“Her election would mire our government and our country in a constitutional crisis that we cannot afford.”—Donald Trump, pointing to the FBI’s renewed examination of Hillary Clinton’s e-mail practices as evidence the former secretary of state might face a criminal trial as president. Clinton countered by saying, “There is no case here.” AP
“That is very unusual. If I was still sitting as the chief of El Paso or Tucson...I’d be a little concerned.”—Victor Manjarrez, a former Border Patrol sector chief and director of the Center for Law & Human Behavior at the University of Texas at El Paso, about the rising number of migrants from countries beyond the Americas trying to sneak into the United States through the Mexican border. AP
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Govt to start meeting with bizmen on Duterte’s rants By Catherine N. Pillas
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Hincheliffe: “Statements made ,like the economic separation and for businessmen to ‘pack up and leave’, are two examples.”
AmCham Executive Director Ebb Hincheliffe confirmed to the BusinessMirror that they will be meeting with Dominguez this weekend, to be apprised of the impact of Duterte’s Continued on A2
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A trader at the Philippine Stock Exchange (PSE) reacts to figures on the electronic board while talking on the phone. Share prices traded lower on Wednesday owing to markets’ concerns over reports that Republican US presidential candidate Donald Trump was closing in on his Democratic rival, Hillary Clinton. NONIE REYES
PHL manufacturing still strongest in Asean region A6-A7
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DUTERTE SEEN TALKING PESO BEYOND 50 LEVEL OF 2008 FINANCIAL CRISIS
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he last time the Philippine peso neared 50 to the dollar, the global financial system was melting down and the central bank raised interest rates to defend it. This time, it has been driven by the President cursing his trading partners and his finance chief accepting the declines. Credit Suisse Group AG and Rabobank Groep predict the currency will weaken past 50 per dollar next year, a level last seen in November 2008. Pioneer Investment Management Ltd. doesn’t see the peso as a long-term, strategic investment. The currency fell to a seven-year low of 48.618 in October, and was Asia’s worst performer in the third quarter, when it fell 3 percent. Global funds have pulled more than $600 million from Philippine stocks since inflows this year peaked in August, as Duterte cursed while talking about US President Barack Obama and announced a “separation” from the US during an official visit to China. Concerns that his outbursts may jeopardize investments in the nation’s more than $20-billion business-outsourcing industry have forced his administration’s top officials to assure companies their interests will be protected as the leader builds new global alliances. See “Duterte,” A2
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conomic managers will start meeting with business groups to clarify President Duterte’s recent policy pronouncements on foreign relations and investments, with Finance Secretary Carlos G. Dominguez III holding the initial round of dialogue with members of the American Chamber of Commerce (AmCham) on Saturday.
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“Since Choi Soon-sil said she committed a sin that deserves death, I came here to help her die.”—South Korean police officer Han Jeung-sub, relating what a 45-year-old man surnamed Jeong told officials after he rammed a large excavator into a gate near the office where prosecutors questioned Choi, the woman at the center of a scandal that threatens the country’s president. AP
By Bianca Cuaresma
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HE Philippines’s manufacturing sector continued to record a strong expansionary state in October, bucking the regional trend of industrial contraction during the period. Nikkei Philippines Manufacturing Purchasing Managers’ Index (PMI) reported on Wednesday “improved manufacturing conditions” in the country in October this year, resulting in an overall index of 56.5 during the quarter. The PMI is a composite index, calculated as a weighted average of five
PESO exchange rates n US 48.4850
individual subcomponents. The components include new orders, which weigh the most at 30 percent of the index; output, 25 percent of the index; employment, at 20 percent; suppliers’ delivery times, at 15 percent; and stocks of purchases, at 10 percent. Readings above 50 signal an improvement in business conditions during the previous month, while readings below 50 show deterioration. While the reading in October is slower than September’s record-high PMI of 57.5, Nikkei said the headline index is still above the country’s average and the region’s performance Continued on A2
The Philippines and Vietnam were the only countries in the region whose manufacturing sectors are on an expansionary mode. In particular, Vietnam hit a sevenmonth low PMI print, but remained above 50 at 51.7 in October.”—PMI
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By VG Cabuag
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hare prices fell for the ninth consecutive trading session on Wednesday, after the Philippine market joined the rest of the region that suffered a decline due to the tightening US election race, which rattled markets. The benchmark Philippine Stock Exchange index (PSEi) fell 152.40 points, or 2 percent, to close at 7,252.40 points, as other subindices also declined. “The listing of Pilipinas Shell Petroleum Corp., the second of the Big Three oil companies, on Thursday should lend a boost to activity,” said Justino B. Calaycay, Jr., head of marketing and research at A and A Securities Inc. “An IPO [initial public offering] should provide a bit of a ‘diversion’, as well as boost turnover. It will principally be a data-driven month—earnings, inflation, GDP and trade, import and export, among others,” Calaycay added. Markets overseas, including major bourses in Asia, were also down on US election jitters. BPI Asset Management Inc. said overnight, the US market was also down, “as investors were spooked following certain poll results showing a tighter presidential race” between Republican nominee Donald Trump and Democratic candidate Hillary Clinton. Aristotle Reyes Jr., trader at UPCC Securities Corp., See “PSEi,” A2
n japan 0.4656 n UK 59.3699 n HK 6.2522 n CHINA 7.1639 n singapore 34.9240 n australia 37.0862 n EU 53.6147 n SAUDI arabia 12.9286
Source: BSP (2 November 2016 )
News BusinessMirror
A2 Thursday, November 3, 2016
Govt to start meeting with bizmen on Duterte’s rants Continued from A1
anti-American rhetoric on matters of commerce. “[The matters] will be all business and trade, statements made like the economic separation and for businessmen to ‘pack up and leave’, are two examples,” Hincheliffe said in a text message. The group of American firms in the country requested the meeting. Dominguez, in a news conference in Malacañang early on Wednesday, spoke of an upcoming meeting with the AmCham in light of the unabated anti-US statements that the President has been making. Just last week, Duterte challenged foreign businesses concerned over the drug war to pack up and leave, prompting alarm among foreign business chambers and industry associations. Duterte’s challenge was made in response to a US State Department official’s statement that his comment on “economic separation with the US” was worrying American investors and businessmen. The Information Technology and Business Process Association of the Philippines (IBPAP), representing the $ 22-billion industry,
also sought an immediate meeting with the President following these comments, as more than 70 percent of the outsourcing work done by Filipino BPO workers are from the US market. The association is similarly seeking an audience with the President, but is yet to be given a spot in his schedule. This was confirmed by IBPAP Trustee Catherine SalcedaIleto. Dominguez said they would also engage other business groups concerned during the Philippine Development Forum set in Davao next week. The six key subsectors under the information technology and business -process management (ITBPM) sector foresee solid growth until 2022, according to the IT-BPM Roadmap 2022. The different segments of the $22-billion IT-BPM sector charted their growth trajectories as part of the crafting of the Roadmap 2016 2022, all with healthy outlooks in the next six years. The six subsectors include animation, contact centers, sharedservice captives, game development, health-information management and software development. Juan Miguel del Rosario, presi-
dent of the Animation Council of the Philippines, sees his segment growing by at least 18 percent from 2016 to 2022, with employment jumping by more than 14 percent. The subsegment’s worth is estimated at $26.4 million this year. Del Rosario said to achieve these goals, support must come from the government in terms of incentives for animation development and allocation of more resources for promotion, among other activities. Speaking for the largest segment of the IT-BPM sector, Jojo Uligan of the Contact Center Association of the Philippines said the industry will grow by double digits, with a compounded average growth rate of 7 percent to 8 percent from 2016 to 2022. “It’s still an exciting and positive growth. But it’s no longer the 15-percent growth; it’s some 10 percent year-over-year, because of a larger base,” Uligan said. Employment of the contactcenter industr y—currently at 750,000—is seen to balloon to 1.1 million in six years. This growth is hinged on the upgrading of human-capital resources and infrastructure development to allow the creation of more contactcenter hubs outside Metro Manila.
The shared services subsector, meanwhile, is projected to grow at a compounded annual growth rate of 8.4 percent, or from an estimated $ 4.7 billion in revenues as of end2016 to $ 7.6 billion. For game development, growth is pegged at 13.5 percent over the next six years, which is just a conservative number, according to Game Development Association of the Philippines President Alvin Juban. The fastest-growing segment today, the health information and management services, can double its revenues from $2.4 billion in 2016 to $5 billion by 2022, and employment jumping from 180,000 to 200,000. This can be achieved by leveling up in specialization of services, such as telehealth and clinical analytics. Finally, the software IT-BPM subindustry could grow from $2.97 billion in 2016 to $5.7 billion, and from 123,000 work force to a headcount of 200,000, said Philippine Software Industry Association Vice President Winston Cruz. The entire IT-BPM industry is seen to be worth $ 38.9 billion by 2022, from $22 billion this year, with employment generated at 1.8 million.
PHL manufacturing still strongest in Asean region Continued from A1
during the period, which was at a contraction mode in October with a 49.2 PMI print. The relatively strong PMI print during the months was brought about by strong client demand from domestic sources which, in turn, drove production and new orders higher. “A further increase in purchasing activity and employment alongside continued stock building contributed to the overall improvement in operating conditions. Meanwhile, strong new business inflows allowed firms to continue to raise output prices as input costs rose for the 10th successive month,” the report read. The Philippines and Vietnam were the only countries in the
region whose manufacturing sectors are on an expansionary mode. In particular, Vietnam hit a sevenmonth low PMI print, but remained above 50 at 51.7 in October. Everyone else in the region was under the 50-point expansionary threshold: Myanmar was at a three-month low at 49; Thailand unchanged at 48.4; Indonesia also at a three-month low reading of 48.7; Malaysia at a four-month low of 47.2; and Singapore with the lowest at 46.8—a six-month low for the island-state. The deterioration of the region’s manufacturing index was brought about by the decline in both production and total new orders due largely to the slump in external demand. The Philippines’s manufacturing sector, however, was able to grow
despite weak external demand because of the offsetting factor of its domestic demand. “The Philippines remained on a strong path of expansion in manufacturing activity, as solid domestic demand drove new orders and production higher. Robust export sales also contributed to the improvement in overall operating conditions,” HIS Markit economist Bernard Aw said.
Concerns on the peso performance Despite his optimism of the local manufacturing sector, the HIS economist expressed concern over the peso’s continued depreciation. “…there are concer ns that the depreciation of peso w ill f u r t he r a g g r av at e i mp or t e d
inf lation,” Aw said. The local currency has been under downward pressure since mid-September due to combined global sentiment shifts and concerns over political developments in the country. At the start of this week’s trade, the local currency opened at a slightly more positive note at P48.38 to a dollar, from its trade close last week at P48.405 to a dollar. “Nonetheless, strong client demand had afforded local manufacturers the ability to raise selling prices to keep up with input cost rises,” Aw said. “Meanwhile, proposed increases in public spending will provide another fillip for the Filipino manufacturing sector in the coming quarters,” he added.
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Duterte. . .
Continued from A1
“Economic impact is difficult to gauge at this stage and may only be seen longer term, but the uncertainty on his foreign policy could deter foreign investment,” said Trang Thuy Le, a macro strategist in Hong Kong at Credit Suisse. “For now, we think it warrants a higher degree of risk premium and volatility to be priced in the Philippine peso.” A gauge of swings in the peso climbed to a two-year high of 7.3 percent on October 12, after Duterte said he may travel to Russia after official visits to China and Japan. One-month implied volatility was at 6.1 percent on Wednesday, compared with a 12-month low of 4.4 percent in August. The Philippine currency was little changed from Friday at 48.43 per dollar as of 9:13 a.m. in Manila. Local markets were shut on Monday and Tuesday for holidays. The peso has weakened from a seven-month high of 45.85 on June 9, before Duterte started his six-year term.
Peso forecasts
Credit Suisse predicts the currency will drop to 50.3 by March, while Rabobank expects that level to be reached by June. The forecasts compare with the median estimate of 48.2 by mid-2017 in a Bloomberg survey of
TPB. . .
Continued from A12
paying “for services rendered [by BBDO] in the absence of a contract, and it has been extended out of savings.” She stressed that “we are looking at ways how to renew the Web hosting without going through the long process of procurement.” She explained that even if they wanted to renew the web site hosting services immediately, the server operator “only accepted credit cards as payment,” which is prohibited under the government’s procurement law. The web-site hosting services cost $379 a month. Miranda said BBDO can actually advance the payment for the Web-hosting services by a US server, “but they want to be assured that we would pay them.” She disclosed that she had to spoken with BBDO executives on Wednesday to immediately get the It’s More Fun web site up and running, adding that certain paperwork and documents were being drawn up to implement this. She couldn’t make any assurances, however, when the web site would actually return to life. The TPB officer said there would be no bidding held for another website developer/maintenance project, “but we plan to renew web hosting until January 2017.” By January, a new Philippines brand campaign would have been launched, which would effectively replace the It’s More Fun page. BBDO’s digital marketing campaign contract was from 2012 to 2015, for which the firm was paid for a total of P47 million. The scope of work includes development of the web site, Web hosting, maintenance and management, including management of the Facebook page and mobile app, and creatives. It was renewable for another three years, but the TPB didn’t do so. When the contract expired in May 2015, Miranda said it was the advertising company, which just advanced the payments for the
PSEi. . .
Continued from A1
said that upon the opening of the market, traders were already expecting the market to go down on the lack of “strong” local news. Total value of trade was higher at P7.89 billion, following block sales of Alliance Global Group Inc., SM Investments Corp. and Bank of the Philippine Islands. Losers edged out gainers 137 to 46 and 49 shares were unchanged. Other subindices were also down
strategists. Rabobank’s projection mainly reflects its expectations of a weaker Chinese yuan and is yet to factor in political tensions with the US, according to Michael Every, its head of financial markets research for Asia Pacific in Hong Kong. “What would concern me is an abrupt drop,” Finance Secretary Carlos G. Dominguez III said in an October 26 interview in Tokyo. “The rate of change is the most important. If it is orderly, if it is rational, it is OK.”
Remittances impact
American companies account for more than 70 percent of the business-process outsourcing industry’s revenue, which is estimated at $22.9 billion this year, according to IT & Business Process Association of the Philippines. The industry is set to become a key foreign-exchange earner amid fluctuations in the amount of money remitted by overseas workers, which makes up about 10 percent of the country’s GDP. Exports have fallen for 17 straight months. While American companies will continue operating in the Philippines unless official sanctions are imposed, the peso may slide further should the president continue to surprise markets with his “unorthodox rhetoric,” according to Stuart Allsopp, head of country risk and financial markets strategy in Singapore at BMI Research, a unit of Fitch Group. Bloomberg News
Web-hosting services, for which the TPB paid for every month out of the agency 2015 savings. She explained that the TPB couldn’t renew BBDO’s contract or hold a new bidding for a website developer/maintenance project “because they [BBDO] still had some deliverables that were not completed until August last year.” By February and March, she said, meetings were held between the TPB and BBDO to settle the “back payments” the agency owed the advertising firm for maintaining the It’s More Fun web site, as well as the Facebook page “The Philippines”. In another meeting between TPB and BBDO on October 7, industry sources said, the advertising firm “turned over everything digital-related and advised [Miranda] that the web site would expire in seven days.” The TPB didn’t act on this information, and by October 28, the web site was off line. Miranda expressed optimism that they will be able to retrieve the web site’s contents, by contacting the local supplier of the US server. Asked to comment about the DOT’s own’s pages rendered inaccessible by the suspension of the It’s More Fun page, the TPB officer said she would “check with DOT’s MIS [Management of Information Services] staff why this happened since the official DOT site has its own web-site host.” The linking of the two web sites began in 2012 because the administration of the DOT, then led by Secretary Ramon R. Jimenez Jr., felt the main DOT pages were too stiff and not user-friendly for tourism marketing purposes, sources said. As such, the main DOT web site was just one of the tabs available for tourists, the media and the rest of the public if they needed any information from the government agency beyond the usual information on vacations, destinations and writeups when navigating the It’s More Fun web site. Despite being made aware of the issue, the DOT has yet to get its main web site (www.tourism.gov.ph) online. led by the broader All Shares index that fell 71.75 to 4,326.83, the Financials index that declined 58.05 to 1,733.65 and the Property index plunged 61.58 to 3,205.06. Shares of most of the day’s most active fell. Metropolitan Bank and Trust Co. fell P4.10, or 5 percent, to close at P77.20 per share; Ayala Land Inc. dropped P0.35 to P35.90; Universal Robina Corp. declined P6 to P176; PLDT Inc. lost P18 to P1,512; BDO Unibank Inc. shed P2.60 to P110.20; and Security Bank Corp. plunged P15.20, or 7 percent, to P205.20.
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Govt eyes rollout of public rental housing program in urban areas By Cai U. Ordinario
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@cuo_bm
he national government plans to undertake a public rental housing program that will allow Filipinos to live near their workplace, according to the Housing and Urban Development Coordinating Council (HUDCC).
Vice President and HUDCC Chairman Maria Leonor G. Robredo said the public rental housing program is one of the “innovative ways” the council is thinking of to make housing more affordable for Filipinos. “We are looking into a public rental housing program to cater to the needs of individuals whose needs are temporary or are, otherwise, not looking to own a home where they are working,” Robredo said. Based on the 2015 Family Income and Expenditure Survey (FIES), second to food, Filipinos spent the most on housing rental or rental value. On average, Filipinos spent 12.2 percent of their total expenses on shelter. The so-called bottom 30 percent of the population, or the poorest Filipinos, spent less on shelter at 7.7 percent, while the upper 70 percent spent more at 13 percent. Robredo further cited data from government think tank Philippine Institute for Development Studies (Pids) which indicated that 33 percent of urban population are renters, while 17 percent are sharers. She added that a 2004 Pids study found that rental housing is found mostly in informal settlements. Robredo said a public rental
₧300 The monthly rent paid by homeless residents to the local government of Valenzuela
program will also allow families who cannot afford to buy their own homes save up toward the goal of being a homeowner in the future. The HUDCC said it has convened a technical working group that will conduct consultations with different stakeholders to develop a public rental housing program and other non-ownership based modes for providing more affordable housing options. “We are also developing innovative approaches to housing finance, including housing microfinance and the use of right-based land tenure instruments as collateral substitutes,” Robredo added. She said these housing solutions also involve local government units (LGUs), in keeping with the HUDCC’s new strategic direction
of putting greater emphasis on empowering local governments. Robredo added that LGUs can be “efficient urban managers” with the capacity to develop plans and deliver services to their growing urban population. These solutions, Robredo said, can make housing more affordable in the long run. HUDCC earlier said the poorest Filipinos cannot afford even socialized housing facilities. Based on the 2015 FIES, the annual income of the poorest 30 percent range, from P86,020 to P132,983. However, HUDCC noted that socialized housing in the Philippines, which includes building a house and buying land, costs as much as P450,000, or higher than the yearly income of the poorest Filipinos. “The challenge that we face now is setting in place a stronger land use policy that is efficiently administered through an integrated land and ISF [informal-settlers family] information system,” Robredo said. “This will be complemented by providing innovative housing solutions through the key shelter agencies and public-private partnerships to address opportunity gaps facing the homeless and low-income families,” she added. Earlier, Robredo said she is looking at the housing program in Valenzuela, where homeless residents pay the local government a monthly rent of P300. Through the housing program, the city of Valenzuela is also able to impose government regulations, such as keeping children in school and giving them regular checkups. The only downside, Robredo said, is the amount needed by LGUs to finance such an undertaking. “The city of Valenzuela is lucky to have the resources, but not all LGUs have that kind of financial muscle.”
MISSING ACTIVISTS
A Filipino man lays flowers beside pictures of missing left-wing activists during a gathering of relatives and friends in downtown Manila on Wednesday. Having no grave or cemetery to visit, the relatives gather each year, bearing candles and flowers, and demand that the government take steps to produce their loved ones, dead or alive. AP
Poorest Filipinos paid more for food in Q3–PSA
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ore expensive food items forced the poorest Filipinos to shell out more money to buy their basic needs in the third quarter of the year, according to the Philippine Statistics Authority (PSA). Inflation among the bottom 30 percent increased to 1.4 percent in the Julyto-September period, from 1.2 percent in the second quarter, and 0.5 percent in the third quarter of 2015. The increase in prices felt by the poorest 30 percent of the population is the highest since the second quarter of 2015 when inflation was at 2.1 percent. “The uptrend was primarily due to higher annual increase in the heavily weighted food, beverage and tobacco [FBT] index. Moreover, faster annual rates were also recorded in the indices of housing and repairs [H&R], services and miscellaneous,” the PSA said. Annual growth in the food alone index in the Philippines escalated 1.6 percent in the third quarter of 2016. Last quarter, the annual rate was registered at 1.4 percent. This increase was largely due to higher inflation in rice at 0.3 percent; cereal preparations, 1.1 percent; eggs, 2.7 percent;
fish, 2.4 percent; and meat, 0.9 percent. On a quarterly basis, consumer prices for the bottom 30 percent income households rose 0.6 percent in the third quarter of 2016, from 0.4 percent in the second quarter this year. “Upward price adjustments were observed in food items, such as rice, eggs, fruits, vegetables, milk, milk products, fish and meat. Increases in the prices of some construction materials and higher salaries for selected construction workers in many provinces also contributed to the uptrend,” the PSA said. In the National Capital Region (NCR), the poorest Filipinos experienced higher inflation at 1.6 percent in the third quarter of 2016. The PSA said this was due to higher increases in the indices of FBT, clothing and miscellaneous. Following the same trend, inflation in Areas Outside the National Capital Region (AONCR) accelerated 1.4 percent in the third quarter of 2016. This was attributed to higher annual mark-ups observed in the indices of FBT, H&R and miscellaneous. University of the Philippines School of Statistics Dean Dennis Mapa earlier said
the poorest Filipinos are very sensitive to food prices. Mapa said this can be explained by the difference in the inflation felt by all households and the inflation experienced by the bottom 30 percent or the poorest Filipinos. He explained that the weight of food in the basket of goods used for the computation of the inflation experienced by the poorest 30 percent is 70 percent against 39 percent for all the households. Monitoring the movement of prices, particularly for the bottom 30 percent, addresses indicators under Global or Sustainable Development Goals (SDGs) 1 and 2, which the Philippines adopted this year. The United Nations said Goal 1 aims to end poverty in all its forms everywhere while Goal 2 aims to end hunger, achieve food security and improved nutrition and promote sustainable agriculture. The SDGs are composed of 17 goals and 169 targets, which need to be achieved by 2030. The set of goals was adopted by 189 countries in September 2015. Cai U. Ordinario
Grab CEO braces for a fight of biblical proportions with Uber
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t was on a late July flight home to Singapore when Anthony Tan grasped the enormity of news that his biggest ally, Didi Chuxing, was about to buy out archrival Uber’s Chinese business. The stunned Grab cofounder knew better than to celebrate the vanquishing of an enemy. Unfettered by a costly battle for China, the world’s most valuable start-up would now pivot to his Southeast Asian backyard. And with Didi and Uber Technologies Inc. taking stakes in each other, it spelled trouble for a global alliance forged to keep the United States ride-hailing giant in check. Distraught, he took to his laptop and spent the next hour hammering out a rallying cry—and warning—to his 1,500 employees. Sure enough, soon after the deal, his American rival began redeploying resources and engineers to markets from India to Latin America, while rolling out new features and services from Singapore to Hanoi. “There are times you just go, ‘it’s time to rise up,’” said Tan, a 34-year-old who’s fond of quoting the Bible and likens Grab to David facing an Uber-Goliath. For Tan, the climax of that Old Testament story wasn’t the battle itself but when “the little guy” walked down the battlefield toward his giant adversary. “That takes real courage,” the Malaysian-born CEO added in his first major interview in a year.“The battle is already won if you can get to the battlefield.” The mission statement penned at 30,000 feet was a rare display of emotion for a man whose ultracom-
petitiveness lurks just beneath an unflappable demeanor, according to friends. He responded to Uber’s deal by clinching $750 million from investors led by SoftBank Group Corp.—a record for a Southeast Asian tech start-up. That money will bankroll Tan’s newest endeavor: GrabPay, a mobile payments service that could set it apart in a region where about 90 percent of transactions take place with cash. “Anthony hates losing,” said Chua Kee Lock, CEO of Vertex Ventures, the venture arm of Singaporean state-owned investment company Temasek Holdings Pte. and Grab’s first institutional investor. It’s unclear how the alliance between Grab, Didi, Lyft Inc. and India’s Ola will proceed. Jean Liu, Didi’s president, told a summit in San Francisco the company is a “big believer” in leveraging the knowledge and strengths of local players. Her company is said to have been in talks to join Grab’s last round of funding, though that investment never got nailed down even as other backers were announced. No one’s suggesting the quartet is breaking up and Tan said the four founders remain close and still share information, but had no immediate plans to hook up their networks. “We’re not launching any time soon,” Tan said of global roaming. “Frankly, for us, we are just focused on our local stuff.” Grab will take on Uber solo if needed. It’s already dispatched a clutch of rivals en route to expanding across 31 cities in six countries since its 2012 inception in a Kuala Lumpur warehouse. Uber is active in just 16
Southeast Asian cities. According to App Annie, Grab topped app downloads in Indonesia the Philippines, Thailand and Vietnam in the third quarter. Uber led in Singapore and Malaysia, Grab’s home turf. “We’ve charted our journey to be alone,’’ Tan said. “Didi did whatever it takes to win. In our case, we will do whatever it takes to win.” Problem is, he’s now facing a $69-billion behemoth that’s raised over $16 billion to date. Grab, in contrast, is said to be worth little more than $3 billion after raising a cumulative $1.45 billion. “Uber is growing strongly and sustainably across Southeast Asia, which is a major focus for the company,” Uber said in an e-mail to Bloomberg. Tan, whose great-grandfather was a taxi driver, got the inspiration
to start Grab during his days at Harvard Business School. He quit the family business in Malaysia, Tan Chong Motor Holdings Bhd., in 2012 and started a taxi-hailing service then known as MyTeksi with his Harvard classmate Tan Hooi Ling. On a recent afternoon at Grab’s Singapore offices, Tan talked about his vision and the hectic pace he sustains. Constant travel has taken a toll: perched on a silver gym ball to ease the pressure on his back, his fingers were covered with blisters from hand-foot-and-mouth disease, a viral infection. Yet, he grows energized when talking about Grab’s future. Tan’s priority now is building GrabPay into a regional mobile wallet and payments service to hook users
and drivers without credit cards. “We really believe that GrabPay will change the game.” This year it teamed up with Ant Financial to allow Chinese travelers visiting Singapore and Thailand to pay for rides through Alipay. Customers can now hook up their Citibank credit cards to GrabPay to pay for rides with points. In Indonesia, it partnered with PT Bank Mandiri to offer a mobile-wallet service, and it struck an agreement with Lippo Group to let shoppers use its app to pay at the conglomerate’s department stores, cinemas and coffee shops. All that’s intended to further Grab’s ambition of becoming a consumer Internet company that just happens to offer rides. “We are creating the BAT of
Southeast Asia,’’ Tan said, referring to China’s triumvirate of Baidu Inc., Alibaba Group Holding Ltd. and Tencent Holdings Ltd. “The next generation of great Internet companies in Southeast Asia will come from Grab if we get it right.’’ Tan isn’t the only one gambling against Uber: his backers include state investment firms Temasek and China Investment Corp., as well as Tiger Global Management. The grandson of Tan Yuet Foh, who cofounded an auto sales-and-assembly empire, is driven by a desire to forge his own legacy. Jixun Foo, managing partner at backer GGV Capital, recalled how Tan once took responsibility for a poor hiring decision he had little to do with. “You could always blame someone, but he took it on himself,’’ said Foo, who sits on the board. “And he has a very strong desire to prove himself.” For now, Grab is fighting it out in a Southeast Asian ride-hailing market, with some 620 million people, forecast to grow more than five times to $13 billion by 2025. But it’s been a topsy-turvy journey, replete with stunners, like Uber’s capitulation. “It’s like Korean drama,” Tan joked, invoking a genre known for its t w ists and tur ns and themes of revenge, betrayal and power. Alibaba cofounder Jack Ma put it best during a recent conversation, he said. “He said, ‘You know Anthony, life is a tsunami. When you’re up on a tsunami, get ready for the crash. When you are at the bottom, get ready for the next wave.’”Bloomberg News
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Integration into the global economy Asean-EU Perspective
HENRY J. SCHUMACHER
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ntegration into the global economy is widely recognized as a key factor for developing economies to sustain economic growth and reach higher income levels. The Philippines is no exception. The Philippines is already a member of a number of international and multilateral organizations, one of which is the World Trade Organization (WTO). As a member of the WTO since January 1, 1995, and a member of General Agreement on Tariffs and Trade (GATT) since December 27, 1979, the Philippines has increased its integration into the global market by adopting policies that are aligned with WTO regulations and agreements, in support of market access facilitation and improved trade ties. One major recent WTO agreement is the WTO Trade Facilitation Agreement (TFA). Negotiations between WTO members for a TFA were concluded at the Bali Ministerial Conference that took place in December 2013. In November 2014 a protocol of amendment was adopted by WTO members to insert the TFA into Annex 1A of the WTO agreement. The TFA includes provisions for expediting the movement, release and clearance of goods, including goods in transit. Additionally, it puts in place measures in support of effective cooperation between relevant authorities, including customs, on trade facilitation and customs compliance issues. It also contains provisions on technical assistance and capacity building. In the case of the Philippines, although the Department of Trade and Industries submitted the documentation for ratification of the Agreement to the Office of the President in early 2016, it was not ratified before the end of the previous administration, but we are happy to note that the Philippines has, meanwhile, ratified the WTO TFA. Additionally, 17 WTO members are currently taking part in negotiations for the Environmental Goods Agreement (EGA). The agreement will target the removal of barriers to trade for environmental goods that are crucial to environmental protection. The agreement will aim to remove tariffs from a number of environmental goods, building upon the list of 54 products on which Apec member-countries have agreed to reduce tariffs to 5 percent of less by 2015. The list will be open to further review and additions at any point in time following its adoption. EGA is a plurilateral agreement, therefore, participation by WTO members is voluntary. The Philippines has not yet indicated if it plans to join negotiations. The Trade in Services Agreement (Tisa) is currently being negotiated by 23 WTO members, which collectively account for 70 percent of world trade in services. Tisa builds upon the WTO’s General Agreement on Trade in Services (GATS) and aims to liberalize markets and improve rules for licensing, financial services, telecoms, e-commerce, maritime transport and professionals moving abroad temporarily, among others. Similar, to the EGA, Tisa is a plurilateral agreement; the Philippines has not yet indicated whether it plans to join negotiations. The Philippines’s accession to the WTO GPA, initially as an observer, and participation in ongoing negotiations on the EGA and Tisa agreements will be a decisive factor in continuing to integrate the Philippines into the international economy and the adoption of international practices, in support of increased competitiveness, market access facilitation and a level playing field.
Editor: Max V. de Leon • Thursday, November 3, 2016 A5
Malaysia, China in landmark military-cooperation deal
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alaysia said it will buy at least four Littoral Mission Ships from China, as Prime Minister Najib Razak announced “new steps” in military cooperation between the two countries.
Najib oversaw the purchase of the vessels on Tuesday during a state visit to Beijing. While no details were released on the value of the ships, the deal comes after Malaysia recently announced that it was cutting its defense budget by 13 percent. “Now we have agreed to the first significant defense deal between our two countries, with Malaysia purchasing littoral mission ships from China,” Najib said on Wednesday in an editorial published in the China Daily newspaper. The first two will be built in China and the next two in Malaysia, with further Malaysian-built ships subject to government financing, he said. A key security partner of the US,
Malaysia undertook its first bilateral military exercise with China two years ago amid increasing uncertainty over Beijing’s territorial ambitions in the South China Sea. China’s claims to more than 80 percent of the waters that host around $5 trillion of trade a year were rebuffed by an international court in July. China has been Malaysia’s largest trading partner since 2009, with two-way trade last year valued at $86.3 billion.
Purely economics
Nearly two years since Najib enjoyed a cozy round of golf with US President Barack Obama, the two leaders’ close relationship was shaken
I don’t think for a second that it’s anything against the US. It’s purely down to economics and China was able to offer something to Malaysia that was a lot cheaper than anyone else.” —IHS Jane’s in July by a US Justice Department bid to seize $1 billion linked to alleged money laundering involving a Malaysian state fund known as 1MDB. In civil filings the department alleged a broader $3.5-bil lion misappropriation from the fund whose advisory
board was formerly chaired by Najib. Still, the decision to purchase ships from China was likely based on cost alone, with Chinese naval systems being significantly cheaper—sometimes one-third of the cost—of similar systems from the West or South Korea, said Jon Grevatt, a defense industry analyst at IHS Jane’s in Bangkok. “I don’t think for a second that it’s anything against the US,” he said. “It’s purely down to economics and China was able to offer something to Malaysia that was a lot cheaper than anyone else.” China would probably also offer the vessels at a very attractive rate that would likely not include full upfront payment, Grevatt said. Still, the deal is significant in that Malaysia isn’t currently operating any naval vessels from China and its only other major defense system from China is the FN-6 portable surface-to-air missile, he said. Defense Minister Hishammuddin Hussein said technical details on the vessels haven’t been finalized, according to a report in the New Straits Times. Bloomberg News
Indonesia central bank chief questioned by antigraft agency
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ndonesia’s central bank Governor Agus Martowardojo was questioned by the nation’s anticorruption agency as a witness in a probe relating to a government contract that was awarded during his time as finance minister. Martowardojo spent several hours on Tuesday at the Jakarta offices of the agency known as KPK, emerging at about 6.15 p.m. local time. He hasn’t been named by the KPK as a suspect in the case, which involves a project to develop an electronic identity-card system, led by the Ministry of Home Affairs. He denied any wrongdoing and insisted allegations by the former Democratic Party Treasurer Muhammad Nazaruddin, already convicted of corruption, that he had received illicit payments were false. He told reporters that, as finance minister and in managing state finances, he had always complied with the law. The accusations by Nazaruddin are “a big lie,” Martowardojo said. “He is a convict and he’s in jail. He is not credible.” Martowardojo, 60, has improved transparency and credibility of monetary policy in Indonesia, helping to bring inflation down to single digits and keeping it below the 5-percent upper limit of the bank’s target for a year. He was finance minister from 2010 to
$84M
The amount lost to alleged corruption in Indonesia’s ID card system between 2011 and 2012
2013 under former President Susilo Bambang Yudhoyono before heading up the central bank. A statement on the KPK’s web site said alleged corruption in the ID card system between 2011 and 2012 had caused losses to the state of 1.1 trillion rupiah ($84 million).
‘Good record’
Martowardojo’s reforms—including the adoption of a new benchmark rate as the central bank’s main monetary-policy tool this year—has improved the performance of the bank, said Josua Pardede, an economist at PT Bank Permata in Jakarta. “Inflation currently remains manageable and the rupiah is also stable,”
Martowardojo
Pardede said, adding that the market knows the governor well. “He has a good track record in terms of his performance as finance minister and currently as the central bank governor. I think the credibility of BI [Bank of Indonesia] is not affected by Agus’s current issues.” The KPK has pursued graft charges against central bankers, government ministers and company executives in the past. Miranda Goeltom, a former senior deputy governor at the central bank, was jailed in 2012 for bribery involving her election to the post.
Former BI Deputy Governor Budi Mulya was sentenced to 10 years in jail for corruption in 2014 relating to the government’s bailout six years previously of Bank Century, at the time the 13th largest bank in Indonesia. While graft remains a problem in Indonesia, the government has made some inroads into tackling it. The country was ranked 88th on Transparency International’s 2015 corruption perceptions index, an improvement on its 107th place in the previous report. Bloomberg News
Sticker shock for cashew eaters after Vietnam’s drought cut production
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et ready for some cashew sticker shock. The global popularity of the kidney-shaped nut has been growing faster than any other tree nut—even almonds. Demand jumped 53 percent since 2010 and outpaced production in at least four of the past seven years, industry data show. Now the worst drought in a century for Vietnam, the largest exporter, is raising concern that supplies will be even tighter in a market valued at $5.2 billion. A lack of rain in the once-fertile Mekong Delta and elsewhere in Vietnam has cut output of its major agricultural exports, including rice, black pepper, coffee and seafood. This year’s cashew harvest fell 11 percent, and domestic prices jumped by as much as a third to an all-time high, a growers’ group estimates. That spells trouble for buyers in the US, by far the biggest importer. “There’s been no year like this year,” Nguyen Duc Thanh, chair-
$5.2B The global cashew-nut market
man of the Vietnam Cashew Association, said during an interview in Ho Chi Minh City. Prices probably will remain high until the next harvest arrives early next year, said Thanh, who has been in the industry for three decades. While peanuts, which grow underground, are, by far, the most popular in the nut world, cashews have overtaken walnuts and pistachios in recent years to trail only almonds in the $30-billion market for tree nuts, International Nut and
Dried Fruit Council data show. Global cashew consumption in 2014, the most-recent data available, reached a record 716,682 metric tons (MT), up from 469,241 tons in 2010, council data show. Rising demand, including from China and parts of Europe, helped spark a 70-percent jump in exports over a decade to 503,713 tons in 2014. A quarter of all shipments end up in the US, to be eaten as a snack or used to make foods, like protein bars and cashew milk. India accounts for almost a third of global consumption and is the second-largest exporter. Ivory Coast ranks No. 2 in production, followed by Vietnam. Cashew trees usually are grown commercially in places where they can get a lot of rain and warm weather year round, like in southeast Vietnam. But over the past year, an unusual dry spell has left 2 million people in the country with acute water shortages and 18 of 63 provinces were in a state of emergency as of
May, according to the United Nations Food and Agriculture Organization. Losses in agriculture, a major source of export revenue, may prevent the economy from reaching the government’s growth target this year. In Binh Phuoc province, home to more than half of Vietnam’s crop, 45-year-old Hoang Thuy Duong says he got just 8 MT (17,640 pounds) this year, compared with his usual average of 11 tons. The drought “has stunted many of my cashew trees, keeping them from producing buds, much less flowers,” said Duong, who has spent more than two decades farming 4 hectares (9.9 acres). The domestic price of raw nuts has jumped to 52,000 dong ($2.33) a kilogram, the highest on record, from 38,000 dong at the start of the year, according to the cashew association. To be sure, Vietnam’s cashew industry isn’t completely dependent upon local farmers. About two thirds of what it processes was grown
somewhere else. West Africa accounted for about 46 percent of the world’s cashews in 2015, and most of those nuts are processed in India, Vietnam or Brazil. Processing is labor intensive. Trees produce an ovalshaped fruit called the cashew apple, with a single nut on the outside. Once harvested, the shells are softened by steam and then cracked by hand. The kernels are dried, peeled and sorted by size and quality. Workers often coat their hands with oil to limit exposure to skin-irritating toxins in the fruit similar to poison ivy. So, even with a smaller domestic crop, Vietnam’s exports probably will rise this year, partly because of a big jump in production from Ivory Coast. Vietnam may import about 800,000 tons of raw nuts in the shell this year, twice the amount grown locally, according to Thanh of the cashew association. While the country accounts for about 15 percent of global production, it supplied 58 percent of exports in 2014.
The Vietnam Cashew Association estimates exports this year will reach 300,000 tons of processed nuts—up from 286,000 tons last year—with 34 percent going to the US. In the first 10 months, cashews accounted for $2.33 billion of Vietnam’s $144 billion in exports, reflecting an increase in the volume of processed kernels, as well as higher prices, according to the General Statistics Office in Hanoi. The full-year total may reach an all-time high of $2.7 billion, topping last year’s record of $2.4 billion, the association said. While increased output from Africa may offset lost supply in Vietnam, rising demand is still impacting the market for processed nuts. Export prices on average have jumped 22 percent this year to $7,809 a ton in August, Thanh said, citing data from Vietnam’s Ministry of Industry and Trade. Shipment prices averaged $9,000 per ton on an FOB basis in Ho Chi Minh City on October 30, he said. Bloomberg News
TheBroa
Business
A6 Thursday, November 3, 2016
Awesome Ozamiz: Ge O
By Roger Pe
ZAMIZ was one of the original four Mindanao cities, along with Davao, Zamboanga and Cotabato, when development of the country’s second-biggest island was just starting to be felt. It was formerly a Spanish town called Misamis, a name people say came from the Subanon word Kuyamis, a coconut variety. It grew because of the presence of a Spanish garrison called Nuestra Señora de la Concepcion del Triunfo, constructed in the 17th century to control pirates from nearby Lanao province. It became a chartered city in 1948 and was subsequently renamed Ozamiz after its former governor, congressman and delegate to the 1935 constitutional convention, Jose Ozamiz, who was also a former Philippine senator. The tranquil city sits in the middle of Panquil Bay, an inlet that seems to pierce through Zamboanga peninsula and part of Lanao del Norte. Its Cotta Fort, interestingly, a small version of Intramuros and as old as Zamboanga City’s Fort del Pilar, testifies the major importance of the area in northern Mindanao. Historians say, the fort already existed long before the Spaniards came, and was only finished with the combined effort of peace-loving Subanons and Spanish conquistadores. Three centuries later today, Ozamiz bids for its place in the sun, serious about building its great tourism potential and to add luster to its title as the “Gem of Panquil Bay”. It is out to correct the wrong impression unfairly given to a city that has been selflessly delivering services and uplifting the livelihood of its people. It wants to promote the real truth of its governance. Some people may have heard about the city only recently from a media coverage gone mad, profuse with misinformation. It’s time to shake them off your mind. Unbeknown to many, Ozamiz is also the cultural, historical and educational capital of northern Mindanao. A number of institutions of higher learning, notably the prestigious De La Salle University Ozamiz, Misamis University and Misamis Institute of Technology, among others, have been there for decades.
Refreshing news
OZAMIZ is bound to be the dragonfruit basket of the Philippines. Its delectable dragon-fruit ice cream, a creamy delight created by local master chef and restaurateur Johann Dagadara, is destined to be a world sensation. The ingredients are fresh, the fruits homegrown in a plantation rich in volcanic soil. The fleshy pulp is pleasantly milky, not of the usual sour variety. The heavenly concoction seems to be the best thing that ever happened to the city. Have a cup and scoop for more are what many recommend. Many would have such opportunity as Mindanao’s longest and largest bridge project will soon be a reality, spanning across the picturesque Panquil Bay. After its construction, which begins on the third quarter of 2017, the bridge will connect Lanao del Norte and Misamis Occidental by 2020, also further connecting the emerging cities of Tangub and Tubod. Significantly, it will reduce travel time between the city to Oroquieta, Dipolog and Dapitan. Ozamiz’s Panquil Bay is also home to a rare species of fish that thrives only in that part of the
Ozamiz Vice Mayor Nova Princess Parojinog-Echavez
TOURISM Assistant Secretary Frederick M. Alegre was sent by Tourism Secretary Wanda Corazon T. Teo to personally oversee Ozamiz’s tourism potentials. Mayor Rey Parojinog is on his left.
country. Called Laya, the snapperlooking grouper is one of the city’s cuisine delights, perfectly sumptuous as kinilaw. Downtown, the city has retained its Old World, undisturbed charm. The streets still resemble those in rustic towns, quaint and narrow, yet occasionally, would surprise you with a colorful riot of colors from Bandera Españolas, bougainvilleas and other multicolored flowering plants as you move along.
Rich heritage
A few heritage houses are sprinkled around the city, withstanding the ravages of time and attracting culturally conscious visitors. Visit the ancestral mansion on Valconcha corner Ledesma streets. Though a paint store has ruined its façade, its soul remains intact. Once owned by a government official with an illustrious name, it transports you back to another era. From the stairways to the living room and bedroom interiors, you will see a microcosm of a culturally rich city and the ilustrado realm of some of its genteel citizens. While progress has enveloped the city, people still take time to look at you in the eye and smile at you. The symphony of habal-habal (tricycles) wakes you up as early as 5 o’clock in the morning, a sound that accelerates to higher crescendo once you step out of your hotel and start exploring the city. One can get by with P100 a day in Ozamiz. With only P5, in fact, one can see the city in its raw, unpretentious beauty.
Immaculate Conception Church’s pipe organ, the only one of its kind in Mindanao.
Real truth
AT the City Hall stands a statue of Jose Rizal, one of few anatomically correct monuments of the national hero in the country. It is well maintained and has nothing of the kitchiness one finds in statues of the polylingual physicians in other cities. When we were there, Department of Tourism Regional Director (for Northern Mindanao) Catalino Chan dropped by to assist local officials in laying a flower wreath to the statue of the hero. By 8 o’clock in the evening, the city begins to lull its way to sleep. There are no nightclubs and seedy pubs. This may be one of the reasons the crime rate in the city is low. In spite of the bad press being heaped on some of its officials, the city wants to promote its real story—that it is one of the most peaceful, livable and abundantly blessed cities in the country, an undisputable fact that has earned it with two Good Governance Recognition awards from the Department of
Dragon-fruit ice cream, Ozamiz City’s newest sensation
Ozamiz, dragon-fruit capital of the Philippines
aderLook
sMirror
www.businessmirror.com.ph | Thursday, November 3, 2016
etting the real picture
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Ozamiz’s famous landmark, the 17th-century Cotta Fort
Asia’s longest and highest zipline, Hoyohoy Adventure Park
the Interior and Local Government in recent years. “We want to tell the entire Philippines and the whole world the real news that people should believe. We are a city that takes care of its people and we don’t do it with words: we walk the talk,” the charming but highly determined Vice Mayor Nova Princess Parojinog-Echavez said. “We want people to come to Ozamiz, to experience the real truth.”
Drugs campaign
PAROJINOG-Echavez was former mayor of the city, becoming the second-youngest elected mayor in the Philippines in 2010. She started her political career by being observant and developing her innate desire to serve the people. Following her father’s footsteps, she ran first as a councilor, for which she emerged a topnotcher during the elections. She proved her doubters
wrong by fulfilling her mandated tasks, delivering and cascading social services to the people. She slid down to vice-mayorship to give way to his father Reynaldo Parojinog Sr., who won in the last elections. The elder Parojinog has aligned himself with Duterte’s tough waron-drugs advocacy. “I am serious in our drive against illegal drugs in the city,” the patriarch said. He said he prioritized drug issues in his program when first elected as mayor in 2001. He laments how his name is now being dragged into the illegal-drugs controversy, accusing his political opponents as twisting the story.
Airport development
BUT why is Parojinog-Echavez very active in promoting Ozamiz tourism? “It is my advocacy and close to my heart. We’ve seen how tourism changed the lives of many people in Ozamiz,” Parojinog-Echavez said. “I want my people from all walks of life—from a lowly vendor to an investing entrepreneur—benefit from tourism. We want to create opportunities for my constituents.” To do that, the lady vice mayor said she is focusing on infrastructure as priority. “Roads leading to many Ozamiz tourist destinations are being improved,” she said. “We moved mountains and earth to have the city airport [unused for 13 years] reopened to spur tourism and business growth in the city. Now, it is capable of ac-
commodating Airbus aircraft.” Parojinog-Echavez excitedly said she hopes “to see night flights to the city soon.” Ozamiz Airport is scheduled to undergo a P300-million expansion and development. Some of the expansion works are the installation of runway lights, the extension of the runway from its current length of 1.9 kilometers to 2.1 kilometers and the construction of a new passenger terminal building by next year. She said plans are also afoot in redeveloping many tourism programs for the city, like sports tourism, even on a small scale. The city government has also embarked on a comprehensive program in its antidrug campaign and rehabilitation measures to make drug users productive. “We want to address the problem at the very root,” she explained. “We want to turn around the problem by giving them hope—through dragon-fruit cultivation and livestock raising, for example.”
Heart-stopping adventure
TOURISM Assistant Secretary Frederick M. Alegre said he is very inspired “to see how the local government and private sector in Ozamiz City work together to make the city a premier tourist destination. “Ozamiz has much to offer—the warmth of the people, its rich heritage, fantastic shoreline, mountain range and outdoor activity are yours to enjoy.” Tourism Secretary Wanda Corazon T. Teo sent Alegre to Ozamiz
over the long weekend to personally look at the potentials of the city for tourism. He was right: the possibilities of Ozamiz’s tourism industry are enormous. A spellbinding experience awaits the more adventurous at Hoyohoy Highland Adventure Park, Asia’s longest (1.225 kilometers, one way) and highest (500 meters) zipline. The daredevil ride gives one a dronelike panoramic view, including a jaw-dropping sight of the ravine 500 meters below. The highlight of the ride is when one reaches the middle of the zipline: you see a gushing river snaking through the base of menacing but beautiful Malindang mountain range. Mountain-climbing enthusiasts, on the other hand, will remember Malindang as the training basecamp of a group of Filipinos before they challenged Mount Everest a couple of years back. Other places of interests are Fuerte de la Concepcion y del Triunfo, also known as Cotta Fort and Shrine, a fort built in 1755 by Fr. Jose Ducos to serve as a Spanish outpost in the area. A special chapel was built inside the walls and an image of the Virgin of the Immaculate Conception enshrined. The image on the Cotta Fort and Shrine’s wall is believed to be miraculously growing. It has been, and still is, the object of yearly pilgrimage. Another place of interest is Bukagan Hill, which offers a stunning view of the city, Panguil Bay, the provinces of Lanao del Norte and
Zamboanga del Sur. At the top of Bukagan Hill are four iron bells, each weighing 7 tons. They were installed in Bukagan Hill and officially inaugurated on July 16, 1948. Naomi’s Botanical Garden and Tourists Inn, meanwhile, sits on a 12-hectare property producing local and imported tropical flowers, plants and fruit seedlings. There are fully air-conditioned private rooms, function halls, a tennis court, golf range, ceramics factory, pottery and a bakery inside its sprawling garden. Mount Malindang Golf and Country Club is also a must-see place in Ozamiz. Located in Bagakay, at the foot of Mount Malindang, the club is a prewar army facility converted into a golf course. There is also the Immaculate Conception Pipe Organ, found in the choir loft of the Immaculate Conception Cathedral. It is the only existing pipe organ in Mindanao and one among the few in the country.
Helping hand
PUBLIC service in travel and tourism is a collaborative effort among different government agencies, according to Tito Umali, the DOT chief tourism operations officer. “We extend assistance through publicity with national and, in some cases, foreign media, depending on how ready LGU’s tourist destinations are for national and/or international standards,” Umali said. In addition to publicity, Umali says, the DOT promotes the destination by inviting the LGU to
participate in regional, national and international tourism events such as travel fairs, road shows and official missions. “We also extend assistance in tourism market research, relevant trainings on tourism services for the local people of the LGU, and infrastructure development related to accessibility and facilities,” said Umali, who heads the DOT public affairs and advocacy. Conversation with Umali and Northern Mindanao Tourism Operations Officer Decius Esmedalla gave many interesting views. Both emphasized the need for tourism sustainability. “We must not exceed our carrying capacity and we should have control mechanisms in preserving our tourist attractions for future generation,” Esmedalla said. “We should not only think about the business side, like what is now happening to some Philippine destinations that are under threat because of overcapacity.” But is Ozamiz ready for the world? Rommel Natanauan, DOT creative specialist, said yes. “Ozamiz City boasts of beautiful natural attractions, rich cultural heritage, properties primed for farm tourism, adventure and recreational facilities, aside from being exempted from typhoons,” Natanauan said. “The city’s tourism potentials, as well as the readiness of its people, together with the Subanon tribe, Ozamiz, indeed, like the dragon fruit, is ripe for tourism.”
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The World BusinessMirror
Thursday, November 3, 2016 • Editor: Lyn Resurreccion
briefs
At least 20 dead, 39 rescued in Indonesian boat capsizing JAKARTA, Indonesia—A boat carrying Indonesian workers home from Malaysia capsized on Wednesday in stormy weather, and Indonesian police said at least 20 people have died. About 90 people were on the vessel that capsized off the island of Batam about 5 a.m, the island’s police chief Sambudi Gusdian said. A search effort under way for hours has rescued 39 people so far. Haryanto, a 51-year-old survivor, said the speedboat capsized amid heavy rains and high waves about two hours after it left Johor Bahru in Malaysia. He said the boat was overcrowded with standing room only. One of the worst ferry sinkings in recent years occurred off Sulawesi in 2009, killing more than 330 people. AP
Hong Kong lawmaker oath standoff sparks more chaos
HONG KONG—Two newly elected prodemocracy Hong Kong lawmakers barred for insulting China in their swearing-in ceremony have set off another round of disorder by scuffling with guards as they tried to retake their oaths in the chamber. Wednesday’s weekly meeting had begun minutes before Yau Wai-ching and Sixtus Leung of the Youngspiration party rushed into the Legislative Council chamber. They were defying an order by the council’s president barring them until a court settles a legal challenge on whether they should be allowed to retake their oaths. Security guards tried to throw them out, but other pro-democracy lawmakers rushed to their defense. The groups scuffled. Yau was ejected and the council president then adjourned the meeting, as guards grappled with Leung and his supporters, who also argued with pro-Beijing loyalists watching from their desks. AP
‘Natl Geographic’s ‘Afghan Girl’ denied bail in Pakistan
P E S H AWA R , Pa ki s t a n —A Pa ki s t a n i prosecutor says a court has dismissed a bail plea from National Geographic’s famed green-eyed “Afghan Girl,” arrested a week ago over allegedly forged ID papers. Sharbat Gulla has denied the charges, insisting she didn’t fraudulently obtain Pakistani nationality. Prosecutor Mohsin Dawar says the court dismissed the plea on Wednesday, citing lack of evidence to prove Pakistani citizenship. Gulla gained worldwide fame in 1984 as an Afghan refugee after war photographer Steve McCurry’s photograph of her, with piercing green eyes, was published on the cover of National Geographic. McCurry found her again in Afghanistan in 2002. She surfaced in Pakistan in 2014, but went into hiding when authorities accused her of buying a fake Pakistani identity card. Interior Minister Chaudhry Nisar Ali Khan has promised to release Gulla on bail. AP
www.businessmirror.com.ph
China’s Xi, Taiwan opposition head voice concern on tensions
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hina’s President Xi Jinping and Taiwan’s opposition chief expressed shared concern about souring relations between the two sides in the wake of the pro-independence Democratic Progressive Party’s (DPP) rise to power on the island.
The encounter between Xi and Kuomintang (KMT) Chairman Hung Hsiu-chu represented the first high-level exchange since the DPP’s Tsai Ing-wen assumed the presidency in May and replaced the more China-friendly KMT. Xi hasn’t yet met Tsai, whose party was founded on the principle of independence from China, and continues to voice skepticism about closer ties. Xi, who received Hung in his capacity as the Chinese Communist Party’s general secretary, said the two sides comprised an “inseverable community of common destiny” and warned against any move toward independence, according to the official Xinhua News Agency. “Looking into the future, the KMT and CPC [Communist Party of China] should take responsibility for the nation and history,” Xi said. The meeting underscores how far political relations across the Taiwan Strait have deteriorated since Xi’s historic handshake almost a year ago with then-Taiwanese leader Ma Ying-jeou. While Tsai has pledged to maintain relations and hasn’t pushed for independence, Communist Party leaders have been angered by her refusal to say both sides belong to “one China”, a concept that underpinned eight years of improved relations under Ma. In response, China has sought to isolate Tsai, courting the island’s diplomatic partners and asserting the right to prosecute Taiwanese phone- fraud suspects caught overseas. The number of mainland tourists visiting Taiwan has also dropped.
10% The percentage of Taiwanese who favored eventual reunification, while 19 percent leaned toward independence Xi’s worry
Hung, a former vice president of Taiwan’s legislature, has cast her trip as an effort to break the deadlock. She supports the one-China framework and advocates signing a peace treaty between the two military rivals, who technically remain at war despite almost seven decades of separate rule and expanding economic ties. “We can understand and can feel General Secretary Xi’s worry about the current state of crossstrait relations,” Hung said when meeting with Xi, according to a post on her official Facebook account. Afterward, she told reporters that she urged Xi to give Taiwan more space to operate in international relations. The DPP said in a statement l at e Tu e s d ay t h at re l at ion s shouldn’t be “narrowly” decided between the KMT and Communist Party. The Taiwanese ruling party said it wouldn’t accept preconditions for talks and called any peace treaty a “highly sensitive political issue” for which con-
China’s President Xi Jinpingn and Taiwan’s Nationalist Party Chairman Hung Hsiu-chu shake hands, as they pose for photographers during a meeting at the Great Hall of the People in Beijing on Tuesday. The meeting underscored China’s key message to the island’s independenceleaning administration: the price of not recognizing Taiwan as part of the Chinese nation, as Beijing demands, is access to China’s highest levels of power. Ju Peng/Xinhua via AP
ditions were not yet ripe. Hung expressed a more accommodating approach during an abortive run for president last year, when she advocated replacing the “one China, different interpretations” slogan used by Ma with “one China, same interpretation.” Such views failed to win public support and the KMT took the unprecedented step of rescinding its nomination three months before the January election. Hung nonetheless won leadership of the party in March. Hung’s delegation began by paying homage on Monday at the Nanjing mausoleum of Sun Yat-sen, regarded as the father of modern China by both the Communists and the KMT. She was scheduled to depart on Thursday after attending a “peace and development” forum in Beijing on Wednesday. The trip comes 11 years after then-KMT chief Lien Chan traveled to the mainland to meet
Communist counterpart Hu Jintao, a landmark encounter that also came at a time of tension between the Chinese government and a DPP president in Taiwan. Taiwan remains apprehensive about closer ties with the mainland, with almost two-thirds of respondents preferring to keep things unchanged in a survey released in August by the island’s Mainland Affairs Council. A bout 10 percent favored eventual reunification, while 19 percent leaned toward independence. China still has about 1,200 missiles pointed at the island and passed a law authorizing an attack the last time a DPP government made moves toward independence. The relationship has broad significance, because the US provides Taiwan a security umbrella under a 1979 law requiring America to defend the island from a Chinese attack. Bloomberg News
11 face charges on death of Moroccan fish vendor crushed in garbage truck
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ABAT, Morocco—Moroccan authorities say 11 people are facing manslaughter or forgery charges in the investigation of the death of a fish vendor crushed inside a garbage truck, an incident which prompted nationwide protests. The suspects include two local security agents, the head of the local fisheries department and the head doctor of the local veterinary services, according to a prosecutor’s statement reported by state news agency MAP. The 11 were presented to a judge in the northern city of Hoceima on Tuesday and ordered detained pending further investigation, MAP reported. Mouhcine Fikri was selling 500 kilograms of unauthorized swordfish, which local police confiscated and discarded on Friday. The prosecutor’s statement confirmed Fikri was killed by a garbage compactor after he climbed inside the truck to retrieve his fish. Activists and witnesses had said that a local police officer ordered the garbage truck driver to start the compactor and “grind him”. “Grind him” has become the top hashtag on social media in Morocco. The Moroccan prosecutor’s statement, however, said “there was no order [given] to assault the victim.” It said the swordfish was not allowed to be sold in October and
With graphic posters and signs, thousands of Moroccans protest on Sunday against the death of Mouhcine Fikri last Friday, in the northern city of Hoceima in Rabat, Morocco. Crowds of Moroccans are protesting, incensed by the death of a fisherman crushed to death in a garbage truck. AP/Abdeljalil Bounhar
November and so police ordered it destroyed. The alleged forgery concerns the paperwork involved in destroying the fish. Some have compared Fikri
to Tunisian vendor Mohamed Bouazizi, who set himself on fire to protest police abuse and corruption, sparking the 2011 Arab Spring uprisings.
Protests denouncing police abuse took pl ace on Su nd ay around Morocco, where widespread and coordinated mobilizations are rare. On Monday
protesters gathered in front of the Moroccan Embassy in Paris, and Tunisian activists called for protests on Tuesday in solidarity with Moroccan demonstrators. AP
Pentagon fears killing civilians from air in Mosul strikes
B
AGHDA D —A s Iraqi and Kurdish militar y forces converge on the eastern outskirts of Mosul, US commanders are concerned about their ability to launch air strikes without laying waste to the ancient city and the civilians who live there. The Sunni Muslim insurgents who captured the sprawling city two years ago have increased the risk of civilian casualties by rounding up thousands of Iraqis at gunpoint and herding them into areas under their control, according to US officials. The militants’ goal, according to the Pentagon, is to force coalition warplanes to bomb civilians trapped in the city or to hold their fire. T he US -le d coa l it ion h a s launched more than 2,900 aerial bombs, artillery and mortar shells, ground-launched rockets and drone-launched missiles since the Mosul offensive began on October 17, according to the Pentagon. But as the battle moves into a city of cobblestone pathways and clusters of shops, homes and Muslim shrines, US pilots will “exercise tactical restraint”, according to Lt. Gen. Jeffrey L. Harrigian, Air Force commander in the Middle East. “We’re going to take a look in the area of the target to make sure there are no civilians moving toward the area,” he said. Last week US warplanes destroyed 40 empty trucks near Mosul that militants planned to use to transport more civilians into the city, US officials said. “Our enemies recognize how much of an issue this is for us and how concerned we are about this,” said Gen. Joseph Votel, US commander in the Middle East, who visited Iraq last week. “I think trying to keep the population on our side by the way we conduct our operations is very important.” The Pentagon already is investigating allegations that a US air strike killed eight members of an Iraqi family, including three children, at their home in Fadhiliya, a village northwest of Mosul, during fighting on October 22. “ The coalition did conduct strikes in the area at the time of the allegation,” said Col. John Dorrian, a spokesman for US forces in Iraq. “We will investigate to determine what happened with this incident.” Chris Woods, director of Airwars, a nonprofit group that monitors civilian deaths from coalition air raids, said his analysts were tracking nine other air strikes around Mosul in the last two weeks that he said had killed 50 people. The chance of hitting civilians has grown as the militants have forced civilians from surrounding districts into Mosul to serve as human shields, according to United Nations officials. In some cases, the militants shot civilians who refused to comply. The militants’ “depraved, cowardly strategy is to attempt to use the presence of civilians to render certain points, areas or military forces immune from military operations, effectively using tens of thousands of women, men and children as human shields,” said Zeid Ra’ad Al Hussein, UN high commissioner for human rights. The use of human shields is prohibited under international law, but humanitarian groups caution it is not an excuse for haphazard targeting. “This does not absolve Iraqi and coalition forces from the obligation to take their presence into account, take all feasible precautions to minimize harm to civilians, and avoid launching attacks that could cause disproportionate harm to civilians,” said Lynn Maalouf, deputy director for research at Amnesty International’s regional office in Beirut. TNS
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Thursday, November 3, 2016
A9
Global growth turning corner as Aussie’s revival beats peers
T
o gauge whether the global economy is finally picking up, take a look at the performance of the Australian dollar since the end of June. Driven by rising local bond yields and commodity prices, the Aussie is the strongest major developed currency over that period, and some analysts are forecasting further gains to an 18-month high. Goldman Sachs Group Inc. and Commonwealth Bank of Australia say inflation in the nation has bottomed, while traders are starting to speculate that policy-makers are done with easing. The world’s fifth-most traded currency climbed for a third straight day on Tuesday after the Reserve Bank of Australia (RBA) left its benchmark interest rate unchanged and said consumer-price gains are likely to pick up. Australia’s economy, the 12th largest globally, sits astride emerging and developed markets, making the currency a favored bellwether for worldwide growth. As the biggest iron-ore exporter and a major supplier of coal, wool, gold and liquefied natural gas, the country’s fortunes are wedded to those of China. But the South Pacific nation is about more than just raw materials—tourism and education are also major exports—and the Aussie is the highest-yielding A A A currency. That combination helped it lead a resurgence in developed markets in 2009 as the dust settled after the global financial crisis. “Australia remains exposed to China’s industrial cycle and the latter is clearly tied to the fate of global growth,” said Vasileios Gkionakis, head of global foreignexchange strategy at UniCredit SpA in London, who was second in a Bloomberg’s ranking of Australian dollar forecasters for the third quarter. “A turn-up in global inflation would mean that higher-yielding currencies would benefit on the back of higher yield spreads. So the likes of Aussie would be likely to experience increased demand.”
Unwinding stimulus
Right now, the Antipodean currency is reflecting a brightening outlook. Global bond yields surged in October, on speculation central banks were preparing to gradually scale back extraordinary stimulus measures, while market expectations for consumer prices started to accelerate, albeit from low levels. Aussie yields rose more than any nation with the top credit scores from all three ratings companies and only Italy and the United Kingdom outpaced them among developed economies. The extra yield on Australia’s 10-year bonds over their US counterparts more than doubled from lows in August and the Australian dollar benefited from that rising premium. The currency has jumped 2.3 percent since the end of June as the outlook for inflation improved on a surge in
commodity prices, and as traders trimmed bets the RBA would cut interest rates. The Aussie rallied 28 percent in 2009 as the global economy recovered from the collapse of Lehman Brothers Holdings Inc. and the ensuing recession. It has advanced 4.6 percent this year, on course for its first annual gain since 2012. While its three-year slide helped the economy combat a decline in mining investment, an appreciating exchange rate may complicate that process, the central bank said in Tuesday’s policy statement.
Three quarters
There are further reasons to be optimistic. For the first time in six years, the price of Australian exports has risen for three straight quarters, boosting national income and tax revenue. A rally in energy prices is also supporting the outlook for growth in consumer prices. The 10-year inflation swap and the break-even rate are both at six-month highs. Traders are signaling the current record-low RBA cash rate may be the bottom of an easing cycle that began in late 2011. The market implied probability for a reduction through the end of 2017 has fallen to 27 percent, from almost 50 percent odds seen at the end of September. The Aussie may appreciate to 80 US cents by the end of next year, according to UniCredit and ING Groep NV, from 76.22 cents as of 2:21 p.m. in Sydney on Wednesday. The median estimate of analysts is for the currency to weaken to 74 US cents, data compiled by Bloomberg show.
Commodity rally
The currency has also drawn strength from rising prices of metallurgical coal, which have tripled, and the 48-percent surge in iron ore in China this year, helping boost Australia’s terms of trade after more than two years of declines. The economy will expand 2.9 percent this year, the fastest since 2012, and growth will remain at that level through 2018, according to Bloomberg surveys of analysts. Inflation will accelerate in the next two years, while global growth will quicken to 3.2 percent in 2017 and 3.3 percent in 2018, from 2.9 percent this year, analysts project. The RBA will release its quarterly Statement on Monetary Policy on Friday, with updated growth and inflation forecasts. “The Australian dollar can act as a barometer of global economic sentiment,” said Richard Grace, chief strategist at Commonwealth Bank of Australia in Sydney. “The nation’s terms of trade, local economic conditions and Asian export growth go some way in pointing to the health of the global economy. Other factors, such as the nation’s relative interest rates, are also important drivers for the currency.” Bloomberg News
Democratic presidential candidate Hillary Clinton responds to cheering supporters during her campaign rally at the Dickerson Center on October 29 in Daytona Beach, Florida. Joe Burbank/Orlando Sentinel/TNS
US stock market counts vs Clinton
F
ew institutions have a better track record calling presidential races than the United States stock market. At the moment, it’s sending information that counts against Democrat Hillary Clinton. The performance of the S&P 500 Index has signaled the outcome of every presidential election since 1984, according to an analysis by Strategas Research Partners Llc. A gain in the benchmark for American equity in the three months prior to the vote has seen the incumbent party win 86 percent of the time since 1928. R ight now, the benchmark gauge is down 3.6 percent since August 8 with just a week until the vote, a fact that in isolation augurs well for Donald Trump. Besides the three-month interval, the S&P 500 fell on Tuesday by the most in three weeks, slipping for a sixth day to 2,111.72, making its first foray below 2,100 since July 7 before rebounding. The gauge is in its longest slide since August 2015 amid polls showing the race for the White House is tightening. The CBOE Volatility Index surged on Tuesday by 9 percent to the highest since June 27. Logically, the stock market’s record of prescience is derived from its sensitivity to the economy, with falling shares potentially correlating with consumer discontent that might
3.6%
The percentage decline in the benchmark gauge since August 8
break in favor of a challenger. While this year’s signal ranks with the weaker ones historically, it comes as growth in GDP is sluggish and follows the biggest monthly retreat in consumer confidence in a year. Some analysts also wonder if Federal Reserve stimulus has made stocks a less reliable signal of economic health than they were in the past. “People may be saying ‘I think Clinton is going to win,’ but people are not putting their money to work on the fear of a Brexit-like event,” said Daniel Clifton, head of policy research at Strategas Research Partners. “The range of outcomes has been increasing in recent weeks rather than decreasing.” The reputation of markets in
handicapping politics took a beating in June, when stocks around the world soared prior to the United Kingdom, referendum only to fall the most in five years when voters chose to secede. Just four months removed from that shock, anxiety levels have spiked in the final week of an election season marked by twists. Clinton’s once-dominant lead over Republican Donald Trump has withered in polls since news on Friday that her e-mails remain a topic of interest to the Federal Bureau of Investigation (FBI). Those hoping to use equities as a thermometer should be aware that the stock market has rarely been as divorced from the economy as in the last seven years. Helped along by near-zero interest rates, the S&P 500 has returned 3.7 percent a quarter on average since March 2009, compared with a 0.9-percent gain in GDP. That gap is the widest since World War II. Federal Reserve (the Fed) rate intentions are playing a role, with odds that the central bank tightens this year surging past 70 percent. That’s helped boost financial shares about 1 percent since August 8. Banks and tech shares are the only of 11 groups in the S&P 500 that have gained. Phone, real-estate and utility shares have plunged in that period, as rising odds for higher interest rates damped enthusiasm for stocks coveted for their high dividend payouts. The banking sector is also the industry most closely tied to the election and favors Trump, according to analysis by Bloomberg.
The S&P 500 Investment Banking and Brokerage index has rallied 13 percent in the last three months. “Despite the fact that Clinton has been ahead in the polls and is likely to win, most of the traditional industries that you would expect would do better under a Republican presidency have done better,” said Michael Arone, the Bostonbased chief investment strategist at State Street Global Advisors’ US intermediary business. US equities led a selloff in riskier assets on Tuesday following an ABC News/Washington Post tracking poll that showed Trump with 46 percent support to Clinton’s 45 percent. Gold surged more than 1 percent, the dollar weakened versus the Swiss franc and Mexico’s peso, considered an inverse proxy for Trump’s election fortunes, tumbled. Real-estate and utility stocks slid more than 1.7 percent. Apple Inc. dropped 2.1 percent to weigh down the technology group, and Pfizer Inc. lost 2 percent as its quarterly profit fell short of estimates. The Dow Jones Industrial Average lost 105.25 points, or 0.6 percent, to 18,037.17. “We have the Fed tomorrow, jobs on Friday and the election on Tuesday,” said Mark Kepner, managing director and equity trader at Themis Trading Llc. in Chatham, New Jersey. “You definitely have the fear factor rising today. Is it more election fear and pricing in the possibility of a Republican victory? Maybe. You also have numbers today that look like the Fed is still on track to raise rates in December.” Bloomberg News
Park names new PM, finance chief amid South Korea scandal
S
outh Korean President Park Geun-hye named a new prime minister and finance minister on Wednesday as she seeks to stem the fallout from an influencepeddling scandal threatening her grip on power. Park nominated Kim Byong-joon, 62, a policy adviser under former President Roh Moo-hyun, as prime minister to take over from Hwang Kyo-ahn. Yim Jong-yong, chairman of the nation’s Financial Services Commission who has taken the lead in overhauling South Korea’s indebted heavy industries, was tapped to take over from Yoo Il-ho in the top finance role, presidential spokesman Jung Youn-kuk said at a televised briefing. The president is required to seek
approval from parliament for the nominees. If confirmed, Kim would be the fourth prime minister to serve under Park in the largely symbolic role since she came to power in February 2013. Yim would be her fifth finance minister in four years. The nominations mark Park’s latest effort to restore confidence in her government as the scandal sends her approval ratings tumbling. Her ruling party has called for a neutral government to restore confidence in her government at a time of sputtering economic growth and high-profile struggles at companies, like Samsung Electronics Co. and Hanjin Shipping Co.
Stocks fall
South Korea’s benchmark stock
index—one of the world’s worst performers over the past month— fell again on Wednesday. The won dropped as much 0.8 percent against the dollar. “Usually, the market reaction to the announcement of a new finance minister depends on the person’s professional background, but this time, reaction was muted as there are doubts as to what policy power the administration can have in this situation,” said Kim Sanghoon, a fixed-income analyst at KB Investment and Securities Co. On Wednesday prosecutors said in text messages they will seek an arrest warrant for Choi Soon-sil, a friend of Park at the center of the scandal. They also said they are investigating a case involving
Samsung. Yonhap News said earlier investigators are looking at the transfer of €2.8 million to a German-based company created by Choi and whether the money came from Samsung Group. Park apologized last week in a nationally televised address for consulting Choi on “some documents” for a certain period after she took office in 2013. Prosecutors have detained Choi— who opposition politicians have linked to a religious cult—for questioning following accusations from opposition lawmakers that she helped make budget and staff decisions in addition to unduly pressuring a business lobby group to raise money for two foundations she controls.
Plummeting popularity
Park’s new appointments may cause a further decline in her popularity, said Choi Chang-ryul, a political commentator and professor of liberal arts at Yong In University. Her approval rating hit 17 percent last week, according to Gallup Korea. The Democratic Party of Korea criticized Park for not consulting the opposition for her pick, saying on its web site that it does not approve of her nominations.Hong Sung-gul, a policy professor at Kookmin University where Kim teaches, characterized Kim as a pro-business policy-maker and said that he would first deal with economic hardships facing the country if appointed. Calls to Kim’s office
at the university went unanswered. Yim, 57, served as the financial regulator chief from March 2015, having previously helmed NH Financial Group. He also held posts in the prime ministers’ office and the finance ministry. As FSC chairman, Yim has also enacted policies to curb household debt growth. Calls to his mobile phone weren’t answered. The president holds executive power in South Korea, with the prime minister having limited responsibilities. Park’s first premier, Chung Hongwon, offered his resignation in 2014 after the deadly sinking of the Sewol disaster hurt confidence in her leadership. Her second premier Lee Wan-koo resigned in 2015 over bribery allegations. Bloomberg News
A10 Thursday, November 3, 2016 • Editor: Angel R. Calso
Opinion BusinessMirror
editorial
We need a big brother
F
ormer President Fidel V. Ramos (FVR) has resigned as special envoy to China, as confirmed on Tuesday by no less than President Duterte. In his resignation letter, FVR said he is stepping down as the special envoy of the President to the People’s Republic of China in the belief that “the efforts of our team, of the special envoy, played a modest but productive role in the breaking of the ice that led to your successful visit” to China.
FVR, however, categorically told the President he remains a Duterte supporter, ready to give out friendly advice from time to time. FVR’s offer is “also an affirmation of my full support of the national interests of our Team Philippines of 100.5 million Filipinos that you now lead.” In accepting FVR’s resignation, the President said he is thankful for the former president’s help in bringing together the Philippines and China, and that he has no hard feelings toward FVR, who submitted a civil and respectful resignation letter. Although Malacañang has released a statement saying there is no animosity between the President and FVR after Duterte accepted the latter’s resignation, the effort failed to stop the deluge of antiFVR comments on social media by loyal Duterte supporters. Duterte die hards said FVR betrayed the President by quitting on him and by bashing him in public. Writing in another newspaper, FVR said the Duterte administration’s first 100 days were a huge disappointment and letdown, adding that the President had spent too much energy on his war on drugs and neglected poverty, the environment and the rising cost of living. He also described Duterte’s hostility and mixed statements toward the US as “discombobulating”. FVR said the President “is unwittingly shooting himself in the mouth, and also all of us, 100.5 million Filipinos” for doing nothing to advance the cause of the Paris Agreement. His words: “Since assuming the presidency on June 30, 2016, the Duterte administration, unfortunately, has done little to move the Paris Agreement forward so that the Philippines can be credited with having ratified this super-important agreement that would prolong mankind’s survival on planet Earth.” It was not clear why FVR made his criticism at this time. But Duterte has made his position clear on the issue of climate change. To recall, the President earlier said developed countries who are responsible for the majority of historical emissions should carry the larger burden of limiting emissions and that developing countries, like the Philippines, who contributed little to these emissions, should be allowed to continue to grow their economies as they try to industrialize. FVR, however, has a strong point when he said, “Ratifying the Paris Agreement will...advance the interests of our country and our people, as one of the most vulnerable to climate change. It will also enable us to secure more investments toward our climate goals and gain access to the financial, technological and capacity-building support to be provided to parties of the agreement.” But the President stated the obvious with his response: “How can I act on something that is not even on my desk.” Miscommunications happen from time to time, even for people in high places. Perhaps, what is needed at this time is for FVR to assume his role as big brother and sit down with the President and help in crafting a strategy that will benefit the country. As a Duterte fan said on social media, publicly criticizing the President and writing damning articles about the Duterte administration is unbecoming of a big brother. Since 2005
BusinessMirror A broader look at today’s business
If Trump wins... John Mangun
OUTSIDE THE BOX
T
he only factor that really matters when you are trying to forecast the future is the trend. If you look down at your speedometer and it reads 100 kilometers per hour (kph), that tells you nothing useful about your future speed. But if one minute ago it was 80 kph and a minute before that you were going at 60 kph, then the probability is that the next time you look, your speed will be 120 kph. You are traveling with an accelerating speed trend. The same is true with stock markets and that is why technical analysis makes the most sense as it measures investor response to the outside factors with you having to even know what those factors are. The greatest correlation of an outside factor to movement on the Philippine Stock Exchange (PSE) is the value of the US dollar in relation to other currencies—not just to the Philippine peso.
Trump and the female vote
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T. Anthony C. Cabangon Jun B. Vallecera
The US dollar index (USDX), which measures the dollar against a basket of currencies, started appreciating at the beginning of October from 95.50. But the negative effect on Philippine stocks began in the middle of the month as the USDX broke above its recent high in July at 97.50. The USDX moved to 98.85. The PSE started dropping on October 19 and while the USDX had already made most of its upside move,
the PSE had to “catch up” with the total USDX trend and move higher from the 95 area. The global markets are now holding their collective breath waiting for the outcome of the US presidential election next Tuesday. This election may turn out to be a fairly easy call. The USC Dornsife/Los Angeles Times poll is unique in that it takes a large number of eligible voters and not simply asking “Who are you going to vote for?” The poll asks: “On a scale of 0-100, what is the chance you will vote for Trump or Hillary?” This poll was the most accurate in 2008 and 2012—the Age of Internet/Social Media Elections—for calling the spread between the winner and the loser. On October 13 the poll was tied with 44.2 percent of Clinton and 44.3 percent for Trump. As of November 1, Trump is ahead at 46.9 percent with Clinton at 43.3 percent. Forecasting elections does not make me money. However, if Trump does win, the heads on the political elite are going to be exploding all over
A
fter the dramatic release of a 2005 videotape of Donald Trump making crude tasteless comments about women and agreeing to vulgar sexual conduct against women, mid-October United States presidential survey results showed Hillary Clinton leading Trump by five to 11 percentage points. His statement that his status gives him a free pass when it comes to the opposite sex horrified the American populace and caused shivers to many.
This candidate who has a great dislike for racial diversity who has absolutely no clear pronouncement on how to run the US and who has consistently failed to present a coherent, workable and acceptable economic and sociopolitical agenda for his country is getting really notoriously popular these days because of his continuing talent for sexism.
Deeper gender battle
But there is a bothersome demographic divide in almost all survey results. Numerous press reports observed a big gender split with Clinton losing votes among men by almost 11 percentage points and Trump losing among women by 33 points. They say if Trump does not win the US presidential election, it will
be by reason of the overwhelming disapproval of the women voters. And there are so many valid reasons and these should resonate not only with women but with men, as well. It is certainly contemptible for both men and women to disregard issues of sexual assault, rape culture, harassment and degradation of women as if the latter were within the commerce of men. Even the very conservative female members of the Republican Party have come out to openly criticize and ridicule their candidate.
Ignoring the Issue
SO how can one vote for someone who does not take seriously the long time misery of women in a world of incessant abuse, misuse and
harm. History is replete with these unfortunate stories. Now witness Trump’s many antiwomen behavioral failures: Once he said he was disgusted about Clinton and women going to the bathroom often and that Clinton was conveniently using the “woman card” to lure the electorate. Worst of all, he described this woman’s card as one that gets you a salary discount or that makes one live in poverty, be sexually exploited and get countless benefits.
Pushing too far
Talking about the military, Trump was undaunted. He mentioned that sexual assault is an expected result of allowing women to serve in the military. His racial and religious prejudice was, likewise, manifested when he publicly attacked one Khizr Khan, the father of a soldier who died fighting in Iraq, and shamelessly stated that the reason Khan’s wife did not explain her side was because she was not allowed to have anything to say. And who even bothers to rigorously debate with a former Miss Universe via twitter in the wee hours of the morning or describe another beauty queen as “Miss Piggy”? Clearly, these comments were just too gruesome that former First Lady Barbra Bush and former Secretary of State Condoleezza Rice had to say “enough.” Because of the negative effect of the women sector’s reaction to
the world as the trend of Indonesia, Thailand, Canada, the Philippines and Great Britain of the people rejecting the establishment continues. So what happens to the markets? The economic elite do not let mere politics cut into their bottom-line. While their political power may be temporarily reduced, money still talks. We can assume there will be a large fall in the stock markets, as the “suckers” rush to sell because the establishment has been telling them Trump is bad for stocks. The same thing happened with the Brexit vote. The London stock market fell 6 percent. It is now 17 percent higher from that postBrexit vote low. The strategy then for the PSE would be to wait for the potential drop if Trump wins and then buy the one vehicle that accurately tracks the movement of the PSE composite index. E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.
his pronouncement, Trump is now in a wild offensive and threatened lawsuits against press people and media outlets that publish his sexual tirades. Now willing to shut up, he ended up saying the women who complain and attack him are liars, horrible individuals and not pretty enough to be harassed in the first place.
Historic chance
IN this rare political milieu, it is up to Clinton to leverage on the growing disenchantment of many Americans with Trump and transform the same into real, actual votes. They say Trump is the best gift to the very much divided women’s movement. That this will catapult the installation of the first female US chief executive remains to be seen. In fact, the survey last week shows that Trump is slowly catching up, especially after the recent Federal Bureau of Investigation’s revival of the e-mail issue. Truly, a very worrisome presidential landscape is looming in the horizon. Gender equality and respect for women are timely and important campaign issues. It should be talked about and taken seriously as an agenda for more inclusive growth, especially in a democratic giant like the US. We shall hold our breath, watch and wait with much anticipation. For comments and suggestions arielnepo. businessmirror@gmail.com
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Due process rolls on estafa suit vs Razon
A covenant stronger than death Msgr. Sabino A. Vengco Jr.
Alálaong Bagá
Val A. Villanueva
Businesswise Conclusion
I
n the estafa case it filed against International Container Terminal Services Inc. (ICTSI) Chairman and President Enrique Razon Jr., Makiling Farms Inc. (MFI) stresses that it is only after its 5-percent stake in Enrique Razon Inc. (ERI), which, it alleges, was illegally transferred to ICTSI.
MFI says it will let due process take its normal course, but will seek all available legal remedies to get the justice that it deserves. It also emphasizes that it was the new management of the Presidential Commission on Good Government (PCGG), particularly the agency’s newly appointed Commissioner Reynold S. Munsayac, which facilitated the release of a copy of the PCGGEnrique Razon agreement that is vital to the ongoing case. MFI’s previous efforts in securing copies of the agreement from the PCGG had been met with resistance, but Munsayac acted swiftly upon learning of the situation. MFI, in effect, is questioning the legality of the transfer to Enrique Razon Sr. of a particular block of 7.7-million shares (now 60.8 million, after stock dividends valued at P4.8 billion) executed by Enrique Razon Jr., in behalf of ERI, with a deed of assignment dated April 10, 1990, allegedly for various services in exchange for being granted immunity from suit. “… Razon successfully negotiated and concluded an agreement with the PCGG for the lifting of sequestration and dismissal of Sandiganbayan Case 0010”...as against ERI among the terms of which is that “...ERI shall pay the government through PCGG the amount of P9 million…” (Razon Jr. signed the deed in behalf of ERI and Razon Sr. signed in behalf of himself.) On October 5, using the freedom of information (FOI) executive order signed by President Duterte, MFI finally obtained from the PCGG the Enrique Razon Sr./PCGG compromise agreement (April 10, 1990) and other documents that Enrique Razon Jr. had steadfastly refused to provide. The documents substantiate that the beneficiary of the agreement was only Enrique Razon Sr. and his family for Marcos cronyrelated charges, since ERI was never charged by the PCGG before the Sandiganbayan. This is completely contrary to the deed which claims that Enrique Razon Jr. obtained for ERI the “dismissal of Sandiganbayan Case 0010.” In summary, Enrique Razon Sr. and his family secured immunity from civil and criminal prosecution and the waiver of the PCGG
claim before the Sandiganbayan of P51 billion against Razon Sr., et al, in exchange for his payment of P9 million, payable in five years without interest. MFI said that, clearly, ERI was not a beneficiary of this personal arrangement of Razon Sr., and there was misrepresentation in saying the P9-million payment was for ERI as the beneficiary of Razon Sr.’s agreement with PCGG, which he then used as the basis for the conflicted transfer of the 7.7-million ICTSI shares to himself. According to MFI, the PCGG and the Razon Family made sure that, even if the Office of the Solicitor General, which is the PCGG’s counsel, will object to the dismissal of the case against Enrique Razon, the PCGG shall not cause the dismissal of the case and, if an adverse judgment is rendered against Enrique Razon, the PCGG will not enforce the judgment against Enrique Razon. “Note that if the agreement were notarized, it would have become a public document and, somehow, third parties [like Makiling Farms Inc.] could have obtained a copy from the notarial section of the Regional Trial Court concerned and Makiling Farms Inc. could have uncovered the fraudulent deal a long time ago. “If the agreement were submitted to the Sandiganbayan as is, or not notarized, the Sandiganbayan would have asked both Enrique Razon and the PCGG to explain why the agreement was not notarized and the public would have been informed of the deal struck by the PCGG. “Over and above this formal defect, submitting the agreement to the Sandiganbayan would have given the Court the opportunity to scrutinize the agreement and ask the PCGG why it was waiving billions of pesos in damages in favor of the government and the reconveyance of ill-gotten wealth, for a measly sum of P9 million. “From May 1990, or after the lapse of 26 years, the PCGG has not submitted any written manifestation to the Sandiganbayan about the Razon-PCGG agreement. Why are both parties keeping the 1990 deal a secret if the agreement was aboveboard?” MFI contends. For comments and suggestions, e-mail me at mvala.v@gmail.com
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he righteous shall behold the face of the Lord and, in His presence, his joy shall be full (Psalm 17:1, 5-6, 8, 15). The God of the living is the reason the dead will rise and the faithful ones shall find eternal life in Him (Luke 20:27-38).
On the right path trusting in God The psalmist is appealing to God to intervene and help him in pronouncing a just verdict. He addresses the Lord as a judge, calling on Him to “hear” his just cause and attend positively to his cry. He dares to summon the Lord to listen to his prayer because of the psalmist’s innocence. He speaks with “lips without deceit”; he is not exaggerating. And he has lived the way of the wise and the righteous: keeping the Lord’s commandments, holding fast to His paths and his feet never faltering. That is why, in his personal innocence, the psalmist is wholly assured of God’s provident justice; he is fully confident that God will hear
his words and incline His ear to him. The psalmist’s prayer for help expresses trust in the Lord in two graphic images. To be saved from his enemies is to be kept “as the apple of God’s eye”, as someone precious to Him the way the Lord looked after His people in the wilderness (Deuteronomy 32:10). To be protected by the Lord is to be “in the shadow of His wings” (Ruth 2:12), shaded from the blazing sun or shielded from the wicked ones, just as the wings of the cherubim above the ark of the covenant are evidence of the sheltering presence of the Lord from His temple (cf. 1 Kings 8:6-7). The psalmist is certain of his reward: to behold the face of God. To stand in God’s pres-
ence in joyful contemplation of the divine goodness is his satisfaction (better than merely material benefits in this life), when he “wakes up”, whether literally when morning comes or metaphorically in waking from death (Daniel 12:2; Isaiah 26:19).
Communion with the God of the living
The aristocratic religio-political party of the Saducees (descendants of the high priest Zadok, cf. 2 Samuel 8:17) accepting only what is actually written in the Bible do not believe in the resurrection from death. To make such belief ridiculous, they cite the case of a woman who got married one after another to all seven brothers in pursuance of the law (Deuteronomy 25:5-10) that provides for the continuation of a man’s name and the inheritance of his property. At the resurrection, whose wife will she be? Jesus points out the radical difference between this age and the age to come. The latter is not just a continuation of the former. If now procreation is the way life continues from generation to generation, in the next age there will no longer be death, for being spiritual, like angels, the blessed ones who will rise as God’s children will be shar-
ing in His life. And in a traditional Jewish method of argumentation, Jesus draws the conclusion supporting resurrection from a text (Exodus 3:1-6) that God is still the God of the ancestors of the Jewish nation. Hence, these ancestors are somehow still alive with God. God is the God of the living, of those who have joined Him through the covenant which no death can sever. Alálaong bagá, as we look into the future in the closing phase of the Liturgical Year, we focus on what God does for us. The resurrection is not the same as the immortality of the soul, which is based on the nature of the human person. The resurrection rests on God’s fidelity to our covenant relationship with Him, wherein the divine desire to bless us with the fullness of life is stronger than death. And if our communion with God will endure forever, how are we to live now? The psalmist’s holding fast to God’s paths without faltering is our sure way of waking up in the presence of the Lord to behold His face. Join me in meditating on the Word of God every Sunday, 5 to 6 a.m. on dwIZ 882, or by audio-streaming on www.dwiz882.com.
Tax obligation of a permanent establishment Fulvio D. Dawilan
Tax law for business
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foreign corporation is a corporation that is organized under the laws other than that of the Philippines. For incometaxation purposes, a foreign corporation may either be classified as resident foreign corporation (RFC) or a nonresident foreign corporation (NRFC). RFC applies to a foreign corporation engaged in trade or business within the Philippines. On the other hand, NRFC applies to a foreign corporation not engaged in trade or business within the Philippines. The income taxation of RFC and NRFC in the Philippines are essentially the same. Both are subject to Philippine income taxes only with respect to income derived from sources within the Philippines and both are not subject to income taxes on income derived from sources outside the Philippines. The only difference is that the NRFC is subject to income tax at the rate of 30 percent on gross income, while the RFC is, in general, subject to income tax at the rate of 30 percent on net taxable income, except when a special tax regime applies. Consequently, the RFC is required to file its income-tax return and pay its own taxes. On the other hand, the NRFC shall not be required to file an income-tax return. Its taxes are paid through the final withholding tax system. The payment of taxes of the NRFC, if any, is the responsibility of the payor/customer as withholding agent. W hile that is based on our domestic law, there is also the
concept of a permanent establishment (PE) found in various tax treaties concluded by the Philippines with other countries. As defined in most treaties, PE means a fixed place of business in the Philippines in which the business of a foreign enterprise is wholly or partly carried on. There are various instances where a PE may be considered to have been established. Among these are the presence of a place of management; a branch; an office; a factory; the presence of employees, agents or representatives in the Philippines for defined number of days and depending on the extent or nature of activities pursued in the Philippines; etc. When a foreign enterprise carries on business in the Philippines through a PE, the income that is attributable to that PE is subject to income tax in the Philippines. The presence of a branch office of a foreign entity is one of the instances that results in the creation of PE. Apparently, a foreign corporation that
gets a Philippine Securities and Exchange Commission (SEC) license to transact business in the Philippines, though a just branch, is considered a resident foreign corporation. Thus, doing business in the Philippines through a branch makes the foreign corporation a resident. As such, a branch is also required to register with the tax bureau and comply with all the filing and reportorial requirements with the said office, including the payment of its own taxes. There are, however, other forms of PEs that involve activities with shortterm durations, but sufficient, to create a PE. May these be considered RFCs or NRFCs? Can they register with the tax bureau so that they can comply with their tax obligations as RFCs or will they remain as NRFCs and pay their taxes through the final withholding tax system? In one case (Court of Tax Appeal Case 6388, August 22, 2005), the Tax Court ruled that a foreign corporation with a PE is still treated as NRFC for incometaxation purposes. In this case, the Court took note of the fact that the foreign corporation was not issued a license to transact business in the Philippines by the SEC, and neither was it registered with the Bureau of Internal Revenue (BIR) and paid its taxes. Accordingly, the withholding of final tax by the Philippine customer/ payor was proper. The BIR, on the other hand, had issued conflicting rulings. There are a number of rulings confirming that the payments to a foreign corporation with a PE in the Philippines are subject to the final withholding tax. This notwithstanding, there are more recent rulings holding that a foreign
corporation that has created a PE in the Philippines is treated as a foreign corporation engaged in trade or business in the Philippines, otherwise known as an RFC. As such, they should pay their taxes like any RFC. Accordingly, they should be able to secure taxpayer identification number (TIN) and register as taxpayer. There is, however, no specific guideline provided for the registration of a PE so that it can comply with its tax obligations. In one ruling, it was stated that the foreign corporation may register using the business address of its permanent establishment. In another ruling, it is implied that the onetime TIN secured from Revenue District Office 39, as generally required for all foreign entities, will suffice. We believe that a foreign entity with a PE should be treated as resident foreign corporation, considering that, to some extent, it is doing business in the Philippines. As such, it should comply with its tax obligation like any regular or special branch of a foreign entity. However, since it is not registered with the SEC, perhaps, the tax authority should consider crafting a rule providing uniform guidelines for the registration of PEs and payment of their taxes. The author is a senior partner of Du-Baladad and Associates Law Offices (BDB Law), a memberfirm of World Tax Services (WTS) Alliance. The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported, therefore, by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at fulvio.dawilan@ bdblaw.com.ph or call 403-2001 local 310.
Long All Saints’ Day weekend with Gael Garcia Bernal and Mario Vargas Llosa Liling Magtolis Briones
Boiled Green Bananas (Again!)
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ost of us look forward to All Saints’ Day holidays to do the things we have always wanted to do, enjoy the activities that bring us joy and emerge refreshed, energized, enlightened and, hopefully, inspired. For me, it is books, music and dance. This is my All Saints’ Day treat to myself: Two seasons and 10 episodes each of Gael Garcia Bernal’s TV series Mozart in the Jungle, five books of Nobel Laureate Mario Vargas Llosa, full- length ballet performances by Roberto Bolle and Svetlana Zakharova, a Facebook status to all whom I love.
Gael Garcia Bernal Garcia Bernal is magnificent in his role of a brilliant symphony conductor in Mozart in the Jungle. At last I have found a TV series that is all about music and musicians! Each episode is introduced with symphonic music and interspersed with LatinAmerican numbers.
Music surrounds and enfolds the viewer with music from beginning to end. And it is not only Mozart, but many of the great musicians ever produced by the human race, including Beethoven. At the end of each number, I would shout “bravo”, clap and say “ang galing!” While the performances in the concert halls were beautiful, I like best those which were held out in the open, with people from all walks of life shown in rapt attention. Season one has Tchaikovsky’s powerful and victorious “1812 Overture”. Season two has two numbers performed in the open, one of which had a distinct Latin American flavor. And always, always, people were drawn to the siren call of music. The beauty of music was communicated by Garcia Bernal through his body movements and exultant, expressive face whenever the music reached an intense conclusion. They say that music is the language of the soul.
Mario Vargas Llosa
TO his legions of readers, he is one of the most important writers from South America, combining the gifts of journalism, essay writing and fiction with political activism. He was born in Peru and received his early education in his home country. His early works are set against the backdrop of Peruvian society. Vargas Llosa is known for his novels, which describe life in Peru during the troubled days of military control amidst social, political and even violent upheavals. These are exemplified by his novels like The Green House, which I am reading now, and Conversation in the Cathedral. He was president of the international association of poets, essayists and novelists (PEN). He once ran for president after Fujimori, but lost. Right now, I am drawn to his nonfiction, particularly his biographical Fish in the Water and his collection of essays, “The Language of Passion.” The essays discuss a wide range of topics, but I like
“A Maiden” best. It is a tender, evocative account about Juanita, the beautiful Incan Mummy maiden discovered in 1995 at the peak of Ampato volcano. She is believed to have been sacrificed to appease the mountain god, Apu. She was about 500 years old at the time of her discovery and perfectly preserved because of the glacial temperatures. Through the maiden Juanita and the artifacts she was buried with, scientists were able to reconstruct important aspects of the life and times of the lost Incan civilization. I have read a number of accounts about Juanita, including detailed scientific analyses but none as enchanting and mysterious as Vargas Llosas’s account. Most of the other essays are about global issues—democracy and freedom, militarism, dictatorship and the many stupid, irrational, cruel and vicious actions that predator humans inflict on their victims. These are issues that resonate with the challenges that we in the Philippines are grappling with.
I like his essay “Why literature?” Thus far, it is the most eloquent and powerful argument on why we need literature in order to survive as individuals, as a nation and as a global community. Right now, a debate is raging in the University of the Philippines. Should the liberal arts courses be reduced to make room for more subjects on technology? Vargas Llosas’s essay can help provide the answers. Can we ever produce magnificent films with great actors? I believe so. We are going in that direction. Can we finally produce a nobel laureate in literature? I think so, too. But we must give space to our artists. We must recognize and reward them generously even as we catch up with technology. Now, excuse me while I watch for the nth time Roberto Bolle and Svetlana Zakharova dance “Swan Lake” and “Giselle”.... I will then go back to my responsibilities with clearer vision, and a better understanding of the bureaucratic world I live in.
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DOF, DTI tweaking incentives package
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By Rea Cu
@ReaCuBM
he Department of Finance (DOF) has opened discussions in order to modernize and update the current fiscal incentives to be able to help evolve a tax system that is equitable, simple and efficient.
During a hearing on fiscal incentives at the House of Representatives, Finance Undersecretary Karl Kendrick T. Chua said the department is currently doing research and consultations to modernize the country’s fiscal-incentives packages to make the system performancebased, targeted, transparent and time-bound. “We are currently preparing, doing our research consultations, and we are most open to working with the DTI [Department of Trade and Industry] to arrive at a package of modern fiscal incentives, coupled with our objective of, eventually, lowering the corporate income tax,” Chua said. Chua, who is also the chief economist of the DOF, explained that the department is aiming for a fiscal-incentives regime that is
I think we also need to be pragmatic; we need to provide fiscal incentives that we think are affordable.”—Chua performance-based. This means it should only be given to companies that provide jobs and productive investments for the country. “First, it needs to be performance based, given only to projects and companies that actually deliver jobs or export or provide productive investment,” he explained. Second, he said, is that it needs
to be more transparent, meaning, letting taxpayers know where their taxes are being used. He said the regime should be time-bound, as changes are happening regularly. “It needs to be transparent, because this is a tax expenditure, people will need to know where their taxes are going and who are receiving them. We believe that starting next year, once we have data from Tax Incentives Management and Transparency Act [Timta], we may be able to, once and for all, understand what is really the cost and benefit of our 40 years of incentives regime,” he explained. The third principle is making it more targeted, according to Chua. This means the incentives would be given to businesses or investments that really need it. “You want to target these incentives only to the first investments who really need them. They are typically those who have very low financial return but have very high social return because they generate a lot of jobs or they generate and attract capital, technology, innovation, governance in the corporate sector,” he added. The DOF undersecretary explained that fiscal incentives are a means to help companies that have just started out with their
respective businesses and, therefore, should not be given indefinitely, which will help promote the welfare of corporations and businesses. “Incentives are supposed to be given to help companies get a head start and to be competitive. However, if these are given indefinitely, then we are simply not promoting the welfare of the corporations and the country as a whole. And also to be fair to other cooperatives or small and medium enterprises, even the micro ones who work as hard as the large ones but do not get these incentives,” Chua said. The DOF hopes to simplify the country’s fiscal-incentives regime through a new law that will compile existing laws with regard to incentives, to eliminate instances of confusion and complexity, and the modernization also making the incentives affordable for the government. “I think we also need to be pragmatic; we need to provide fiscal incentives that we think are affordable, it needs to be part of the budget as a tax expenditure. We can use the upcoming Timta data to analyze whether the P100-plus billion of incentives that we give every year, that is around one percent of GDP, is actually benefiting the country in terms of better jobs and poverty reduction,” Chua said.
TPB admits oversight, vows to resuscitate D.O.T. web site By Ma. Stella F. Arnaldo
@akosistellaBM Special to the BusinessMirror
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HE Tourism Promotions Board (TPB), the marketing arm of the Department of Tourism (DOT), failed to renew the digital marketing campaign contract of BBDO Proximity, which maintains the “It’s More Fun in the Philippines” web site, as well as the Facebook page, “The Philippines,” which has 1.1 million followers. This was part of the reason the cover page www.itsmorefuninthephilippines.com, which links to the main DOT web site (www.tourism.gov.ph), has failed to display since October 28, with only the bold words “This account has been suspended,” written across the screen. Tourism stakeholders noted that any foreign tourist who wants to get any information about where to go and what to do in the Philippines would be unable to do so because of the suspended Web account.
(See, “Stakeholders mourn ‘death’ of DOT web site,” in the BusinessMirror, November 2, 2016.) And while various sources interviewed by the BusinessMirror said the TPB was informed adequately by BBDO that the web site hosting by an external US server would expire by the end of October, the government agency failed to act on this information. Contacted for comment, Nedalin Miranda, TPB officer in charge for the Marketing Communications Department and Brand Management and Advertising Division, admitted “oversight on our part” for failing to renew the Web-hosting services, and denied this was an “intentional” act, as an official of the Tourism Congress of the Philippines suggested. She added that “we only realized that the account was suspended as the All Saints’ Day vacation began.” She also confirmed that TPB has been See “TPB,” A2