L A R K F R EEP OR T—T he Chief Justice lambasted on Wednesday the quo warranto petition filed against her in her keynote speech at the Integrated Bar of the Philippines (IBP) Central Luzon Regional Convention and Mandatory Continuing Legal Education held at the Quest Hotel here on Wednesday. “Ano po ang tawag sa kondisyon na ang citizen walang kalaban-laban sa gobyerno [What do you call a condition where the citizen has no way to fight the government?]” Chief Justice Maria Lourdes A. Sereno asked. “Ang tawag po doon dictatorship, hindi po constitutional democracy ang tawag doon [You call that dictatorship, that is not what you call a constitutional democracy],” she said. “That is what is going to happen if the quo waranto petition is granted,” Sereno stated. “That is why I have been demanding that the impeachment complaint be forwarded to the Senate, because I want to tell a story to the people. Not my personal story but the story of judicial and legal reforms,” she added. “But it seems they don’t like it, that is why they invented a very gloomy weapon in the form of the quo warranto petition,” Sereno said. “The booming voice of Justice

Vicente Mendoza has reverberated that if the quo waranto petition is granted, the Judiciary will destroy itself,” Sereno said as she also praised the IBP’s stand to oppose and dismiss the petition. Sereno said her words are clear. If she gets convicted in the impeachment trial, she will step down. “Hindi ako magdadalawang salita ukul dito kase ’yun po ang proseso ng Constitution [I will not make any conflicting statements on this because that is the Constitutional process],” she said. Sereno added that, as long as it is constitutional, she will adhere, adding she is not afraid to face the charges in the Senate even if they will scrutinize how she runs the Supreme Court (SC). But she complained that it is not only how she runs the SC that is being probed, but what she had done and failed to do 30 years ago. “That is why I am saying that this quo warranto petition is deadly not only to the Judiciary but to every impeachable official, because any time, they can be compromised,” she said. “The decision of the chairman of the Comelec [Commission on Elections] or the Commission on Audit [COA], two powerful positions that can determine our political future, and the accountability in the public coffers, can also be swayed with just a word from the solicitor general or from the Office of the President

because they will be threatened with a quo warranto petition,” Sereno warned. “What will happen to the accountability to our people? Will COA still be adamant in their report? Will the Comelec still be fair with its decision? What will happen to our motherland?” Sereno said the government is indeed a very difficult opponent. Public officials, as well as the more than 1 million government employees nationwide, can be removed any time because they can be subjected to a quo waranto petition. “So what will happen if there is no longer a professional bureaucracy and everyone’s security of tenure in the government is unsure? What do you call that?” she asked. “ That’s dictatorship. That’s the destruction of professional government service. That is the destruction of the merit-based civil-service system,” Sereno said. Sereno told the lawyers’ convention that their legal profession will no longer be considered a profession but reduced to mere “pro forma appearance” for their clients. She told the lawyers that they will no longer be needing fairness or due process, as well as the rules of court compliance and the law, because it will be replaced with, “who knows the solicitor general?” What you will need then will be a deft political negotiation with the powers that be, she said.

ormer Tourism Secretary Ramon R. Jimenez Jr. and two other officials of the Department of Tourism (DOT), along with two executives of an advertising agency, have been charged with graft and corruption before the Ombudsman for allegedly conspiring to award and extend twice a tourism advertising campaign project that cost the government almost P1.2 billion in three years. National Bureau of Investigation (NBI) Director Dante A. Gierran, in a letter to Ombudsman Conchita Carpio-Morales, said the NBI’s investigation showed Jimenez and the other DOT officials, including a former assistant secretary who is now a DOT undersecretary, and the two top officials of advertising agency Dentsu Philippines Inc., violated the Anti-Graft and Corrupt Practices Act for their alleged involvement in the award of an original P200-million ad campaign in 2012 and its extension twice in 2013 that cost close to P1 billion without public bidding. The NBI also asked the Ombudsman to charge all the DOT officials who are still in office with administrative cases of alleged gross negligence of duty and serious dishonesty for awarding and conspiring to keep the project with Dentsu for three years. Gierran said the NBI legal team that investigated the case found Dentsu should not have been awarded the original P200-million contract in 2012 because it was found “ineligible” for failing to comply with documentary requirements, and the extension of the ad contract twice in 2013 by Jimenez and his co-accused allegedly

proved a conspiracy to circumvent the national government’s procurement laws and processes. The advertising campaign was bidded out by the DOT to implement its “It’s More Fun in the Philippines” tourism-promotion campaign launched in 2012 to promote the Philippines here and abroad as a tourist destination. Among those charged with Jimenez are current DOT Undersecretary Benito C. Bengzon Jr., who was an assistant secretary when the ad campaign was awarded to Dentsu, Atty. Guiller Asido, former COO of the Tourism Infrastructure and Enterprise Zone Authority (Tieza) and now administrator of the Intramuros Administration, Ma. Nonna Nanagas, former president of Dentsu Philippines and Romelyn S. Martinez, finance and administrative director of Dentsu. The NBI told the Ombudsman that based on its findings, Dentsu should not even have been awarded the original advertising campaign project in October 2012 costing P200 million because it was found in July 2012 to be ineligible to participate in the project by the Special Bids and Awards Committee (SBAC) created by former DOT Secretary Albert C. Lim. The SBAC created by Lim, who was replaced by Jimenez in January 2012 to solicit and review bids for the advertising campaign, found Dentsu ineligible because the company failed to submit required documents, including its income-tax return and audited financial statement. The NBI noted that the DOT SBAC had a change of heart on the ineligibility of Dentsu in September 2012 when it ignored basic bidding rules, and short

listed instead Dentsu and one other company. Afterward, the technical working group of the DOT SBAC gave Dentsu the highest technical rating over the other bidder that eventually landed Dentsu the original advertising campaign contract in October 2012. The NBI said Jimenez extended the original contract on February 1, 2013, up to June 30, 2013, at higher cost of P400 million, and included a 2-percent professional fee for Dentsu despite an opinion from Justice Raoul Creencia of the Office of the Government Corporate Counsel (OGCC) that an extension should not exceed the original approved budget of the contract of P200 million, and should secure a clearance from the Department of Budget and Management (DBM) as a multiyear obligational authority. According to the NBI, Jimenez ignored the OGCC’s caution, and even extended the advertising campaign contract for Dentsu for the second time in October 2013, this time costing P600 million, with no prior approval from the TPB Board of Directors. The TPB Board ratified the second extension of the Dentsu contract only in November 2013. The NBI said the extension of the Dentsu contract twice with no public bidding constituted a conspiracy among Jimenez, Asido and the other DOT officials to circumvent the government procurement law so they could keep the advertising campaign project in Dentsu’s hands. Jimenez had justified keeping the advertising campaign contract with Dentsu as necessary so that the pacing and implementation of the “It’s More Fun in the Philippines” campaign would not be affected.

Economy

A4 Friday, May 4, 2018 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

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Neda chief: ADB support leaves more to be desired

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By Cai U. Ordinario

@cuo_bm

he Philippines is lamenting the small support extended by the Asian Development Bank (ADB) on certain sectors that it considered crucial in the country’s economic growth and development. In a forum at the ADB’s 51st Annual Meeting, Socioeconomic Planning Secretary Ernesto M. Pernia said the ADB’s support has been lacking in population management, closing infrastructure gaps, narrowing inequality in between and among regions, improving education and health, and promoting science and technology (S&T). “I think the bank has done relatively little as regards population management [including family planning]—a crucial, yet sensitive and contentious issue [at least until very recently]—thereby, materially delaying the country’s harvest of the demographic dividend; progressively narrowing the country’s huge infrastructure gap, including traffic congestion in the NCR [National Capital Region]; interregional disparity; quality of higher education and health care; and promoting S&T and innovation to prepare for Industry 4 [characterized by disruptive technologies],” Pernia said. To this end, ADB Vice President for Operations 2 Stephen Groff said the Manila-based multilateral bank is already in the process of addressing these concerns through the bank’s Strategy 2030, which outlines the

direction of the bank’s efforts and support until 2030. At the news conference, ADB President Takehiko Nakao said Strategy 2030 will see the bank’s engagement in the Philippines range from technical and vocational training to financing the government’s ambitious “Build, Build, Build” program. “We need to support the Philippines’s Metro areas, how to mitigate these traffic difficulties and how to support the railway projects, and the LRT [Light Rail Transit] or MRT 3 [Metro Rail Transit Line 3],” Nakao said. Nakao added the ADB will also be investing more in Mindanao, particularly under the Country Operations Business Plan (COBP) between 2018 to 2023. ADB Philippines Office Country Specialist Joven Balbosa earlier told the BusinessMirror that the Manila-based multilateral development bank is supporting efforts to address this through the Regional Development Project for South Central Mindanao and the upcoming COBP. Balbosa said the new COBP will focus on regional development, consistent with the aim of the national

government to pursue federalism. He added that the ADB is working together with local governments, particularly lagging regions, to help match them with leading regions, which can help them increase investments in their locale. “We want to invest more in Mindanao, because for the peace, for sustaining peace [in] Mindanao. We need to develop Mindanao in a broader sense,” Nakao said. In December 2017 the National Economic and Development Authority (Neda) identified the $100-million Regional Development Project, Phase 1-South Central Mindanao, formerly Mindanao Development Program as part of the pipeline for ADB financing this year. Apart from the Regional Development Project for South Central Mindanao, the pipeline for 2018 includes financing projects, such as the Expanding Private Participation in Infrastructure Program Subprogram 2 (PBL) and the Inclusive Finance Development Program (PBL), which was formerly known as the Reducing Income Inequality through Financial Inclusion worth $300 million each. Big-ticket projects, for the next year also include the $110-million Davao Public Transport Modernization Project and the $100-million Metro Manila Transport Project, or formerly Metro Manila BRT Edsa Project. For 2018 there are also standby projects, namely, the $300-million Secondary Education Support Project and the $100-million Disaster Risk Financing Phase 1. For 2019, the firm pipeline of

Group: No funds for dictatorships By Bernadette D. Nicolas

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@BNicolasBM

local legal research and policy advocacy group working for the protection of indigenous peoples and local communities urged the Asian Development Bank (ADB) to reconsider funding authoritarian regimes who do not tolerate civil-society groups, noting that some of the massive infrastructure projects funded by the multilateral lender have historically impacted on the lives of indigenous and poor upland communities. Legal Right and Natural Resources Center/ Friends of the Earth Philippines Executive Director Norly Grace Mercado also stated the need for a meaningful consultation between the civil-society groups, specifically the marginalized and the ADB. “Also in our analysis, we said that transportation and infrastructure have been directed in massive superhighways ports and airports. [Such] megastructures sometimes span several regions [that] cut across key biodiversity areas and culturally important heritage sites or indigenous territories and ancestral domain,” she said, adding that the ADB had also admitted that around half of the total number of public-sector loans projects funded by the bank inflicted involuntary displacement of communities. The ADB, Mercado added, also failed to consider among its proposed strategic priorities one important worsening trend in the region, which is shrinking democratic space for civil-society organizations and communities. “This is evident in the growing incidence of human-rights violations, which results to chilling effect in terms of communities in civil-society groups,” she said. Mercado also urged the ADB not to only focus on infrastructure but, more important, on governance and in pushing for the environmental and social safeguards, which will give way to ensure a sustainable and inclusive growth that will consider social justice and human rights.

Aware

Responding to Mercado, ADB Vice President Stephen P. Groff said that although the ADB believes strongly that infrastructure is a critical component of development and inclusive growth, they are “very well aware of these challenges.” “We are constantly engaging with the countries in which we work to ensure that we are doing the utmost to minimize those risks,” he said. On broader sustainability concerns, Groff said the ADB is also paying very close attention to the fiscal framework of these countries, including their debt management. “What we also implore all countries to do is to be extremely transparent around the kind of debt that they may be accumulating in their efforts to finance these large infrastructure projects,” he said. “That kind of transparency is absolutely critical to ensuring that this is done in a sustainable manner and that kind of investment brings the benefits that it can possibly can,” Groff added. The ADB, he said, is helping countries position their economy to grow faster when they partake on debt to invest in infrastructure projects. “But if you are not doing the proper analysis on each individual project to ensure that you are maximizing that economic benefit, you’re putting the economy in a position in the future to pay backwards, leading to inefficient cycle of debt and inflation and currency depreciation, among other things,” he said.

Palace condemnation

Malacañang, meanwhile, condemned the killings of Fr. Mark Ventura in Cagayan and radio broadcaster Edmund Sestoso in Dumaguete. Ventura, known to be critical of mining and an advocate on the welfare of indigenous peoples of Cagayan, was gunned down last Sunday by a still-unknown gunman in Tuguegarao after he held Mass. The Catholic Bishops’ Conference of the Philippines also condemned the killing of the Catholic priest of the Archdiocese of Tuguegarao, calling it an “evil act.” Dumaguete radio broadcaster Edmund Sestoso, on the hand, also killed on Monday while he was on his way home, drawing condemnation from international watchdog groups who have expressed their dismay in the fatal shooting, calling the murder “appalling.” “We are condemning those killings and we are assuring everyone that the government is doing the necessary steps to fulfill its responsibilities. We are going to investigate it and hold those killers accountable,” Presidential Spokesman Harry L. Roque Jr. said in Filipino.

projects include the Secondary Education Support Project; Local Government Development Program; and Facilitating Youth SchooltoWork Transition, Subprogram 2, which will cost $300 million each. Also included in this pipeline are the $200-million Metro Manila Water Supply Project, Phase 1, and the $200-million Malolos-Clark Railway Project, as well as the $100-million Disaster Risk Financing Phase 1. For 2020, the firm pipeline includes Improving Growth Corridors in Mindanao Road Sector Project, Phase 2; Inclusive Finance Development Program, Subprogram 2; and Expanded Social Assistance Project, which will cost $300 million each. The standby pipeline for 2020 includes the $300-million Metro Manila Transport Project; the $200-million Regional Development Project, Phase 2-Northern Mindanao; and $100-million Disaster Risk Financing Phase 2.

Coal equation

Several civil-society groups on Thursday joined the call for the ADB to stop its “anti-poor and anti-development strategies,” which include the funding of coal plant projects for power generation across Asia and the Pacific. Sanlakas Secretary-General Atty. Aaron Pedrosa slammed the ADB for “falsely” posturing as a partner for Asia and the Pacific in combating poverty and in promoting a more resilient and sustainable environment, despite its major role in pushing for coal and other “dirty technologies” in the region. “The ADB continues to increase the poverty and vulnerability of communities and their environ-

ment by introducing and financing dirty energy through coal projects,” Pedrosa said following a protest action during the Asian Development Bank 51st Annual Meeting in Mandaluyong City. According to Asian People’s Movement on Debt and Development (APMMD), the ADB’s total financing for coal projects reached P10.7 billion from 2009 to 2017. For her part, APMMD Coordinator Lidy Nacpil also cited the bank’s vital role in the introduction of coalfired power plants in the Philippines alone through the implementation of Electric Power Industry Reform Act (Epira) in 2001. “Through Epira, which liberalized [the] Philippines’s power industry, the country was made vulnerable to big coal investors. Today, we have an avalanche of coal plant projects being railroaded; with the ADB leading the growth of Philippines’s dir t y energ y through its million-dollar loans for projects like the Korea Electric Power Corp.’s 200-megawatt coalfired power plant in Cebu and the rehabilitation of Masinloc Power Partners Ltd.’s 600-MW coal-fired thermal-power plant in Zambales province,” Nacpil said. In the Philippines the Philippine Movement for Climate Justice said the ADB has extended loans of $120 million for the construction of the Korea Electric Power Corp.’s 200MW coal-fired power plant in Cebu province and $200 million for the rehabilitation of the Masinloc Power Partners Ltd.’s 600-MW coal-fired thermal-power plant in the Zambales province. It said the ADB has an approved project for Philippine Investment

Alliance for Infrastructure (Pinai), wherein equity investment worth $1,054,850 million was approved. This involves a 552-MW coal-fired power plant in Kauswagan, Lanao del Norte—a joint venture of GNPower Kauswagan and Pinai. Moreover, Center for Energy, Ecology and Development Legal and Policy Officer lawyer Avril de Torres said the ADB’s role in promoting dirty energy is contradictory to its projected agenda for inclusivity and sustainability in the Asia-Pacific region and its projected alignment with the Paris agreement on climate change and other global development platforms. “In spite of the well-established fact that fossil fuels, especially coal, spike the risk for climate change and in spite of many countries and communities in the Asia-Pacific region standing on the frontlines of climate-change impacts, the ADB still pushes for fossil fuel-sourced energy more than it does for clean energy,” de Torres said. Philippine Movement for Climate Justice National Coordinator Ian Rivera, for her part, condemned the ADB for claiming that coal being “clean and efficient,” despite “clean coal” technology still greatly contributing to GHG (greenhouse-gas) emissions and warming of the planet. “If the ADB is truly serious in aligning with global development and climate commitments, it should explicitly aim for ending its financing and pushing for anti-development and anti-climate technologies like coal power—which only serve private interests while being of great disservice and injustice to the people,” Rivera said. With Jovee Marie N. dela Cruz

Point of contention: To go PPP or not By Rea Cu @ReaCuBM & Jasper Emmanuel Y. Arcalas @jearcalas

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he Public-Private Partnership Program (PPP) remains to be the more effective mode in the implementation of large-scale infrastructure projects, according to some Association of Southeast Asian Nations representatives in the ongoing ADB Annual Meeting 2018 in Mandaluyong City. PT Indonesia Infrastructure Finance Managing Director-Chief Investment Officer Harold Tjiptadjaja told the BusinessMirror that PPP “is more fitting” for infrastructure projects that are larger and more complex in scale. “Normally, it should be for the larger and complex, and wherein the private sector will have an added value. If you are doing what the government has done for the last 100 years, unless the private sector bring efficiency, then I don’t see any reason [not to go into PPP] unless it’s budget constraint issues,” Tjiptadjaja said.

Not an elixir

ASIAN Development Bank (ADB) President Takehiko Nakao, however, warned countries, including the Philippines, not to rely exclsively on PPP as it is not an elixir that would solve their respective infrastructure gap problems and other economic development woes totally. “PPP is not a magic panacea to resolve all the issues. It should be designed and implemented in a very fair and transparent, wise way, otherwise, the burdens end up in taxpayer, consumers or users,” he said at a news briefing at the ADB Annual Meeting 2018 on Thursday.

Nakao added that an efficient and effective PPP scheme requires a “good infrastructure and good investment climate,” which includes a “stable” policy and regulation environment. Under the Duterte administration, the government has laid out a plan to implement 75 flagship projects of scale under its “Build, Build, Build” (BBB) program, and has tweaked the traditional PPP into a “hybrid” model so that the government now implements the projects using a combination of its own budget, inflows from the official development assistance and funds raised from bond floats at investment-grade rates, to speed up project implementation. Tjiptadjaja added that the government has options other than the PPP in terms of implementing infrastructure projects, but it has to invest time in imposing proper due diligence and preparation for project implementation. “Regardless if it’s a PPP or not, you have to do the preparation properly. Some of the people…cut [corners but], you shouldn’t do it that way, you should have the proper due diligence, the proper preparation, and then you decide which way to go,” he added. Tjiptadjaja further stated that the government cannot implement infrastructure projects alone, and that it has to provide opportunities for the private sector to contribute to the project. “We all know that the government alone can’t do infrastructure, we have to find a way how we can drive the private sector to contribute,” he said during the ADB seminar on Private Sector Participation in Asian Infrastructure Development on Thursday at the ADB Headquarters in Ortigas City.

Last month Finance Secretary Carlos G. Dominguez III expressed confidence that projects under the Duterte administration’s BBB program will be implemented fast enough, with an assurance that such projects would be free from graft and corruption. The finance chief said that with an array of flagship infrastructure projects due for rollout this year, he expressed confidence that the BBB projects will be also completed on time, given that the government had put in place measures to ensure graft-free completion. The Duterte administration has identified 75 flagship infrastructure projects under its five-year BBB program with a combined total cost of $170 billion, with 23 projects already having been given the go-signal by the National Economic and Development Authority Board chaired by President Duterte. Nandita Parshad, managing director for Energy and Natural Resources of the European Bank for Reconstruction and Development (EBRD), pointed out that when starting a PPP, endorsement from the government is key, and that the government should keep the private sector engaged, among others. “Make sure that there is a headline government endorsement and commitment. Pile in when you get the endorsement, if you want to bring in the private sector you have to pile in. Keep the private sector engaged,” Parshad said. Syed Afsor Hassan Uddin, CEO of the PPP, Authority of the Prime Minister’s Office in Bangladesh, for his part, said that financing remains to be an issue in terms of going into the PPP which needs to be addressed to make the partnership sustainable.

BOI, Peza investment approvals up 53% in Q1

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he value of projects approved by the Philippine government’s two investment promotion agencies (IPAs) increased by a substantial 53.2 percent in the first quarter of 2018 relative to the same period last year. Combined investment approvals by the Board of Investments (BOI) and the Philippine Economic Zone Authority (Peza) jumped to P182.83 billion in the first quarter of 2018, from only P119.31 billion in the first quarter of 2017.

These investments are expected to generate 31,007 jobs once projects are in full operation. About 57 percent of them, or equivalent to P104.35 billion, was invested in the sector of electricity, gas, steam and air-conditioning supply. Other economic activities where investment pledges were high include real estate, with projects amounting to P27.24 billion; manufacturing, with P23.85 billion; water supply, sewerage and waste management, with P13.87

billion; and transportation and storage, with P7.01 billion. The bulk of the investment commitments at the BOI and Peza were from Filipino companies, which valued at P169.08 billion. The two major IPAs in the country continued to attract investments from foreign sources, amounting to P13.75 billion in the first quarter of 2018. However, this was a 36.5-percent drop from P21.67billion investment pledges from foreign entities in the same period last year. PNA

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For many in Yemen, bread and tea are the day’s sole meal

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DEN, Yemen—The young mother stepped onto the scale for the doctor. Even with all her black robes on, she weighed only 84 pounds—38 kilograms. Umm Mizrah is pregnant, but starving herself to feed her children. And her sacrifice may not be enough to save them. The doctor’s office is covered with dozens of pictures of emaciated babies who have come through Al-Sadaqa Hospital in Aden, casualties of a three-year war in Yemen that has left millions of people on the edge of famine. Mothers like Umm Mizrah are often the only defense against the hunger that has killed thousands. They skip meals, they sleep to escape the gnawing in their stomachs. They hide bony faces and emaciated bodies in voluminous

black abaya robes and veils. The doctor asked the mother to get back on the scale holding her son, Mizrah. At 17 months, he was 5.8 kilograms (12.8 pounds)— around half the normal weight for his age. He showed all the signs of “severe acute malnutrition,” the most dire stage of hunger. His legs and feet were swollen, he wasn’t getting enough protein. When the doctor pressed a finger into the skin of his feet, the indentation lingered. Around 2.9 million women and children are ac utely malnourished; another 400,000 children are fighting for their lives, in the same condition as Mizrah. N e a r l y a t h i r d o f Y e m e n ’s population—8.4 million of its 29 million people—rely completely on food aid or else they would starve. That number grew by a quarter over the past year.

Aid agencies warn that parts of Yemen could soon start to see widespread death from famine. More and more people are reliant on aid that is already failing to reach people. The war, now three years old, drags on interminably between Yemen’s Shiite Houthi rebels who hold the country’s north, and the Saudi-led coalition, armed and backed by the United States, which has sought to bomb the rebels into submission with a relentless air campaign in support of the Yemeni government. It is unknown how many have died, since authorities are not able to track cases. Save the Children late last year estimated that 50,000 children may have died in 2017 of extreme hunger or disease, given that up to 30 percent of children with untreated cases of severe acute malnutrition die. AP

Democrats strive to tighten their hold in several states

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NDEPENDENCE, Oregon—Unfazed by signs banning soliciting and dogs that barked at her in almost every home she visited, a political newbie knocked on doors, handed out campaign flyers and asked voters to elect her to the Oregon Senate. Deb Patterson, who canvassed in the riverside town of Independence on a recent Saturday, hopes to win the May 15 primary and unseat fourterm Republican Sen. Jackie Winters in November. A win could propel Democrats into a “supermajority” in the legislature, with the ability to increase state revenue without Republican support. Democrats buoyed by anti-Trump political activism want to wrest control of legislatures from Republicans, but they’re also striving to tighten their hold

in states where they have an edge—or where control is split—in order to pass legislation ranging from gun control to health care and from taxation to campaign finance reform. Republicans also consider these states battlegrounds. In Oregon, a political action committee called No Supermajorities has received a $5,000 contribution from Koch Industries, the Kansas-based energy conglomerate of billionaire brothers Charles and David Koch who advocate for conservative causes. “If even one Republican loses reelec tion in November 2018, there is no telling what kind of new taxes Democratic leaders might push through,” the PAC’s web site proclaims. A supermajority is a level that exceeds

the threshold to produce a majority. In Oregon, Democrats need just one more seat in the Senate and one in the House to reach a three-fifths supermajority in both chambers. That would give them a better shot at increasing corporate taxes in a state where corporations pay one of the lowest rates in the nation. “We continue to have a pattern where families pay more into the tax system to support state services than do corporations and businesses,” said Jeanne Atkins, chairman of the Democratic Party of Oregon. “With a supermajority maybe there’s a better chance, but of course the devil is always in the details.” Atkins called Patterson “a serious candidate” who’s among those who might take seats from Republicans. AP

Friday, May 4, 2018

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Red Cross: Female staffer abducted in Somali capital

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OGADISHU, Somalia— Armed gunmen stormed into the International Committee of the Red Cross compound in Somalia’s capital and abducted a German nurse on its staff, the aid group said late Wednesday.

The kidnapping of the woman in Mogadishu was the latest in a series of targeted attacks on aid workers in the long-chaotic Horn of Africa nation. It came a day after a Somali employee with the World Health Organization was shot dead by two men who approached her in a busy market in the capital. The nurse was abducted despite the presence of several secur it y g uards, police Capt.

Moh a me d Hu s s e i n told T he Associated Press. He said the guards had been arrested. “ We a re dee ply concer ned about t he s a fet y of ou r collea g ue,” Da n ie l O ’ M a l le y, t he de put y head of t he R ed C ross de legat ion i n Som a l i a , sa id i n a st atement. “ S he i s a nu rse who w a s work i ng e ver y d ay to s ave l ives a nd i mprove t he hea lt h of some of Som a l i a’s most v u l nerable people.”

“We call for her immediate and unconditional release,” he added. T he Red Cross said it was in contact w ith “var ious author ities” to tr y to secure the woman’s release. In late-March a local Red Cross staffer died of his injuries after a bomb attached to his vehicle e x ploded nea r t he orga ni zation’s office in Mogadishu. Another staffer was wounded. The Somalia-based extremist group al-Shabab, which is linked to alQaida, claimed responsibility. There was no immediate claim of responsibility for Wednesday night’s attack. The targeting of aid workers has sent shockwaves through the aid community in Somalia, one of the world ’s most dangerous places for humanitarian groups. Many have died in bombings by al-Shabab extremists, who continue to control large par ts of r ura l Soma l ia and often attack the capital. AP

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Friday, May 4, 2018

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US-China trade talks center on rivalry over technology

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EIJING—A high-powered United States delegation arrived in Beijing on Thursday for talks with Chinese officials on defusing tensions propelling the world’s two largest economies toward a trade war.

Treasur y Secretar y Steven Mnuchin is leading the group, which includes Commerce Secre t a r y W i l b u r R o s s a nd U S Trade Representat ive Rober t Lighthizer. Liu He, President X i Jinping’s top economic adviser, was heading the Chinese side in the talks, which analysts say appear unlikely to yield a brea k t hrough g iven t he t wo sides’ intensif y ing r iva lr y in strategic technologies. President Donald J. Trump said he expected relations with Beijing to stay on an even keel.

“Our great financial team is in China trying to negotiate a level playing field on trade!” he said on Twitter late Wednesday. “I look forward to being with President Xi in the not too distant future. We will always have a good [great] relationship!” Tr u m p i s s e e k i n g t o c u t t he c h ron ic US t rade def ic it b y $10 0 bi l l ion a nd ga i n concessions over pol icies t hat fore ig n compa n ies s ay force t hem to sha re technolog y w it h C h i nese pa r t ners i n order to ga i n m a rket access.

His administration has threatened to impose new tariffs on roughly $150 billion in Chinese goods—prompting China to announce its own tariffs on US goods. T he d ispute has deepened as China stepped up efforts to overtake western industry leaders in advanced technologies, especially for semiconductors, the silicon brains required to run smartphones, connected cars, cloud computing and artificial intelligence (AI). Under X i, a program know n as “Made in China 2025” aims to ma ke China a tech super power by advancing development of i ndu st r ies t h at , i n add it ion to sem iconduc tors, i nc ludes A I, phar maceutica ls and electr ic vehicles. T he plan most ly involves subsid izing Chinese fir ms. But it a lso does require foreig n companies to prov ide key details about their technolog ies to Chinese par tners. Beijing looks unlikely to cede

any ground on that strategic blueprint. “The Made in China 2025 industrial policy concerns China’s long-term development plan, so the overall direction won’t change at all,” said Yu Miaojie, professor at Peking University’s National School of Development. Yu said China would rather cut the trade deficit by importing high-tech products from the US that are currently tightly restricted. Str ik ing an adamant tone, t he state-r un Global Times newspaper said on T hursd ay in a commentar y that it’s “our sovereig n r ight to develop high-tec h indust r y a nd it is connected to the qua lit y of rejuvenation of the Chinese nation. It w il l not be abandoned due to exter na l pressure.” Both sides have shown a diversity of opinions, with China recently moving to loosen a restriction on foreign ownership of automakers to minority stakes. AP

Pedestrians walk past an electronic display showing the Hang Seng Index figure in Hong Kong, China, on July 8, 2015. Jerome Favre/Bloomberg

Stocks slip as focus shifts to trade; dollar falls

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TOCKS in Europe followed Asian peers lower as investors began to switch their attention away from the Federal Reserve and back to earnings and the outlook for global trade. The dollar gave back some of its recent gains. European shares retreated following Wednesday’s rally, with telecom and insurance companies leading the decline and most industry groups in the red. In Asia, Hong Kong stocks underperformed just as Chinese smartphone maker Xiaomi Corp. filed for what’s expected to be the world’s biggest IPO since 2014. United States futures were more upbeat after the main gauges slid a day earlier. The yield on 10-year Treasuries fell, and the greenback pulled back from its highest since January. The euro climbed, even as European inflation unexpectedly weakened in April. Thursday sees the start of trade talks between the US and China, with both sides dialing back expectations. Beijing won’t agree to preconditions that include abandoning its advanced manufacturing program and agreeing to cut the trade gap by a fixed amount, a Chinese official said. American delegates said earlier that a break-

through is unlikely, and they might leave early if unsatisfied. “When you think about the things that have been weighing on the market—the potential for trade war with China, Nafta breaking up, rising rates and of course the potential rolling over in growth—I think the one that is really weighing the most heavily is trade and that’s why the market tends to swing the most violently on every new piece of news,” RiverFront Investment Group Chairman Michael Jones told Bloomberg TV. Investors are also digesting the outcome of the latest Fed gathering. The US central bank kept rates on hold as expected on Wednesday, admitting inflation is near target without suggesting any need to accelerate its gradual hiking path. Elsewhere, oil rose as traders weighed a rise in stockpiles against concern about United States sanctions on Iran. The pound shrugged off political turmoil and mediocre PMI data to edge higher, while Turkey’s lira slumped to a record low after worse-than-expected inf lation data. Terminal users can read more in our markets live blog. Some key events coming up during the remainder of this week:

T he European Commission will present its spring economic forecasts, including growth, inf lation, debt and deficit projections. Payroll gains in the US probably picked up in April, w ith the unemploy ment rate forecast to drop to 4 percent, according to surveys of economists before the data reports due Friday. Earnings season continues, with Alibaba and HSBC Holdings Plc., on Friday. Reserve Bank of Australia releases its quarterly update of growth and inf lation forecasts on Friday. Berkshire Hathaway holds its annual shareholders meeting in Omaha, Nebraska on Saturday. The Stoxx Europe 600 Index declined 0.2 percent as of 10:34 a.m. London time, the largest drop in more than a week. Futures on the S&P 500 Index rose 0.2 percent, the biggest advance in a week. The MSCI All-Country World Index climbed less than 0.05 percent. The United Kingdom’s FTSE 100 Index increased less than 0.05 percent, reaching the highest in more than three months on its sixth consecutive advance. Germany’s DAX Index sank 0.2 percent, the first retreat in more than a week. The MSCI Emerging Market Index decreased 0.6 percent to the lowest

in a week. The MSCI Asia Pacific Index declined 0.1 percent to the lowest in a week.

Currencies

THE Bloomberg Dollar Spot Index sank 0.4 percent, the biggest dip in six weeks. The euro jumped 0.4 percent to $1.1996, the largest climb in more than two weeks. The British pound climbed 0.1 percent to $1.3593, the first advance in more than a week. The Japanese yen jumped 0.3 percent to 109.51 per dollar, the largest climb in more than three weeks.

Bonds

THE yield on 10-year Treasuries decreased two basis points to 2.95 percent, the lowest in two weeks. Germany’s 10-year yield dipped two basis points to 0.56 percent. Britain’s 10-year yield declined three basis points to 1.457 percent.

Commodities

WEST Texas Intermediate crude climbed 0.3 percent to $68.13 a barrel. Copper jumped 1.6 percent to $3.12 a pound, the highest in a week on the biggest jump in more than two weeks. Gold jumped 0.6 percent to $1,312.84 an ounce, the largest climb in almost three weeks. Bloomberg News

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Euro-area inflation unexpectedly slows, muddying ECB exit debate

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URO-AREA inflation unexpectedly weakened in April, a setback for European Central Bank (ECB) policy-makers as they edge toward paring back their unconventional stimulus. Consumer-price growth slowed to 1.2 percent, while the core rate, which excludes highly volatile items like food, dropped to just 0.7 percent, the weakest in more than a year. Both readings were lower than economists had forecast. The cooling reflects the timing of Easter—and its impact on airfares and package holidays—and may not tell a true picture of underlying inflation. However, the optics won’t be welcomed by the ECB, as its officials debated how and when to easing back on the monetary accelerator after years of interest-rate cuts and bond buying. W hile inf lation isn’t where policy-makers would like, and the economy has cooled this year, President Mario Draghi has said

the ECB is confident price growth will move toward its target of close to 2 percent in the medium term. Still, his caution about the outlook was apparent after last week’s policy meeting in Frankfurt, when he said that measures of underlying inflation haven’t showed concrete evidence of improvement. “There hasn’t been any convincing upward trend or signs that this upward trend is about to come,” Draghi said on April 26. “There are certain encouraging signs on nominal wage growth where we start seeing some movements, which may support price pressures in the coming months.” The European Commission updated its economic forecasts on Thursday, and kept its inflation predictions unchanged. It sees price growth averaging 1.5 percent this year and 1.6 percent in 2019. The ECB aims to get it to just below 2 percent over the medium term. Bloomberg News

Norway sticks to tightening plan as rate held at record low

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ORWAY’S central bank kept its signal intact to st a r t ra i si ng i nterest rates in the second half of this year, undeterred by a cooling economic recovery in western Europe’s biggest oil producer. In an inter im decision on Thursday, Norges Bank, as anticipated, held its key rate at 0.5 percent. The bank reiterated its message from March that it will start tightening monetary policy “after summer.” “The outlook and the balance of risks do not appear to have changed substantially since the March Repor t,” centra l bank Governor Oystein Olsen said in a statement. The krone rose about 0.1 percent after the decision, perhaps a sign that “some had feared a more dovish twist,” according to Kristoffer Lomholt, an analyst at Danske Bank A/S. Norwegian policy-makers and their peers globally are seeking to retreat from the extreme monetary stimulus unveiled in the aftermath of the financial crisis. Sweden’s Riksbank has signaled a rate increase toward the end of this year, while the European Central Bank (ECB) is preparing its own slower exit.

But doubts are cropping up over whether any tightening will be carried out. Since the most recent Norwegian rate decision in March, unemployment data has disappointed and underlying inflation has unexpectedly dipped further below the target. In its broader assessment, the bank chose to highlight that a decline in confidence indicators in Europe suggests growth for its trading partners is “somewhat weaker” and that consumption of goods in Norway was lower than expected. On the other hand, oil prices are now higher than assumed and the krone weaker than projected, it said. “Given that markets already price in a high probability of a September hike, we would want to prefer a clearer signal that the latest string of disappointing domestic data releases are but temporary before rebuying the krone,” Lomholt said. Policy-makers in March did get some more support for their plans to tighten when the government lowered the inflation target to 2 percent, from 2.5 percent. That was designed to bring the price target in line with the likes of the ECB, the Federal Reserve and Sweden’s Riksbank. Bloomberg News

Adidas CEO: We don’t support Kanye West slavery remark

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DIDAS AG CEO Kasper Rorsted distanced himself from comments about slavery by Kanye West, but said the company has not discussed dropping the rapper as a designer. “There clearly are some comments we don’t support,” Rorsted said on a call. The company plans to talk with West about the matter, he said in an interview with Bloomberg TV. West is ver y important to the German sportswear maker’s strategy, the CEO said in the interview after the company reported quarterly sales, highlighting the tricky balance companies have to strike when their celebrity brand ambassadors veer off the script. The performer sparked outrage on social media with his comments on slavery in the United States, in an interview with TMZ this week. “When you hear about slavery for 400 years—400 years? That sounds like a choice,” West said. The artist designs the top-ofthe-line Yeezy models that Adidas only offers in limited runs, often raffling them off or selling them only at specific stores. Rorsted said Yeezy provides a limited financial

contribution but is important for “brand heat.” That strategy pushes brand desirability and helped Adidas steal market share from larger rival Nike Inc. Adidas last year overtook Nike’s Jordan as the No. 2 brand in US sports footwear, behind the US company’s flagship label, according to NPD analyst Matt Powell. The German company’s affiliation with West reflects a shift in sports companies’ marketing to social media and away from television and print advertisements, as they tap celebrities and musicians in addition to top athletes to reach younger consumers. In its financial update, Adidas said first-quarter sales rose 10 percent at constant exchange rates, but the strong euro limited gains in local-currency terms to 1.9 percent. The shares slumped as much as 3.5 percent. Adidas’s reputation in the US has already been bruised by an investigation into allegations that one of its former executives helped to facilitate illicit payments to basketball players to steer them to universities partnering with the brand. Bloomberg News

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Mahathir probed under Malaysia fake news law for sabotage claim

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A L AYS I A N o p p o s i t i o n l e a d e r Mahathir Mohamad is under investigation for a potential breach of a new fake news law, less than a week before an election that has him vying with Prime Minister Najib Razak for the crucial votes of ethnic Malays. Mahathir, a former premier who was the country’s longest-serving leader, has not been charged. A probe is ongoing, Kuala Lumpur police chief Mazlan Lazim said on Thursday by phone, without elaborating. “ They c an charge me in cour t,” Mahathir was quoted as saying in the Star newspaper. “I have no fake news. Only truth.” A spokesman in Mahathir’s office declined to comment. The investigation follows a statement by Mahathir last Friday that a chartered plane due to take him to the northern island of Langkawi, where he is campaigning for a parliamentary seat, was tampered with so that it was unable to fly. The Civil Aviation Authority of Malaysia concluded there was no indication of sabotage and that the plane suffered an air leak from a wheel. He later traveled to Langkawi in time for the nomination deadline on Saturday. Mahathir split from Najib’s coalition in 2016 amid a falling out with the premier over issues, including the handling of a financial scandal at a state investment

fund, and has since formed his own party within the opposition alliance. He’s seeking to unseat the United Malays National Organisation, a party that has held power since independence in 1957 with the support of ethnic Malay voters in the predominantly Muslim nation. Mahathir might represent the opposition’s best chance yet, given his potential to draw Malays away from the UMNO-led Barisan Nasional coalition. Najib, in turn, has painted the opposition as a “motley collection of parties” that have little in common and would struggle to work together in office. Barisan Nasional lost the popular vote for the first time in the 2013 election while retaining a slim majority of seats. In the lead up to the May 9 vote, Mahathir has seen a ban on the opposition coalition Pakatan Harapan using its own logo or his photos in campaign materials. His party faced a 30- day prohibition on campaigning for not providing the correct documents to authorities, though that has since been suspended by a court order. The parliament passed a law against fake news in April with maximum punishments of six years in prison and a 500,000 ringgit ($127,000) fine for anyone who “maliciously” creates and distributes false information related to the country or its citizens. The law applies to anyone inside or outside Malaysia, regardless of nationality or citizenship. Bloomberg News

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EIJING—China’s foreign minister congratulated North Korean leader Kim Jong Un on Thursday on his moves to reduce tensions with South Korea, China said. Their meeting in Pyongyang underscored warming ties and Beijing’s desire to remain a key player in the Korean Peninsula peace process. Foreig n Minister Wang Yi also told Kim that Beijing backs North Korea’s shift of focus to economic growth, along with its efforts to resolve its “ legitimate security concerns” while taking steps to denuclearize, China’s Foreign Ministry said in a statement. China “supports and congratulates” Kim’s summit meeting

There was no damage to the monument. At least 64 people died and another 67 were injured in northern Uttar Pradesh state, Kumar said. In the western state of Rajasthan, the Press Trust of India news agency said that 27 others died and another 100 were injured. Most deaths were caused by house collapses and lightning. The rainstorm caught people by surprise as the monsoon season is still more than six weeks away. Uprooted trees flattened mud huts of the poor, Kumar said. Electricity supply and telephone lines were snapped in parts of Uttar Pradesh state, Kumar said. AP

Germany: Liu Xiaobo’s widow is welcome in Berlin ‘at any time’

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E I J I NG — G e r m a ny s a i d o n Thursday it would welcome the widow of Chinese Nobel Peace laureate Liu Xiaobo after a recording was released of her crying in desperation and indicating that she has given up hope of being able to leave China. “If I can’t leave, I’ll die in my home,” Liu Xia, the widow, said during a recent phone call with her close friend Liao Yiwu, a writer who documented their conversation in an essay published on Wednesday. “Xiaobo is gone, and there’s nothing in the world for me now,” Liu said tearfully. “It’s easier to die than live. Using death to defy could not be any simpler for me.” Liu has never been charged with a crime, but has been kept guarded and largely isolated since her husband, Liu Xiaobo, was awarded the Nobel Peace Prize for his human-rights activism in 2010. He was still serving a prison sentence for inciting subversion of state power when he died of liver cancer last summer. Germany’s Foreign Associated Press Ministry told The Associated Press on Thursday that the German government has been discussing Liu’s case with China and “will continue to do so.” “According to the information available to us, Liu Xia has not been accused of any crime,” the ministry said in e-mailed comments. “She should be allowed to travel, also for humanitarian considerations. Should she choose to come to Germany, Liu Xia would be welcome here at any time.” Writing from Germany where he is living in exile, Liao said that Chinese state security agents repeatedly

A7

China congratulates NoKor’s Kim for reducing tensions with SoKor

Rainstorm kills at least 91, injures over 160 in India UCKNOW, India—A powerful dust storm and rain swept parts of north and western India overnight, causing house collapses, toppling trees and leaving at least 91 people dead and more than 160 injured, officials said on Thursday. The devastation was particularly severe on Wednesday night in Agra, the northern Indian city where the white marble Taj Mahal is located. Forty-three people died there as the wind speed touched 130 kilometers (80 miles) per hour, said Relief Commissioner Sanjay Kumar of Uttar Pradesh state.

Friday, May 4, 2018

promised Liu Xia that she would be able to leave the country and seek treatment for the clinical depression that has long ailed her. Germany was prepared to take her in, according to Liao: “In early-April the German Foreign Minister had already made specific arrangements, including as to how they’d not alert the news media, how they’d covertly collect Liu Xia at the airport, and how they’d arrange her treatment and recovery and more.” But hopes for a quiet departure have not borne fruit. Hu Jia, a dissident and longtime friend of the Lius, described Liao’s essay as a “counterattack” against Chinese authorities prompted by an “awakening” after hearing for months that Liu would soon be released. Corroborating Liao’s account, Hu said Liu had initially been told by security agents to wait until after the 19th Party Congress last fall, when President Xi Jinping secured a second term at the helm of the ruling Communist Party. Then, Hu added, they told her to wait until after the meeting of the ceremonial legislature in March. During this time, Liu’s supporters kept a low profile because government agents told them that remaining silent about the case would lead to a solution, Hu told the AP. “Why did Mr. Liao call Liu Xia on April 30? Because at that point it was already clear that hope was shattered,” Hu said. “We were duped.” When asked at a regular news briefing whether Liu will be able to leave the country, Foreign Ministry spokeswoman Hua Chunying said she was “not aware of the situation.” AP

last week with South Korean President Moon Jae-in and the statement they issued, it quoted Wang as saying. “The meeting has brought a favorable opportunity for a political resolution of the Korean Peninsula issue,” Wang said. Relations between China and North Korea have undergone a vast out ward improvement

following Kim’s recent visit to Beijing. China, North Korea’s big gest trad ing pa r t ner, has joined United Nations sanctions against the North that have cut trade between them by around 90 percent. Kim’s March trip was his first to his country’s only major ally since taking power six years ago, kicking off a flurry of diplomacy. A meeting between Kim and US President Donald J. Trump is expected in the coming weeks, although arrangements have yet to be announced. For China, the recent meetings offer an opportunity for it to reinforce its importance in the region and ensure that its concerns and interests are respected in any future negotiations. China sent troops to fight on North Korea’s side in the 19501953 Korean War, but relations have suffered in recent years over the North’s reluctance to implement Chinese-st yle economic reforms and K im’s continued pursuit of nuclear bombs and the

missiles to deliver them. China has long called for a return to six-nation talks on the North ’s nuclear program, and welcomed the Koreas’ summit as a way to reduce tensions. Analysts say China’s sanctions may have helped prompt North Korea’s diplomatic initiatives, although the secretive regime in Pyongyang has not commented publicly on the issue. China said sanctions imposed over North Korea’s nuclear and missile programs are intended to further diplomacy rather than punish the North. Beijing opposes any measures that could topple North Korea’s government and possibly lead to a tide of refugees crossing its border and the stationing of US and South Korean troops in the North. Wang also told Kim that China supports efforts to bring a formal end to the Korean War, which was halted with an armistice, not a peace treaty, and North Korea’s “shift of strategic focus to building its economy.” AP

Banking&Finance

A8 Friday, May 4, 2018 • Editor: Jun B. Vallecera

BusinessMirror

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Persistent high inflation seen waning in Q4 By Cai U. Ordinario

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& Bianca Cuaresma

@cuo_bm @BcuaresmaBM

ilipinos should brace for still higher commodities prices as the high inflation regime will likely continue until the end of the year, according to the National Economic and Development Authority (Neda).

This view was validated on Thursday by Bangko Sentral ng Pilipinas Governor Nestor A. Espenilla Jr. who acknowledged that their latest inflation simulation show numbers that “somewhat spread,” resulting to more “elevated” price worries. “We have always said that we will position policy based on our assessment of inflation. It is a very objective process and we keep looking at the data. And the data flow suggests that our concerns may be elevated in terms of inflationary pressures and expectations moving up,” Espenilla said. “What we want to react to is whether it [inflation] is spreading and it is affecting expectations. And based on the latest

data it seems to have spread somewhat and in fact, we revise upward our inflation forecast slightly,” he quickly added. Socioeconomic Planning Secretary Ernesto M. Pernia told reporters at the sidelines of the Asian Development Bank (ADB) 51st Annual Meeting in Manila that inflation will continue to be high due to oil prices and the impact of the Tax Reform for Acceleration and Inclusion legislation. The BSP estimates inflation to be between 2 percent and 4 percent this year until the President steps down in 2022. However, inflation already averaged 4.3 percent in March, or an average of 3.8 percent in the first quarter of the year. “I think it will continue to be an issue

throughout most of the year, maybe it will the peter out during the last quarter of the year—start to peter out,” Pernia told reporters. However, Pernia said once the Philippines puts place a rice tariff to replace the country’s expired quantitative restriction (QR) on rice, there could be some reprieve where rice prices are concerned. Pernia estimated that a rice tariff can cut inflation by a percentage point, which is already a considerable reduction. This is possible since food accounts for over 30 percent of the consumption of households and the bulk of this is accounted for by rice, the country’s staple. “At least 1 percentage point. It’s quite big,” Pernia said. “I think oil prices have really been a more material factor [in inflation].” The Neda earlier stated that there is a need to immediately pass the rice tariffication bill in Congress to reform the agricultural sector. The passage of the bill, which amends Republic Act 8178, otherwise known as the Agricultural Tariffication Act of 1996, will pave the way for the replacement of the QR on rice imports with tariff. This will remove unnecessary government intervention in the rice market, as envisioned by President Duterte during the meeting with rice traders, officials of

the National Food Authority (NFA) and members of the NFA Council (NFAC). Inflation in the first three months of the year averaged at 3.8 percent, still within the 2-percent to 4-percent target for the year. In March, however, inflation rose sharply to 4.3 percent. “You know our position here, we keep on monitoring those numbers. We don’t just focus on what we see today but look at it from a medium term perspective, especially with respect to the medium term,” Deputy BSP Governor for the Monetary Stability Sector Diwa C. Guinigundo said also at the sidelines of the 51st ADB Meet. “But again you have the discipline of inflation targeting, you just don’t move the policy rate without considering all of the factors that we normally consider in the context of inflation targeting. We look at both price and monetary conditions we look at the trend in output,” the deputy governor added. Guinigundo also cited one of the arguments saying that the economy has grown enough to absorb a tighter monetary-policy stance. “Let us see on May 4 what is going to come out of the PSA [Philippine Statistics Authority]. If it is higher than 4.3 percent then it means something. If it is lower than 4.3 percent, 4.2 percent or

4.1 percent then we have to reassess all the numbers,” Guinigundo said. The BSP earlier said inflation in April would likely climb above 4 percent and range from a low of 3.9 percent to as high as 4.7 percent. The Department of Finance, meanwhile, projected inf lation as high as 4.5 percent in April. The PSA will release the latest inflation numbers on Friday, May 4, while the BSP will have its rate-setting monetary-policy meeting on Thursday, May 10. “But let me just clarify. If the sum of all of these points of considerations point to the BSP undertaking decisive action, we will not have second thoughts on this because maintaining price stability is our primary mandate and we are going to adhere to that mandate of the BSP,” Guinigundo said. The members of the NFAC Council, which include the Neda, also took note of the instruction of the President to expedite the processing of the necessary papers and clearances. The Council is responsible for setting the terms of reference including the volume to be imported for the year, the timing of import arrivals and the mode of importation, while the permit to import by a specific trader or importer is being processed by the NFA.

Progressive tax seen offsetting Exorbitant returns betray technological innovation impact cryptocurrency scam T T By Samuel P. Medenilla @sam_medenilla

he Asian Development Bank (ADB) called for “progressive taxation” to help protect the rights of workers seen displaced by the onset of rapid technological evolution in the region. At a news conference on the occasion of the ADB’s 51st Annual Meeting, ADB President Takahito Nakao stressed the importance of tax reforms especially for developing countries in Asia to blunt the possible displacement of workers due to such developments as automation and robotics. “Some people may lose their jobs and it is not easy for them to find new jobs. We need policies to support the people behind these technological plan,” Nakao added. Citing the recently published ADB’s “Asian Development Outlook (ADO) 2018: How Technology Affects Jobs,” Nakao said the government need to allocate a budget for the retraining of workers and at the same ensure they have social security and health care. “We should have a more progressive taxation system....We need proper redistribution system. No question about it,” Nakao added. At a forum at the ADB main office in Mandaluyong City on Thursday, Sameer Khatiwada, one of the authors of the ADO, said the proposed “progressive taxation” would not be uniform across the region. “We didn’t really delve in which areas would have to increase ta x and which area you would have to decrease,” Khatiwada added. “It must be tailored to the country’s own needs and the country’s institu-

tional mechanism in place. To put the right set of tax policies...This is to make sure people are not left behind,” he said.

Protecting workers

Elisabetta Gentile, an economist who coauthored the ADO, said progressive taxation arrangement is one where “those who can should contribute more to support this transition that workers are going to go through in the near future.” She stressed the importance of retraining and providing for unemployment insurance to the displaced workers so they can return to the labor markets. “If we skill our workers and we allow them to take advantage of their opportunities that technology gives,” Gentile said. “But this is not a cost-less process. This is not something we could do for free. It has cost. And this is why in our report we discussed for example progressive taxation,” she added.

Expected displacement

ADO is a comprehensive review of the impact of the introduction of new technology in the work force of 12 countries in the Asia-Pacific region, including the Philippines, from 2005 to 2015. The report show some 2 billion workers in Asia will be affected by the use of more new technology in the various workplaces. ADB said some of these workers, particularly those engaged in routine-non cognitive jobs like factory workers, will be displaced since their jobs will be “transformed” into new iterations. “ There is a shift from low-skilled clerical work toward more middle-skilled work,” Khatiwada said. On a positive note, Gentile, said the economic impact of the displacement

AUB posts fastest growth in 2017

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sia United Bank (AUB) was among publicly listed Philippine universal banks that posted the highest annual growth in 2017. The 20-year-old bank has been silently revolutionizing banking by leveraging on its enhanced information-technology platform to improve the banking experience for customers. Since it opened at the height of the Asian financial crisis in 1997, AUB has made use of technology to differentiate its service and operations. Based on published statements of conditions submitted to the Bangko Sentral ng Pilipinas, AUB ranked No. 1 in deposits and loans, with yearon-year increases of 22.40 percent

and 31.87 percent, respectively. Its deposit level stood at P158 billion in 2017, from P129 billion in 2016, while total loans amounted to P130 billion in 2017 and P99 billion, previously. In terms of asset growth, the Rebiscoowned bank came in second with a 20.8 percent year-on-year increase or from P163 billion in 2016 to P197 billion in 2017. On return on equity (ROE), a measure of profitability that calculates how much profit a company generates with every peso invested by its shareholders, AUB recorded the second-biggest jump—with a year-onyear ROE growth of 16.60 percent or from 10.42 percent to 12.15 percent.

caused by the technologica l revolution will be offset by the rise of productivity and corresponding increase i n dem a nd for good s a nd ser v ices in Asia. According to the ADO, over 101 million jobs would have been lost in Asia Pacific each year due higher productivity attributed to new technology. “However, concurrently higher demand for goods and services more than offsets this with an associated 88-percent increase in employment, equal to 134 million jobs per annum.” Gentile said with the surge in income and productivity in Asia, more high-skilled jobs are expected to emerge in the region. She added this could be availed of by the retrained workers. “ This is no longer the era, where you take one job for you entire lifetime anymore. Now people will change their jobs many times in their lifetimes,” Gentile said.

HE Department of Justice (DOJ) on Thursday began its preliminary investigation against suspects in the so-called Bitcoin scam that allegedly duped several individuals of some P900 million. Principal respondents Arnel and Leonady Ordonio, who were earlier arrested by the Philippine National Police (PNP), failed to show at the preliminary investigation conducted by Assistant State Prosecutor Charlie Guhit. However, 10 of their corespondents submitted counter-affidavits denying their involvement in the scam. Aside from the Ordonio couple, 34 other respondents identified by 28 complainants were charged with syndicated estafa before the DOJ. Based on the complaint, the group enticed their victims to invest in their company NewG Bitcoin,

The power of why

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s an association executive, I have facilitated strategic retreat sessions several times for the association that I work for and also get invited to do similar sessions for other associations. For me, building a strategic thinking culture in associations (and even in business organizations) is critical to growth and sustainability. Strategic retreat is not strategic planning per se. Strategic planning is a systematic process of envisioning a desired future, and translating this vision into broadly defined goals or objectives and a sequence of steps to achieve them. A strategic retreat, meanwhile, is a good team exercise to take stock and gauge the progress in achieving your strategic plan. It is an opportunity to step back (i.e., retreat) from your daily routine to discuss needed adjustments to your plan or other pivotal organizational issues. Interestingly, the term “strategic retreat” has its origins from the military—the retreat and regrouping of forces. I recently conducted a strategic retreat session for the board and senior management of a convention facility. In my research for an appropriate framework to come up with a foundational and inspiring statement of purpose and commitment for the organization, I found out and decided to use Simon Sinek’s “Golden Circle” concept.

Association World Octavio Peralta Management theorist, author and motivational speaker Sinek purports that great and inspiring organizations seem to create their foundation by first addressing the question of why they exist, then how they go about their purpose, and then finally, what they do—the exact opposite many organizations do and communicate. He adds that people don’t buy what you do, they buy why you do it and cites the example of Apple. Here’s Apple’s Golden Circle statement: In everything we do, we believe in challenging the status quo and thinking differently. The way we challenge the status quo is by designing our products beautifully, simple to use and userfriendly. We just happen to make great computers. Notice that Apple started with its “why.” The sequential questions to be answered are: Why —The core belief of the business; the reason the business exists; How—the manner by which the busi-

ostensibly an online business in the form of “cryptocurrency” and the promise of huge interest income. The interest rate promised by Ordonio to investors was 30 percent, with payouts every 15 days. The investors were given an option to invest either P90,000 or P160,000 per slot. For the first few months, or from September to November 2017, Ordonio gave the promised interest to his investors. However, starting last December, Ordonio did not at all get in touch with his investors and can neither be located nor contacted. The police subsequently arrested the couple at an entrapment operation along Calle Crisologo in Vigan City on April 4. The next preliminary investigation was set for May 24. Joel R. San Juan

ness fulfills this core belief; What—the things the company does to fulfill this core belief. I think starting with why is very much valid for associations, as well since they exist for a purpose, a cause, or an advocacy. “Purpose” has a deeper meaning and impact as it strikes at the very core of an association and answers these basic questions: “Why do you do what you do?,” “Why do you exist?,” and “Why do you serve your cause?.” So purpose is the beacon that guides and answers the why. Members and leaders of associations must know by heart their purpose for strategy and direction. If you are not clear about your purpose, then you will not know what to do and where to go. This is as basic as it can get. The column contributor, Octavio Peralta, is concurrently the secretary-general of the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) and the CEO and founder of the Philippine Council of Associations and Association Executives (PCAAE). PCAAE is holding a mini-conference on public relations, branding and communications on June 6, 2018 at the Philippine International Convention Center (PICC). The event is supported by ADFIAP, the Tourism Promotions Board and the PICC. E-mail inquiries@adfiap.org.

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Editor: Jennifer A. Ng • Friday, May 4, 2018

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Farm-gate price of palay nears ₧21–PSA

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By Jasper Emmanuel Y. Arcalas @jearcalas

he average farm-gate price of unmilled rice as of the third week of April inches closer to touching the P21-perkilogram (kg) mark as it rose by 9.65 percent to P20.79 per kg, from P18.80 per kg recorded a year ago.

During the period, data from the Phi l ippine St at ist ics Authority (PSA) showed that the highest average farm-gate price of palay was recorded in Nueva Ecija, Davao del Sur and South Cotabato at P24 per kg. The lowest was recorded in Zamboanga City at P17.83 per kg. “The average farm-gate price of palay at P20.79 per kg went up at a slower pace by 0.39 percent than its average farm-gate price in

the previous week,” the PSA said in its latest weekly report titled, “Updates on Palay, Rice and Corn Prices.” The PSA also noted that the retail prices of well-milled rice and regular-milled rice during the period were higher than their year-ago levels. The average retail price of well-milled rice rose by 4.7 percent to P43.78 per kg, while the price of regular-milled rice

at P39.99 per kg was higher by 7.85 percent. “Relative to a week-ago level, the average wholesale price of wellmilled rice at P41.07/kg increased at a faster pace of 0.34 percent. Compared to the price in the same week of the previous year, it further climbed by 7.01 percent,” the report read. “Regular-milled rice retained its previous week’s average wholesale price of P37.46 per kg during the week. On an annual basis, it went up at a slower rate of 8.05 percent,” it added. The PSA report noted that the highest retail price of well-milled rice during the period was recorded in Davao del Sur and Davao del Norte at P50 per kg. Meanwhile, the highest retail price of regularmilled rice was observed in Sijiquor at P46.50 per kg, according to PSA data. Rice farmers are expected to conclude harvesting their summer crop this month. Previously, the farm-gate price of unmilled rice usually goes down during harvest.

Photo taken from www.irri.org

PHL meat imports up 23.86% in Jan-Feb T

he country’s meat imports in the first two months of the year grew by more than a fifth to 106,884.521 metric tons (MT) on the back of the continuous increase in demand for frozen meat and processed meat products. L atest d at a f rom t he Bureau of Animal Industry (BAI) showed that meat imports during t he Januar y-to -Febr uar y period was 23.86 percent higher t h a n t he 8 6, 293.07 1 M T recorded in the same per iod last year. “It does appear that the general trend of import is up. I suppose the consumers’ acceptance of frozen meat continues to go up. This is seen all over the world,” Meat Importers and Traders Association President Jesus C. Cham told the BusinessMirror. Cham said the growing demand for frozen meat by consumers could be driven by the improvement in their purchasing power as they had more disposable income due to the tax exemptions stipulated in the Tax Reform for Acceleration and Inclusion law. “The latest SWS [Social Weather Station] survey shows that there are less poor and food-poor people. Perhaps an improving economy and the increase in pur-

chasing power are behind this,” he added. BAI Assistant Director Simeon S. Amurao Jr. said meat imports are steadily increasing due to the growing need of meat processors for “cheap” raw materials from abroad. This in turn, Amurao added, is used by meat processors to produce “affordable” processed meat products such as hot dogs. “There’s really a trend of increasing meat importation, particularly for raw materials, needed by meat processors to sustain their businesses,” Amurao told the BusinessMirror. “There is a lot of demand for processed-meat products today, especially from the masses. For example they would purchase hot dogs and pork ‘tocino’ sold in wet markets, which are cheaper and produced by meat processors, even at smaller quantities, because they are affordable,” he added. Of the country’s total meat purchase in the two-month period, almost half, or about 46.87 percent, were pork. Pork imports during the reference per iod rose by 24.28 p e rc e nt t o 5 0,10 0. 3 9 5 M T, f r o m t h e p r e v i o u s y e a r ’s 40,313.422 MT. Cham said international pork

prices were generally “low,” allowing importers and traders to import more. T he countr y’s chicken imports during the two-month period rose by nearly 27 percent to 34,040.929 MT, from 26,876.097 MT recorded a year ago. Chicken meat accounted for 31.85 percent of the country’s total meat imports. Cham and Amurao pointed to the increase in inward shipments of mechanically deboned meat (MDM) as the main driver for the expansion of chicken meat imports during the twomont h per iod . P u rc h a ses of impor ted chicken MDM rose by 27.33 percent to 25,949.233 MT, from the previous year’s 20,380.019 MT. Used in manufacturing chicken nuggets and hot dogs, chicken MDM accounted for 76.23 percent of total chicken meat imports during the period. Data f rom t he BA I a lso showed that the purchases of imported buffalo meat rose by 84.54 percent to 6,974.402 MT f rom 3,7 79. 36 M T re corde d a year ago. Amurao said the increase in buffalo meat imports is “surprising” and could mean that meat processors are increasingly shipping corned beef and other pro-

cessed meat products to other countries. The BAI noted that that beef imports during the two-month period grew by 3.55 percent to 15,512.176 MT, from 15,126.382 MT recorded a year ago. Turkey-meat imports during the January-to-February period posted the fastest increase among all imported meat products at 116.79 percent. Purchases of imported turk e y m e a t r e a c h e d 17 3 . 9 9 8 MT, from the previous year’s 80.261 MT. Lamb-meat imports declined by 27.02 percent to 82.621 MT, from 113.206 MT recorded a year ago, according to the BAI. Last year, meat imports went up by nearly 7 percent to a recordhigh volume of 691,462.564 MT. Data from the BAI showed that purchases of imported meat in 2017 surpassed the 646,503.7 MT recorded in 2016. BAI data indicated that bulk of the country’s meat imports were pork, accounting for about 44.18 percent of the total volume purchased last year. Pork imports in 2017 posted the highest increment, expanding by 10.65 percent to 305,479.806 MT, from the 2016 record of 276,066.999 MT. Jasper Emmanuel Y. Arcalas

What happened to Davidson Bangayan a.k.a. David Tan? Dr. Jesus Lim Arranza Continued from Page 1

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n fact, during that hearing, no less than President Duterte, who was then-Davao City mayor, also identified Davidson Bangayan as the same person as David Tan. Duterte strongly deplores rice smuggling. But I can still remember that after the Senate hearings, the National Bureau of Investigation (NBI) filed a case against Davidson Bangayan a.k.a. David Tan for rice smuggling at the Department of Justice (DOJ). However, I would learn later that the case against Bangayan was returned by the DOJ to the NBI, for allegedly lack of material evidence to

substantiate the latter’s case against Bangayan. And after that, a long eerie silence on Bangayan and the case against him followed. That silence worries me though. I remember the famous quotation of Saint Ambrose, the Bishop of Milan who became one of the most influential ecclesiastical figures of the fourth century, that says: “In some

causes silence is dangerous.” But it’s not only this writer that is wondering what happened to the Bangayan case. In one of the recent hearings of the Senate Committee on Agriculture on rice shortage, Sen. Grace Poe said, “Matagal na nating naririnig ang pangalan ni Davidson Bangayan/David Tan. Nasa hearing natin ’yan noon. Mismong ang Presidente, sinabi niya na siya ay dadakpin. Hindi pa matunton. May kaso ba yan o hanggang ngayon wala pa rin?” Poe asked

How I got Involved in the Bangayan case

I could have chosen to stay on the sidelines and just watch the unfolding developments on the Senate hearings on rice smuggling where a certain David Tan allegedly called the shots. But the nationalistic and consumerist side of me prompted me to come out with a document, executed by a Davidson Bangayan himself, that practically connected him to

I could have chosen to stay on the sidelines and just watch the unfolding developments on the Senate hearings on rice smuggling where a certain David Tan allegedly called the shots. But the nationalistic and consumerist side of me prompted me to come out with a document, executed by a Davidson Bangayan himself, that practically connected him to be the same person as David Tan. be the same person as David Tan. For the NBI investigators who were already facing a blank wall on who David Tan really is, my information proved very helpful as it gave them a new direction in their investigation. The document I am referring to is a duly signed and notarized complaint affidavit of Davdison Bangayan againt me for libel. The libel case stemmed from an incident where

China shunning US soybeans on trade tensions–Bunge CEO

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he world’s biggest oilseed processor just confirmed one of the soybean market’s biggest fears: China has essentially stopped buying United States supplies amid the brewing trade war. “Whatever they’re buying is non-US,” Bunge Ltd. CEO Soren Schroder said in a telephone interview on Wednesday. “They’re buying beans in Canada, in Brazil, mostly Brazil, but very deliberately not buying anything from the US.” In a move that caught many in US agriculture by surprise, China last month announced planned tariffs on American shipments of soybeans. As the market waited for the measure to take effect, there was some hope among traders and shippers alike that relations between the nations could ease in the meantime and the trade flow would continue. But that doesn’t seem to be the case, at least for now, according to Bunge. It’s “very clear” that the trade tensions have already stopped China from buying US supplies, Schroder said. “How long that will last, who knows? But so long as there is this big cloud of uncertainty, that’s likely to continue.” Price volatility in farm goods has picked up in recent weeks as the saber-rattling between the US and China intensifies. Other

agricultural products caught up in the dispute include corn, pork and sorghum. Soybeans are the second-largest American crop and prices are heavily dependent on trade with the Asian nation, the world’s top importer. In the two weeks ended April 19, China canceled a net 62,690 metric tons of US soybean purchases for the marketing year that ends August 31, US Department of Agriculture (USDA) data show. At this time of year, South American countries typically complete their harvests and become the dominant shippers for several months. Brazil’s lead on global exports is expected to widen to a record in the 2017 to 2018 season as it sells 73.1 million tons abroad versus 56.2 million from the US, the USDA estimates. Bunge has still been able to meet Chinese demand by filling shipments with supplies from outside the US, Schroder said. The White Plains, New York-based company has a large presence in South America. “I would rather say that we would prefer that free trade and no disruptions take place because it’s not good for anyone,” Schroder said. “We are, by virtue of our footprint, in a very good position to deal with” the situation, he added. Bloomberg News

a Singaporean approached me for help in his problem with Davidson Bangayan a.k.a. David Tan regarding their transaction on scrap metals. Davidson Bangayan a.k.a. David Tan was then engaged in scrap metal trading through a company he owned, named Advanced Scrap Specialist Corp. And in our radio program with Sen. Juan Ponce Enrile, I mentioned about Davidson Bangayan a.k.a. David Tan and his questionable shipment for the Singaporean that were supposedly scrap metals but turned out to be used tires. On that basis Bangayan filed the libel complaint against me. On page 7, paragraph 16 of his complaint affidavit, Bangayan said, “Clearly, the foregoing publicity categorically imputed to me and the company Advanced Scrap Specialists Corp. the following wrongful acts namely swindling, contraband shipment… and the identification of the person referred to in the publication definitely referred to me considering that there is no other person by the

name of Davidson Bangayan a.k.a. David Tan.” That affidavit practically nailed Bangayan to the rice-smuggling issue. That is why it remains a big puzzle to me why the case against Bangayan was returned by the DOJ to the NBI. Years have already passed, and we have yet to see a solid case being filed at the appropriate courts against Davidson Bangayan a.k.a. David Tan. Prompting me to ask the question what happened to David Tan? However, lo and behold, I was just told by some of my reliable sources at the NBI that the case against Davidson Bangayan a.k.a. David Tan has been refiled. An answered question, I would say, that I hope would finally put to rest my apprehensions about the campaign against rice smuggling in the country. Thank you President Duterte for being true to your commitment to rid the country of corruption and smugglers, and to give better lives for the Filipinos.

A10 Friday, May 4, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

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editorial

Barangay polls: Go out and vote

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s we prepare to choose new sets of barangay leaders on Monday, we must remember that barangay elections are fundamental to our national existence. If we do it right, we will help elect grassroots leaders who can be vital cogs in nation-building. If we remain indifferent, dismissing the barangay polls as an insignificant exercise that amounts to inconsequential benefits, that’s a vote for scalawags and miscreants.

Here’s why we must help choose respectable, decent and honest barangay leaders: The Philippine Drug Enforcement Agency (PDEA) said that at present, out of the country’s 42,036 barangays, 49.65 percent are considered drug-affected. That represents a total of 20,872 barangays plagued by the drug menace. And if there are illegal drugs, can crimes be far behind? Let’s look at the correlation of illegal drugs and crime, both social ills that need to be stamped out. Consider: The nation’s prison population has exploded beyond capacity and most inmates are in prison, in large part, because of substance abuse; 80 percent of offenders abuse drugs or alcohol; about 50 percent of prison inmates are clinically addicted; and approximately 60 percent of individuals arrested for most types of crimes test positive for illegal drugs at arrest. The US-based National Council on Alcoholism and Drug Dependence Inc. said “at the most intense levels of drug use, drugs and crime are directly and highly correlated and serious drug use can amplify and perpetuate preexisting criminal activity.” It said there are essentially three types of crimes related to drugs: Use-related crime: These are crimes that result from or involve individuals who ingest illegal drugs, and who commit crimes as a result of the effect of the drugs on their thought processes and behavior. Economic-related crime: These are crimes where an individual commits a crime in order to fund a drug habit. These include theft and prostitution. System-related crime: These are crimes that result from the structure of the drug system. They include production, manufacture, transportation and sale of drugs, as well as violence related to the production or sale of drugs, such as a turf war. Based on consolidated data gathered from operational reports of PDEA Operating Units and other law-enforcement agencies, out of 20,872 barangays plagued by the drug menace, “66.7 percent or 13,920 barangays are classified as slightly affected, 32.3 percent or 6,744 barangays are moderately affected, while the remaining 1 percent or 208 barangays are seriously affected.” A barangay is said to be drug-affected when there is a reported presence of drug user, pusher, manufacturer, marijuana cultivator or other drug personality, drug den, marijuana plantation, clandestine drug laboratory and facilities related to production of illegal drugs. There are three classifications of drug-affected barangays: Slightly affected, moderately affected and seriously affected. A barangays is considered slightly affected if there is a reported presence of drug user/s; moderately affected if there is a reported presence of drug pusher/s and/ or user/s; and seriously affected if there is a reported presence of any of the following: Clandestine drug laboratory, warehouse, marijuana plantation and drug den/tiangge, drug trafficking or smuggling activities and drug personalities (i.e., users, pushers, financiers, protectors, cultivators, and manufacturers). We can help spare our barangays from the social ills of crime and illegal drugs by choosing honest and honorable leaders. By participating in Monday’s barangay elections, we can help shape our social, economic, cultural and political development. But first, we must become informed about the candidates and about grassroots issues that can improve our lives.

Since 2005

BusinessMirror A broader look at today’s business ✝ Ambassador Antonio L. Cabangon Chua

Why is there a housing crisis? Edgardo J. Angara

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2016 University of Asia and the Pacific (UA&P) study found that the country will have a housing need of 12.3 million by 2030—given a backlog of 6.7 million from 2001 to 2015, and a projected housing demand of 5.6 million from 2016 to 2030. Out of that 12.3 million housing requirement, here’s the affordability table: (1) 15 percent, or 1.88 million, will need to be built for households who can’t afford to take on any form of housing loan nor subsidy—they are simply too poor; (2) 22 percent, or 2.7 million, can afford socialized housing (P450,000 and below); (3) 50 percent or 6.2 million, for economic housing (P450,001 and P1.7 million); and (4) 12 percent, or 1.53 million can afford low-cost housing (P1.7 million to P3 million). The same study also found that in 2015, there was an excess of around 253,300 high-end (or open

market) houses and 307,740 midpriced homes, many of which were situated within the National Capital Region (NCR) and the country’s other urban centers. The numbers point to the huge and continuously growing housing crisis in the country, where decent homes are becoming too expensive but affordable options are being built farther and farther away from economic centers—ultimately adding to the misery of working people. Housing is one of basic human rights. No less than the Constitution mandates the State to ensure it, especially for “underprivileged

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James Jimenez

T. Anthony C. Cabangon

spox

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ere’s what I think. The low number of Sangguniang Kabataan (SK) election candidates can be attributed directly to the operation of the anti-dynasty provision in the SK Reform Act of 2015.

Prior to the passage of the Reform Act, one of the most common—and almost universally agreed on—criticism of the SK system was that it was a nursery for dynasties. With very few exceptions, the kids who ran for SK chairman or kagawad were scions of local political families. They were either being groomed for higher office when they came of age, or they were installed simply to ensure that wealth and clout stayed well within the family. Over the years, this practice became a kind of norm that many people loudly and scathingly criticized, but which far too few did anything about. It became accepted as the immutable order, if you will, and the youths not fortunate enough to have been born within these

royal families simply ceded ground. Is it any wonder then that with the sudden disqualification of dynasts, remarkably few youths stepped up to file their own certificates of candidacy? Having lived so long in the shadow of the dominant political families and their sons and daughters, the barangays seem to have not been conducive to the emergence of new youth leaders. Deprived of what has essentially become the de facto ruling class, the youth are most likely now coming to realize that they have to find leaders amongst themselves. So, the question raised by the lack of SK candidates now shouldn’t be whether or not these young people need more time to file their certificates of candidacy; the question should be: are they ready?

and homeless citizens in urban centers and resettlement areas.” But as UP School of Economics Professor Emeritus Gerry Sicat noted in a recent column, the State hasn’t been able to fulfill this role given the fact that construction of affordable housing has been left mainly to the private sector. In fact, the State enjoyed early success through the Philippine Homesite and Housing Corp. (PHHC), which is the forerunner of the National Housing Authority as the lead agency of the government for housing projects. The PHHC, however, started to sell off its vast landholdings, marking the start of a shift from a state-led to a privatesector driven housing policy. Sicat explained that due to a combination of market-driven forces and policies on rent control and mandatory compensation for the eviction of squatters, the housing supply for workers within city centers became tighter and tighter through the years. This opened the opportunity for rich land developers to come in, snap up landholdings, and landbank— to eventually become the primary source of housing. Because the State stayed back

What may not be so obvious in all the hand wringing being done at the moment by various quarters is the great likelihood that this will be self-correcting. By the time the next SK election comes rolling along—in two years, unless otherwise delayed yet again—the youth will have already realized that it truly is their turn; that, for better or worse, the big political families no longer have a monopoly on the SK and that the field is wide open for those who aspire to public office, despite not being born to that world. Or, more to the point, why aren’t they? Leaving that question aside for the moment, it might also be asked if the low turnout of SK candidates should be considered the death knell of the SK experiment? I think not. In fact, I believe that this low number of candidates should have been expected; in hindsight, it seems pretty obvious. What may not be so obvious in all the hand wringing being done at the moment by various quarters

Housing is one of basic human rights. No less than the Constitution mandates the State to ensure it, especially for “underprivileged and homeless citizens in urban centers and resettlement areas.” But as UP School of Economics Professor Emeritus Gerry Sicat noted in a recent column, the State hasn’t been able to fulfill this role given the fact that construction of affordable housing has been left mainly to the private sector. and reneged on its mandate, the result has been overly burdensome for many workers—housing that is unaffordable and distant, many even hastily and shoddily built. This housing crisis is part of the reason thousands of our workers have to spend up to three hours a day on the road to and fro from their homes and workplaces. Such crisis demands the full attention and effort of our leaders. E-mail: angara.ed@gmail.com| Facebook & Twitter: @edangara

is the great likelihood that this will be self-correcting. By the time the next SK election comes rolling along—in two years, unless otherwise delayed yet again—the youth will have already realized that it truly is their turn; that, for better or worse, the big political families no longer have a monopoly on the SK and that the field is wide open for those who aspire to public office despite not being born to that world. And that is the reason now is not the time to waver on the SK elections. In fact, now is the perfect time to double down on the SK. Where political families used to groom their young sons and daughters for political office, so too should the mechanisms put in place by the SK Reform Act now be used judiciously to foster the development of leadership skills, civic-mindedness and political mettle in regular kids. The old SK was effectively abolished in 2013 and the SK Reform Act of 2015 was widely considered as the cure for all that plagued the old system. Now, with the low turnout of SK candidates for the 2018 SK elections, we are simply being reminded that—like any good remedy—the SK Reform Act and its anti-dynasty provisions will probably take some time.

Opinion BusinessMirror

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Rethinking human capital investments

In praise of old friends Tito Genova Valiente

Alvin P. Ang

EAGLE WATCH

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ast week we shared our thoughts on the potential short-term negative impacts of the closure of Boracay. We said that it is necessary to employ CostBenefit Analysis incorporating impacts today and as well as into the future. It is possible that because of the Tragedy of the Commons, the long-term benefits outweigh the short-term pain. Nonetheless, it is still necessary to provide cushion and safety nets to those who will be affected. As we ponder on this challenge, a student of management came to interview me regarding his research on inequality and poverty in the Philippines. Our discussion came into the topic of human capital investments—primarily education and health. Development literature has argued that weak or failure to invest in human capital has led to slow economic growth, dragging poverty and inequality as issues over a longer period of time. Investments in human capital do not result to lower poverty and inequality now, but they will give people increased choices in the future. Again, this is not so much different from understanding what is needed now and what is needed in the future. Consider this real scenario: many undereducated and lower skilled people are applying for few jobs that require basic skills. The result is unemployment. This is happening at the same time that our technology-driven economy is unable to get qualified workers and there is actually lack of applicants. This is partly the reason why many low-skill jobs are now being outsourced because there are many people available to do this. As the economy grows and as more technology is introduced into the system, the availability of manpower will be a huge challenge. Ou r col leag ue, Dr. C iel ito Habito has been warning in our Eagle Watch briefings about the challenge of stunting. According to his research, about one-third of children today are stunted. Stunting according to the World Health Organization (WHO) is the impaired growth and development that children experience from poor nutrition, repeated infection and inadequate psychosocial stimulation. Its physical manifestation is low height compared with children of the same age. In the future, stunted children will have diminished mental activity and learning capacity leading to poor school performance and reduced earnings in the future. The challenge of stunting is that it is irreversible once a child reaches 2 to 3 years old. Thus, this means that the demographic dividend—meaning the time when our population has reached a point where there are more people working than dependents, will be a weak one. This is because onethird of the future work force supposed to bring the Philippines to its economic golden age are not the fully capable and dependable ones that developed countries had when they passed through their demographic transitions. Stunting is the anti-thesis of the development of cognitive capital, which is critical in the knowledge-based economy that we have today. According to the presentation given by Michael Samson in the High Level consultation on Social Protection last week—Cognitive Capital jointly enable creativity, flexibility and ability to work collaboratively. This same capital is driving the growth in technology and the rise of artificial intelligence.

As we consider various challenges and debates on policy today, there is no argument against a scientific fact that is coming our way. We must continuously rethink how economic policy will look into the future and not just the short-term benefits or costs today. Beyond government structures and systems, there is a serious need to decide the kind of knowledge economy that the country will have by 2040. Is it one that is manned by capable, critical and creative individuals or one that is repeatedly being challenged by the need to reinvest in basic education and health? This will diminish demand for low skill and repetitive work in the future. The imperative today is therefore to invest in human capital—better education and better health. China’s incredible economic growth run was accompanied by its investments in knowledge-based activities primarily through research and development. This was made possible because of its strong basic education and health foundations. The Philippines is currently pursuing the Conditional Cash Transfer Program, which is more accurately a human capital investment program. It is a long-term investment to give opportunities and choices to the poor families today to graduate into a better future—possibly free from stunting and able to participate in reaping the future demographic dividend. Samson argues in the same presentation, the need for the government not to work in silos but to consider putting a comprehensive investment strategy in education, health, social services and livelihood promotion. Single sector strategy in a challenge like this does not work over a macroeconomic framework. It is better to deliver programs in smaller chunks managed by local governments who understand their localities much better than the national government. As we consider various challenges and debates on policy today, there is no argument against a scientific fact that is coming our way. We must continuously rethink how economic policy will look into the future and not just the short-term benefits or costs today. Beyond government structures and systems, there is a serious need to decide the kind of knowledge economy that the country will have by 2040. Is it one that is manned by capable, critical and creative individuals or one that is repeatedly being challenged by the need to reinvest in basic education and health?

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annotations

he Greeks have thought about it and Aristotle is correct when he said to be friends is quick but friendship is a slow-ripening fruit.

We tested how the fruit has slowly ripened a few days ago when, after some 40 years, we met again, or decided to see each other again. “We” is composed of Lulu, Adelfa, Ligaya, Emmie, Caloy and this writer. If anyone of these persons had said in 1977 or 1978 or even in the 1980s that we would meet when most of us had hit late1950s or 1960s, I would have not believed it. But we did. Martial law was in its early inception when we all saw each other. Except for those close to the dictators’ family, very few individuals got to travel out of the country then. The activists hiding in the mountains had to take the south backdoor, the Mindanao area, just to be able to leave the Philippines. We were not activists, I believe. We participated in demos and teach-ins but who did not. Slowly, as young individuals, we were part of the generation trying to make sense of the dictatorship and the cultures being introduced then: curfews, censorship and a notion of freedom that was odd because there was an unreal element in it. The government said we could talk but we knew what happened to those who did express their mind. Travel—an act that was viewed with suspicion by the government—was the same movement that brought us together. A young organization called YSTAPHIL (short for Youth and Students Travel Association of the Philippines) was behind this program that connected the youths of the country with those from foreign lands. There were two exchange prog rams: t he Canad a-World Youth Exchange and the International Christian Youth Exchange

(IC Y E)—t he for mer bet ween Canada and the Philippines in particular and with other countries, in general; the latter was an exchange program that covered practically all nations. ICYE was initiated after the Second World War when the German youths were isolated from the rest of the world. The program was then extended to other parts of the globe. I do not remember now whether the program was conscious of one fact, that martial law with the disappearance and disillusionment of the Filipino youths was almost like the situation of the German youths suffering with the stigma of Nazism. We, too, were cut off from the rest of the world. It would take years before the world outside would supply us with the truths about our country and the government that was ruining it. Getting the visa during those years was difficult. I almost missed my exchange program to Japan. By the time I was given the visa, I was halfway through the year. One exchangee to Sweden never came back. Most of us did come back but we never heard from each other again. The one year abroad had changed us, I believe. We all grew older. Every now and then, we would hear snippets of news about each other. There was no attempt to come up with a grand reunion. It was like we did not want to talk about what we saw on that other side of the moon. One night, while I was on vacation in Naga, I got a call. I did not even know how she got my number but there was Lulu at the other end of the line. Lulu was one of the senior coordinators at

Friday, May 4, 2018 A11

YSTAPHIL. For us boys from the province, she was our grand introduction to woman sophisticated. With one hand always holding a cigarette, Lulu was a trenchant presence. Gentle but with acerbic tongue spared only by her capacity to make fun of herself, Lulu was now telling me through static that Caloy was getting married. “Getting married!” was my shocked response. Caloy was the gregarious student. Brimming with confidence even at a young age, Caloy was the kind of friend who could take you to an empty building, unafraid of being caught, so that he could smoke, drink beer and look at the city below loving itself. He could write like hell and compose confessionals that only few would dare read or listen to. Caloy went to Canada and to many other places that his heart and not his legs would take him. Caloy was cousin of Ligaya but the relationship ended there. Ligaya was a person unto herself. It was not surprising that while exchange scholars were all eager to go to the United States or Europe, she was happy to be in India. Except for a brief visit, the second time I saw her she was married to an American and sporting a family name difficult to recognize—Sukke. The next time I saw her again, she had grown-up sons and she still looked like a virgin surrounded by tulips and peonies and mountain laurels. She is into flowers, events and growing old gracefully. Adelfa and I were close to each other because our exchange year overlapped. My first night in Tokyo was spent in her host home. She invited me home without even formally asking her host mother about it. Years later, we would discover that was not done. But Adelfa was the brave one. The Facebook reconnected us, with Adelfa retaining her love for Japan by her outbursts of haiku every now and then. All these years, she made good her promise that she would reside in Japan. Em m ie i s t he re ve l at ion. She came back and worked at YSTAPHIL for awhile. She attracted

The way of spreading the truth Rev. Fr. Antonio Cecilio T. Pascual

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SERVANT LEADER

s Radio Veritas strengthens its station by launching “Ang Radyo ng Simbahan” as its new tagline, it also intensifies its mission to evangelize all the Catholic faithful by serving as a tool of spreading the teachings and values of the Catholic Church.

This action is our way to “stand firm with the belt of truth buckled around our waist, and with the breastplate of righteousness in place” (Ephesians 6:14) as we prepare for the celebration of 500 years of Christianity in our country. By mea ns of ou r pl a n to strengthen and deepen the faith of the Catholic faithful, “we will grow to become in every respect the mature body of our Lord Jesus Christ who is the head” (Ephesians 4:15) because “He chose to give us birth through the word of truth, that we

might be a kind of first fruits of all He created.” (James 1:18) “We are from God, and whoever knows God listens to us; but whoever is not from God does not listen to us. This is how we recognize the Spirit of truth and the spirit of falsehood.” (1 John 4:6) As a station of truth, we are doing our best to prepare and unite all the Catholic faithful by means of delivering and “sanctify them by the truth; and the word of God is the truth.” (John 17:17). We are empowering our station

in giving the public the information they need to know especially about social issues, particularly about the plan of our administration to change our constitution through Charter change. According to the result of Veritas Truth Survey in March of this year, 38 percent of the Filipinos are in favor of constitutional convention (Con-con), while 21 percent of the respondents are in favor of constituent assembly (Con-ass). Further, analysis likewise, reveals that when segmented by age group, the younger the respondents were the more aware they are of the difference between Con-con and Con-ass. Such results are thus indicative that even though sufficiency of awareness is present among the respondents, still a fair amount of clarification would still be needed to reach a decision. This is what the Catholic Bishop Conference of the Philippines Pastoral said that “changing our constitution, is such a serious matter for the entire country, because it will de-

How to make better teachers

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eaching may be more art than science, but the longterm benefits of doing it well aren’t up for debate: Good teachers boost their students’ performance on standardized tests, their chances of going to college and even their lifetime earnings. Whether countries prosper and grow depends on the quality of their teachers— which is why governments need to

invest in raising standards. Partly, this means paying teachers more. The public-school teachers striking for better pay in some Republican-controlled states have a good case. But improving teacher quality requires more than that. The overriding priority should be to attract and develop greater talent. In the United States, there’s no national minimum standard for

admission to teacher-preparation programs. Compare that to Singapore and Finland, whose students consistently score near the top of international assessments. Their prospective teachers are drawn from the top 30 percent of university students and must pass a series of exams, demonstrate math and language proficiency and sit for interviews with teaching professionals.

someone who took her to far-off Switzerland. Presently, she still lives in Europe even as she maintains a resort in Palawan and continues her search for a good heart and the best salad. In our reunion, Emmie gathered all the herbs in the kitchen to make a veggie sandwich to the surprise of the old woman there who was charmed how those leaves for healing could be for eating. I flew in from Manila to catch all of them in Bicol. They came by plane via Legaspi, caught the sight of a quiet Mayon Volcano, motored to Ligaya’s ancestral home in Guinobatan for a breakfast and drove to the Iriga home of Caloy and Telay. They would be together for some more days but I was with them only for an afternoon. Everyone was asleep except for Caloy and Ligaya when I arrived. When Lulu came out, her first word was “Brujo! Thank God, you are here.” Except for strands of gray hair, which appeared to be more production design than nature, Lulu had not aged. We had ripened, to follow what the Greek philosopher proposed. The metaphor about fruit and friendship stops there. We are not about to fall off some branches of life. Not yet. That afternoon, we took photos in twos and threes and fours, rearranging the position of each other with each other, as if the permutation would cause magic. Briefly, names of those who passed on were mentioned but we did not dwell on them. Life is short and time is brief, they say. But for the six of us, life has been made longer and time to the fullest extended. There was so much food on the table: exotic jelly from Tokyo; chocolate from Switzerland and rice cakes from the towns around us; a colorful array of pastries that Caloy dubbed “Turkish Delight.” But we barely touched them. We were watching our diet, careful of the carbs and controlling of sugar. Life had made us wiser and yet— this is the lesson of good friends meeting after many years—we are now gifted with the certainty to refuse anything that claims to be sweeter than our friendship.

termine the future of our country politically, that we must make the widest consultation on it for adequate information, discussion and education.” My dear brothers and sisters in Christ, let us not forget that we have the power to tell the truth. Let us take this as an opportunity to reflect and ask for God’s wisdom to be our guide to see the truth. For any personal comments or suggestions you may call 925-7931 loc: 130 or e-mail me at veritasresearch@workmail.com. To know more about Caritas Manila, visit or follow us on Facebook: CaritasManilaInc. For your donations, call our DonorCare lines 563-9311, 564-0205, 09997943455, 0905-4285001 and 09298343857. Make it a habit to listen to Radio Veritas 846 in the AM band, or through live streaming at www. veritas846.ph and follow its Twitter and Instragram accounts @veritasph and YouTube at veritas846.ph. For comments, e-mail veritas846pr@ gmail.com.

In Finland, where teaching ranks as the most admired profession, only 10 percent of applicants for primary-school teaching positions make it through this process. Once admitted, they’re required to earn a master’s degree and complete coursework in their chosen academic subject, as well as drama, music and physical education. Bloomberg View

2nd Front Page BusinessMirror

A12 Thursday, May 3, 2018

PHL tourism gets boost from ADB annual meet By Ma. Stella F. Arnaldo

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Special to the BusinessMirror

VER 4,000 delegates from around the world are participating in the 51st Asian Development Bank (ADB) Annual Meeting, which is expected to boost the business of many tourism-related establishments in the Ortigas Central Business District (CBD). While bulk of the meetings will be held at ADB headquarters along ADB Avenue, several hotels in the area will be hosting some side events and parallel meetings, with delegates billeted at these establishments as well. In an interview with the BusinessMirror, Leeds Trompeta, general manager of the 220-room Discovery Suites Manila, said the hotel occupancy is currently in the “high 90s to 100 [percent]” with delegates having flown in starting last Sunday. Guests include several “premiers or heads of state,” which he declined to identify, with delegates coming from mainly Asia and the South Pacific. Because ADB is a “partner” of the hotel, he said, delegates to the meetings get discounted rates on their rooms. “All they have to show are their IDs,” he said. Trompeta noted the robust turnovers at the hotel ’s food outlets, primarily at 22 Prime, a popular steak restaurant in the Metro, where “some delegates who are checked in here hold some pocket meetings.” Assistant Secretary Arturo P. Boncato Jr., cochairman of the Department of Finance Organizing Committee for the 51st ADB annual meeting, said the

Opportunities... Continued from A1

However, John West also explains that China is not a passive recipient of GVC investments. China has a purposive program of scaling up its participation in the GVCs (meaning climbing upward the technology, skills and valueadded ladder), hatching and promoting its made-in-China GVCs, and, now promoting a “rebalancing” in the economy (such as growing the domestic and export markets in an integrated and balanced way). China and the Asian Newly Industrialized Countries did not adopt a simplistic one-sided liberalization of the economy just to promote GVC investments, as what some GVC economists are trying to push. An Industrial Policy, with capital I and P, is the primary guide in the industrial programming undertaken by the successful Asian countries. This is why in his book, Asian Century on a Knife Edge (2018, Palgrave Press), John West warns that there are risks and challenges in pursuing a pure “GVC-based development” strategy. Special come-ons for GVC investors such as duty-free imports, tax holidays, “soft regulations for labor and environment,” access to cheap land and other resources, and exemptions from limits on foreign ownership can discriminate, directly or indirectly, against the domestic economy and domestic producers. The GVC-based development strategy exposes a country to the vagaries of inter-

“ bulk of the delegates to the meetings are billeted in hotels in the Ortigas CBD,” with parallel meetings being held outside the ADB headquarters by other sectors like civil society, banks and other multilateral institutions. He said other hotels in the Ortigas CBD accredited for the event, which officially started on Wednesday, include Marco Polo Ortigas Manila, Edsa ShangriLa Manila, Linden Suites, Citadines Millennium Ortigas, Mercure Manila, Richmonde Hotel,

Joy-Nostalg Center and Crown Plaza Manila Galleria/Holiday Inn Manila Galleria. Also accredited are Shangri-La at The Fort in Bonifacio Global City, the Makati Shangri-La Manila and Fairmont Makati. The meetings formally end on Sunday. While most delegates are in town strictly for the meetings, Boncato said some delegates who arrived early, “went to Tagaytay and Batangas,” for sightseeing trips. Country delegations, “on their own,” are visiting areas outside Metro Manila and the provinces to check up on the projects they have funded. “The delegations from Australia are in Cotobato City to visit their projects, while there is a delegation that will visit Angat Dam [in Norzagaray, Bulacan], and on Thursday, 10 ministers will visit the Pililla Wind Farm [in Rizal],” he noted. For her part, Aileeen Clemente, president of Rajah Travel Corp., said pre- and post-tours had been made available to the ADB delegates. “We’ve received a number of inquiries, but since today [Wednesday] was just the first day, they haven’t finalized

their itineraries yet.” Some of the tours include short trips to Intramuros, a visit to Greenhills for “retail therapy,” heritage sites in Taal, Tagaytay City and art museums. For short holidays, Clemente said delegates can choose three days-two nights packages to Palawan, Cebu, Bohol and Davao. Rajah Travel has a tour desk at the ADB headquarters. Boncato said the Philippines is one of the fastest-growing economies in the world, and the ADB meetings is a “good chance to showcase our growing economy to the delegates. It is also an opportunity to learn from other countries with stronger economies.” The last time the Philippines hosted the ADB Annual Meetings was in 2012, at the Philippine International Convention Center. It was an opportune time for the government to launch the “Its More Fun in the Philippines” ad campaign in the international arena, with TV commercials and special tourism features airing over CNN International. About 4.3 million foreign visitors traveled to the Philippines that year, the highest on record that time. This year, the Philippines hopes

Failure Of Bidding To Delay Return Of Cheap Rice to Local Markets By Jasper Emmanuel Y. Arcalas @jearcalas

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here were empty tables and chairs at the office of the National Food Authority (NFA) where it conducted its first bidding of the year for rice impor ts under the government-togovernment (G2G) scheme on April 27. The venue was not jam-packed despite the fact that the NFA was under pressure to replenish its depleted stockpile, which fell to less than a day of the country’s total national rice consumption. The NFA had wanted to import rice earlier, but the government’s economic managers and the food agency’s highest policy-making body—the NFA Council (NFAC)—thumbed down the G2G scheme. They claimed that the procurement mode was “vulnerable” to corruption. But the current state of the NFA’s buffer stock forced the government to resort to it again. The food agency was supposed to have a stockpile equivalent to 15 days of consumption, or around 465,000 metric tons. As of April 27 the buffer stock stood at only 8,500 MT. This caused the NFA to stop selling cheap rice. The purchase of rice abroad via G2G would take only 30 days to be completed. In contrast, buying rice via the open tender would require at least 45 days. The food agency now under the Department of Agriculture (DA) is currently struggling to bring back “affordable” rice in the market, the sale of which was temporarily suspended due to the depletion of the NFA’s buffer stock. The poor who patronize the NFA’s cheap rice, however, would have to wait a little longer.

Possible suppliers

In a G2G rice importation, the NFA could only purchase rice from countries with which Manila has an existing memorandum of understanding (MOU). In this case, only Vietnam and Thailand could participate to offer to sell rice to the Philippines. Under the approved terms of reference (TOR), for the NFA’s purchase of 250,000 MT of rice via G2G, the food agency would only accept offers until the 10 a.m. of April 27. On that day, people from the government, media and non-governmental organizations (NGOs) started to arrive by 9:10 a.m. There were circular tables prepared for guests from the media, observers, NFAC and the government. Members of the participating countries sat just across the NFA’s Committee on G2G

www.adb.org

national trade and finance. There is also the added risk posed by advances in technology: Investors can withdraw because robots, artificial intelligence and other innovations have made GVC assembly work cheaper in their home countries. Right now, there is widespread fear in the Philippine call center/BPO sector that there will be a “reshoring” of outsourced customer service back to North America and Europe because of advances in automated interactive communication. In an earlier paper for the South Centre based in Geneva (“Harnessing Global Value Chains,” 2013), Filipino economist Manuel Montes wrote that the issue facing developing countries is not whether to participate in the GVC system. To Montes, the more important question is “how” to participate in the GVC system. In particular, Montes warns that a country may get “trapped” in the middle or in the lower level of the value chain, earning a pittance out of the global value added, which is appropriated mostly by the “lead companies” or MNCs. Montes cited a study by a London economist (Rashmi Banga) showing the skewed distribution of the global value added as follows: OECD countries (67 percent), China (9 percent) and the rest of the world (24 percent). Thus, to Montes, successful participation in the GVCs requires not only measuring the immediate investment and job gains but also assessing and monitoring the medium- and long-term impact of GVC operations for a partici-

pating country. For example: Is export diversification growing or stalled? Are value-added gains increasing or have become stagnant? Do the GVC operations promote backward and forward linkages in the host economy? Montes warns that the supposed gains in the GVC system are being used to justify the adoption of a one-sided facilitation and liberalization program. He cautions the Philippines and other developing countries on policy prescriptions promoting GVC investments, such as the wholesale liberalization of services, the removal of tariffs and the easing of performance and capital requirements for foreign investors. Incidentally, the DTI policy brief has a strange observation: “The Philippines is a relative newcomer to GVCs compared to other countries in the Asean region.” This is historically inaccurate. Even before China, under Deng Hsiao Peng, embraced marketization and export orientation in the late-1970s, the Philippines already had elevated as a national economic policy an economic program dubbed by the National Economic and Development Authoprity then as the “labor-intensive export-oriented ” industrial policy. Part of the promotion of the LIEO is the creation of export processing zones or EPZs (Bataan, Cavite, Baguio and Mactan) and the establishment of bonded warehousing manufacturing units (BWMUs) as base facilities for duty-free reexport manufacturing.

As a result of the LIEO development strategy, the Philippines was able to garner GVC investments in electronics and garments. The problem is that unlike China and some Asian countries, which also participated early on in the emerging GVC system (called then by some academics as the “new international division of labor”), the Philippines was unable to scale up its involvement in the GVC system. It has been trapped in the middle or even lower levels of the GVCs, as what happened in the case of electronics assembly. Singapore had fewer electronics assemblers and yet, it was able to realize higher value-added earnings because it was involved in higher types of electronics assembly and testing. In the case of South Korea and Taiwan, these countries were able not only to scale the technology ladder in electronics; they were also able to develop their own electronics products that were competing with those produced by Japan and other developed countries. The classic example is Samsung: from a mere part assembler of Sanyo, Samsung was able to develop capacity in original equipment manufacture and graduate into original brand manufacture and original design production and eventually into the production of various electronic and industrial products now flooding the world market. One labor-intensive industry that was worth citing here is the export-oriented garments industry. Investors in the industry flocked to the EPZs and took advantage of the BWMU facilities licensed

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by Peza. They were able to make the Philippines as one of the top 10 global garments exporters in the 1970s-1990s. They were able to generate around a million jobs, one-third of which were in the formal factory system, and the rest through the complicated system of subcontracting of embroidery work and parts assembly to home-based producers organized by provincial and town agents. And yet, the industry today is comatose. The quota system under the MultiFibre Arrangement (MFA) provided by North American and European importers and which guaranteed sure market and profits to garments exporters in the earlier decades was removed in 2004 under the Agreement on Clothing and Textiles, per arrangement with the WTO. But more tellingly, concerned policy-makers and garments-industry leaders were informed, through a series of industry studies and tripartite consultations in the 1990s, that due to the scheduled MFA removal and given the emergence of alternative cheaper garment production platforms in Asia (e.g., China, Cambodia, Bangladesh, Sri Lanka and so on), the way forward for the industry was to scale up—that is, to invest on local fiber production, to focus on high-value garments production (e.g., quality designer clothes), to reduce cost of logistics, to speed up export delivery and to invest on better union-management relations. Sadly, very little happened on the scaling-up proposal. The garments industry leaders focused on

250,000 mt The volume of rice that the Philippines is seeking to import under the government-to-government scheme Procurement (CGGP), which oversees the whole bidding process. Representatives from Bangkok were the first one to submit their offers in a sealed envelope at around 9:46 in the morning. Applause filled the room while the Bangkok representative, while holding the sealed envelope, faced the members of the media for a photo opportunity. The sealed envelope was placed inside the empty box, which was in front the table of the members of CGGP. Shortly after, a member of the five-man delegation of Hanoi placed their bids in the box. This was applauded by some of those who attended the bidding. At exactly 10 a.m., Deputy Administrator Judy Carol Dansal, who chairs the CGGP, formally announced the closing of the presentation of offers. Dansal then instructed a member of the secretariat to close the box. “Thank you, governments of Thailand and Vietnam for participating in this G2G tender for the supply of 250,000 MT of rice for the food security and buffer stock of the NFA,” Dansal said. “We invited obser vers from NFA Council, House and Senate Committees on Agriculture, religious sector, NGOs, Office of the President, media and the DA, to show to the public that all aspects of this importation process are above board and in strict compliance with pertinent rules and regulations on government procedures,” Dansal added.

Bid process

Dansal explained that the NFA opted for a G2G importation to fast-track the delivery of rice needed to boost the agency’s buffer stock. “As you know, no less than the President instructed the NFA to immediately replenish our depleted buffer stock.” “And G2G importation is the fastest means of bringing the needed stocks for food security and stabilization of rice prices in the Philippines,” she added. See “Failure,” A2

an expensive program of extending the quota system through a “Save Our Industry” scheme. The SOI program entailed extensive lobbying, with the assistance of expensive American legal firms, for US Congress to pass a law promoting duty-free exportation of American textiles to the Philippines, whose garments producers would be able in return to export duty-free garments to America. Nothing happened out of this campaign under three American Presidents— George Bush Jr., Bill Clinton and Barack Obama. In the meantime, the decline of the garments industr y was preceded by the decline of another industr y—the textile industr y, which was largely domesticoriented. There was ver y little productive linkages between the two industries. With their dutyf ree pr iv i leges, t he ga r ments industry imported everything— sewing machines, textiles, buttons and other paraphernalia. Some even over-imported, with m a ny of t he su r plus impor ts finding their way in the ukayukay markets that have proliferated around the countr y. With no supportive development program in place, the textile industr y simply withered away. Clearly, the Philippines needs to strategize more fully its participation in the GVC system. It cannot simply embrace a simplistic program of trade and investment liberalization based on the naïve belief that growth and jobs would automatically follow.