Businessmirror may 31, 2017

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Wednesday, May 31, 2017 Vol. 12 No. 230

Businessmen prefer expanding martial law By Bianca Cuaresma @BcuaresmaBM & Jasper Emmanuel Y. Arcalas @jearcalas

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artial law has not affected the financial market and is not expected to affect investors’ appetite even if it is expanded to other parts of the country, according to the chief of the Department of Trade and Industry (DTI).

Bill including casinos ‘Dark age’of infra seen in ambit of Amla OK’d sans passage of TRAIN

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he Senate and House of Representatives passed on final reading their respective proposed measures expanding the coverage of Anti-Money Laundering Act (Amla) of 2001 to include casino operators. Voting 219-0, the House of Representatives approved on late Monday the inclusion of casinos, including Internet and ship-based gaming sites, and chipwashing or junket operators, with respect to their casino financial transaction related to their gaming operations. The Senate, voting 21-0, passed

on third reading its own version of the bill on Tuesday. Once signed into law by President Duterte, the remedial legislation will be presented to the Asia-Pacific Group and the Paris-based Financial Action Task Force (FATF), internat iona l watc hdogs trac k ing money-laundering activities. Its principal sponsor, Sen.Francis G. Escudero, chairman of the Committee on Banks and Financial Institutions, said its enactment into law makes the coverage of the government watchdog See “Bill,” A2

By Elijah Felice E. Rosales @alyasjah

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ongress be warned. The nonpassage of the Tax Reform for Acceleration and Inclusion Act (TRAIN) might imperil financial deals with China and Japan, which, in turn, would result in a “dark age”—instead of a “golden age”—of infrastructure under President Duterte. In a news briefing in Malacañang on Tuesday, Socioeconomic Planning Secretary Ernesto M. Pernia said the government will be forced to rethink, if not rescind, agreements with the two superpowers should Congress decide not to pass the TRAIN the soonest possible time. “We will have to go slow on, you know, accepting or entering into official development assistance [ODA] agreements with China,” Pernia said. The same goes for Japan ODAs, Pernia added, in spite of fewer commitments with the East Asian country.

Friends to keep the world clean Teddy Locsin Jr.

free fire

The projected hike in investment pledges in May

See “Businessmen,” A2

PERNIA: So instead of 10 [public infrastructure], maybe just one or two. It’s not going to be the golden age of infrastructure; it will just be the bronze age, [or even] the dark age of infrastructure.” Pernia said this is because the government will need to balance spending and indebtedness on one hand, and capacity to pay and servicing the debt, on the other. “So instead of 10 [public infrastructure], maybe just one or two. It’s not going to be the golden age of infrastructure; it will just be the bronze age, [or even] the dark age of infrastructure,” Pernia said. This is how terrible and unwelcomed, Pernia said, the nonpassage of the comprehensive tax-reform package (CTRP) is going to be. See “Dark age,” A2

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Trade Secretar y Ramon M. Lopez said businessmen have remained in the region following the declaration of martial law in Mindanao to fight terrorism. “So far, no one has pulled out or held back their investments in Mindanao. It seems that investment pledges up to May will even

2016 ejap journalism awards

Ambassador Teddy Locsin Jr.’s remarks at The Group of Friends of a pollution-free world

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hank you for organizing this first meeting of The Group of Friends and for inviting me. I have recommended to Manila that the Philippines join the group. Capital will be only too pleased to join the friends of a pollution-free world. We are a country on the receiving end of other countries’ garbage. We’d like it to stop. Continued on A11

BMReports

Technology, economy boost pawnshops in PHL By Bianca Cuaresma @BcuaresmaBM

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Conclusion

HEY were the cash source of last resort. Today, pawnshops are treated differently. “Filipinos then think of pawnshops as their last resort to obtain credit and solve their financial difficulties,” Central Bank Deputy Governor Nestor A. Espenilla Jr. told the BusinessMirror in response to a query. “Today, pawnshops offer mu ltiser v ice, such as money remittance services, foreign-exchange/money-changing activities; plus, you can pay your bills too in a pawnshop.” Despite their relatively limited service offers compared to actual

banks, pawnshops have grown to have paralleled the reach of banks in the country—particularly in areas where banks refuse to penetrate due to issues of market profitability. As of end-2016, there are 16,698 pawnshops—including both head offices and branches. Banks, in comparison, have 28,297 total head offices and branches nationwide. While the number of pawnshops are only about two-thirds that of actual banks in the country, these pawnshops are present in 1,196 out of 1,634 cities and municipalities. This means that pawnshops cover about 73 percent of local government units (LGUs), higher than the reach of banks, which is at 64 percent.

Continued on A2

Fast, free public Wi-fi bill awaits Duterte’s pen By Butch Fernandez

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AWARDING CEREMONY U-BIX Corp. Chairman Edilberto B. Bravo (right) and Konica Minolta President and CEO Shoei Yaman opens the awarding ceremony of Konica Minolta held after their conference at Dusit Thani Makati. ALYSA SALEN

PESO exchange rates n US 49.8000

@butchfBM

he Cong ress-approved f ree publ ic Wi-f i bi l l m a k i ng I nte r net se r vices readily available to all Filipinos is now on its way to President Duterte’s table for signing into law, Sen. Ralph G. Recto reported on Tuesday. Recto, the bill’s principal proponent, said the soon-to-be-enacted law, which he dubbed as a form of “liberation technology”, also in-

cludes provisions to ensure that free broadband services would be “faster and more efficient”. He noted that the final version of the bill ratified by the Senate and the House of Representatives “not only mandates the mushrooming of free Internet access in public places and offices nationwide, it also requires Internet to be fast and reliable.” The senator said the project, overall, aims to roll out 23,631 sites by 2018, expanding it fourfold to 100,349 by 2026.

“Others may deride free public Wi-fi hot spots as populist-driven conveniences. Sadly, those who embrace this falsehood have not been able to fully grasp the empowering potential of ICT (information and communications technology),” Recto said. The senator pointed out the awaited Free Internet Access in Public Places Act mandates upstream reforms in the telecoms sector that are expected to “result in the better delivery of what is now acknowledged as the third utility

after power and water.” He added the bill contains provisions aimed at not just improving Internet speed and better broadband services, but also “slash the red tape that retards ICT growth”. Explaining the need for remedial legislation, Recto said: “If we want a thousand Wi-fi spots to bloom, we must cut the thicket of regulations choking its growth. This bill authorizes the declogging of administrative bottlenecks.” See “Wi-fi bill,” A2

n japan 0.4477 n UK 63.9631 n HK 6.3961 n CHINA 7.2484 n singapore 35.9282 n australia 37.0313 n EU 55.6117 n SAUDI arabia 13.2797

Source: BSP (30 May 2017 )

BMReports BusinessMirror

A2 Wednesday, May 31, 2017

‘Dark age’. . .

Technology, economy boost pawnshops in PHL

Continued from A1

“We ought to realize the people should rally with the administration to motivate, to urge Congress to pass the bill, especially, of course, the first package,” he said. He added subsequent packages have yet to be discussed reason lawmakers should decide on the fate of the TRAIN immediately. Projected annual revenue under the CTRP is at P162 billion, if the Department of Finance’s (DOF) estimation is to be followed, but modifications introduced by Congress lowered figures to just P82 billion, Pernia said. He said part of the income generated from the tax reform will be used to pay for loans acquired by the government, such as the $9-billion credit facility pledged by China during Duterte’s visit to the country last October. Entailing a total cost of $3.4 billion, China vowed to shoulder the cost of the Chico River Pump Irrigation Project, New Centennial Water Source-Kaliwa Dam Project and the North-South Railway South Line. “They [lawmakers] should realize that we in the economic team, our interest is really just the country’s development, the improvement of society,” Pernia said. “We are trained to do economic analysis, tax analysis. And you know, I don’t think the legislators are as well-versed as the economic team is,” he added. Duterte on Monday certified as urgent the TRAIN, giving Congress the mandate to approve the measure on or before Wednesday. The President acted on the appeal of Finance Secretary Carlos G. Dominguez III to fast-track the bill before lawmakers begin their recess on Friday. “We are transmitting this letter of President Duterte certifying to the necessity of the immediate enactment of House Bill 5636 [the proposed Tax Reform for Acceleration and Inclusion Act],” Executive Secretary Salvador C. Medialdea said in his letter to Speaker Pantaleon D. Alvarez. The TRAIN is the first package of the CTRP, which is aimed at lowering personal income-tax rates and implementing offsetting measures, such as broadening the taxpayer base, limiting value-added tax exemptions, increasing excise taxes on oil and fuel products, among others. “The benefits to be derived from this tax-reform measure will sustainably finance the government’s envisioned massive investments in infrastructure; thereby encouraging economic activity and job creation, as well as fund the desired increase in the public budget for health, education and social programs to alleviate poverty,” Duterte said in a separate letter to Senate President Aquilino L. Pimentel III. Meanwhile, Pernia said the government is projecting GDP growth in the second quarter to outpace the 6.4-percent expansion in the first quarter on higher consumer and government spending. “We expect the second quarter GDP [to] be better,” Pernia said. However, when asked for estimated figures, he said economic managers have yet to formulate an exact forecast. Economic managers earlier placed first quarter GDP growth at 6.9 percent to 7 percent, but official GDP data released in mid-May revealed the Philippine economy expanded by only 6.4 percent year-on-year in the first quarter. This, in spite of the upturn in the agriculture sector, robust trade and manufacturing growth, as well as sustained strong domestic demand. Growth in the first quarter slowed from 6.9 percent recorded a year ago and the previous quarter’s 6.6 percent. Still, the Philippines displayed signs of resiliency after it sustained its 6-percent performance for seven consecutive quarters. Pernia said household and government spending would drive better GDP growth numbers in the second quarter. He added that investments and exports are picking up, while the agriculture sector continues to improve on the supply side. “I guess there will be stronger spending for public infrastructure [during the second quarter],”Pernia said, naming another factor that could bolster the expansion of the Philippine economy. Under Duterte, the government is dead set on completing big-ticket public infrastructure projects, such as the North Luzon Expressway Harbor Link, Luzon Spine Expressway, Philippine National Railway North and South Rails and the Metro Manila Subway. It intends to achieve this dream by increasing the country’s infrastructure-to-GDP ratio to 7.4 percent, which would amount to as much as P9 trillion by the end of Duterte’s term in 2022.

Bill. . .

Continued from A1

Anti-Money Laundering Council’s (AMLC) “more comprehensive”. This is one of the priority measures of the 17th Congress. Under the approved House bill, among those covered are transactions in cash or other equivalent monetary instrument involving a total amount in excess of P500,000 within one banking day. Covered persons are those with a single casino financial transaction involving an amount

Continued from A1

Additionally, among unbanked LGUs—or the places with no banking presence, 44 percent have access to pawnshops as of the latest data. “With their extensive network, pawnshops provide readily access points for financial services, especially in areas where banks presence is lacking,” Espenilla said. “Thus, pawnshops are helpful in BSP’s advocacy of expanding financial inclusion.”

Regulatory environment ACCORDING to Espenilla, the BSP’s recent policy issuances enhancing the regulations on pawnshops and money service businesses help ensure financial service access points are properly supervised for their effective compliance with antimoney laundering, internal control, consumer protection and other existing rules and guidelines, in recognition of their important role in the provision of basic financial services, especially to the unbanked. In Circular 938, all existing pawnshop operators are given one year from the date of effectivity of the Circular or until 28 January 2018 to secure their Authority to Operate (AtO) a pawnshop. Upon expiration of the transitory period, all acknowledgement of registrations previously issued shall be automatically revoked. Asked for an update on the industry’s compliance on the circular, Espenilla said existing BSPregistered pawnshops are still in the process of complying with the new licensing framework to secure their respective AtO.

Businessmen. . . Continued from A1

post double-digit growth,” Lopez told reporters on the sidelines of the launching of the National Intellectual Property Strategy (NIPS) on Tuesday. “The last time I checked, investment pledges were up 31 percent, but I think growth [in May] would be close to 30 percent,” he added. According to Lopez, the faceoff between government security forces and terrorists in Marawi would hardly make a dent in investment pledges. “Investment inflows will not stop just because of that. If I were the investors, the opportunity to invest in the Philippines would still be based on the attractiveness of the demographics and the usual [metrics],” he said. Lopez expressed confidence that investors in Mindanao would not be affected by the declaration of martial law as businessmen would want to assure the safety of their operations from terrorists. “They [investors] are not affected in Mindanao, in general, except in Marawi for now. Because if you talk of plans in Mindanao, they are still being pursued,” he said. “ The imposition of martial law is Mindanao-wide because you want to control the situation. You don’t want [chaos] to spread to nearby areas; it’s a preventive measure,” Lopez said. The DTI chief also said businessmen will be “unfazed” even if President Duterte decides to expand the coverage of martial law

in excess of P5 million, or its equivalent in any other currency, provided that the said threshold may be adjusted by the AMLC based on the recommendation of the congressional oversight committee. The bill refers to casino as a business authorized by the appropriate government agency to engage in gaming operations. An Internet-based casino, on the other hand, refers to a casino in which persons participate by the use of remote communication facilities, such as, but not limited

“The BSP, through the Integrated Supervision Department I, continuously conduct road shows on the new licensing and registration guidelines/ process,” the deputy governor said. “This is to assist and facilitate compliance of the industry with the requirements.”

Proactive stance ESPENILLA added that pawnshop complaints or incidents received by the BSP has since significantly gone down. “It seems that our pawnshop operators are able to handle their customers concerns immediately,” Espenilla said.“The BSP adopts a proactive stance to ensure consumer protection of those that transact with all BSP-supervised financial institutions and, in particular, builds the public confidence and trust in doing business with pawnshops.” Looking ahead, the BSP said pawnshops are likely to continue to evolve in the nature of their services. As such, the central bank’s regulations will likely evolve to cover risks associated with the foresight of an evolved pawnshop industry. “With the increasing popularity of fintech companies, pawnshop operators feel the need to implement the latest technological innovations to keep up with the demands of the market,” Espenilla said. “From the traditional way of accepting pawns, online pawning ‘e-pawning’ are now being offered/seen that enable customers to pawn their personal property through electronic channels without personally visiting the pawnshop office. Electronic gadgets can now

to the Visayas region, or even nationwide. “I don’t think [expanding coverage of martial law] will have an impact on business. Businessmen would even prefer such a situation because they would feel safer,” he said.

‘Strong peso’

Despite the declaration of martial law in Mindanao, analyst Joey Cuyegkeng of ING Bank Manila said the potential impact on the financial markets is likely to remain low as market players are focused on the strong fundamentals of the country’s economy. Cuyegkeng said the Marawi siege and the President’s declaration of martial law did not overpower the sentiment of market players, as the relative strength of the peso amid political circumstances has to do with “sound and favorable economic fundamentals which are seen to remain despite the political developments in the south”. “These fundamentals include a relatively strong economy and growth outlook, large foreign-exchange reserves, strong banking system, still solid consumer and investment spending despite the weak fiscal performance in April,” he said. “The directly affected area in south Philippines by military activity is limited within the Northern Mindanao region, which contributed 3 percent to 4 percent of GDP in 2015,” Cuyegkeng added. Duterte placed the entire Mindanao under martial law last week after hostilities between the Philippine Army and terrorists from the Maute Group erupted in Marawi

to, Internet, telephone, television, radio or any other kind of electronic or other technology for facilitating communication. Ship-based casinos refer to casinos the operation of which is undertaken onboard a vessel, ship, boat or any other water-based craft wholly or partly intended for gambling. PDP-Laban Rep. Ben Evardone of Eastern Samar, chairman of the House Committee on Banks and Financial Intermediaries, said the amendments were intended not only to further strengthen the law, but also to make it fully compliant with the United Nations Convention against Transnational Organized Crime (2000 Palermo Convention) and related UN Conventions, such as the UN Convention Against the Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988 Vienna Convent ion) and t he UN Convention Against Corruption (2003 Merida Convention), a nd t he i nter n at ion a l st a ndards on combating money laundering and terrorist financing set by FATF through its Revised 40 Recommendations. “The laundering of the proceeds of crime is very dynamic. As criminals continue to exploit identified weaknesses of the

likewise be pawned.” With these various kinds of business models that evolved over time, the BSP said its the regulations were and will be “carefully calibrated” to handle these changing activities.

Test and learn ESPENILLA particularly cited the different classifications of Pawnshop Operator License as an example of the careful calibration of regulatory measures to keep up with the industry’s changing needs. The BSP has implemented different classifications of Pawnshop Operator License, with corresponding amount of required capitalization have been introduced depending on the type/level of complexity they will take on in the conduct of pawn brokering business. Espenilla sees “challenging years ahead, both for the regulator and pawnshop operators as the industry becomes a more complicated business from the basic pawnshop years ago”. “As the financial system becomes more complex and varied, the system becomes more susceptible to reputational, legal and moneylaundering risks, among others,” Espenilla said. “But at the same time, we have seen a lot of opportunities for the pawnshop industry to grow with the diversified products and services available in the market that they can also offer as corollary business.” Espenilla said the BSP will continue to adopt and implement its “test and learn” approach as it applies to the evolving pawnshop industry.

City. While martial law remains in effect, Cuyegkeng said foreign and local market players are likely to be unaffected as no disagreement in Congress is expected to brew in the near term with regard to the declaration. “A constitutional crisis may develop if the Supreme Court or Congress decides that martial law has to be lifted or its scope reduced. The President last weekend threatened not to listen or obey the decision of the Supreme Court or Congress and would prefer to listen to the security forces,” he said. Cuyegkeng said markets are not taking the potential constitutional crisis seriously since Congress is likely to support the decision of Duterte. “Government stance against terrorism has been supported not only by the government’s coalition but also members of the opposition and also by the Vice President. The fight against illegal drugs has also received widespread support,” he said. “The means to fight these have been the source of disagreement. Nevertheless, markets continue to focus on the strong economic fundamentals and the limited impact of the hostilities to overall economic activity,” Cuyegkeng added. On Tuesday data from the PDS Group showed the local currency moved sideways to close the day’s trade at P49.84 to a dollar. This is weaker compared to the previous day’s P49.82 to a dollar. The total traded volume on Tuesday was at $409.5 million, higher than the $385.8 million on Monday.

legal and regulatory structures and mechanisms of jurisdictions in order to surreptitiously launder the proceeds of their crime and make them beyond reach of the legal and judicial powers, the law enforcement and judicial system should likewise evolve to counter them. Our responsibility as legislators is to ensure that our government is equipped with the necessary legal tools,” he said. The Amla was enacted in 2001 in reaction to the inclusion of the country by the FATF on the “NonCooperative Countries and Territories” list, also known as the “black list”. It has undergone three amendments so far, in 2003, 2012 and in 2013. According to Evardone, as a result of these amendments, the Philippines was stricken from the black list and moved to the list of vulnerable jurisdictions, or the gray list. Further improvements to the Amla in the 2013 amendments resulted to another upgrade for the country, he said. In June 2013 Evardone said the FATF decided to remove the Philippines from the gray list. However, Evardone said it enjoined the Philippines to “work with the APG [Asia-Pacific Group] as it continues to address the full range of AML/CFT [Anti-Money

Laundering/Combating the Financing of Terrorism] issues identified in its Mutual Evaluation Report, in particular, regulating the casino sector in the Philippines for AML/CFT purposes and making it subject to AML/CFT requirements.” The lawmaker also said in the plenary meeting in September 2016, the Asia-Pacific Group on Money Laundering (APG) gave the Philippines until June 2017 to pass the bills including casinos as covered persons under the Amla, as amended. Evardone said failure to enact such bills within the said period would compel the APG to refer the Philippines to the International Cooperation Review Group (ICRG) of the FATF for monitoring. “Referral to the ICRG means that the Philippines will be included in the gray list of the FATF. In such case, our continuous failure to pass a law putting casinos within the ambit of the Amla will justify the ICRG to recommend to the Plenary that the country be included in the black list,” he said. “Should the Philippines be included in the black list of the FATF, we will go back to where we started in 2001. All our efforts for the past 16 years will be put to a nil.” Jovee Marie N. dela Cruz, Butch Fernandez

www.businessmirror.com.ph

Wi-fi. . .

Continued from A1

Moreover, the senator adds the proposed law likewise aims to “do away with government-permitting problems encountered by the DICT [Department of Information and Communications Technology] contractors and telcos in putting up facilities.” The Recto bill mandates the DICT to streamline the process for the application, renewal and release of permits, licenses and clearances needed for the construction of infrastructure or installation of equipment. It specifically provides, among others, that “licenses and permits must be approved and released within seven days after submission of complete requirements and payments of the corresponding fees”. At the same time, Recto assured that the Wi-fi bill was crafted to also promote fair competition and bars unfair business practices by including a provision specifically “prohibiting any unfair method of competition and exclusivity arrangements in favor of a single telecommunications entity”. Recto explained that under his bill, “ the DICT, in coordination with the National Telecommunications Commission, shall be allowed the free use of available and unassigned spectrum for the free public Internet access program.” The senator added that “the excess capacity of private-sector partners may be offered to deliver supplemental Internet access service for a reasonable fee.” Recto added that to lower Internet costs, private service providers will be “encouraged to exchange data traffic at domestic Internet protocol [IP] exchanges, which may be designated by the DICT.” In addition, Recto’s bill would require the NTC to “provide minimum standards for quality of service, including but not limited to download speed, latency, packet loss and jitter for public free Internet service.” The senator also included a provision in the bill soon to be a law that “the minimum quality of service standards for free public Internet access services shall not be lower than minimum quality of service standards provided for retail basic Internet connectivity services offered to the public.” As envisioned, free Wi-fi hot spots will be installed in national and local government offices; public schools, including state universities and colleges; public hospitals and health centers; public parks, plazas and libraries; and airports, seaports and transport terminals. Recto recalled that the idea was planted way back in 2014, when he moved that the Senate increase the budget allocated for the Free Public Wi-fi Project of the DOST’s Information and Communications Technology Office, the precursor of the DICT. “Since then, three national budgets have sustained funding for what would become the Free National WiFi Project,” said Recto, reporting that by the end of this year, it is projected that 13,024 sites covered by 18 Points of Presence in 1,489 towns and 145 will be up and running.

Breaking the dominance In an analysis of the telecommunications market in the country, BMI Research, a think tank under Fitch, said shaking up the telco market is not an overnight endeavor—one that requires hard management and regulatory decisions. The market is currently dominated by PLDT Inc. in the fixed-line segment and Globe Telecom Inc. in the wireless segment. “Breaking PLDT or Globe’s dominance will not happen easily or quickly and we believe successful candidates would need deep pockets and consistent regulatory support in order to thrive,” the research agency said. But more than huge amounts of initial investments, which the NTC pegs at more than $2 billion, the country needs reforms on regulations and laws. “The lack of an investment-positive regulatory regime is the biggest barrier to change,” BMI Research said. San Miguel Corp. attempted to shake up the market a few years back, but it miserably resigned to sell its telco assets to both the existing telcos due to political and economical pressures. This transaction—pegged at P70 billion—has since been questioned by the Philippine Competition Commission, the government’s antitrust watchdog.

Economy

A4 Wednesday, May 31, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

Group seeks legal, ecological protection for Philippine Rise By Jonathan L. Mayuga

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@jonlmayuga

ceana Philippines, an oceanconservation advocacy group, is pushing for the legal and ecological protection of Philippine Rise as a marine-protected area.

The group also wants the Benham Bank, the shallowest portion of the Philippine Rise, to be declared as a “no-take” zone and ban human activities in the area. Formerly named Benham Rise, the underwater plateau 250 kilometers off Aurora province remains unprotected against “destructive” human activities, particularly fishing. It is also threatened by future oil and gas exploration for its potential to augment the country’s energy supply. In a news statement, Oceana Philippines Vice President Gloria Estenzo-Ramos underscored the need to strengthen the protection for the entire territory against all threats, including overfishing. “Where else can we find 100percent coral cover? We must work together and exercise our sovereign rights to nurture and protect it. The first step is to declare the pristine Benham Bank as a notake zone, immediately shielding it from any form of exploitation,” Ramos said. In partnership with various stakeholders, including the De-

partment of Agriculture-Bureau of Fisheries and Aquatic Resources (DA-BFAR), the Department of Environment and Natural ResourcesBiodivesity Management Bureau (DENR-BMB), and local government units (LGUs), Oceana Philippines is pushing for sustainable fishing practice and the strengthening of protection mechanism for marineprotected areas in the country. Together with its allies in the government and private sector, the group recently held a policy dialogue called “Bayanihan Para sa Benham”, which was graced by representatives from various government agencies and other stakeholders. During the policy dialogue, DENR-BMB Director Mundita S. Lim shared that Benham Rise was designated as an Ecologically and Biologically Significant Marine Area (Ebsa) by 196 countries during the 13th Meeting of the Convention of Parties (COP) to the Convention of Biological Diversity in Mexico in December 2016. Ebsas are said to be “geographically or oceanographically discrete areas that provide important services to one or more species or pop-

ulations of an ecosystem or to the ecosystem as a whole, compared to other surrounding areas or areas of similar ecological characteristics, or otherwise meet the following scientific criteria: 1) uniqueness or rarity; 2) special importance for life history stages of species; 3) importance for threatened, endangered or declining species and/or habitats; 4) vulnerability, fragility, sensitivity or slow recovery; 5) biological productivity; 6) biological diversity and naturalness. Benham Rise scored high in four of the seven criteria, a global recognition of its importance, and of being pristine and unique. The COP decision described Benham Rise as “relatively pristine… of critical ecological importance, including for offshore mesophotic coral-reef biodiversity and for the sustainability of fisheries.” It added that, “aside from being an important source of biodiversity and contributing to the resiliency of threatened ecosystems,” Benham Rise was also cited as “forming part of the only known spawning area

of the Pacific blue fin tuna, Thunnus orientalis.” Other world-famous Ebsas include the famed Galapagos Islands in Ecuador and the Rajah Ampat Park in Indonesia. “We need to conduct more research on Benham Rise to know exactly what there is to protect,” Lim pointed out. The Philippine government has launched several expeditions to the vast and still-largely unexplored region. In May 2016 Oceana joined government scientists from the BFAR, plus the University of the Philippines, Philippine Coast Guard and Philippine Navy for an expedition to Benham Bank. The expedition team reported an astounding 100-percent coral cover in the surveyed area—where corals grew atop other corals. In a country where healthy reefs are the exception rather than the rule, Benham Bank is a treasure trove for oceanic life. Scientists cited the area as a potential refuge for shallow reef fish and other marine organisms, which can be affected by climate change.

Where else can we find 100percent coral cover? We must work together and exercise our sovereign rights to nurture and protect it. The first step is to declare the pristine Benham Bank as a no-take zone, immediately shielding it from any form of exploitation.”—Ramos

DOJ sets hearing on second tax-evasion case vs Mighty Corp. By Joel R. San Juan @jrsanjuan1573

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he Department of Justice (DOJ) has set another round of preliminary investigation on the second tax-evasion complaint filed against tobacco firm Mighty Corp. and its top executives involving P26.93 billion in unpaid excise taxes. This, after the investigating DOJ panel, chaired by Senior Assistant State Prosecutor Sebastian Caponong, submitted for resolution the first tax-evasion complaint involving P9.56 billion. Caponong wrapped up the hearing after the respondents—Mighty Corp. owner and Vice President for external affairs Alexander Wongchuking; former Armed Forces Deputy Chief of Staff and retired Lt. Gen. Edilberto Adan, company president; retired Judge Oscar Bar-

rientos, company executive vice president; and company treasurer Ernesto Victa—submitted their rejoinder where they reiterated their denial of the charges. The respondents said anew they did not violate the National Internal Revenue Code and insisted they had paid the correct amount of tax. The Mighty Corp. executives also reiterated their plea for the dismissal of the Bureau of Internal Revenue (BIR) complaint for lack of probable cause. Their camp, however, refused to furnish members of the media a copy of their latest pleading. “So, after the rejoinder affidavit, this case is now submitted for resolution. Now we hear the other case on June 8 at the same time,” Capanong told the parties. He also denied the request of BIR and Mighty Corp. lawyers to be given 15 days to submit their respective memoranda before the panel resolved the first case.

₧37.88B Mighty Corp.’s total estimated tax liabilities so far

The prosecutor stressed that the submission of a memorandum is discretionary on the part of the panel. “The submission of memorandum is discretionary on our part. If we feel there is no need for you to file a memorandum, we will proceed with resolving the case. As of now, we feel that we can resolve the case even if you don’t file a memorandum. So, we will just have to let go of your memorandum and we will proceed with the case being submitted for resolution,” Caponong said. He also deferred action on the request of Mighty Corp. to consolidate

all the three tax-evasion cases on the ground that their defense would be the same. “So without the appropriate motion, we will treat these cases as two separate cases,” he said. BIR lawyers manifested during the hearing that they would oppose any move to consolidate the complaints. The first complaint stemmed from the master cases of cigarettes worth P2.3 billion bearing fake-tax stamps seized from the firm’s warehouse in San Simon Industrial Park in Pampanga, while the second one involves the 1,072 master cases with fake stamps seized from its warehouse in San Ildefonso, Bulacan. A third complaint was filed by the BIR against the firm last week involving P1.39 billion in unpaid excise taxes for its master cases with fake-tax stamps seized from its warehouse in Barangay Lagao, General Santos City.

Mayor Binay leads Makati’s Smart City evolution By Claudeth Mocon-Ciriaco Correspondent

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akati City is now a step closer to transforming itself into a “Smart City” after forging a collaboration agreement with Globe Telecom, its subsidiary G-XChange Inc. (GXI), and iBayad Online Ventures Inc., for the launch of the Makatizen Card, which will be available to Makati residents and workers soon. Makati City Mayor Abigail Binay said the initiative supports Globe’s drive to transform the Philippines into a digital nation by instilling the importance of e-governance to offices ranging from the local government units up to the national government level. Some 1,000 functioning sample cards were launched and tested at Makati City Hall on Tuesday morning. Although there is still no definite

date yet on the full implementation, Binay said the city’s 500,000 residents can use the card to transact the services of the city government. With the card, Makati residents can receive cash allowances, stipends and other cash benefits using their Makatizen Card. They can also use their cards to pay fees and taxes, as well as for personal remittances and other financial transactions. City hall employees, on the other hand, can use their Makatizen Card to receive salaries and allowances, prompting Binay to remind them not to pawn their card. The Makatizen Card also functions as an automated teller machine Card and is a valid government ID card. Binay said the Makatizen Card collaboration with Globe and its subsidiaries “takes us a step nearer to achieving our goal of empowering everyone, including those in the marginalized

sectors of society, to enjoy a better quality of life”. She that the Makatizen Card goes beyond providing Makati citizens with instant access to essential services of the city government, which in itself is a major leap forward for the city. “The wide range of digital and mobile services offers the people of Makati more convenient and cost-effective ways of meeting their day-to-day needs and obligations,” she added. The mayor said the city government will extend its full support to Globe Telecom’s initiatives “geared towards strengthening its telecommunications network to promote a digitally connected Philippines”. “With confidence and optimism, we view this unsolicited project proposal from Globe and its subsidiaries as the springboard for the rapid transformation of Makati into the country’s first digital city, where

citizens and civil servants are able to experience the optimum benefits of the latest innovations in information technology,” she added. “For the Philippines to truly become a digital nation, we need to fully take advantage of new digital opportunities and innovations to enable growth in every corner of our country. We laud the vision of the Makati City government whose support of this initiative is critical to build the city-wide digital ecosystem, a step toward the realization of our dream for the Philippines to become an admired nation,” said Ernest Cu, Globe president and CEO. Globe has been ramping up network investments in a bid to amplify benefits of its new spectrum assets and enhance mobile services, particularly for data. The company has announced a capital spend of $750 million for the year in an effort to continuously improve mobile and data services.

news@businessmirror.com.ph

Bicam approves free tuition bill

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he Universal Access to Tertiary Education Act of 2017 approved on Monday by the Senate-House bicameral committee will shortly be forwarded to Malacañang for the signature of President Duterte. Albay Rep. Joey S. Salceda, principal author of House Bill 2771, which served as the working draft of the approved version, said as early as the second semester of school year 2017-2018, students in all state universities and colleges (SUCS), local community colleges and those accredited by the Technical Educational and Skills Development Authority (Tesda) will no longer have to pay tuition and miscellaneous fees. The measure also provides subsidies and loans for students in private colleges. Salceda, who was the driving force behind the measure, cited the Albay model for the measure, which he pioneered in his province, where he was governor for nine years until last year, when he returned to Congress. Salceda stressed the value of higher education in economic development. Tertiar y education, he said, is one of the three principal factors, which enabled Albay to reduce its poverty incidence from 41 percent to 15 percent. His massive col lege scholarship program benefited some 89,000 baccalaureate and related degrees. Together with infrastructure and tourism development, they served to distribute economic gains and push development. Under the upcoming law, he said, “if a youth from a poor family in Rapurapu [an isolated island town in Albay] is admitted to management engineering at the Ateneo de Manila, there should be no economic reason stopping him from attaining his dream for a better life by completing his course and, thus, be competitive in the professions and the jobs of the future." Salceda explained that in cities and towns where there are no

₧20B

The amount allocated under the Universal Access to Tertiary Education Act of 2017 for those who will enroll in public, private and community colleges accredited by the CHED

available SUCs, students who enroll in private colleges and universities will also be subsidized by the government equivalent to the cost of tuition and miscellaneous fees equal to the nearest SUCs. The new law also provides free tuition and miscellaneous fees in all technical-vocational institutions accredited or under Tesda, except for “unique” learning materials chosen by the student, which are not included in the governmentlisted free expense items. The new law allocates some P20- billion subsidy for those who will enroll in public, private and community colleges accredited by the Commission on Higher Education (CHED), for students from the poorest (Decile 1) to middleincome class families (Decile 9) except those in the top 10 percent, to underwrite their cost of living and other school expenses. The measure also appropriates some P10 billion for student loans for those from the lowest to middle- income class families who enroll in CHED-accredited public, private and community colleges, except those in the top 10 percent, giving priorities to those belonging to Decile 1 to Decile 9. The loans, which could be used for cost-ofliving allowances and other school expenses, will be repaid when the student-beneficiary had finished his studies and got employed with a salary over P360,000 per year. PNA

LRT 2 Masinag extension project operational by April 2019–DOTr By Lorenz S. Marasigan @lorenzmarasigan

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RAIN commuters from the east of Metro Manila may soon enjoy reduced travel time, as the government pushes for the completion of the extension of the Light Rail Transit Line 2 (LRT 2) to Masinag in the next five quarters. But opening the extension to the public will require the government another semester, according to the transportation department, as it still has to complete the electromechanical systems of the facility. Transportation Secretary Arthur P. Tugade, who led the groundbreaking for the construction of the Masinag and Emerald stations of the LRT 2 in Antipolo City, said the project will hugely cut travel time from Recto to Masinag from three hours to 40 minutes. “It will be a timely addition to have both new stations in the LRT Line 2, as we acknowledge the need for greater accessibility of passengers coming from the eastern side of Metro Manila extending to key areas of Antipolo and its nearby cities,” he said. The additional two stations are designed to accommodate an additional 80,000 passengers daily during its first five years of operation, which will add to the current LRT 2 average daily ridership of 240,000. “ This increased capacity of 80,000 daily ridership of the rail line will not only provide a means to decongest our roads but, more important, offer better riding options to our daily commuters. As we improve the public’s general mobility, we also unburden them from traffic worries,” Tugade said. Representatives from the provin-

cial government of Rizal and cities of Antipolo, Pasig and Marikina also attended the event. Light Rail Transit Authority (LRTA) Administrator Gen. Reynaldo I. Berroya said the project proves that the government “takes solving traffic woes seriously”. “The completion of the LRT Line 2 East Extension Project is part of the fulfillment of the government’s promise to ease traffic congestion by extending the service of the LRT Line 2 System to the eastern part of Metro Manila,” he added. The project, which is being implemented by DM Consunji Inc. (DMCI), involves the construction of a 4-kilometer extension of the existing LRT 2 System from Santolan, Pasig City, to Masinag in Antipolo, Rizal. Two additional stations will be built, namely, the Emerald station, which will be located in front of Robinsons Metro East and Santa Lucia in Cainta; and Rizal and Masinag stations, which will be located before the Masinag Junction in Antipolo City. It is expected to be completed by August 2018, but will only be operational by April of 2019. For her part, Rizal Gov. Rebecca Ynares described the additional stations as a “noble project”. “For quite a long time, traffic has always been a problem of our province—that is why we are happy and thankful to see this much-anticipated project in our province become a reality,” she said. Tugade, likewise, appealed for patience and understanding from the commuting public while the two new stations are being constructed. He mentioned that the construction may cause traffic congestion in the affected areas. 

 “This will cause a bit of inconven-

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

The World BusinessMirror

Wednesday, May 31, 2017

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Probe: Kushner’s motives in meeting with Putin ally

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ASHINGTON—Jared Kushner, the president’s sonin-law and senior adviser, was looking for a direct line to President Vladimir Putin of Russia—a search that in mid-December found him in a room with a Russian banker whose financial institution was deeply intertwined with Russian intelligence, and remains under sanction by the United States.

Federa l a nd cong ressiona l investigators are now examining what exactly Kushner and the Russian banker, Sergey N. Gorkov, wanted from each other. The banker is a close associate of Putin, but he has not been known to play a diplomatic role for the Russian leader. T hat has ra ised quest ions about why he was meeting w ith Kushner at a cr uc i a l moment in t he president ia l t ra nsit ion, accord ing to c u r rent a nd former of f icia ls fami liar w ith the invest igat ions. The New York Times first repor ted t he meet ing bet ween Kushner and Gorkov in March, but the W hite House at the time did not explain its aim. That article quoted a W hite House spokesman, Hope Hicks, who said the meeting came at the request of the Russian ambas-

sador to the US, Sergey I. K islyak, with whom Kushner had met earlier last December at Trump Tower to discuss opening a communications channel with Russian officials during the presidential transition. But the half-hour meeting with Gorkov since has come under increasing scrutiny. The current and former US officials now say it may have been part of an effort by Kushner to establish a direct line to Putin outside of established diplomatic channels. The meeting came as Trump was openly feuding with US intelligence agencies and their conclusion that Russia had tried to disrupt the presidential election and turn it in his favor. The Senate Intelligence Committee notified the White House in March that it planned to question Kushner about the meeting.

On Friday, citing US officials briefed on intelligence reports, The Washington Post reported that Kislyak told his superiors in Moscow that Kushner had proposed a secret channel and had suggested using Russian diplomatic facilities in the US for the communications. The White House has not denied the Post report, which specified that Russian communication centers at an embassy or consulate in the US were discussed as hosts for the secure channel. It is not clear whether Kushner saw the Russian banker as someone who could be repeatedly used as a go-between or whether the meeting with Gorkov was designed to establish a direct, secure communications line to Putin. T he reasons the parties wa nted a communicat ions channel, and for how long they sought it, are also unclear. Severa l people w ith knowledge of the meeting w ith K islya k, and who defended it, have said it was pr imar ily to discuss how the US and Russia could cooperate to end the civ il war in Sy r ia and on other polic y issues. They also said the secure channel, in part, sought to connect Michael T. Flynn, a campaign adviser who became Trump’s first national security adviser, and military officials in Moscow. Flynn attended the meeting at Trump Tower with Kislyak. Yet, one current and one former US official with knowledge of the continuing congressional and FBI investigations said they were

examining whether the channel was meant to remain open, and if there were other items on the meeting’s agenda, including lifting sanctions the Obama administration had imposed on Russia in response to Moscow’s annexation of Crimea and its aggression in Ukraine. During the Trump administration’s first week, administration officials said they were considering an executive order to unilaterally lift the sanctions, which bar Americans from providing financing to and could limit borrowing from Gorkov’s bank, Vnesheconombank. Removing the sanctions would have greatly expanded the bank’s ability to do business in the US. In a statement on Monday, Hicks said that “Mr. Kushner was acting in his capacity as a transition official” in meeting with the Russians. Kushner has agreed to be interviewed by congressional investigators about the meetings, she said. In March Gorkov said in a statement that his December meeting with Kushner was part of the bank’s strategy to discuss promising trends and sectors with influential financial institutions in Europe, Asia and the US. That statement said he met with representatives of “business circles of the US, including with the head of Kushner Cos., Jared Kushner”. At the time, Kushner was still running the company, which is his family’s real-estate business. Vnesheconombank has not responded to questions about

which other financial institutions and business leaders Gorkov met with while in the US. Trying to set up secret communications with Putin in the weeks after the election would not be illegal. Still, it is highly unusual to try to establish channels with a foreign leader that did not rely on the government’s own communications, which are secure and allow for a record of contacts to be created. But the Trump transition was unique in its unwillingness to use the government’s communication lines and briefing material for its dealings with many foreign governments, partly because of concern that Obama administration officials might be monitoring the calls. In addition, Kushner disclosed none of his contacts with Russians or any other foreign officials when he applied for his security clearance in January. He later amended the form to include several meetings, including those with Kislyak and Gorkov, but it is unclear whether he told the investigators who conducted his background check about the attempts to set up a back channel. His aides have said his omissions from the clearance form were accidental. The meeting with Gorkov is now being scrutinized by the Federal Bureau of Investigation as part of its ongoing investigation into alleged Russian attempts to disrupt last year’s presidential campaign, and whether any of Trump’s advisers assisted in such efforts.

His bank is controlled by members of Putin’s government, including Prime Minister Dmitry A. Medvedev. It also has long been intertwined with Putin’s inner circle: It has been used by the Russian government to bail out oligarchs close to Putin, and has helped fund the Russian president’s pet projects, such as the Winter Olympics in Sochi in 2014. Vnesheconombank has also been used by Russian intelligence to plant spies in the US. In March 2016 an agent of Russia’s foreign intelligence service, known as the SVR, who was caught posing as an employee of the bank in New York, pleaded guilty to spying against the US. The spy, said Preet Bharara, then the US attorney in Manhattan, had under “the guise of being a legitimate banker, gathered intelligence as an agent of the Russian Federation in New York”. Gorkov is a graduate of the academy of the Federal Security Service of Russia, a training ground for Russian spies. T hou g h c u r re nt a nd for me r Americans said it is unlikely that Gorkov is an active member of Russian intelligence, they said his past ties to the security services in Moscow was one of the reasons he was put in charge of the bank. In March both CNN and the Post columnist David Ignatius reported that Kushner had met with Gorkov because he wanted the most direct possible contact with Putin. New York Times News Service

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BusinessMirror

Wednesday, May 31, 2017

Japan’s 2.8% jobless at two-decade low in April

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The World

apan’s jobless rate remained at the lowest in more than two decades last month, and retail sales rose from March, climbing for a fourth month. High l ights of Dat a R et a i l sales rose 1.4 percent from March, and were up 3.2 percent compared to April last year. The unemployment rate for April was 2.8 percent, the same as the forecast. Household spending fell 1.4 percent in April from a year ago (forecast -0.9 percent), following a 1.3-percent decline in March. Private demand rebounded during the first three months of the year as Japan’s economy expanded for a fifth consecutive quarter, its longest run of growth in a decade. But households have struggled, with workers receiving limited pay increases despite the tight labor market. With private consumption accounting for almost 60 percent of the economy, wages and consumer spending will need to gain traction before Japan’s recovery becomes self-sustaining. “Improving labor conditions are supporting consumption,” which is stronger than expected, according to Masaki Kuwahara, senior economist at Nomura Securities Co. Bloomberg News

www.businessmirror.com.ph

Macron challenges Putin on Syria, gay rights

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ERSAILLES, France—France’s newly elected president, Emmanuel Macron, came out of his first meeting with President Vladimir Putin of Russia on Monday with a message of stark challenge, promising French military reprisals for any use of chemical weapons by Russia’s allies in Syria and saying he would closely monitor the curtailing of civil rights for gay people in Chechnya.

Against the gilded backdrop of the Palace of Versailles, Macron and Putin pledged to work with each other to fight terrorism. But their body language was, at times, tense, and the sometimes confrontational tone of the meeting was made clear in Macron’s comments afterward during a joint news conference, where he signaled his intent to play a forceful role on the global stage and not be cowed by other world leaders. Wit h P ut in st a nd ing beside him, he accused two news organizations w ith ties to Russia of acting as “organs of inf luence” r at he r t h a n a s t r ue out let s for jou r na l ism. And he publicly warned the Russian leader that

the use of chemical weapons was a “red line” for France. “The use of chemical weapons by anyone will be the object of reprisals and immediate retaliation on the part of France,” he said. Putin has strongly backed President Bashar al-A ssad of Syria, whose forces have been accused of using chemica l weapons as recently as April. The Russian president did not respond directly to Macron’s implicit challenge. The visit by Putin, at Macron’s invitation, was described as a working meeting timed to coincide with the opening of a show at the Grand Trianon, a château within the Versailles complex. The exhibition celebrates the

ties between Russia and France forged 300 years ago by Peter the Great when he visited France after encouraging diplomatic ties between the two countries. Macron made a point of opening the news conference by summarizing the long cultural ties between the two countries in literature, culture and philosophy and by noting that “no essential issue can be handled today without talking with Russia”. T he meeting was Macron’s first with the Russian leader, and he appeared intent on introducing himself as a new factor for Russia to take into consideration on the European stage. It was also a chance for Macron to show France and the rest of Europe what kinds of issues will matter to him in international relations. M ac ron , w ho w a s e le c te d three weeks ago, recently returned from his first meeting with North Atlantic Treaty Organization and Group-of-Seven leaders, but in those meetings he was part of a larger group and the agenda was collective. On Monday he appeared set on opening discussions on a variety of topics, including Russia’s involvement in Ukraine and Syria. For his part, Putin appeared to want to reestablish the relatively warm relations the two countries have had in the past and to use the meeting as an opportunity to underscore Russia’s position in a number of policy areas. Not least of t hose a re its dema nd for l if t ing Eu ropea n e conom ic s a nc t ion s a g a i n s t Russi a t hat were put in pl ace after the annexation of Cr imea a nd medd l ing in U k ra ine. Responding to a question about sanctions against Russia over Ukraine, Putin answered, “These sanctions do not contribute at all to settling the crisis in Ukraine.”

“On ly t he abol it ion of a l l restrictions, a free market and free competition unburdened by political considerations can help develop the world economy,” he said, urging “an end to all limitations on international exchanges”. Despite the sometimes tough tone of the news conference, Macron received Putin with all t he usu a l for ma l it ies: W hen Putin opened the door of his black limousine in the vast Versailles courtyard, as the formally dressed French Republican guard—in gold-braid decorated uniforms—stood at attention, Macron came down the red carpet to the car to greet him. The two leaders had serious expressions as they sat down to talk. Much of Macron’s account of their conversation—putting aside their lengthy comments on Peter the Great’s visit to Versailles in 1717—suggested that he had stuck to his stated plan of pushing the Russians in areas where Putin’s policies are at odds with those of European Union countries. Macron had plenty of reasons for personal animus toward Russia. Reports by cyber-security firms found that groups tied to Russia had targeted his campaign in a hacking attack, and rumors about him were disseminated by Russian-allied news outlets. He chose to put the issue behind him, saying it had already been discussed and he was not in the habit of revisiting topics. Putin quashed the issue even more emphatically. “For what is called Russian interference in the elections of this or that country, it was not a question that we took up: The French president did not manifest any interest and me, even less,” he said. However, Macron minced no words when it came to responding

The use of chemical weapons by anyone will be the object of reprisals and immediate retaliation on the part of France.”—Macron

to a question about why his campaign had shut out two Russianassociated news organizations: Russia Today and Sputnik. Asked about why they did not have access to his campaign headquarters after the first round, Macron responded: “When press organs sow defamatory untruths, they are no longer journalists. They are organs of influence.” He added, “Russia Today and Sputnik have been organs of inf luence during this campaign, which on many occasions produced untruths about me and my campaign and so I determined that they had no place, I confirm it, in my headquarters.” Russia Today’s editor in chief, Margarita Simonyan, responded by saying, “It is disappointing that what started as a rather productive conversation between the leaders of the two countries turned into another opportunity for President Macron to levy baseless accusations against RT.” She added, “By labeling any news reporting he disagrees with as fake news, President Macron sets a dangerous precedent that threatens both freedom of speech and journalism at large.” On human rights, Macron said he had raised the troubles facing gay and transgender people in Chechnya, as well as those of non-governmental organizations. Macron said he had discussed the reports of collective punishment of gay men in Chechnya with Putin and that they had agreed on a “very regular monitoring” of the situation. Macron said Putin had told him he had taken measures to “establish the complete truth on the activities of local authorities” in Chechnya, but he did not specify what those measures were. Chechnya is under the control of a pro-K remlin leader, R amzan K adyrov. “As for me, I will be constantly vigilant on these issues, which are in keeping with our values,” Macron said. Although he did not dispute Macron’s characterization, Putin did not mention gay people during the news conference. New York Times News Service

Old world order is alive but unwell after 4 months of Trump

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our months into Donald J. Trump’s presidency, the sky has not fallen in on the system of global governance the US did so much to construct since World War II. It is, however, in deep trouble. Trump has not followed through on preelection threats to declare the North Atlantic Treaty Organization (Nato) obsolete, abandon the North American Free Trade Agreement, accept Russia’s annexation of Crimea or declare China a currency manipulator. And, yet, as he flew back to Washington at the weekend, Trump’s meetings with traditional US allies during his nine-day tour of the Middle East and Europe appeared to leave them more, rather than less, worried about the inventory of issues that caused such concern last November. They emerged unsure of his commitment to Nato’s collective-defense principle, unclear as to his stance toward Russia, deeply concerned about his distrust of free-trade agreements and in suspense as to whether he’ll withdraw the US from the 2015 Paris Agreement to slow climate change. Trump said on Twitter he’d make the decision this week. “We are not in good shape at all,” said Francois Heisbourg, a veteran analyst of the trans-Atlantic alliance and chairman of the International Institute for Strategic Studies. “In some ways it’s worse than I thought.” He described those as issues of Trump’s impetuous charac ter and governance style.

Merkel’s watershed

German Chancellor Angela Merkel, a trans-Atlanticist who managed to get on well with former US President George W. Bush when other continental Europeans could not, seemed especially despondent after spending three days with Trump, first

at Nato and then a Group-of-Seven (G7) summit in Sicily. “The times when we could fully rely on others are to some extent over—I experienced that in the last few days,” she told supporters at a campaign event in Munich last Sunday. “We Europeans must really take our destiny into our own hands.” To be sure, for some allies, like the Arab Gulf States and Israel, Trump’s election is proving to be a win, delivering clear US support in their rivalry with Iran. Saudi Arabia also struck a deal to buy more than $100 billion worth of US arms and got a pass on its poor human-rights record. Like Trump, these countries believe their relationship with the US is recovering, after significant strain during the administration of former President Barack Obama.

Nato doubts

However, the alliances and institutions the US built with like-minded democracies fared less well. “On the alliance front, we’re having to engage in permanent damage limitation. There clearly isn’t much we can do together,” said Heisbourg, dismissing Trump’s success last week in getting agreement to focus the alliance more on counterterrorism. “Nato is as equipped to deal with counterterrorism as the Vatican.’’ At Nato, Trump omitted to clearly state his commitment to the alliance’s pledge of collective defense, known as Article 5, in a speech to commemorate it. While White House officials said the speech should be read as reaffirming his support, the encounter left allies still uncertain whether the US would come to their aid if attacked. As he watched footage of Trump’s meeting with Merkel, Japanese Prime Minister Shinzo Abe and other G7 leaders in Sicily, while on Bloomberg television, Ian

Bremmer, president of the risk consultancy Eurasia Group, said he was witnessing “the first ever formal meeting of the G-zero”. That’s a reference to Bremmer’s forecast that the familiar institutions of the liberal world order built by the US and other democracies since World War II—the G7 and Group of 20, Nato, the World Trade Organization and the European Union—will become dysfunctional and irrelevant.

China’s advances

Indeed, as the G7 and Nato struggled just to hang together, arguing over trade late into the night and splitting six-to-one on climate change, China had just finished hosting a summit with about 30 nations to promote its One Belt, One Road initiative. Unlike the G7, said Bremmer, that event had “real coordination, strategy and money behind it”. One Belt, One Road is a multi billion-dollar infrastructurebuilding program to connect China’s producers with markets across the globe, at the same time boosting Chinese economic and political influence. By contrast, Trump’s “America First” positions on trade and climate change led to concern among some of the allies he met in Brussels and Sicily that he risks abdicating the US role as global leader and rule-maker to China. He has already pulled the US out of negotiations on the Trans-Pacific Partnership trade deal, a strategic, as well as economic measure aimed at binding other Pacific nations more closely to the US; China was not invited. Japan, in particular, pushed at the G7 for a recommitment to supporting a rules-based global order, whether on trade, freedom of navigation in the South China Sea, nuclear nonzproliferation or climate change. Bloomberg News

SUGAR REGULATORY ADMINISTRATION

ST 31 ANNIVERSARY

A BusinessMirror Special Feature

www.businessmirror.com.ph

Wednesday, May 31, 2017

A9

SRA gears up for SIDA programs AN INDUSTRY OVERVIEW T T HE improvement in the productivity of sugarcane farmers, coupled with the Sugarcane Industry Development Act (SIDA) programs rolled out by the Sugar Regulatory Administration (SRA), would ensure that sugar production would remain stable until 2022. According to a Global Agriculture Information Network (Gain) report, Philippine sugar production for the current marketing year (MY) ending on November 30 could go up to 2.25 million metric tons (MMT), from 2.135 MMT recorded a year ago. The Gain report, which was published recently by the US Department of Agriculture’s Foreign Agricultural Service (FAS) in Manila, said the hike in output would be due to favorable weather and the slight expansion in sugarcane areas. “Post forecasts MY 2016/2017 raw sugar output to reach 2.25 MMT as experts foresee a return to traditional production levels with a return to more normal weather conditions after a period of prolonged drought,” the report read. Citing data from the SRA, the

report noted sugarcane production area in crop year (CY) 2016-2017 increased to 419,000 hectares from 412,000 hectaresin the previous CY. This is expected to result in more cane production, which could reach 23.5 MMT, slightly higher than the 23.25 MMT milled in the previous crop year, according to the report. The sugar-production forecast of the FAS in Manila is based on the US MY for sugar, which starts on December 1. The CY for sugar, in the Philippines starts on September 1. The FAS projection is consistent with the SRA’s production forecast for the current CY, which would end on August 31. For MY 2017/2018, the report noted Philippine sugar production would increase slightly to 2.3 MMT. “Industry contacts report increasing difficulty in finding farm labor to harvest the cane, which may affect the actual amount of cane harvested.” The report also noted that domestic consumption of cane sugar in MY 2016/2017 would increase to 2.2 MMT, or 2.8 percent higher than the recorded consumption volume of 2.14 MMT in previous

market year, according to report. “Consumption of cane sugar should rise to 2.2 MMT in MY 2016/2017, if anticipated restrictions on the importation of high fructose corn syrup [HFCS] are implemented, or if prices of domestic sugar drop to lower levels,” the report read. “The Philippine Department of Agriculture and beverage manufacturers have agreed on a phase-in period for the new HFCS guidelines for the release of imported HFCS in to the market,” it added. Due to expansion of the food processing beverage manufacturing sector, demand for sugar and/or sugar substitutes is anticipated to increase. FAS projected Philippine sugar imports in MY 2016/2017 would settle at around 100,000 metric tons (MT), 56.5 percent lower than the 230,000 MT imported in MY 2015/2016.

SIDA programs

THE SRA under President Duterte will pursue a number of programs under the Sugarcane Industry Development Act to ensure the stability of sugar output in the Philippines.

These are the initiatives of the SRA under the SIDA Programs: A. BLOCK FARMING • About 80% of sugarcane farmers are agrarian reform beneficiaries and small farmers cultivating farms of 5 hectares or less, but with inefficient farming systems such that their sugarcane production is only around 30% of the national production; • Block farming is an initiative that will consolidate ARB / small farms to a minimum size of 30 hectares, to take advantage of the economies of scale while ownership remains with the landowner, it will be professionally managed as an agribusiness enterprise; • The objective of this program is to increase productivity and reduce production cost with the end view to increase income of small farmers. • A mandated appropriation of around P300 million annually under the Sugarcane Industry Development Act (SIDA) is provided for the block farming program. In 2016, 62 block farms have been identified as recipients of this fund. B. SOCIALIZED CREDIT PROGRAM • Investments on sugarcane production inputs and farm support services are some of the key solutions to improving farm productivities. However, right timing of fund releases especially in the procurement of farm inputs to coincide with the need of the sugarcane crop are essential in optimizing farm productivities; • The SIDA mandated a support fund of around P300 million for socialized credit to be handled by the Landbank of the Philippines (LBP). SRA proposed to LBP a 2% management fee so that the program will really benefit the farmers and if possible, be administered by PHILSUCOR which understands how the sugarcane industry works; The provision of financing assistance to farm equipment service providers like the acquisition of harvesters, cane cutters and loaders are also a priority due to shortage • of labor in the industry. C. INFRASTRUCTURE DEVELOPMENT Sugarcane is an annual crop and along its growing stage, exposure to adverse / extreme weather conditions or abnormal climatic changes is inevitable that affect its • farm productivity and eventually sugar yield which in turn directly affect the income of farmers; Infrastructure support services like the construction / rehabilitation of farm-to-mill roads (FMRs), installation of irrigation / drainage systems, and IT infrastructures as • early warning information systems /device are the solutions that will provide resiliency in sugarcane farming; The SIDA program committee on infrastructure will develop / formulate an infrastructure masterplan which includes road network maps of each sugarcane mill district. • This plan will support funding allocations for priority sugarcane infrastructures on a year-on-year basis; • The SIDA provides for a P1.0 billion mandated appropriation for the industry’s infrastructure projects. D. FARM MECHANIZATION PROGRAM • Farm mechanization in the sugarcane industry is still low especially in the harvesting and loading operations where availability of labor services is a challenge; • The sugarcane roadmap 2020 estimated the mechanization levels of the various farm operations in CY 2015-2016 to be 64% on land preparation, 17% on cultivation, 1% on harvesting and 1% on loading operations; • Acquisition of prototype farm machineries is supported by the R, D & E fund while financing for service providers is part of the socialized credit program; • The support of DA and DAR or any foreign-assisted financial assistance on sugarcane farm mechanization is desired because available funding support is very lean considering the current mechanization level of the industry. E. RESEARCH, DEVELOPMENT AND EXTENSION The sugarcane industry deserves a strong research, development and extension support services that will contribute in the improvement of its competitiveness through • a well-planned and aligned R, D & E agenda; • R, D & E should be participative in nature in terms of sharing of expertise, access to funding and technological advancements that are appropriate and needed by the industry; • Partnership between SRA, PHILSURIN, the MDDC, DOST, DA, UPLB and other SUCs and international organizations are essential to have an aligned R, D & E agenda; Existing R, D & E projects are sugarcane breeding, establishment of sugarcane high-yielding variety nurseries, soil profiling / characterization and soil fertility mapping • of all mill districts, adaptability trials, national cooperative tests of new varieties, pest & disease / sugarcane nutrition studies, farm-based farmers trainings, technical trainings on sugar / bioenergy production, capacity / efficiency audits of sugar mills/refineries, environmental studies and monitoring of sugar mills, sugar quality studies, farm mechanization studies, acquisition of prototype farm machineries, production of trichogramma as biological agent to control cane borers, production of micropropagated sugarcane plantlets, etc.; • A mandated appropriation of around P300 million annually is provided under SIDA for R, D & E projects. F. HUMAN RESOURCE DEVELOPMENT PROGRAM • The sugarcane industry has a felt need on the generation of expertise because of its ageing technologists, researchers and the absence of scientists who will cater to the technological advancement of the industry; • The skills of the industry’s farming and labor sectors need to be upgraded as well due to the introduction of new / advanced technologies, farm machineries and process equipment and to serve the advocacy on product diversification; • DOLE, SRA, CHED, TESDA, UPLB, PRC and the private sector are mandated by SIDA to formulate the Human Resource Development Master Plan as guide in identifying the priority expertise and skills that the sugarcane industry need to further its competitiveness; • Formulation and implementation of competency standards and training regulations for technical vocational education and training for the sugarcane industry by the TESDA is mandated by the SIDA which will enable the capacity building, skills trainings, institutional strengthening of the sugarcane industry workers, small farmers and agrarian reform beneficiaries to actively contribute in productivity and competitiveness of the sugarcane Industry. • Funding can be sourced from the capability building component of the R,D & E fund and the annual SIDA scholarship fund of approximately P100 million. G. SCHOLARSHIP PROGRAM • The SIDA provides a scholarship program for the underprivileged but deserving college and post graduate students who are taking up courses relevant to the development of the sugarcane industry • For 2016, the GAA has appropriated 78M for SIDA Scholarships with CHED as the implementing agency, 20M under TESDA and 9.7M under SRA The scholarship program aims to enable the small sugarcane farmers and other workers in the Philippine sugarcane industries and their dependents/children to avail of college and • graduate scholarship grants and to encourage career in agriculture, agricultural engineering and mechanics, and chemical engineering and sugar technology, and other relevant field of disciplines such as but not limited to engineering, agricultural extension, chemistry, agricultural business, agricultural economics and statistics, and biology; H. STRENGTHENING OF THE MILL DISTRICT DEVELOPMENT COUNCILS (MDDCS) • The MDDCs are created by SRA as conduit in the identification and implementation of programs for the sugarcane mill districts; • Under SIDA, the extension services that MDDCs can provide include: technical assistance and advice, conduct of tests, propagation and distribution of high yielding varieties, and operation of demonstration farms; • The MDDC’s are also responsible for the formulation of the development plan of its mill district, in line with the targets of the Sugarcane Industry Roadmap; • Under the Sugarcane Industry Development Act (SIDA), a Mill District Development Program Committee is created to develop guidelines for the funding, prioritization and implementation of the development plan submitted by the MDDC and to evaluate and recommend projects, programs, activities and implementation of the roadmap. The MDDCs may avail of funding from the government’s general appropriations through the SRA for its extension services projects subject to Commission on Audit (COA) • accounting rules and regulations with the following conditions:(i) the proponent MDDC is accredited by the SRA, (ii) has the organizational capacity to implement and manage the project, and (iii) has no pending financial obligations or unliquidated funds with SRA.

OTAL sugarcane area in crop year 2013— 2014 was 423,333 hectares planted in around 20 provinces within the 10 regions of the country. However, in crop year 2014—2015, the plantation area for sugar production declined to 416,893 hectares. Further, in crop year 2015 – 2016, latest crop estimate of SRA shows another shrinkage in plantation area to 413,264 hectares. Sugarcane growing areas cover 29 Mill Districts (MDs)—7 MDs in Luzon (including Isabela Mill District, a newly created mill district dedicated to bioethanol fuel production), 3 MDs in Mindanao, 4 MDs in Panay, 2 MDs in Eastern/Central Visayas (Durano MD is merged with Bogo-Medellin MD due to the closure of its sugar mill), 2 MDs in Negros Oriental and 11 MDs in Negros Occidental. SRA created the Mill District Development Committee (MDDCs) in the Mill Districts to oversee and implement programs and projects for the development of the sugarcane industry. It is composed of representatives from the mills, planters’ associations, Philippine Sugar Research Institute (PHILSURIN) and SRA as secretariat. The MDDCs were transformed into SEC-registered foundations or Mill District Development Council Foundation Inc. (MDDCFIs) to avail of the Sugar ACEF grant in 2001. Generally, within the five-crop-year period, sugarcane areas harvested were up from 385,662 hectares in crop year 2009-2010 to 413,264 hectares in CY 2015-2016. Negros island shares 55 percent of the sugarcane production areas, followed by Mindanao with 21-percent share, Luzon with 14-percent share, Panay with 7-percent share and Eastern/Central Visayas with a share of 3 percent. In terms of farm productivity within the five cropping seasons, from CY 2011-2012 to CY 2015-2016, crop year 2012-2013 exhibited the best yield of 59.78 TC/ha, while the estimated

yield in crop year 2015-2016 of 55.07 TC/ha is the lowest so far. The changing climatic conditions is the main reason for farm yield variability such that in CY 2015-16, the plantations nationwide suffered an extended El Niño which stressed the growth of sugarcane, being an annual crop.

SUGARCANE PROCESSING

THE sugarcane industry in the Philippines has grown into a multi-product industry with sugar, bioethanol and power as its major products. Muscovado, although the production areas ranged from 2,000-3,000 hectares only, is a competitive product considering that its price in the domestic and international market is higher than raw and refined sugar. Molasses is a by-product from sugar manufacture which became a major raw material in bioethanol production. nSugar Factories. In crop year 2015-2016, there are 27 operational sugar mills and 14 sugar refineries. Out of the 27 sugar mills, one is registered with SRA to be producing muscovado sugar. The rest of the muscovado producing facilities are not registered with SRA. In terms of sugar production, it was in CY 2012-2013 that the industry produced a record-high of 2.465 million metric tons of raw sugar (reckoned from data starting crop year 1977-1978) and a low of 1.33 million metric tons in crop year 1986-1987. Production of sugar in CY 2015-2016 was affected by the prolonged El Niño, which may bring down production to a range of 2.15—2.20 million metric tons. nBioethanol Facilities. The Biofuels Act of 2006 opened up the gates to new investments in the sugarcane industry, through the bioethanol fuel production facilities. In 2007 voluntary 5 percent bioethanol blend in gasoline was implemented to jumpstart with the mandate

and the bioethanol used were all imported. San Carlos Bioenergy Inc. (SCBI) pioneered in the bioethanol fuel business which started operation in 2009 with an initial capacity of 30 million liters annually. The target sugarcane production areas dedicated to supply the feedstock needs of SCBI is around 5,000 hectares. Although Leyte Agri Corp. was operated in 2008, the facility is an old one producing potable and industrial alcohol. Its production capacity is only 9 million liters annually. Roxol Bioenergy Corp. and Green Future Innovations followed, putting up new investments in the bioethanol industry with annual production capacities of 30 million liters and 54 million liters, respectively. Green Future Innovations Inc. (GFII) is the second sugarcane-based bioethanol investment in the country, which utilizes around 5,000-8,000 hectares of sugarcane plantations in Isabela and nearby provinces to supply its feedstock needs. GFII invested around P11 billion for its production facilities and plantation development. A major setback of the bioethanol investments occurred in 2010, when the prices of sugar went up and the implementing guidelines of the bioethanol mandate is not yet in place. SCBI halted its operation, Roxol deferred its operation while Green Future Innovations was still in its construction phase. Investments in the bioethanol sector was revitalized in late 2011 upon the issuance of the Department of Energy the implementing guidelines on the optimization of locally produced bioethanol fuel and the 10 percent bioethanol mandate. Oil companies are given local monthly allocations out of the volume commitments of local producers and a bioethanol reference price was put in place to serve as benchmark during price negotiations between the petroleum companies and the bioethanol producers.

A10 Wednesday, May 31, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Biotech crops offer economic benefits

T

he economic benefits of planting biotech crops can never be underscored enough. According to the latest report from the International Service for the Acquisition of Agri-biotech Applications (ISAAA), Filipino farmers who planted Bacillus thuringiensis (Bt) corn from 2003 to 2015 earned an estimated $642 million. For 2015 alone, ISAAA said farm income reached around $82 million. At the average exchange rate of P45.50 to the greenback, corn farmers netted P3.73 billion in 2015.

According to ISAAA, the Philippines ranks 12th in biotech crop commercialization for 2016, when 812,000 hectares of biotech maize have been planted. This is 16 percent higher than the 702,000 hectares planted with Bt corn in 2015. Data from the ISAAA also showed that adoption rates also increased last year to 65 percent, from 63 percent in 2015. The number of small farmers growing on average 2 hectares of Bt corn in the Philippines last year was estimated at 406,000, according to ISAAA. Bt corn was the first genetically modified crop to be commercialized in the Philippines since 2002, when the government rolled out a regulatory framework that is considered a model in Southeast Asia. “The Philippines continues to be at the forefront of biotech research and commercialization in Southeast Asia and has a model for science-based and thorough regulatory policy in the region,” the ISAAA said in its report. Despite this, however, only one crop—Bt corn—has been commercialized. There are a number of biotech crops that are currently in the pipeline: Golden Rice, Bt cotton, biotech papaya with delayed ripening and papaya ring spot virus, and the controversial fruit and shoot borer resistant Bt eggplant. The prospects of commercializing Bt eggplant, or Bt talong, dimmed when the Supreme Court (SC) ruled in December 2015 to stop its field testing. The SC also halted the processing of applications for contained use, field testing, propagation, commercialization and importation of GM products when it nullified Administrative Order 8 issued by the Department of Agriculture in 2002. While the SC reversed its decision in August 2016, proponents of Bt talong have yet to push through with the field testing of the crop. Other crops in the pipeline, such as the Golden Rice, have yet to reach the field testing stage. But because it is the country’s staple, Golden Rice’s commercialization will not be smooth sailing. This, despite the absence of definitive proof that GM crops are harmful to human health and the existence of a regulatory framework that is regarded as worth emulating in other parts of the region. Biotech crops, such as Bt corn, allow farmers to save on production cost because they will no longer have to extensively use pesticides to kill the corn borer insect. For now, only corn farmers in the Philippines are reaping the benefits offered by biotech crops. Hastening the commercialization of other biotech crops would allow more Filipino farmers to enjoy higher incomes and help them get out of poverty. Since 2005

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INSURANCE FORUM ARD Pioneer Microinsurance Inc. (CPMI) is not only a leader in nonlife microinsurance, it is, in fact, the very first microinsurance company in the Philippines.

It is a joint venture insurance company established by Center for Agriculture and Rural Development, Mutually Reinforcing Institutions (CARD MRI) and Pioneer Insurance and Surety Corp. in 2013. CPMI’s objective is to develop and market relevant and affordable nonlife microinsurance products. CPMI is CARD MRI’s 12th subsidiary institution. The founder of CARD MRI is Jaime Aristotle B. Alip, Ph D. It has gone a long way since Alip, together with 15 rural development practitioners, organized the Center for Agriculture and Rural Development Inc. in San Pablo City, Laguna, in December 1986 as a social development fund to address the continuing poverty in Regions 4 and 5. In 1989 a grouplending pilot was launched by CARD,

based on the Grameen Bank’s methodology. A year later, CARD launched its credit arm, the Landless People’s Development Fund (LPDF). In 1997 it became the first non-government organization to transform into a licensed rural bank. CARD Bank, officially established in September 1997, is headquartered in San Pablo City, Philippines. CARD Bank provides credit and savings for rural clients. As of July 31, 2009, the bank was serving 338,796 active borrowers, and reported a total portfolio of approximately $25,643, and total assets of $34,189,940. CPMI was formerly known as Pioneer Asia Insurance Corp. (PAIC), which was incorporated and registered with the Securities and Exchange Commission (SEC)

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on August 16, 1963. On September 10, 2013, the SEC approved the amendment of PAIC’s corporate name to CARD Pioneer Microinsurance Inc. It is the country’s first nonlife company specifically created to address the calamity, agriculture and income-loss insurance needs of the marginalized market at the microinsurance level. CPMI is 47.85-percent owned by Pioneer Insurance and Surety Corp. (PISC), 47 percent by CARD Mutual Benefit Association Inc. (MBA), 2 percent by Card MRI Insurance Agency Inc. (CaMIA), 1.51 percent by Pioneer Intercontinental Insurance Corp. (PIIC), 1.42 percent by Pioneer Life Inc. and 0.22 percent by Pioneer Life Holdings Inc. (PLHI). The registered office address of the CPMI is Pioneer House, 108 Paseo de Roxas, Legazpi Village, Makati City. Before the creation of CPMI, CARD MRI was a client of Pioneer Life Inc.’s microinsurance line. However, it did not take long for this to eventually blossom into a partnership between these two companies, who are pioneers in their own respective fields. CARD MRI, on the other hand, is the Philippines’s largest microfinance institution. Among the subsidiaries of CARD MRI is CARD

China’s seniors will reshape the world Adam Minter

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

Ruben M. Cruz Jr. Angel R. Calso

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F

or decades, Nestlé SA has tried to get its infant milk powder into the hands of China’s new mothers with promises of brighter, healthier babies. Now it’s trying to do the same for the elderly. Last week the company launched “Nestlé Yiyang Fuel for brainTM senior milk powder”, a formula designed to help China’s seniors “refuel their brains and start a new smart life”.

The announcement didn’t get quite the hype that products targeted to China’s millennials do. But it may yet prove more consequential. With 222 million people over age 60, China is home to the world’s largest population of seniors, and their economic clout is set to surge in the years ahead. By one estimate, the value of products and services geared toward them may reach 33 percent of GDP by 2050. If that trend holds, caring for seniors will be China’s dominant industry by the middle of the century, and old folks will be its defining demographic. That presents plenty of challenges for the government—

but also some major opportunities for business. Seniors are already playing a key role in shifting China’s economy away from exports and toward consumption. Fan Min, president of China’s biggest online travel site, predicts they’ll be the primary drivers of the country’s tourism market within a decade. About 5 million of them are traveling overseas annually, with that number expected to more than double by 2030. As they venture out, the travel industry is adjusting to their demands (by offering more group tours and cheaper accommodations, for example). And it’s not just tourism:

In recent years, businesses, ranging from car companies to online marketplaces, have built features marketed to China’s elderly. Health care is another industry that may be transformed. Unlike Japan and Western Europe, China is aging before it has grown rich enough to develop the institutions—such as nursing homes— needed to sustain a large senior population. Increasingly, the private sector is stepping in. For those who can’t afford to travel overseas, private preventative care is becoming much more common. Elsewhere, companies are developing “smart care” products, in which Internetconnected devices track the health of customers. Beijing is expanding a program that uses a discount shopping card to monitor seniors while applying data analytics to anticipate their needs. Nestlé clearly understands these trends. At the launch of its new senior milk powder, a company official told the press: “As an old Chinese saying goes, ‘Diet cures more than the doctors’.” Long term, that attitude—combined with investments in health-focused artificial intelligence and big data by companies, such as Alibaba Group Holding Ltd. and Baidu Inc.—may well

MBA, which also holds a direct interest in CPMI. CARD MBA was registered with the Securities and Exchange Commission (SEC) as a nonstock, not-for-profit association on October 29, 1999. It was granted a license by the Insurance Commission (IC) on May 22, 2001, to engage as a mutual benefit association that extends benefits and services for the welfare and financial security of its members and their families in the form of death benefits, medical subsidy, pension and loan redemption assistance and ensuring continued access to benefits and resources. On July 16, 2013, CARD MBA entered into a purchase agreement with CPMI for the purchase of 2,303,428 shares, or 47 percent of CPMI. On September 30, 2013, the consideration paid by CARD MBA for its investment in CPMI amounted to P257.98 million. CPMI focuses on the communitybased social development undertakings for improving the quality of life of the economically and socially challenged families and women in the country. Atty. Dennis B. Funa is the current insurance commissioner. Funa was appointed by President Duterte as the new insurance commissioner in December 2016. E-mail: dennisfuna@yahoo.com.

reshape the health-care industry, both in China and globally. But the area where China will have the biggest influence on the market for senior services will likely be housing. As of 2015, China had an average of only 26 nursing beds for every 1,000 seniors. Over the coming decades, it’s unlikely that the government will be able to build— much less staff—nearly enough facilities to meet the demands of its growing elderly population. As a result, it will need to develop new and more creative models for senior care. That might mean more automation (there’s at least one robotics pilot program in Hangzhou). It could mean home care that’s supported by a network of Internet-dispatched delivery services (especially for food). And it will surely mean an expansion of smart monitors and technology to interpret the data they collect. Given the size of the potential market, there’s reason for optimism that the China’s entrepreneurs can figure out low-cost models that work at home— and quite possibly overseas. For China’s current generation of seniors, having come of age at a time of global isolation and domestic hardship, that’s a level of influence few could have imagined in their youth.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Duterte must learn from the Westphalian doctrines of 1648 Michael Makabenta Alunan

on the contrary

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here’s a lot President Duterte and other world leaders can learn from history, specifically from the principles of the Peace Treaties of Wesphalia of 1648 in Germany that can guide them, as these have proven to bring back world peace and development. Pre-Westphalian wars brought havoc. Prior to the series of peace treaties from May to October 1648 in Westphalia, Germany, involving 109 delegations and 94 states and kingdoms from all over Europe, there were unending internecine wars among Europeans for over a century that brought havoc and millions of deaths. The worst immediately before the treaties of Westphalia was the Thirty Years’ War from 1618 to 1648 involving the Holy Roman empire, or much of Europe. Earlier was the Eighty Years’ War (1568 to 1648) between Spain and the Dutch Republic. Much earlier, was the Spanish Grand Inquisition by Tomas de Torquemada, a Spanish Dominican friar, who persecuted Muslims and Jews and expelled Jews from Spain in 1492. Mainly characterizing these wars over religion was the policy of retribution, or basically reviving the Old Testament’s “Eye-foran-eye, tooth-for-tooth” conflicts that even worsened the conflicts. It is lamentable that Duterte seems to believe in this outdated, distorted form of justice.

Doing the advantage for others

Apart from the religious wars that dominated Europe then, states were taxing each other, particularly those along Europe’s rivers. To avoid getting penalized, they took over each other’s territories and fought wars. But in a contiguous continent, everyone had to share the same resources, like river systems. No state had full control, without sharing, unless it goes to war and amasses the spoils of war along an extractive and destructive economic relationship over defeated enemies. It had to take the genius of a Cardinal Jules Mazarin, an Italian diplomat, a politician in robes and chief minister of France acting as de facto ruler, who initiated the treaties of Westphalia that ended the wars and finally brought peace and development to Europe. Peace prospered when each state tried to do the advantage for the others, which is enshrined in Mazarin’s Westphalian principles on state sovereignty, equality of states and nonintervention on each other’s internal affairs, but helping one another, the precursor of what today is the UN.

Revival of the ‘Clash of Civilizations’

But history shows how certain groups want the world in permanent revolution and permanent war, despite the thawing of the Cold War with the breakdown of the Soviet Union in the early 1990s with Mikhail Gorbachev’s “Glasnost” and “Perestroika” policies on openness and restructuring. The communist bogey vs. democracy propaganda lost its appeal, leading to the fall of the Soviet Union’s iron curtain, China’s bamboo curtain and the Berlin Wall. This threatened the industrial-military complexes from irrelevance and imminent bankruptcy. Luckily, they found an ideological savior in Samuel Huntington, author of Clash of Civilizations, whose ideas fanned the old pre-Westphalian flames of hatred between Islam and Western Christendom and fueled the imminent clash between China

and America. Facing the throes of death amid threats of another financial bubble brewing, maybe worse than the 2008 global financial crisis, the neocons have been behind many geopolitical destabilizations. Former British Prime Minister Tony Blair’s doctrine for regime change and lying about Iraq’s weapons of mass destruction triggered the conflagration in the Middle East and the Islamic State of Iraq and Syria (ISIS) specter in Syria. George Soros is also believed funding the “color revolutions” like the Orange Revolution in Ukraine; Rose Revolution in Georgia; the failed White Revolution in Russia; Yellow Umbrella Revolution in Hong Kong; the Arab Spring in the Middle East and North Africa and lately the destabilization against President Donald J. Trump. Former US President Barack Obama’s fingerprints were also all over the place, and even two weeks before Trump took over the presidency, Obama sent 4,000 troops to Poland on Russia’s border in an act of provocation to Russia and disrespect for Trump, who believes the North Atlantic Treaty Organization (Nato) built to stop the Soviet Union is now obsolete. Obama’s Pivot to Asia also triggered friction with China. Duterte must not fall for the martial-law trap. The neocons are sophomorically linking Trump with the old bogey Russia, mainly because he has postured to talk peace and development with Russia and cooperate with China’s One Belt One Road Initiative that has gathered 29 heads of states and top-level representatives from 130 countries during the recent May 14 and 15 summit, which is seen to wipe out terrorism with the massive infrastructure development globally. Despite his earlier Islamophobic remarks, Trump talked peace recently with Saudi and other Muslim leaders. He also wants the Israel-Palestine issue resolved, or finds the Cold War remnant Nato obsolete, which are angering neocons and, likely, new rounds of troubles globally. Locally, we have the ongoing ISIS-inspired Maute Group rebellion in Marawi City, which triggered Duterte to rush (yan) the imposition of martial law while in Russian land. Caught flat-footed, Duterte’s knee-jerk or panic reaction was to impose martial law, which is dangerous, as it brings horrific images of the past, but more the fear we fall into the trap laid out for him that may trigger more radicalization of displaced Muslims and the resulting escalation of violence. He must instead do the same surgical offensives sans martial law, because even if the threat is valid, as the sayings go, “power corrupts, and absolute power corrupts absolutely”, and that the “road to perdition [hell] is paved with good intentions”. There is a danger therefore that flirting too long with martial law, or even toying with the idea of expanding it nationwide is a political quicksand trap that could lead to an abyss of destruction that may reverse his Dutertenomics and “Golden Age of Infrastructures”.

E-mail: mikealunan@yahoo.com

Wednesday, May 31, 2017 A11

Friends to keep the world clean Teddy Locsin Jr.

Free fire Continued from A1

‘I

n two weeks our leaders and ministers, partners and stakeholders will be at the UN to mobilize global support for the protection of the world’s oceans, seas and marine resources, which deserve only the most carefully studied sustainable development. The Ocean Conference to support Sustainable Development Goal 14 can be a game changer for us all to ensure that the Earth—whose habitability depends entirely on the health of its oceans—will not perish from what we have done to it and failed to do for it. Global warming plays the most destructive role, but pollution is not far behind.” “For the most part, it comes from the land and the things we do on it. Unclos was a victory whose fruits among others are the recognition of exclusive economic zones and of

oceans as humankind’s heritage. But it will be a pyrrhic victory if we go on dumping waste on them, a lot of it imperishable. When mankind finally makes something immortal,

it seems it will be garbage.” “True, if global warming is not stopped, the oceans will rise and swallow the land. But well before that, we shall drown in garbage, a lot of it from advanced economies. The Philippines has addressed this threat in the 2012 Manila Declaration, which seeks the protection of the earth’s waters from land-based polluting activities.” “We look forward to contributions from The Group of Friends that will enrich the dialogue in the Oceans Conference. We are particularly interested in learning how we can enhance cooperation and coordination, especially capacity building. Countries like ours, which have not the wherewithal to export waste, are compelled to deal with it incountry and can only benefit from The Friends’s shared experiences and best practices.” “We have much to learn from each other. We look forward to the time when we have achieved such a measure of success that we can

change our name from ‘friends of a pollution-free world’ to ‘friends to keep the world clean.’ Thank you.” I turned to the host, Macharia Kumau, the elegant and well-spoken Kenyan ambassador who hosted the event, and who said that The Friends hoped to make Pollution Free World a side event to the main conferences. I said that quite the contrary, it can be a stand-alone event because this is one cause in which everyone can list to keep their places clean and clean up after themselves. It took a fashionable statement in Manila that one would rather be caught dead with a plastic bag rather than a canvas one brought from home for shopping to start the serious phaseout of plastic bags. I wish Gina Lopez can be here for this event, because she takes it seriously. I also hope this event will end the export of garbage from advanced countries proud to call themselves pollution free, because naturally, they export their waste (hazardous at that) to countries like ours.

Jared Kushner and the knotty politics of clan David Brooks

new york times

J

ared Kushner deserves a bit of sympathy. All his life, he’s been serving his father or father-in-law. All his career, he’s been thrust into roles he’s not ready for. His background has ill prepared him for national government. Now, he is in a realm where his instincts seem to lead him astray, and where there’s a chance he will end up in disgrace, and possibly, under indictment.

The Kushner family drama begins in the Holocaust. In 1941 Rae Kushner was living in Belarus and was among the teenage girls selected to clean blood from the cobblestones after one of the Nazi mass executions. Rae and other family members tunneled out from the ghetto and joined an armed resistance camp. After the war, they eventually made it to New Jersey, where her husband set up a successful construction business that flourished under their son. So far, this is an inspiring story of family struggle and immigrant hustle. But as riches rained down on the family, so did betrayal. The feud between Jared’s father and uncle was over grabbing family money, and from the various accounts, it’s hard to tell who betrayed the family most. We do know that Jared’s father, Charles, hired a prostitute to have sex

with his brother-in-law so he could send a tape of the act to his sister, and ended up pleading guilty to 18 felony counts. “I believe that God and my parents in heaven forgive me for what I did, which was wrong,” Charles once told an interviewer, according to Politico. “I don’t believe God and my parents will ever forgive my brother and sister for instigating a criminal investigation, and being cheerleaders for the government and putting their brother in jail because of jealousy, hatred and spite.” Jared’s brother was very young while all this happened and has since gone on to a fantastically successful independent career. But Jared interrupted his studies to take over the family business. He lived out his familyfirst devotion, his loyalty to kith and kin. He may have lacked wisdom, but not audacity. In a Trumpian move, he sold the family’s New Jersey apartment com-

plexes and bought 666 Fifth Avenue for $1.8 billion, then the most ever paid for a Manhattan office building. He seems to have vastly overpaid. The Met-Life building sold at roughly the same time for $600 a square foot, according to reporting in The New York Times, but Kushner bought his building for $1,200 a square foot. Kushner worked feverishly to save the deal, and has built his company despite it, but it’s been a financial albatross ever since, one reason Kushner has spent so much time looking for Chinese investors, and possibly Russian ones. We tell young people to serve something beyond self, and Kushner seems to have been fiercely, almost selflessly, loyal to family. But the clannish mentality has often ill served him during his stay in government. Working in government is about teamwork, majority-building and addition—adding more and more people to your coalition. It is about working within legal frameworks and bureaucratic institutions. It’s about having a short memory and not taking things personally. Clannishness, by contrast, is about tight and exclusive blood bonds. It’s a moral approach based on loyalty and vengeance against those who attack a member of the clan. It’s an intensely personal and feud-ridden way of being. Working in government is about trusting the system, and trusting those who have been around and understand the craft. But the essence of clannishness is to build a barrier between family—inside the zone of trust—and others, outside that zone. Consequently, Kushner has made some boneheaded blunders in

Innovation won’t overcome stagnation By Satyajit Das | Bloomberg View

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nnovation, everybody hopes, will rescue the world from economic stagnation. I’m not so sure. The extent to which an innovation is significant depends on the degree to which it alters existing activity or the performance of a function. It must create related and ancillary activities, that in turn, lead to employment, wealth and other discoveries in a virtuous cycle. It must have longevity, being capable of exploitation over long periods. These characteristics are why the Second Industrial Revolution (electricity, internal combustion engines, modern communications, entertainment, hydrocarbons and so on) succeeded in lifting productivity and living standards. Today’s innovations are unlikely to be nearly as powerful. Most new technologies have significant benefits, but don’t radically reshape the modes of doing things. A driverless or electric automobile is just a new type of car. It isn’t the quantum leap that motorized transport was over its animal-powered predecessors. E-mail improves the speed of communication, but it isn’t as radical as the advent of telephony. Platforms such as EBay Inc., Uber Technologies Inc. and Airbnb Inc. are merely new marketplaces matching buyers and

sellers. Big data is just a more sophisticated way to handle information and statistical analysis. Moreover, many of today’s tech companies focus on consumption, improving the marketing and distribution of existing goods and services. Many center on entertainment and communication, with tangential impact on productivity. Most emphasize enhancing speed, capability, power and efficiency, rather than changing the work itself. Word-processing software didn’t eliminate the need to type out documents, but eliminated secretaries and typing pools, leaving individuals to do the task themselves. New technologies also tend to cannibalize existing industries, limiting their effect on growth and productivity. Smartphones and tablets cannibalized computers, mobile phones, portable music players such as the Walkman and digital assistants like the once-ubiquitous Palm Pilot. They replaced low-end cameras and watches. They incorporated GPS and other standalone technologies. Alphabet Inc. and Facebook Inc. divert advertising revenue from newspapers and magazines. Amazon.com Inc. and other online sellers have taken market share from existing retailers. Netflix Inc. has cannibalized television, video stores and cinemas. Few of these businesses create completely new streams of income.

The revenue gain for smartphones is offset by reduced revenue from all the products it replaces. New products redirect investment capital, and are not necessarily incremental, at least not significantly. It’s true that many recent innovations have reduced costs. But they’ve often done so by using lower-quality products or untrained workers, or by extracting revenue from personal assets. Airbnb allows people to rent out their own lodging for accommodation. Uber allows people to use their own cars to offer rides for others (or entails arbitraging regulations). Many online media or entertainment services rely on contributors who offer their services for free. Such disruption changes industry economics. New technologies have reduced advertising rates, benefiting advertisers but harming companies that relied on them. Uber and Airbnb have had the same effect on taxis and hotels, reducing the earnings of incumbents. Lower-cost products and services leave more disposable income for consumers to spend elsewhere. But the decreased cost typically comes at the expense of employment or wages. The loss of income offsets the savings. In an economic model that is 60 percent to 70 percent powered by consumption, this affects total economic activity. Another reason for skepticism is that many new industries don’t require

the White House. He reportedly pushed for the firing of Federal Bureau of Investigation Director James B. Comey, even though anybody with a blip of experience could have told you this move would backfire horribly. He’s allowed his feud with Steve Bannon to turn into a public soap opera. We don’t know everything about his meetings with the Russians, but we know that they, like so much other clan-like behavior, went against the formal system. We also know that they betray rookie naiveté on several levels — apparently trusting the Russians not to betray him, apparently not understanding that these conversations would be surveyed by the US intelligence services, possibly not understanding how alarming they would look to outsiders. We seem to now be entering the paranoia phase of the Trump presidency, as insiders perceive that everybody else is out to get them. As the Times’s Glenn Thrush, Maggie Haberman and Sharon LaFraniere detailed in some amazing reporting, Kushner’s role in this White House may be in peril. This turmoil, for both Trump and Kushner, was inevitable. Our forebears have spent centuries trying to build a government of laws, and not of hereditary bloodlines. It’s possible to thrive in this system as a member of a clan—the Roosevelts, the Kennedys and the Bushes—but it’s not possible to survive in this system if your mentality is entirely clannish. That mode, whether in the Donald J. Trump or Jared Kushner version, simply self-destructs in the formal system and within the standards of behavior that now surround us.

substantial investment or create wellpaying jobs. Many are easily scalable: Electronic platforms mean that expansion of activity doesn’t necessarily require a commensurate expansion in investment and capacity. Many new tech companies, finally, are based on implausible business models. Rather than displacing competitors through efficiency or creating new markets, they often seek to simply convince investors that their future market dominance is inevitable. Although they may have limited long-term growth and productivity potential, such businesses can still appeal to venture capitalists, who hope to extract short-term value by selling out to an incumbent or going public. Typically, competition increases spending through higher expansion and customer-acquisition costs, extending the period before investment is recovered and resulting in poor longterm returns. In short, there’s little reason to think this current round of innovation will overcome stagnation. Its overall effect on economic activity and living standards is lower than believed. The failure of traditional remedies to restore the health of advanced economies has made policy makers, many of whom need assistants to work their digital devices, vulnerable to the siren song of technology, promising a quick and painless fix.

STANDARDIZING

HEALTHCARE A BusinessMirror Special Feature

A12 Wednesday, May 31, 2017

www.businessmirror.com.ph

Stepping up the evolutionary ladder

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By Leony R. Garcia

IFTY years ago, premier health institution The Medical City (TMC) began with a vision of service, enlivened by the patients to whom it was committed, the health professional community from which it sprang and the nation through which it found purpose. And, amid the twists and turns of the ensuing five decades, TMC has remained firm on that vision. TMC celebrated its 49th anniversary last October 28 and 29 with the theme “Glancing Back. Looking Inward. Moving Forward. Celebrating the Journey of The Medical City.” The celebration served as a prelude to a host of events and activities that will mark the health institution’s golden anniversary in October 2017. Nearing its half century mark, TMC earned its fourth Joint Commission International’s Gold Seal of Approval for Hospital Accreditation. By demonstrating continuous compliance with its internationally-recognized standards, TMC was first accredited by JCI in 2006, and, again, in 2009 and 2012. TMC is among the four Philippine hospitals that have been cited by JCI in 2012 for rendering the best service to Filipino patients.

The other three hospitals are Makati Medical Center, St. Luke’s Medical Center (SLMC) in Quezon City and Chong Hua Hospital in Cebu. JCI was established in 1997 as a division of Joint Commission Resources Inc. (JCR), a wholly controlled, not-for-profit affiliate of The Joint Commission. Through international accreditation, consultation, publications and education programs, JCI extends The Joint Commission’s mission worldwide by helping to improve the quality of patient care. JCI assists international health-care organizations, public health agencies, health ministries and others in more than 100 countries. With the JCI accreditation, the healthcare system in the Philippines is considered generally to meet global standards. JCI is the world’s most prestigious accrediting body

for health care organizations. The honor is a recognition of the caliber of hospital staff in the Philippines, with Filipino medical practitioners being graduates from top universities in the country and many of them having also studied in medical schools in the United States. Some of these US-educated doctors had practiced medicine in America before returning to their native country. Filipino nurses,

meanwhile, are internationally competitive, with thousands of them working in many hospitals in foreign countries.

Accreditation

HOSPITAL accreditation is a major factor that should be considered by a patient in picking a medical institution that will provide medical care to him. It is defined by R. Rawlins (R. Rawlins, BMJ. 2001 March 17;

322(7287):674) as a public recognition by a national or international health-care accreditation body of the achievement of accreditation standards by a health-care organization, demonstrated through an independent external peer assessment of that organization’s level of performance in relation to the standards. This means that an institution accredited by a credible accreditation body possesses high

standards of health-care service and patient care that add up to the reliability of the institution. The JCI is a medical commission that helps international healthcare organizations, public-health agencies and health ministries evaluate, improve and demonstrate the quality of patient care while at the same time accommodating specific legal, religious and cultural factors in a particular country. It has been accrediting health-care organizations since 1999 and, since then, have accredited approximately 450 public and private health-care organizations in 50 countries. Its accreditation and certification process is acknowledged by many medical organizations as essential in ensuring a safe environment for their patients, staff and visitors. The JCI Accreditation and Certification procedure is seen as a platform to consider when choosing a hospital or a medical center. Therefore, the level of confidence and trust of patients in a hospital increases through accreditation, especially by the JCI, since it ensures that the accredited hospital not only performs evidence-based practices but also gives importance to efficiency, quality and effectiveness of health-care delivery and ensures a safe environment for the patients, staff and visitors. The accreditation would establish excellence in the delivery of health care and promote continuous quality improvement.