Businessmirror november 25, 2016

“We believe that the US government is going to increase its security budgets in the upcoming years, and definitely we look forward to take part in it.”— Saar Koursh, CEO of Magal Security Systems, the Israeli company that has built high-tech fences along the country’s volatile borders. It is now trying to build a bridge to the Trump administration—hoping to use its experience to cash in on the president-elect’s plan to seal the border with Mexico. AP

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Donald Trump’s presidential victory has dimmed hopes for reviving the Israeli-Palestinian peace process, and analysts say Israel may be given carte blanche from his administration. A foreign-policy novice, the billionaire businessman takes pride in his deal-making skills, and says he’d love the challenge of negotiating a Mideast agreement. He told The New York Times on Tuesday it “would be such a great achievement”. He said his son-in-law, Jared Kushner, an observant Jew and a close adviser, may help make that happen. AP

“Under her leadership we will reform the US education system and break the bureaucracy that is holding our children back, so that we can deliver world-class education and school choice to all families.”—Donald Trump, on his selection of Republican charter-school advocate Betsy DeVos to lead the Department of Education. Randi Weingarten, president of the American Federation of Teachers, tweeted, “Trump has chosen the most ideological, antipublic ed nominee since the creation of the Department of Education.” AP

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Friday, November 25, 2016 Vol. 12 No. 44

Teo: Weak peso to help woo foreign travelers By Ma. Stella F. Arnaldo

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@akosistellaBM Special to the BusinessMirror

HE weak peso will help attract more foreign tourists to the Philippines, making airfare, local accommodations and shopping more affordable, according to officials of the Department of Tourism (DOT).

In an interview with the BusinessMirror on the sidelines of Wednesday’s Tourism Summit at the Diamond Hotel, Tourism Secretary Wanda Corazon T. Teo said, “More tourists will come here,

inside

and this will allow them to increase their purchases, because their money can buy more goods. Airfare and hotels will also be cheaper.” The local currency finally breached

TEO: “Their money can buy more goods. Airfare and hotels will also be cheaper.”

the psychological barrier of 50 to the US dollar on Thursday morning, settling at 49.98 at the close of trading, giving foreign tourists more bang for Continued on A2

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TELCOS NOT COWERING TO DUTERTE’S THREAT TO OPEN UP MARKET By Lorenz S. Marasigan

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@lorenzmarasigan

UTTING down prices of telco services on the short term is only a palliative, and not a cure, to what experts see as a disease in the telecommunications sphere dominated by two giants, experts say. What they deem as the ultimate solution is to open the market to new players to further drive competition, perceived as The combined profit of PLDT the key ingredient to and Globe from Jan to Sept improve and make the relatively dismal telco services in the country more affordable. “The only way to lower prices and improve quality of Internet service sustainably is through real competition,” Mary Grace Mirandilla-Santos, an independent researcher on information and communications technology (ICT) and telecommunications policies, told the BusinessMirror. Citing a report from the International Telecommunications Union, she said that, while the duopoly may result in more affordable telco services, a shift to a three-operator market can further drive prices down. “President Duterte has a great opportunity to introduce reforms in the telecom sector, which has been controlled by the duopoly for five years,” Santos said. “And the dismal improvement in quality of Internet service and low value for money are proof that consumers’ interest has not been served optimally by just two major service providers.” In fact, consumers experience poor service even in basic telecom services like voice, where dropped calls

₧33.4B

Continued on A4

motoring

Land-conversion ban won’t hurt ecozones

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Ford Philippines hosts regional drive

motoring

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Faces of biotechnology BusinessMirror Science Editor Lyn Resurreccion (right) is among those awarded in the first Faces of Biotechnology recognition on November 21. She was recognized as an “outstanding media person writing balanced and accurate stories on biotechnology.” Sponsored by the Department of Agriculture Biotechnology Program, the event was part of the 2016 National Biotech Week celebration. The other awardees are (from left) farmer-scientist Edwin Y. Paraluman, advocate-leader Benigno D. Pecson, farmer-scientist Rosalie M. Ellasus, Dr. Nina Halos, Dr. Desiree M. Hautea, Dr. Nina G. Gloriani, Dr. Flerida A. Cariño and advocate-leader Edith Burgos. Nonoy Lacza

PESO exchange rates n US 49.9060

By Cai U. Ordinario

@cuo_bm

he Philippine Economic Zone Authority (Peza) said on Thursday it remains optimistic that the moratorium on land conversion will not affect its efforts to set up more economic zones nationwide. Peza Director General Charito B. Plaza told the BusinessMirror on the sidelines of the Global Investment Forum at F1 Hotel that the agency received a total of 29 new ecozone applications. These applications, unlike the 32 ecozones that See “Land conversion,” A2

n japan 0.4436 n UK 62.0881 n HK 6.4340 n CHINA 7.2129 n singapore 34.8652 n australia 36.8506 n EU 52.6808 n SAUDI arabia 13.3100

Source: BSP (24 November 2016 )

News BusinessMirror

A2 Friday, November 25, 2016

www.businessmirror.com.ph

Teo: Weak peso to help woo foreign travelers Continued from A1

their buck if they come to the Philippines. But local money changers have already been selling US dollars at an average of P50.08 since the weekend. Tourism Undersecretary Rolando Cañizal said the weak peso will also be a boon to domestic tourism, as Filipinos may be discouraged to travel abroad due to increased costs they have to pay for hotels and airfare. “They [Filipinos] will travel more around the Philippines instead of going abroad. And if they do that, they will be able to contribute more to the growth of the local tourism industry.” This was echoed by Philippine Airlines President Jaime J. Bautista, who said their internal projections for the exchange rate this year was 49 to the dollar, “ but it’s already exceeded that, hitting 50 already.” Although the weak peso will not have so much impact on their operations, as “70 percent of our revenue is in US dollars and third currencies—we generate dollars, we pay in dollars,” he said there could be a decrease in outbound passengers. “It will affect more the ability of people to travel… it may reduce the demand for people to travel outbound.” He added that the airline will be considering this possible reduction in outbound travels in its financial projections for 2017. The DOT is targeting foreign-visitor arrivals to reach 6 million in 2016, and 6.5 million in 2017. Domestic travelers, meanwhile, are seen rising to 70.5 million in 2016, and 73.3 million in 2017.

Land conversion. . . Continued from A1

are already awaiting the President’s approval, still need to complete documents and would have to be evaluated by the Peza Board, which is slated to meet next week. “Right now, those that are due for presidential proclamation already that we have approved in the Peza Board, there are 32 new economic zones and then, right now, we have about 29 pending. We’re waiting for them to submit some documents,” Plaza said. Plaza added that once the proponents of the ecozones comply with the requirements of Peza, these will be approved by the

Asia’s emerging markets have faced outflows since Donald J. Trump won the US presidential election earlier this month. The Philippines is ground zero for the rout, as a resurgent US dollar and Manila’s stillexpensive stock market have made it even more vulnerable, with the peso plunging to an eight-year low. The currency of the Southeast Asian nation reached 50 to the dollar for the first time this decade on Thursday and headed for its biggest annual loss since 2013. While equities are poised for their worst month since August 2013, valuations are still the priciest in Asia. A Bloomberg gauge of the dollar is heading for the strongest close since at least 2005, amid speculation the president-elect’s policies will push the Federal Reserve to undertake a faster pace of rate increases. “Emerging markets globally are experiencing fund withdrawals, but what makes the Philippines different, or vulnerable, was its valuation,” said Smith Chua, chief investment officer at Bank of the Philippine Islands, the nation’s second-biggest money manager with the equivalent of $12 billion in assets under management. “The foreign-exchange movement has also been a significant factor for overseas investors. As the year is heading to a close, some of them want to lock in their gains before the peso weakens further.” The last time the Philippine peso neared 50 to the dollar in 2008, the global financial system was melting down and the central bank raised interest rates to defend it. The Bangko Sentral ng Pilipinas is probably watching the market as the peso didn’t go

beyond the 50 level, according to Jonathan Ravelas, chief market strategist at BDO Unibank Inc., the nation’s biggest bank by market value. Other currencies in the region have not been spared, with Malaysia’s ringgit approaching its weakest level since 1998, when the Asian financial crisis occurred. The Indian rupee was also trading near a record low reached in August 2013. A look at the flow of exchange-traded funds show that in the past month the US had the biggest net inflow at $55 billion, data compiled by Bloomberg show. By contrast, developing nations, led by China and including the Philippines, saw outflows. The peso was at 49.930 per dollar as of 2:05 p.m. in Manila after reaching 50 earlier. It has weakened almost 6 percent in 2016. Overseas investors off-loaded a net $327 million from the stock market in November, set for a fourth month of sell-offs since Duterte took office at the end of June. Philippine stocks are trading at 16.29 times 12-month estimated earnings, higher than the 11.9 times for the MSCI Emerging Markets Index of shares. The nation’s dollar bonds, which were up as much as 12 percent this year in July, have pared those gains to about 4 percent. Philippine equities valuation peaked at 19.6 times earnings in July, as stocks rallied, amid speculation Duterte’s policies would accelerate one of the region’s fastestgrowing economies. Since then, concerns over his deadly drug war —which has killed thousands—and his anti-US rhetoric have led investors to pull back.

Some foreign-exchange strategists estimated earlier this month the currency would reach the 50 level only by next year, as a seasonal increase in money remitted by overseas Filipinos for Christmas spending will curb a decline in the currency. “A weaker peso just gives more dollar value to potential investors in emerging markets,” said Manila-based Ravelas at BDO said. “In terms of our valuation in the stock market, we’re expensive.” During the Tourism Summit, industry stakeholders worked with DOT officials to thresh out the agency’s programs and priorities, giving it vital feedback on destinations and how to best deliver its projects. The participants included representatives from the transport sector, travel agencies, accommodations, MICE organizers and tourism estate developers/managers. Emphasizing the 10-point economic agenda of Duterte, Teo informed participants the areas where the tourism sector can contribute the most, such as “increasing competitiveness and the ease of doing business; accelerating the annual infrastructure spending to account for 5 percent of the GDP with public-private partnerships playing a key role; promoting rural and value-chain development toward increasing agricultural and rural enterprise productivity and rural tourism; investing in human capital development, including health and education systems, matching skills and training to meet the demand of business and the private sector; and promoting science, technology and the creative arts to enhance innovation and creative capacity toward

self-sustaining inclusive development.” She said, for instance, the DOT can improve its processes that have “direct business interface” to make them more investor-friendly. She added that the agency will also work with the Department of Trade and Industry “by supporting programs that will develop micro-, small- and mediumsize enterprises.” The DOT chief also stressed continuing the agency’s convergence programs with the departments of Transportation, and Public Works and Highways to ensure the development and implementation of vital infrastructure projects that will make destinations more accessible to tourists. She added that to boost rural enterprises, “the DOT can…develop farm/eco/ agri-tourism products to open additional markets.” The agency can also “help identify skill gaps, work with educational institutions and learning centers to address these gaps, and undertake capacitybuilding activities to enhance industry manpower development. Teo said the DOT can, likewise, assist in the promotion of the creative arts as part of the agency’s overall program to promote culture and the arts. “Malasakit, pagbabago at kaunlaran [concern, change and development] are the three pillars where the national [tourism and development] plans will stand on. The [DOT] will ensure that its directions will be in accordance with the national priorities and that every tourism stakeholder’s inputs on how to bring this about will be heard,” she said. With Bloomberg News

investment promotion agency immediately. Once approved, these proposals will be forwarded to the Peza Board for another level of approval, then submitted to the Office of the President. The list of pending economic zones includes a proposal to create a 1,500-hectare special economic zone in Mauban, Quezon, which will also have its own airport and wharf. Under the proposal, around 200 hectares will be donated to the government for relocation of national executive, legislative and judicial offices. “We have a lot of new, big investments that require huge lands and, if I may add, we have also a palm-tree plantation from Malaysia, which needs 280,000 hectares

to plant palm trees and put up the refinery of oil because, accordingly, we are now importing palm oil as much as 5 million tons a year. So if this agri-industrial ecozone, which will be located in Agusan, will be realized, this will be a big boost to lessen our importation of oil,” Plaza. She added that another applicant is proposing to build a special economic zone in Leyte. The proponent is a British-Filipino steel company that intends to build a steel plant in the province. Plaza said Leyte was the perfect location for the company since iron is abundant and of high quality in the province. The plant will also require nickel and chromite, which will be sourced from Surigao.

She added that this will be a big help since the country’s steel imports reach $5 billion a year. “We have so many pending investors, we have so many pending developers waiting for these economic zones to be identified nationwide,” she added. These proposals will be good additions to the Peza’s aim of increasing the number of ecozones, which can continue even under a land-conversion moratorium. This includes untapped land in Mindanao, which, she said, contributes as much as 40 percent to the country’s GDP but fail to receive the same amount in terms of development or investment. Peza is now studying the number of available government land and islands nationwide so that it can

determine the best locations for ecozones. “We have many lands. If you look around, there are so many vacant lands around us. The biggest landowner, in fact, is the government. We have so many public lands which are not tapped, which are idle, which are not planted, which are not utilized and only grasses are growing,” Plaza said. “[These lands] will not be covered once the moratorium is approved, particularly the special economic zone or Peza’s project of establishing economic zones,” she added. Plaza said that, while Peza has been successful in ushering in investments into the country, it failed to increase the number of ecozones nationwide. She added that ecozones need not be dedicated to heavy industry, but to other kinds of industries. This includes tourism economic zones, which requires a minimum of 5 hectares to as much as 25 hectares. Other economic zones, however, will require a minimum of 25 hectares and above to accommodate plantations, manufacturing and processing industries, support facilities and others. These economic zones can also attract the business-process outsourcing (BPO) industry, banks and financial intermediaries, schools, malls, hotels, retirement villages and others. Apart from large economic zones, the Peza is also willing to explore locating special economic zones in cities such as Quezon City, which will help decongest traffic in Metro Manila. Building places of work nearer to where people live will shorten travel time and ensure work-life balance among Filipinos. Plaza’s presentation during the last day of the Global Investment Forum focused on revolutionizing Peza. The Global Investment Forum is the first gathering of its kind organized by the Philippine First Investment Council Corp. The event gathered businessmen and policymakers to discuss the pressing economic issues of the day. Earlier the National Economic and Development Authority (Neda) said the implementation of a two-year ban on land conversion would keep millions of poor families homeless and delay the government’s infrastructure projects. Socioeconomic Planning Secretary and Neda Director General Ernesto M. Pernia said the Neda has circulated a two-page position paper to members of the President’s economic team to prevent the imposition of the ban on land conversion. Pernia said there is already a draft executive order to create the two-year ban. However, this policy is being held in abeyance awaiting the opinion of the economic team. If the ban is implemented, Pernia said this will limit the ability of the government to carry out the relocation of informal-settler families and delay right-of-way acquisition for infrastructure projects.

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A4 Friday, November 25, 2016

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Bank of China to engage more PHL SMEs

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he Bank of China (BOC) will engage more Philippine small and medium enterprises (SMEs) next year, with its campaign to be highlighted by two major SME-geared road shows in 2017.

This is meant to further strengthen relations between Philippine small businesses and their Chinese counter parts, subsequently hiking investments in various sectors. “In March [2017] 100 Chinese companies will talk to 400 to 500 Philippine companies in our next, cross-border SME matching in Singapore. SMEs in China lack information on the Philippine rules and regulations for investing, and for Philippine enterprises, it’s vice versa,” said Wang Jian, BOC general manager for the SME Services Department. A larger SME Conference will be held in September 2017, now focusing solely on Philippine SMEs, which will either take place in Manila or Cebu. According to Deng Jun, Bank of China’s Philippine branch head, a thousand more Philippine SMEs are expected to join the September conference. Jian, in his speech at Tuesday’s Roadshow for BOC SME Crossborder Trade and Investment Conferences, said they intend to be selective in SMEs to engage to ensure they are properly matched with Chinese SMEs. “The Bank of China has earmarked 2017 for the Philippines; we will be the focus of the business-to-business promotions and that is a welcome development,” the Philippine Chamber of Commerce and Industry said. “We will come up with criteria to select the Philippine companies, but initially, we’re looking at those companies that have been in business for at least three years, and with revenues over a certain level, in renminbi, ” Jian added. The BOC will be implementing its six-step process in its matchmaking service: information sharing, customers matching, online matchmaking, one-on-one meeting, onsite inspection and all-round banking services. Sectors that can benefit from the business matching include agribusiness, renewable energy and technology. The BOC has already finished the first two steps. The BOC will also be engaging qualified SMEs to which they can channel the $3- billion credit facility pledged during President Duterte’s state visit to China. The BOC is talking to at least 10 Philippine banks and microfinance institutions to act as conduits for the credit lines.

Catherine N. Pillas

House leader refiles measure raising discount perk for elderly By Jovee Marie N. dela Cruz

@joveemarie

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DPWH, MNTC sign NLEX-SLEX Connector Road Concession Agreement Public Works Secretary Mark A. Villar and

Manila North Tollways Corp. (MNTC) President and CEO Rodrigo E. Franco shake hands after signing the concession agreement for the Nlex-Slex Connector Road, an 8-kilometer all-elevated highway along the PNR extending the North Luzon Expressway (Nlex) southward from the end of Segment 10 in C-3/5th Avenue, Caloocan City, to PUP Santa Mesa, Manila. Also present during the signing are (from left) Public Works Undersecretary for Legal Affairs Karen Jimeno, Public Works Undersecretary for Planning and Public-Private Partnership Service Maria Catalina E. Cabral, MNTC COO Raul L. Ignacio and MNTC Senior Vice President for Legal, Regulatory and Government Relations Romulo S. Quimbo Jr. Under the contract, the government, through Department of Public Works and Highways grants MNTC the right to design, finance, construct, operate and maintain the Nlex-Slex Connector Road Project for 37 years inclusive of the two-year construction period. The project is expected to reduce travel time from Slex to Nlex from two hours to just about 20 to 30 minutes.

China wants quick close on regional trade pact after TPP hopes dashed

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hina wants to seal the deal on a trade agreement with Southeast Asian countries as soon as possible with a US-led pact now in doubt, a Ministry of Commerce official said on Thursday. The country will work with the Asean to negotiate the Regional Comprehensive Economic Partnership (RCEP), Spokesman Shen Danyang said in a briefing in Beijing, echoing President Xi Jinping’s Saturday speech to the Asia-Pacific Economic Cooperation (Apec) meeting. China will actively participate in multilateral or bilateral trade and work closely with World Trade Organization members to foster “freer and more convenient” global trade regardless of how the Asean-backed RCEP or American-led Trans-Pacific Partnership (TPP) fare, Shen said. China’s bid to assert its economic leadership is gaining traction in its push for the Asia-wide trade pact in the wake of Donald J. Trump’s surprise election victory, which dashed hopes for the US-led TPP deal that would have taken in about

40 percent of the global economy. The TPP excludes China and RCEP excludes the US. Securing a deal would further enmesh the world’s second-largest economy in the region and help cement China’s role as a geopolitical leader. It would boost China’s clout in a region where it has territorial disputes with neighbors, including Japan, Vietnam, Malaysia and the Philippines, and is looking to displace decades of US strategic dominance. The US withdrawal from the 12-nation TPP—reaffirmed by Trump in a videotaped speech on Monday—has focused attention on a competing set of trade talks. The next round of RCEP negotiations will be from December 2 to 10 in Bumi Serpong Damai City, near Jakarta. Xi told Apec members gathered on Saturday in Lima, Peru, that China pledges to boost global trade and cooperation by opening up further and giving greater access to foreign investors. Beijing wants a level-playing field for foreign and local companies so that they can share in the country’s growth, Xi said. Bloomberg News

Telcos not cowering to Duterte’s threat to open up market ... continued from a1

“And with the shifting demand to Internet, it is high time to let real competition set the bar high again so that market players will keep striving to offer better and more affordable services,” she said. President Duterte on Thursday threatened to open up the telco market to foreign players to force companies to step up their game, and promote inclusive growth. He also cited the multibillion-peso net income of PLDT Inc. and Globe Telecom Inc. as his basis for opening up the sector to other players. Combined, the two companies netted P33.4 billion in profits during the first nine months of 2016. Duterte noted that he will not open the market if telcos will “make their price dive down.” Pierre Tito Galla, who founded consumer group Democracy.Net.PH, and Internet Society of the Philippines Chairman Winthrop Yu lauded the Chief Executive for standing up against the two telco titans, saying that they are hopeful that this statement will result in significant price cuts in telco services. “We fully support the President’s plans to actively foster competition in order to truly improve Internet access and affordability for all Filipinos. The Philippines has been falling behind for over a decade, and it is time for clear, positive action that will enhance business competitiveness and support national development. We look forward to the President’s decisive moves to fast-track regulatory and legislative initiatives to foster competition,” Yu told the BusinessMirror. He was referring to the Philippines’s almost consistent bottom-two ranking in Akamai Technologies’ State of the Internet Reports. Filipinos, according to the report, endured an average broadband speed of 4.3 Mbps, which is a 24-percent improvement from 3.5 Mbps last quarter. When compared to the second quarter last year, the country’s average broadband speed improved by 37 percent. The only country behind the Philippines is India, while South Korea continued to be the Asia-Pacific nation with the fastest broadband connection with 27 Mbps. For wireless Internet, however, the Philippines ranked sixth in the second-quarter report of the content-delivery network player with an average speed of 8.5 Mbps for mobile, faring better than other developed economies, such as Singapore and Hong Kong. Galla noted that, while his group is supportive of President Duterte’s call to lower the prices of telco services, his camp deems that opening up of the market to

new players is a better option. “Promos, promises and press releases are not improvements, and Filipinos are painfully aware of this. The President can fulfill his campaign promise of ending poor quality and expensive telecommunications service from the dominant duopoly,” he said. Santos agreed, saying that the ultimate solution to the Philippines’s dismal ranking in Internet quality in the region is to heighten competition through a third player. “Lowering prices does not equate to better service. It may even mean worse service. Lowering price is a populist move that does not effect real change. It’s a palliative, not a cure,” she said. San Miguel Corp. was supposed to launch a third-core player in the Philippines this year. The hype for its partnership with Telstra Corp. Ltd., however, was quickly extinguished when the PLDT and Globe coacquired San Miguel’s telco assets to gain access to its spectrum holdings. This effectively removed the prospect of another player and trimmed down the chance of a budding company to compete against the two existing vendors with the limited frequencies left with the National Telecommunications Commission. This is not the first time Duterte threatened to open up the market to new players. After winning the elections this year, he floated the idea of welcoming new entrants to the sector. In his latest statement, Duterte said he is not waging war against the Ayala and Pangilinan groups, but merely wants Filipinos to enjoy quality telco services just like in other countries. Responding to his statement, executives of the two players cited their multibillion-peso investments over the last few years as a testament to their vow of improving their services, while offering them at affordable prices. “We welcome this development. Vibrant competition will be good for the industry and country. On our part, we are investing massively to build the fastest and most advanced data-centric fixed and mobile networks in the country to deliver progressively better and affordable services,” Ray C. Espinosa, who heads the regulatory affairs and policy office at PLDT, told the BusinessMirror. Smart Communications Inc. Spokesman Ramon R. Isberto added that in terms of affordability, prices of telco services have been going down for the past five years. For example, he said, the price of a megabyte of data way back in 2011 was at P1.20. Today, it only costs about 4 centavos. “It’s being going down significantly in the last two years as a result of innovation and competition,” he said. “We are doing our share. We are investing.”

leader of the House of Representatives has refiled a measure increasing the grant of discount privileges extended to elderly citizens from 20 percent to 30 percent. In House Bill 206, Deputy Speaker and Liberal Party Rep. Frederick F. Abueg of Palawan said his proposal seeks to amend Republic Act (RA) 7432, as amended, otherwise known as “An Act Maximize the Contribution of Senior Citizens to Nation Building, Grants Benefits and Special Privileges and for other Purposes.”

30% The new elderly discount rate embodies in House Bill 206

The bill provides senior citizens a higher discount grant of 30 percent, from its current discount of 20 percent, on health services, medicines, services in hotels, restaurants, recreation centers, transportation, admission fees to theaters, cinema houses, funeral and burial services, prime commodities, basic necessities and utilities. The measure is currently pending before the House Committee on Population and Family Relations. “This is a big help to our senior citizens knowing that they no longer have their own steady source of income or a stable job,” Abueg said. The lawmaker, citing the 2010 National Statistical Coordination Board Medium Population Projection, said there are around 6.3 million elderly Filipinos aged 60 years and above, making up 6.9 percent of our total population. Abueg, also citing United Nations Population Fund (UNFPA) report, said it is estimated that the senior-citizen population in the country will reach 23.63 million by 2050. “Aging is a lifelong process and today’s young people will be part of the population of older people in 2050,” he said. “We, the Filipino people, value family more than anything. Despite external liberal influences, we remain family-oriented. The family is not complete without our elders, lolo and lola, living with us under the same roof. It is part of Filipino tradition and practice that children and grandchildren give love and care to our elderly. This is, in fact, embodied in the 1987 Constitution; the family has the duty to care for its elderly members, but the state may also do so through just programs of social security,” he said. According to Abueg, some senior citizens feel ignored in the Philippines, and are unable to participate in the activities of the state. “The UNFPA also highlighted that, in the Philippines, age has become one of the barriers to employment,” he said. “Without a steady source of income or a stable job, our senior citizens only rely on their pensions, gift or allowances given by relatives and sometimes, by their own pagsusumikap [diligence] to make ends meet,” Abueg added. Under RA 7432, as amended, senior citizens are entitled to a discount of 20 percent on health services, medicines, services in hotels, restaurants, and recreations centers, transportation, admission fees to theaters, cinema houses, etc., and funeral and burial services, as well as other discounts on prime commodities and basic necessities, and utilities, among others. However, the reprieve is still not sufficient. Although some people may think that senior citizens are pampered by these discount, statistics show otherwise. Moreover, Abueg said out of the eight basic sectors in the Philippines, the senior citizen sector has the sixth-highest poverty incidence, at 15.1 percent in 2003 and 16.2 percent in 2006. “Only a small percentage from that sector is covered by pensions because a good portion belongs to the informal sector,” he said.

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AseanFriday BusinessMirror

Editor: Max V. de Leon • Friday, November 25, 2016 A5

Singapore braces for impact of protectionism Thai junta eyes ways to revive state firms

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hailand is seeking to set up an investment-holding company next year for government shareholdings, part of a wider effort to improve the performance of state-controlled enterprises. A law to boost the governance of such firms and enable the creation of the holding company may be enacted by March, according to Ekniti Nitithanprapas, the director general of the State Enterprise Policy Office. “We’d like the holding company to work in an efficient way like Temasek or Khazanah,” Ekniti said in an interview in Bangkok on Wednesday, referring respectively to Singapore’s state-owned investment firm Temasek Holdings Pte. and Malaysia’s sovereign fund Khazanah Nasional Bhd. State enterprises are planning 446 billion baht ($12.5 billion) of investment in 2017, according to the policy office. That’s equivalent to about 3 percent of Thailand’s gross domestic product, underlining the importance of ensuring the companies are managed well. The new law is supposed to create a policy committee and a master plan for the sector, as well as boost transparency, formalize the way directors are appointed and evaluate corporate performance. “This reform is crucial for long-term economic development,” said Santitarn

Sathirathai, head of emerging Asia economics at Credit Suisse Group AG in Singapore. “Ministries are in charge of state enterprises and often wear too many hats as shareholders, rule setters and referees, which sometimes breeds conflict of interest and inefficiencies.” The stock market signals there’s scope for government businesses to be better managed. The State Enterprise Policy Office’s website lists six companies as publicly traded state enterprises: oil explorer PTT Pcl., Krung Thai Bank Pcl., Thai Airways International Pcl., Airports of Thailand Pcl., MCOT Pcl and PTT Exploration and Production Pcl. An index of those companies has climbed 23 percent in the past five years, less than the 54-percent advance in the benchmark SET index, according to data compiled by Bloomberg. The Thai administration said a number of listed and unlisted businesses will go into the holding company. Details haven’t been finalized yet. There were 52 state enterprises with total assets of 13.5 trillion baht and liabilities of 10.6 billion baht as of June 2016, according to the State Enterprise Policy Office’s web site. Bloomberg News

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ingapore, on track to post its worst economic performance since the 2009 global financial crisis this year, is bracing for more uncertainty, as rising protectionism poses risks for the export-dependent nation.

While the government is forecasting economic growth of as much as 3 percent in 2017—double the maximum it sees for this year—the city-state faces mounting global concerns that could affect trade, including financial-market volatility following the United Kingdom’s vote to leave the European Union, the threat of debt defaults in China and the aftermath of the US election. “Political risks and uncertainties have risen, and could, in turn, lead to greater economic uncertainties,” Loh Khum Yean, permanent secretary at the Ministry of Trade and Industry, told reporters in Singapore. “An increasing backlash against globalization could further dampen global trade, which is already weak.” US President-elect Donald J. Trump won support by tapping into workers’ anger over job losses linked to globalization. He has pledged not to revive the Trans-Pacific Partnership (TPP), a free-trade pact signed by countries including Japan, Australia and Singapore, and to impose higher tariffs on

An increasing backlash against globalization could further dampen global trade, which is already weak.”—Loh China. Singapore is vowing to push ahead with TPP, Loh said. The city-state on Thursday cut the top end of its 2016 growth forecast to 1.5 percent from 2 percent and estimated nonoil domestic exports probably fell as much as 5.5 percent. The economy contracted an annualized 2 percent in the third quarter from the previous three months, the Ministry of Trade and Industry said in a report. For next year, the government’s export

forecast ranges between a 1-percent decline to a 1-percent gain. “We find it hard to see the economy improving from this year, going into next year,” Brian Tan, an economist at Nomura Singapore Ltd., said by phone. “You have the protectionist stuff, European elections coming next year, so many risks, it’s hard for us to share the government’s optimism.” The US is Singapore’s third-largest trading partner, while China is the largest. Loh said Singapore is concerned about “rising corporate credit levels” in Asia’s biggest economy, as a sharper-than-expected correction in the real-estate market could lead to surging defaults in property-related loans. While the UK is a smaller trading market for Singapore, uncertainty about Brexit negotiations could lead to bouts of volatility in financial markets and possibly a slowdown in growth in the UK and the euro area, in general, Loh said. Krystal Tan, an economist with Capital Economics Ltd. in Singapore, said she’s anticipating growth in the city-state of about 1.5 percent next year, even as exports stabilize. Borrowing costs, which are closely tied to US interest rates, may rise and curb household and business spending, she said. “It’s a bit surprising that they have the upper range of their forecast so high at 3 percent,” Tan said by phone. “I would expect the government to cut the top of the forecast gradually over the next few months.” Bloomberg News

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Women for Trump Cabinet: Haley for UN, DeVos for Ed

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President-elect Donald J. Trump (left) stands with investor Wilbur Ross after meeting at the Trump National Golf Club Bedminster clubhouse in Bedminster, New Jersey, on November 20. Trump is poised to offer the position of commerce secretary to Ross, a head of a private-equity firm. AP/Carolyn Kaster

Billionaire investor is Trump’s commerce secretary pick

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ASHINGTON—Wilbur Ross, the billionaire investor considered the “king of bankruptcy” for buying beaten-down companies with the potential to deliver profits, is President-elect Donald J. Trump’s choice for commerce secretary, a senior transition official said. The official isn’t authorized to publicly discuss the matter and requested anonymity. Reputed by Forbes to be worth nearly $3 billion, Ross would represent the interests of US businesses domestically and abroad as the head at Commerce. Hi s de pa r t ment wou ld be among those tasked with carrying out the Trump administration’s stated goal of protecting US workers and challenging decades of globalization that largely benefited multinational corporations. With a Florida home down the road from Trump’s Mar-a-Lago retreat, the 78-year-old Ross played a role in crafting and selling the president- elect ’s ta x-cut and infrastructure plans. Ross has suggested that much of America is disgruntled because the economy has left middle-class workers behind and says Trump represents a shift to a “ less politically correct direction.”

“Part of the reason why I’m supporting Trump is that I think we need a more radical, new approach to government—at least in the US—from what we’ve had before,” Ross told CNBC in June, referring to Trump’s blunt tone and sweeping promises to reinvigorate economic growth. Despite his embrace of populist rhetoric, Ross has enjoyed a patrician lifestyle. He frequently commutes between his offices in New York and home in Palm Beach, Florida, according to Haute Living magazine. He maintains an art collection worth more than $100 million that includes works by the Belgian surrealist Rene Magritte. A graduate of Yale University, he pledged a $10 million to help build its management school. For 24 years as a banker at Rothschild, Ross developed a lucrative specialty in bankruptcy and corporate restructurings. He founded his own firm, W.L. Ross, in 2000 and

earned part of his fortune from investing in troubled factories in the industrial Midwest and in some instances generating profits by limiting worker benefits. That region swung hard for Trump in the election on the promise of more manufacturing jobs from renegotiated trade deals and penalties for factories that outsourced their work abroad. A s p e c i a l i s t i n c or p or at e t ur narounds, Ross buys d istressed or bankrupt companies at steep discounts, then seeks to shave costs and generate profits. Some of those cost reductions have come from altering pay and benefits for workers. Since 2000, his firm has invested in more than 178 companies. Ross most prominently created four companies through mergers and acquisitions that focused on steel, textiles, autos and coal. In some cases, Ross has sold the companies he packaged to even larger globe-spanning compa n ies. I n 20 05 he sold the International Steel Group, which included the former Bethlehem Steel, to the Indian steel magnate Lakshmi Mittal. And while his investments appear to have proved generally lucrative, they have also, at times, brought troubling publicity. In early 2006, the Sago coal mine owned by Ross exploded, triggering a collapse that killed a dozen miners. Federal safety inspectors in 2005 had cited the West Virginia mine with 208 violations. Ross

said afterward that he knew about the safety violations but that the mine’s management had assured him that it was a “safe situation.” “Oh, my God, it’s the worst week of my entire life,” Ross told ABC News days after the collapse. If confirmed by the Senate as commerce secretary, Ross would oversee nearly 47,000 employees and a budget of roughly $8 billion. Among its responsibilities, the Cabinet department provides data on the economy through the Census Bureau and monitors the environment through the National Oceanic and Atmospheric Administration. One former Commerce secretary, Donald Evans, noted that a prime responsibility is opening up markets around the world for US companies and workers. “What you are is ambassador to the world from America,” said Evans, who served under President George W. Bush. “It’s critically important when you go to other countries that, first and foremost, you care about them, the citizens of their country.” That advice clashes somewhat with the promises made by Trump, who campaigned on the doctrine of putting “America first.” The president-elect told voters that Mexico, China and other countries had played US trade negotiators for fools. “Under a Trump administration, no American citizen will ever again feel that their needs come second to the citizens of foreign countries,” Trump said in April. AP

Clinton told: Seek recount in 3 battleground states

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EW YORK—A group of election lawyers and data experts have asked Hillary Clinton’s campaign to call for a recount of the vote totals in three battleground states— Wisconsin, Michigan and Pennsylvania—to ensure that a cyber attack was not committed to manipulate the totals. There is no evidence that the results were hacked or that electronic voting machines were compromised. The Clinton campaign on Wednesday did not respond to a request for comment as to whether it would petition for a recount before the three states’ fast-approaching deadlines to ask for one. President-elect Donald J. Trump won Wisconsin and Pennsylvania by razor-thin margins and has a small lead in Michigan. All three

states had been reliably Democratic in recent presidential elections. The group, led by voting-rights lawyer John Bonifaz and J. Alex Halderman, the director of the University of Michigan Center for Computer Security and Society, contacted the Clinton campaign this week. That call, which was first reported by New York Magazine, raised the possibility that Clinton may have received fewer votes than expected in some counties that rely on electronic voting machines. But Halderman, in an article posted on Medium on Wednesday, stressed that the group has no evidence of a cyber attack or voting irregularities. He urged that a recount be ordered just to eliminate the possibility. “The only way to know whether a cyber attack changed the

result is to closely examine the available physical evidence paper ballots and voting equipment in critical states, like Wisconsin, Michigan and Pennsylvania,” Halderman wrote. Recounts, which are often costly and time-intensive efforts, would likely only be initiated if the Clinton camp pushed for one, though Wisconsin independently announced that it would conduct an audit of its vote. A call for a recount, particularly coming on the heels of a fiercely contested and sharply partisan election, would likely be cheered by Democrats, but denounced by Republicans eager to focus on governing. A request to the Trump transition team for comment was not immediately returned.

Trump’s campaign had long believed that his message of economic populism would resonate in the Rust Belt. He frequently campaigned in Pennsylvania and made a late push in both Wisconsin and Michigan, successfully turning out white working-class voters whom pollsters may have missed. Many preelection polls showed Clinton with slight leads. While advocating for the recounts, Halderman writes that “the most likely explanation” for Trump’s surprise win “is that the polls were systematically wrong,” The deadlines for petitioning for a recount in all three states are in the coming days, with Wisconsin’s on Friday. Green Party candidate Jill Stein announced a fund-raising effort on Wednesday to pay for such recounts. AP

ALM BEACH, Florida—Injecting the first diversity into his Cabinet-to-be, Donald J. Trump selected two Republican women on Wednesday who had unflattering things to say about him during the presidential campaign: South Carolina Gov. Nikki Haley to serve as US ambassador to the United Nations and charter school advocate Betsy DeVos to lead the Department of Education. Haley has little foreign-policy experience, yet Trump praised her as “a proven dealmaker.” DeVos, like Trump, is new to government but has spent decades work ing to change A mer ica’s system of public education. DeVos and Haley are the first women selected for top-level ad m i n i st rat ion post s a s t he president-elect works to shape a White House team from scratch. Haley is the daughter of Indian immigrants, so she also would be his first minority selection after a string of announcements of white men. Retired neurosurgeon Ben Carson said “an announcement is forthcoming” on his role, which would make him the first black choice—possibly as secretar y of Housing and Urban Development—but he also sug gested he’d be thinking about it over the Thanksgiving holiday. “I feel that I can make a significant contribution, particularly to making our inner cities great for everyone,” Carson wrote on his Facebook page. Wednesday’s picks came as Trump worked to distance himself from the “alt-right”, a movement of white supremacists who continue to cheer his election. He announced his two new choices in a statement released as he gathered with family behind closed doors at his Palm Beach estate for Thanksgiving. He’s spending the holiday there after a week of interviews of potential appointees in New York, punctuated by announcements

of members of his national security team. In a Thanksgiving message posted on social media, Trump acknowledged that the nation “ just finished a long and bruising political campaign.” “Emotions are raw and tensions just don’t heal overnight,” he added. “It’s my prayer that on this T hanksgiv ing we begin to heal our divisions and move forward as one country strengthened by shared purpose and very, very common resolve.” Bad blood between Trump and his new Cabinet selections had been evident through much of this year’s campaign. “The people of South Carolina are embarrassed by Nikki Haley!” Trump wrote in March. Haley denounced several of his campaign comments and urged voters to “reject the siren call of the angriest voices.” DeVos, from Michigan, told The Associated Press in July, “A lot of the things he has said are very offputting and concerning.” On Wednesday Trump said of his UN selection: “Governor Haley has a proven track record of bringing people together regardless of background or party affiliation to move critical policies forward for the betterment of her state and our country.” She said she loved her South Carolina post but “when the president believes you have a major contribution to make to the welfare of our nation, and to our nation’s standing in the world, that is a calling that is important to heed.” While Republicans praised Haley’s selection, DeVos faced criticism from left and right. The president of the National Education Association, Lily Eskelsen Garcia, said in a statement that, for years, DeVos “has lobbied for failed schemes, like vouchers—which take away funding and local control from our public schools—to fund private schools at taxpayers’ expense.” AP

Thanksgiving travel expected to be heaviest since 2007

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HIC AGO —Elizabeth Thompson can’t wait to leave the big city behind and decompress over the Thanksgiving holiday at her grandmother’s house in rural south-central Indiana. But first she has to get there. On Wednesday Thompson, 23, missed her Amtrak train from Chicago to Galesburg, Illinois, where she’d planned to catch a ride with a family member the rest of the way to Edinburgh, Indiana. “It’s just where we go to unplug and escape,” said Thompson, who had to decide whether to wait several hours for the next train or hop on a bus and get going. Americans took to the roads, air and railways on Wednesday for what is expected to be the busiest Thanksgiving travel period in almost a decade. Almost 49 million people are expected to travel 50 miles or more between Wednesday and Sunday, the most since 2007, because of lower gas prices and an improving economy, according to A A A. And while they look forward to eat ing t urkey and watching football, many are ready to abandon another, more recent, A merican pastime: rehashing the rancorous election between Republican Donald J. Trump and Democrat Hillary Clinton. “My mother specifically said, ‘We’re not going to talk about it,’”for her grandmother’s sake, Thompson said. Although nobody in her family supported President-elect Trump, “my grandmother is sick of hearing about it.” Sit t ing on t heir su itcases at a de pa r t u re lou nge at O’Ha re Inter nat iona l A ir por t in Chicago, a major travel hub,

Sha r y n Iof fe a nd her brot her Sau l Iof fe sa id t here’s a good c ha nce pol it ics w i l l inter vene t h is T ha n k sg iv ing when t hey a r r ive home in New York. “I’m pretty anxious about it,” said Sharyn Ioffe, 27, who supported Clinton, though others in her family sided with Trump. “I’m still very emotional about the election. I know you have to try and understand the other side. But I’m not there yet.” Saul Ioffe, 20, said he is expecting some heated exchanges. “I’m battening down the hatches,” he said. Lines of cars, taxi cabs and buses dropping travelers off and picking others up at O’Hare terminals grew longer by early evening. Crowds grew steadily inside, too, as travelers pulled suitcases into departure terminals decked out with giants wreathes. A light, cold rain fell outside, but most flights as of evening were listed on big boards as “on time.” The Chicago Department of Aviation said on its web site that delays were averaging 15 minutes. The weather appeared to be cooperating for the most part, with no significant issues in the majority of the country, the National Weather Service said. The National Weather Serv i c e i s s u e d w i nt e r w e a t h e r advisories for parts of northern Wisconsin, Minnesota and Michigan, as well as western and central Montana and central Idaho, New York and Pennsylvania for Wednesday night. A winter-storm warning was in effect for par ts of nor thwest Washington state, w ith heav y snow ex pected through T hanksg iv ing Day. AP

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

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Friday, November 25, 2016

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US biz cheers OT ruling; many already upped pay

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AS VEGAS—Businesses around the country on Wednesday cheered a court decision blocking the Obama administration’s sweeping new overtime rules, but many had already raised salaries or ordered managers to stick to a strict 40-hour workweek to avoid costs they expected to incur starting next week.

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The number of workers who would have been newly eligible for the time-and-ahalf pay

An injunction issued on Tuesday by the federal court in the Eastern District of Texas prevents the Department of Labor from mandating overtime pay for salaried employees who make less than about $47,500 a year—a dramatic jump from the old threshold of $23,660. More than 4 million workers would have been newly eligible for time-and-a-half pay under the rule, which now faces far more uncertainty from Donald Trump’s

incoming administration. The ruling giving businesses a reprieve “is a little late for a lot of people’s taste,” said Tom Gimbel of Chicagobased LaSalle Network, a staffing firm that advised companies on how to prepare for the new rule. “A lot of companies had already rolled it out.” Wal-Mart, for example, raised entry-level managers’ starting salaries by $3,500 in September to stay above the threshold. But there were also raises among clerical workers for Opportunity Village in Las Vegas, a nonprofit that teaches vocational skills to people with disabilities and raises its money through private donations and running a thrift store. Opportunity president Bob Brown said he couldn’t bear to backtrack on the decision. “It’s put us in a difficult situation—you’re spending money you wouldn’t have been spending,” he said. In Colorado some restaurant owners operating on thin margins shifted salaried managers to hourly pay so they could better track their hours and cap them at 40.

“That was demoralizing for managers who felt they were being demoted,” said Sonia Riggs, CEO of the Colorado Restaurant Association. The Department of Labor in May ordered the changes to give overtime to many more American workers, saying they would “go a long way toward realizing President Obama’s commitment to ensuring every worker is compensated fairly for their hard work.” Inflation had weakened the US overtime law passed decades ago. Overtime provisions applied to 62 percent of US full-time salaried workers in 1975 but just 7 percent today. That means some low-level retail and restaurant managers are making $25,000 a year but aren’t eligible for overtime, even when they’re working 60 hours a week. The court agreed with the rule’s opponents that the labor department overstepped the authority it has from Congress and that the rule could cause irreparable harm if it took effect on December 1 as scheduled. The department is

now considering its legal options, but Trump will be in charge of the department after taking office on January 20. Trump told the news website Circa in August that he hoped small businesses would get an exception from the overtime rule, although the issue was not a prominent presidential campaign theme. The rule’s supporters are now grappling with implications for workers who were expecting more overtime pay just as the holiday shopping rush gets under way. “ T h i s i s a b out t he w or s t news t hey cou ld get head ing into T hanksgiv ing and the holiday season,” said Vick i Shabo, v ice president of t he Nationa l Pa r t nersh ip for Women a nd Fami lies, a Washing ton, D.C .b a s e d g r o u p t h at p r o mo t e s work place fa ir ness. Workers who want to make a good impression on their employers, feel compelled to cover for absent coworkers or are passionate about their jobs often put in far more than 40 hours a week and end up making a subminimum wage.

Advocacy groups say employees who work for free are giving up time they could be spending with their families or advancing their education to get better paying jobs. But businesses said the rules would have created an overly restr ictive env ironment that would have penalized younger and slower workers. “We were going to have to send them home at times,” said Jose Villa, president of the Los Angeles-based ad agency Sensis. “Say, ‘You’re done for the day, you have to go,’ even though we’re working on some important stuff that’s going to be very educational for them.” With the overtime pay order suspended, Trump’s administration could choose to make its own rule changes through a lengthy administrative process. The Republican-controlled Congress could change the country’s labor laws, although House Speaker Paul Ryan had decried the overtime plan “an absolute disaster” that Obama rushed through to boost his political legacy. AP

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Trump win could give Israel freer hand with Palestinians

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An Israeli bulldozer works at the site where Israel builds a barrier along the border with Egypt in southern Israel. Magal, the Israeli company that has built high-tech fences along the country’s volatile borders, is now trying to build a bridge to the Trump administration, hoping to use its experience to cash in on his plan to seal the border with Mexico. AP/Diaa Hadid

Mexican wall a boon for Israeli security firm

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EHUD, Israel—The Israeli company that has built hightech fences along the country’s volatile borders is now trying to build a bridge to the Trump administration— hoping to use its experience to cash in on the president-elect’s plan to seal the border with Mexico. Magal Security Systems has been a major player in building high-tech fences and walls along Israel’s volatile northern and southern borders, as well as the massive separation barrier that snakes along the frontier with the West Bank. Its products include cameras, sophisticated sensors, robots and software to operate the systems. “We believe that the US government is going to increase its security budgets in the upcoming years and, definitely, we look forward to take part in it,” the company Chief Executive Saar Koursh told The Associated Press. Investors seem to agree. Despite a mixed record of profitability and a historically vola-

220 km

The length of the barrier structure Israeli company Magal Security Systems has built that has halted an influx of African migrants across the Egyptian border and a high-tech fence separating the Hamas-ruled Gaza Strip from Israel tile stock, the company’s shares have surged on the Nasdaq Stock Market since Donald Trump was

elected president on November 8, while trading volume has surged in some cases by more than 150 times the preelection levels. Its shares were trading at $5.53 apiece on Wednesday, up 24 percent from its $4.45 closing price on November 8. Magal was established in 1965 as a branch of the state-owned Israel Aerospace Industries. It was privatized 15 years later and has traded on the Nasdaq since 1993. Magal has served customers in over 80 countries, including airports, the seaport in Mombasa, Kenya, and sporting events and utilities. With market capitalization below $100 million, the company is much smaller than potential competitors, which could include major global electronics and construction firms. But it’s a leader in a country that is, in turn, a global leader in the building of barriers. Israeli defense officials confirmed Magal’s projects have included not only the West Bank barrier but a 220-kilometer structure that has halted an influx of African migrants across the Egyptian border, as well as a high-tech fence separating the Hamas-ruled Gaza Strip from Israel. Victor Bar-Gil, a former Israeli

Defense Ministry official who worked with Magal on a project to fortify the border with Lebanon, said the company did “very thorough and precise work.” “It was work that had to be done really urgently. The military was withdrawing from Lebanon and a fence needed to be built very quickly and this fence was built,” he said. Koursh believes that if the Mexico barrier is built, it will be similar to Israeli structures that include a combination of fences and walls equipped with cutting-edge technology. “It is dependent on so many factors, including the type of wall, the type of fence, [and] the type of sensors that you want to put on the fence [that] it’s hard for me to estimate but for sure this will be a mega project,” he said. David Holtzman, a financial analyst at Israel’s First International Bank, said Magal is considered a world leader in the construction of security barriers but cautioned that the run-up in its stock price is speculative. “It is important to remember that currently we still do not know yet whether ever ything that Trump has promised prior to the election he will, in fact, carry out,” he said. AP

ASHINGTON—Donald Trump’s presidential victor y has dimmed hopes for reviving the Israeli-Palestinian peace process, and analysts say Israel may be given carte blanche from his administration. American presidents have long struck a delicate balance in the conflict, stressing the close US friendship with Israel and lavishing the Jewish state with aid. But recent presidents also have tried to negotiate, and they have called out Israel for actions seen as undermining peace efforts, such as expanding settlements in the occupied West Bank. Trump’s role can’t be easily predicted. A foreign policy novice, the billionaire businessman takes pride in his deal-making skills and says he’d love the challenge of negotiating a Mideast agreement. He told The New York Times on Tuesday that it “would be such a great achievement.” He said his son-in-law, Jared Kushner, an observant Jew and a close adviser, may help make that happen. Last December Trump told The Associated Press that he wanted to be “very neutral” and try to get both sides together. But his tone became decidedly more pro-Israel as the campaign progressed. He has spoken disparagingly of Palestinians, saying they have been “taken over” by or are condoning militant groups. Some of his top aides challenge the legitimacy of Palestinian demands for a state and have claimed that the Palestinians are a made-up people. That has cast doubt on whether he would ever question Israeli actions or even try to serve as a neutral broker. “Trump’s administration may take a totally hands-off approach,” said Yousef Munayyer, a political analyst and executive director of the US Campaign for Palestinian Rights. “Israel would have free rein to dominate the Palestinians forever and ever if there is no external involvement.” David Makovsky of the Washington Institute for Near East Policy said the volatility of the Middle East and of American political parties after a grueling campaign have made “the conclusion of a two-state solution very unlikely.” Some senior Israeli officials share that view. Cabinet Minister Naftali Bennett, head of the pro-settler

Scenes of panic as Iraqis flee Mosul

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OSUL, Iraq—They came by the hundreds—men, women and children fleeing the battle for Mosul, some bloodied and crying out for help. So large was the crowd on the road that Iraqi troops initially ordered them back, worried that an Islamic State (IS) suicide bomber could be hiding among them. Mosul’s residents are fleeing in growing numbers as Iraqi forces push deeper into the country’s second-largest city, and the battlehardened extremists are fighting for every block, exploiting the dense urban terrain and using civilians as human shields. On Wednesday the tide of displaced people reached the Samah district, where Iraqi medics treated dozens of wounded, including at least six soldiers. At one point, four children and a man from the same family were rushed into the station, bleeding heavily as their relatives wailed in grief. A mortar round had slammed into the inner courtyard of their home. A few minutes after being brought to the aid station, a 16-monthold girl with a head wound was pronounced dead. Then the main rush came—hundreds of civilians racing forward on a dirt road. The troops ordered them to halt, saying they had intel-

ligence that IS might send suicide bombers disguised as civilians. One of the men raised his shirt to show that he wasn’t armed, saying he was desperate for food. Mosul, which fell to IS in the summer of 2014, is still home to more than 1 million people. Fearing a mass exodus, authorities have urged residents to stay inside their homes. But the presence of civilians has prevented the US-backed Iraqi forces from using overwhelming force, slowing their advance and prolonging the city’s agony. The UN says at least 68,000 people have fled the fighting in Mosul, including 8,300 over the past four days. Later on Wednesday Iraqi soldiers arrived from the front lines with a man who was bound and hooded. They said they had caught him burning tires to help the militants hide from air strikes and the drones that buzzed overhead. Trembling, the man said he had been forced to aid the extremists. Black Humvees carried wounded soldiers back from the front. The body of a special forces soldier killed in combat was wrapped in a blanket on the hood of a vehicle. The Iraqi military does not release official casualty figures, but field medics say dozens of troops have been killed and wounded

since the Mosul operation began last month. Mortar rounds, artillery and gunfire rang out throughout the day, punctuated by occasional booms from air strikes that sent plumes of smoke into the air. A predawn air strike by the USled coalition struck a bridge across the Tigris River, which divides the city in two, leaving only one crossing intact and disrupting IS supply lines. It was the second bridge to be struck this week, and two other bridges were destroyed by air strikes last month. Until now, most of the fighting has been on the eastern bank of the Tigris. Iraqi forces are expected to use pontoon bridges when they reach the river. A spokesman for one of several state-sanctioned Shiite militias, meanwhile, said they had seized a road to the northwest of Mosul linking the city to Raqqa, the defacto capital of the IS group’s selfstyled caliphate. The militias have been converging on Tal Afar, an ISheld town west of Mosul that had a Shiite majority before falling to the extremists in 2014. “We have cut off Tal Afar from Mosul and we cut off Mosul from Syria,” Jaafar al-Husseini, a spokesman for the Hezbollah Brigades, told The Associated Press. AP

Iraqi citizens fleeing the fighting between Iraqi forces and Islamic State militants carry their belongings as they arrive to a gathering point where the Iraqi army transfers people from the front line villages to refugee camps in the Al-Samah neighborhood in Mosul, Iraq, on Wednesday. AP/Hussein Malla

Jew ish Home par t y, said after Trump’s November 8 election that “the era of a Palestinian state are over.” Defense Minister Avigdor Lieberman suggested Israel could cut a deal with Trump that allowed expanded construction in major settlements while freezing building in isolated parts of the West Bank. That would be a sharp break from Obama administration policy. Prime Minister Benjamin Netanyahu has been more cautious, congratulating Trump but giving no indication on whether he will now change his policies. Relations have been tense between President Barack Obama and Netanyahu. Trump has accused Obama of putting undue pressure on Israel. But Obama has hardly cast off Israel. In September the US signed its largest-ever security agreement, giving the Israeli military $38 billion over 10 years. While Obama pressured Israel into a partial settlement freeze in 2009 and 2010, settlements continue to expand. According to the antisettlement w atc hdog g roup Peace Now, there were 3,915 housing starts during Obama’s term as of the end of 2015. By the time Obama leaves office, that number will almost certainly surpass the 4,191 units started during George W. Bush ’s presidency. Previous administrations have given varying amounts of leeway to Israel on the issue of settlements, but also have pushed for the two-state solution. President Bill Clinton helped broker the Oslo Accord, attempting to establish a framework to resolve the conflict. President George W. Bush launched a plan that endorsed an independent Palestinian state existing peacefully alongside Israel. Both approaches fizzled, and two rounds of peace talks during the Obama years quickly collapsed. Tr ump cr iticized Pa lestinians when he spoke in March at the American Israel Public Affairs Committee conference in Washington. He said “half of the population of Palestine has been taken over by the Palestinian ISIS [Islamic State in Iraq and Syria] and Hamas, and the other half refuses to confront the first half.” Hamas, an Islamic militant group, controls the Gaza Strip. ISIS is not a major force in the Palestinian territories. AP

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

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Friday, November 25, 2016

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Then-Republican presidential candidate Donald Trump (fourth from left), accompanied by members of his family (from left) Donald J. Trump Jr., Eric Trump, Melania Trump, Tiffany Trump and Ivanka Trump, speaks during the grand opening of the Trump International Hotel-Old Post Office in Washington. AP/Evan Vucci

A look at 5 Trump biz ties that pose conflicts

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EW YORK—After Ivanka Trump appeared on CBS’s 60 Minutes wearing a $10,800 bracelet from her jewelry line, someone at her company sent photos from the interview to fashion writers to drum up free publicity. A firestorm of criticism erupted over the impropriety of profiting off the presidency, and the company apologized. If only the bracelet brouhaha was the end of it. Experts on government ethics are warning President-elect Donald J. Trump that he’ll never shake suspicions of a clash between his private interests and the public good if he doesn’t sell off his vast holdings, which include roughly 500 companies in more than a dozen countries. They say just the appearance of conf licts is likely to tie up the new administration in investigations, lawsuits and squabbles, stoked perhaps by angr y Oval Office tweets. “People are itching to sue Donald Trump and stick him under oath,” said Richard Painter, chief White House ethics lawyer for George W. Bush. In an interview with The New York Times on Tuesday, Trump insisted that the “law’s totally on my side,” and ethics experts agree that federal conflicts of interest rules don’t apply to the president so he can run his business pretty much the way he pleases while in office. His company, The Trump Organization, had no comment on the conflicts issue, other than a statement reiterating its plans to transfer control of the company to three of the president-elect’s adult children. Painter doesn’t think that goes far enough. In a letter to Trump last week, he joined watchdog groups and ethics lawyers from both Democratic and Republican administrations in predicting “rampant, inescapable” conflicts that will engulf the new administration if the president-elect does not liquidate his business holdings. A look at five areas where conflicts may arise:

New hotel

For use of the government-owned Old Post Office for his new Washington hotel, Trump agreed on annual rent to the government in a contract that was signed more than three years ago. So what possibly could be the problem now? Plenty, according to Steven Schooner, a professor of government procurement law at George Washington University who has studied the contract. In addition to base rent, the president-elect agreed to additiona l annua l pay ments based on var ious financia l measures of how wel l the hotel is doing. Schooner says such pay ments t y pic a l ly re qu i re d r aw n - out negotiations each year.

“How can anyone expect a government employee to negotiate with the Trump family at arm’s length and treat the Trump family like any other contractor?” Schooner asks. Schooner thinks Trump should terminate the contract because, even if the Trump family acts honorably, the appearance of a conflict will spread doubt throughout the contracting system. Federal rules prohibit government employees and elected officials from striking contracting deals with the government for just this reason, though the president is exempted. “The US government pays over $400 billion in contracts a year,” Schooner says. “Why should other contractors have to follow the rule if the President of the United States doesn’t have to?” As president, Trump will have the authority to appoint a new head to the General Services Administration, the federal agency that signed the lease with Trump and will negotiate the rent each year. Business at the hotel could get a lift if foreign dignitaries decide to stay at the new hotel to curry favor with the new president. In addition to the Washington hotel, Trump Organization leases land from some local governments, including for a golf course in New York City and one in Florida.

Foreign affairs

Trump’s extensive operations abroad raise the possibility that his foreign policy could be shaped by his business interests, and vice versa. Trump has struck realestate deals in South Korea, the Philippines, Indonesia, Uruguay, Panama, India and Turkey, among other countries. In June Turkish media reported that President Recep Tayyip Erdogan called for Trump’s name to be removed from the Trump Towers in Istanbul because of what Erdogan characterized as anti-Muslim comments by the candidate. A North Atlantic Treaty Organization member, Turkey is a key ally in fighting the Islamic State (IS) group in Syria. In India, the newspaper Economic Times reported that Trump held a meeting in New York a week after his election with business partners who put up the Trump Towers Pune in the western part of the countr y. The president-elect also has a Trumpbranded residential tower in nearly Mumbai with another company. Kenneth Gross, head of political law at the firm Skadden,

Arps, Slate, Meagher and Flom, says Trump’s business ties will raise suspicions that he is getting special deals abroad because he is president, and that this runs the risk of violating the Emolument Clause. That is a section of the US Constitution that forbids public officials from receiving gifts from foreign governments and foreigncontrolled companies without the consent of Congress. “He can’t avoid conflicts,” said Gross, “unless he sells his assets.”

Trump lender

One of Trump’s biggest lenders is Deutsche Bank, a German giant in settlement negotiations with the Department of Justice on its role in the mortgage blowup that triggered the 2008 financial crisis. The hit to Deutsche could be substantial, with the government reportedly demanding $14 billion. Will a Justice Department under Trump go easy on the bank? It’s not clear anyone will know. Trump will nominate the head of that agency, too. One possible response is for Trump to make sure the Deutsche case is handled by career civil servants at Justice, and any appointee, like the Attorney General, is recused. A career civil servant doesn’t have to worry about being fired if he goes against Trump’s wishes, but may still worry about displeasing bosses connected to the president. More than 300 positions at Justice are currently held by presidential appointees.

Tax audit

The odds that the Internal Revenue Service (IRS) will rule against Trump may be no different than before he was elected, but it’s difficult to know for sure. Trump has cited a long-running audit by the IRS in refusing to release his tax returns. If he is under scrutiny, it’s not surprising. In his October 9 debate with Hillary Clinton, Trump confirmed he used a $916-million loss in 1995 to avoid paying federal taxes for years. The president nominates the commissioner of the IRS who, assuming the Senate approves, serves for five years. Trump will also get to make appointments to the National Labor Relations Board, which rules on labor disputes. In July the board ruled against Trump in a case involving workers trying to unionize at the Trump Hotel Las Vegas. The Trump Organization lists six other hotels in the US on its web site.

Flurry of lawsuits

Trump said on Friday that he agreed to pay $25 million to settle three lawsuits alleging fraud at his Trump University so he could focus on preparing for his presidency. But this could also bring problems, as Trump himself has acknowledged previously. “When you start settling cases, you know what happens?” the president-elect said earlier this year. “Everybody sues you because you get known as a settler.” Painter, the ethics lawyer for George W. Bush, predicts the political divide in Washington is going to make things worse. AP

Iraq to join in Opec deal to cut output

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raq will shoulder part of the burden of oil-output cuts, said Prime Minister Haider Al-Abadi, reversing the nation’s previous insistence for an exemption and potentially removing an obstacle to an Organization of Petroleum Exporting Countries (Opec) deal next week. “Iraq will cut its output to preserve prices,” Al-Abadi told reporters in Baghdad on Wednesday. The country wants Opec to reduce production by a total of 900,000 barrels a day when it meets next week in Vienna, because low prices are hurting global investment in the industry, he said. The premier’s statement could improve the chances that the Opec will implement its September pledge to reduce crude output to remove a global oversupply and boost prices. Opec failed to finalize the details of supply curbs on Tuesday, largely because of Iran and Iraq’s resistance to making any reductions. The government in Baghdad had argued that it needs all possible resources for its fight against Islamic State (IS). Opec agreed on September 28 in Algiers to reduce output to 32.5 million to 33 million barrels a day. Opec estimates it pumped 33.6 million barrels a day last month, meaning a 900,000 barrel cut would place production in the middle of that range. A $1 increase in the price of oil boosts Iraq’s revenues by $1 billion a year, Al-Abadi said. “If Opec cuts down output at 1 million barrels a day, this will help prices to go up and Iraq will make gains from this,” he said. If there’s no agreement to restrict output, the International Energy Agency has said that oil prices are likely to fall in 2017 as

the surplus persists. Opec’s own estimates of supply and demand also show that the A lgiers agreement would barely drain a record oil surplus next year without the cooperation of nonmembers such as Russia, the world ’s largest energy exporter. Officials from Kremlin and other non-Opec nations will meet with the group in Vienna on November 28. Saudi Arabia, Opec’s largest producer, has expressed optimism that consensus can be reached to cut supply, although oil prices have been volatile, amid speculation that previous demands for exemptions from Iran and Iraq could thwart a deal. Iran has insisted that it should be a llowed to restore output to pre-sanctions levels, which it pegs at about 4 million barrels a day. A fter r ising to a one-year high of $53.73 a ba r rel l ast month in the wake of Opec’s A lgiers accord on output cuts, benchmark Brent crude slipped to $48.97 a barrel as of 12:29 p.m. in Singapore on Thursday. Pr ices remain less than ha lf their level in mid-2014, amid a persistent global oversupply. Iraq remains capable of paying money due to oil companies operating in the country, Al-Abadi said. “We have talks with these companies, complicated talks, and we cut the finance of unnecessary spending programs,” while supporting the continuity of funding necessary to raise oil output, he said.

Russian reluctant to cut oil production

For months Russia has told Opec its preferred option in any eventual

oil-supply deal was to freeze production, rather than to cut it. It’s dawning on the group that Moscow may actually mean it. W hile Russia ta lked about a freeze, Saudi A rabia and its a l lies pr ivately ex pected Moscow wou ld event u a l ly join a cut if Opec delivered its ow n reduction, accord ing to peo ple br iefed on the matter, who asked not to be named because of the sensitive nature of the t a l k s. Several Opec members are adamant Russia must reduce supply if the plan to ease a global glut is to succeed. Just one week before Opec’s ministerial meeting in Vienna, that prospect seems less likely. The two views are set to clash on November 28 in talks between Opec and non-Opec nations. The outcome may decide whether there is any eventual agreement. Russia, Azerbaijan and Mexico are set to participate, according to people familiar with the arrangements. Others that have attended previous gatherings, including Oman, are not joining this time. If Russia and other non-Opec producers balk at the idea of cutting output, Saudi Arabia could reconsider pushing ahead. “The negotiations will continue until the very end, and the deal is likely to go down to the wire,” said Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. in London. Russian Energy Minister Alexander Novak on Wednesday said that a delegation plans to meet Saudi Arabia and others on Monday, but that it was too early to say whether the nation would join the formal Opec ministerial meeting on November 30. Bloomberg News

A10 Friday, November 25, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Who provides the fake news?

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here you are, reading your Facebook news feeds. All you are interested in is your sister-inlaw’s pictures of her new baby girl and the golden wedding anniversary of your best friend’s grandparents. Suddenly, you come across a link and preview from a news web site with the most astounding revelations about some celebrity or a new study that proves your pet can actually talk if you listen carefully. Of course, you have to share this with your friends. By the next day, you discover that you have been fooled by one of the hundreds of “fake news” web sites. Fake news is becoming such a problem that Facebook Founder Mark Zuckerberg plans to fight it. The Chinese government considers fake news as serious as terrorism and is demanding stronger government control and censorship. Even Vice President Maria Leonor G. Robredo’s staff is giving advice on how to spot and avoid these “news” items after she was apparently the target of “‘vicious” pregnancy rumors. Many web sites clearly state that they are featuring satire as the most famous one—theOnion.com—carries the motto “Tu stultus es”, which, from the Latin, roughly translates to “you are an idiot”. Yet, politicians “in aid of legislation” and major news organizations around the world have been fooled into thinking that everything on the Internet must be true, especially if viewed by millions of people. The very real Californian Parenting Institute was quoted as producing a very unreal “Study Finds Every Style of Parenting Produces Disturbed, Miserable Adults”. The New York Times quoted a story from The Onion about President Barack Obama appearing on the cover of Teen Beat magazine, which was a joke. However, the worst type of fake news is “distorted news”. You walk by the Japanese restaurant and you see a display of food on the plate or in bowls. But you know from experience that the food inside the restaurant does not look exactly like the display. Even a child learns quickly that this is “fake food” made of plastic and paint. But too many people only read the headlines and assume that it tells the full and genuine story, just like the ramen and tonkatsu in the window. One of the major US news organizations—NBC—asks the incoming White House chief of staff, “Can you equivocally rule out a registry for Muslims?” Reince Priebus responds, “Look, I’m not going to rule out anything but we’re not going to have a registry based on a religion”. The NBC headline is “Reince Priebus on Muslim Registry: Not Going to Rule Out Anything”, a complete distortion. However, which group is responsible for the most fake and distorted news? The government, of course. The US government paid a British public-relations company more than $500 million to spearhead a topsecret propaganda campaign in Iraq. The Bell Pottinger Co. created fake videos that appeared to be the work of al-Qaeda and news stories that looked as though they were produced by Arab media outlets for propaganda purposes to US and British citizens. On some occasions, even the White House signed off on the propaganda materials. Fake and distorted news is a danger to free press but so also is government censorship and control. The proliferation of fake news is the responsibility of the public, not the government. Your sushi on the plate is never as perfect as in the window. Buyer and reader beware. Since 2005

Good news James Jimenez

spox

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his early, people are already wishing that 2016 would just end already. The second half of the year, after all, has seen a series of upheavals and calamities—both natural and man-made —that would make anyone despair. How can we not, when we now live in a world where armed policemen in combat gear, wearing skull masks have become a mundane sight in Congressional hearings, where people are viciously attacked online for simply expressing a contrary opinion, where the previous night’s detritus typically includes a body or three? These past few weeks have been such a drag that when the Commission on Elections (Comelec) appeared before the House Committee on Suffrage hardly anyone noticed. This, despite the fact that what happened there was actually a welcome bit of good news. So welcome, in fact, that it bears retelling here, in the words of the Office of the Comelec chairman himself. “The Commission on Elections’

Hazards of a crusader

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reform measures for the 2016 national and local elections were highly commended at the House of Representatives. Comelec Chairman Andres D. Bautista addressed the Committee on Suffrage and Electoral Reforms of the House of Representatives, last Monday, November 21 and gave an exhaustive assessment and evaluation of the 2016 national and local elections. “Chairman Bautista presented the

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ome say reform in government is just like the Crusades in history—there are no instant changes, only instant casualties. Change, as a word, has become a common slogan in election campaigns, here and abroad. (Change we need, change is coming, etc.) Change in leadership is inevitable. In any workplace, change does not have to be a difficult experience for any worker. Oftentimes, a change in place of assignment or transfer to another company produces a psychological imbalance, albeit temporarily. However, we all know that change is constant. When I graduated from grade school in a Quezon City-based exclusive school, I was anxious, knowing that I will be going to a co-ed secular high school in the University Belt in Manila. I was anxious as I will leave a set of friends and my own comfort zone for a strange place along Recto Avenue. The anxiety, however, died down in a matter of months and it was even replaced with much excitement as I soon encountered teenage girls in school. When I left public service and joined the corporate world, I didn’t mind the change in environment. I even welcomed it since it gave me renewed energy as I learned, and am still learning, a ton of new things about the aviation industry. President Duterte’s different

leadership style, criticized as divisive, has caused a temporary psychological imbalance in the hearts of a few Filipinos. Some are “shocked and awed,” as the Duterte administration has undertaken a major overhaul, especially in the field of law and order. I say things will get worse before they get better. I say this because any transformation entails cost before one can see its benefits. When I became the head of the immigration bureau, opposition was rife in the early stages. Trials came in bunches up to my very last day in office. I can personally attest that reform has a heavy price. Some leaders may succumb to the pressure as they pursue reforms—Director Francisco Villa Jr. of the Energy Regulatory Commission (ERC) while some may be eliminated, Deputy Commissioner Arturo Lachica of the Bureau of Customs and Director Jonas Amora of the Bureau of Internal Revenue (BIR).

accomplishments of the commission, particularly in securing a credible election with an enhanced voter experience. He cited the all-time high voter turnout of 81.95 percent. Bautista presented key result areas and performance indicators as measured by the performance scorecard he introduced, such as improved technology, enhanced voter education, increased system safeguards, high voter turnout, and expanded voter-care services. Chairman Bautista, likewise, stressed that an important factor that ensured the success of the 2016 elections can be attributed to the active involvement and cooperation of key stakeholders through mechanisms introduced by the commission. In ending his presentation, Bautista enumerated positive remarks from civil-society groups, research organizations and other election watchdogs affirming and validating the gains of the recently concluded election. “Members of the House committee praised the commission under Bautista’s leadership for ensuring a transparent, credible and inclusive election. Electoral Reform and Suffrage Committee Chairman Rep. Sherwin Tugna expressed his grati-

tude to the relentless efforts of the commission as evidenced by the positive data presented to the committee. “Deputy Speaker Fredenil Castro, likewise, praised the commission’s efficiency, which, according to him, is bereft of any form of insincerity. Meanwhile, Cebu Rep. and Deputy Speaker Gwendolyn Garcia affirmed the credibility of the elections, citing that the 2016 elections was a far cry from the two previous automated elections as regards the security features of the ballots and the votecounting machines. “Recognizing the accomplishments of the commission, Deputy Speaker and Marikina Rep. Romero Quimbo expressed that the 2016 elections can be considered as the new bar and standard within which we can measure election credibility. Chairman Bautista, for his part, ensured the committee that further needed reforms are on its way not just in preparation for the midterm election in 2019 but for the 2022 elections thereafter.” James Arthur B. Jimenez is director of the Commission on Elections’s Education and Information Department.

In my case, I fortunately managed not to fold, even if I paid the price of besmirched reputation by way of administrative cases and character assassination in media. I had to stand my ground, knowing that I am doing things for a higher purpose. In the bureau, temptations were plenty, challenges came in bunches and the hardships were without end. Early on, I was asked to do a few things that were against my principles. I guess my father’s guidance and my personal experiences in the Army allowed me to resist these “indecent proposals”. In his book, A Good Lawyer, lawyer Bobby Quitain said a purpose is purified by temptation, sanitized by challenges and filtered with hardships. And that your purpose in any crusade must be tested with fire, which comes in many forms. Servant leaders should allow and, in fact, welcome, these “fires” to test their resolve and strengthen their conviction in following their purpose. No one said your purpose in public service would be easy anyway. Working for government exposed me to endless complaints, and worse, even lawsuits. As I tried to get rid of dishonest employees who give all other civil servants a bad name, I became the subject of both administrative and criminal complaints. In my first three months in office, I was already a respondent in an Ombudsman case initiated by a disgruntled high-ranking official in the bureau who was reassigned by Commissioner Ricardo A. David Jr.

I think no less than five complaints before the Ombudsman have been filed against me during my four years in the bureau. Until the very end, it was a rather baseless and “intriguing” National Bureau of Investigation report regarding the escape of a Korean fugitive was used to justify my relief. When others became interested in my position as commissioner, I became the subject of a vicious black propaganda operation, many times, aimed to destroy the family name that my father and his siblings protected and nurtured throughout the years. I can vividly remember reading a full-page ad published in a major newspaper maliciously citing all the cases filed against me. I call these things as hazards every time a “crusader” introduces reforms in public service. Change has arrived in our country. New initiatives, like reduced income-tax rates (from 30 to 25 percent), larger infrastructure spending (from 2.9 percent of GDP to 5 percent), transparency measures and, of course, our relentless antidrug campaign will surely make our country “different”, hopefully for the better. In the process, the purpose of President Duterte and his new team in public service will be tried and tested by “fires”. Yes, it will be challenging and punishing at the start, just like the crusades during the medieval times. But, will it be fulfilling and rewarding in the end? It was for me. I fervently hope the same is true for those faithful departed public servants in the ERC, BOC and BIR.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Friday, November 25, 2016 A11

To BRICS or not to BRICS All in an eternity of wretched days Leonardo A. Lanzona Jr.

Tito Genova Valiente

annotations

EAGLE WATCH

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ith President Duterte’s pivot to China, a whole new avenue for Philippine trade agreements has been opened. Furthermore, with the apparent aversion to international trade of President-elect Donald J. Trump of the United States, our previous trade partnerships with the US, as well as other Western countries, can now only promise limited gains. Given the new international environment and sentiments of global leaders, should the Philippines now explore other trade coalitions? This question is even more important, as Chinese President Xi Jinping has invited Duterte in the next BRICS (Brazil, Russia, India, China and South Africa) Summit in September next year. After their meeting in mid-July 2014, the BRICS had become a new global force that the Philippines can potentially consider. As also one of the emerging economies, the country needs to consider being a part of BRICS for several reasons. First, unlike other emerging economies, these countries have one of the largest populations. If we can somehow differentiate our products from them, the huge markets found in these economies can prove to be quite lucrative for our exporters. Of course, these may be quite difficult since we also have a large population. Thus, our labor-intensive products may compete directly with their similarly labor-intensive products. Second, while the BRICS also trade with the traditional center economies of the United States and Europe, they have developed enough to be strong competitors of these countries. A partnership with BRICS then can serve the basis for the independent foreign policy that the current administration is creating. This will be particularly important since we have had territorial disputes with the leading BRICS country, China. This new foreign policy should answer the following questions, which the current administration seemed to have avoided. How can we benefit now as an ally of China? How can we develop a relationship with a country that at one point bullied us in our own territory? Aligning ourselves with BRICS can establish various directions and strengthen commitments as we begin to craft our new policy with China. Third, BRICS inaugurated two innovative institutions, which rival the International Monetary Fund and World Bank. This pertains to (1) a Contingency Reserve Arrangement, with an initial capitalization of $100 billion that can be used by BRIC members undergoing balanceof-payments problems; and (2) the “Development Bank” with a total authorized capital of $100 billion that is accessible to all members of the United Nations. All of these seem to point to positive implications. However, certain issues need to be addressed. In particular, these potential benefits are hinged on the condition that BRICS continue with their high growth rates. Recent data show a slight weakening in the economic performance of these countries in consonance with the worldwide depression. The point is that BRICS remains dependent on the fortunes of China, which is already showing signs of diminishing returns to scale. Unless China upgrades its technology, in the same way that South Korea and Japan had over the decades, we cannot expect China to grow simply by accumulating more labor and capital. What this suggests is the gains from trade with the BRICS may not be permanent. While our terms of trade can improve with a coalition with this group, we cannot expect this to continue for a long time. The point is the gains from trade cannot solely be based on the improved terms of trade. In other words, trade is not only about reducing tariffs and accumulating capital and labor. The best trade agreements should include larger provisions, such as protection for intellectual property, liberalizing trade in services and enforcing

To be effective, any megatrade deals, such as a coalition with the BRICS, must entail spillovers on technology and institutional reform. Unfortunately, these countries may not exactly be the best partners in creating the systems that engender greater innovation and institutional development. stricter labor and environmental standards. All this probably creates efficiency and helps farmers and workers. Including such provisions in modern trade deals will help, particularly in undoing our failure to help those industries who lost out from globalization. To be effective, any megatrade deals, such as a coalition with the BRICS, must entail spillovers on technology and institutional reform. Unfortunately, these countries may not exactly be the best partners in creating the systems that engender greater innovation and institutional development. To a large extent, the institutions in BRICS in terms of their ability to handle incomplete information, for instance, are not too different from the institutions in the country. Engaging in trade agreements does not simply involve incorporating our markets, but also includes integrating standards and institutions. Since we are almost on a par with BRICS in terms of these factors, one would not expect changes in these areas. Hence, if our industries are exploitative of labor before the agreement, we would expect the same exploitative relationships after the agreements. In fact, with increased trade, if the industries that have comparative advantage are also those that are exploitative, it is likely that such practices may even worsen. In contrast, if we become partners with countries whose institutions are far advanced in terms of higher standards compared to ours, then trade will naturally transform our institutions to be like theirs. In fact, developed countries with higher quality institutions will often have prerequisites before an agreement is established. In the case of the European Union, for instance, a major requirement is the satisfaction of labor standards comparable to those found in Europe before a partnership is forged. Otherwise, countries with poor labor-market protocols may stand to gain, and countries that comply with such values lose because of the costs of setting up these standards. In the long run, labor standards will be beneficial to Filipino workers but may be costly to our firms in the short run. In summary, a coalition with BRICS will be inferior with trade deals with the more conventional economic centers unless institutional change and technology transfers for all countries are incorporated into these agreements. Without these conditions, the coalition will be as flexible and as hazy as that of the Asean, where trade gains, if any, are not felt by the masses. Leonardo Lanzona Jr. is a professor of Economics at the Ateneo de Manila University and a senior fellow of Eagle Watch, the school’s macroeconomic research and forecasting unit.

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he same things have been happening for days and days now in our country. All of these events or acts have characters but I will not name them. They are personas in memories, as hazy as they are recalled. There is no emotion as we remember them. The events become greater than the characters.

Criminals are caught every day. All of them are criminals or suspects. Most of them are placed in jail or beside policemen. Some of them grapple with the policemen on their way out or in the police precincts. Those who do this die. No one believes the story. People are tired to complain. The next day, a similar event takes place. Sometimes, the criminal or suspect is so notorious or popular, the nation awaits for the resolution of the chase. The fugitive moves from place to place but is eventually apprehended. We have a good police force. The arm of the law is indeed long in this republic. But, there is something missing in the accomplishment. The nation seems not proud of it. The nation does not like the story. No one needs to believe in a tale for it to be retold. And so, similar events take place again. One day the fugitive is finally caught. People await for his arrival. People wonder why it seems easy to get this big-time criminal. Maybe he is no big deal. Again, the story attracts us for its similitude. Then another suspect is apprehended. In another report, he surren-

ders. In one document, he is found in the big city; in another, he is spotted and then grabbed in a small town in Northern Luzon. The event becomes exciting because there are many narrators,

and the story is being told in many ways. Truth, or the lack of it, turns into an exciting enterprise in our country. The last man to be caught or whatever has a sensual angle to his adventures. He is supposed to be the lover of this female politician. Before the media, he confesses to a seven-year relationship. You can hear the snickers and giggling of the so-called media personalities. At last, a female reporter musters enough courage or curiosity to ask the man what message he has for his paramour politician. The crowd could not control their excitement and wolf whistles emanate from whatever respectability and decency the reporters possess. I realize eternity is a state of mind or an act of cruelty to time and space.

Cardinal Tagle’s message in the closing of the Holy Year of Mercy Rev. Fr. Antonio Cecilio T. Pascual

SERVANT LEADER

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he Archdiocese of Manila closed the Extraordinary Jubilee of Mercy by closing the Holy Door of Mercy in the Manila Cathedral, led by His Eminence Luis Antonio Cardinal Tagle, DD, last Sunday, November 13, 2016.

Cardinal Tagle said we must thank God for the bountiful mercy offered to the thousands of pilgrims who crossed it, prayed, celebrated the sacraments of reconciliation and the Eucharist and participated in acts of mercy. Here is an excerpt of his message for the closing of the Holy Year of Mercy. “As we close the Holy Door of Mercy, let me offer some points for reflection as we conclude the Jubilee. “First, recall that a year ago, I was not alone in opening the holy door.

With me were a girl who used to live on the streets, a person with disability and a whole family trying to move out of poverty. As they opened the holy door, they also opened their lives and hearts to us. Entering the world of the poor and suffering, we found Jesus who remains faithful to them. Jesus will never close the door of His heart to those who seek His mercy. Conversely, the need of a poor person is our door to the heart of Jesus. Let us continue our pilgrimage of mercy and compassion by encountering

the hungry, thirsty, homeless, sick, imprisoned, dying, confused, lost, lonely and desperate. Walk with Jesus to meet the poor. Walk with the poor to meet Jesus. “Secondly, let us enter the wounds of other people, especially those that we have inflicted by what we have done or failed to do. Though difficult, it would help us to see how much suffering we have brought to other people’s lives. Let us not be afraid or ashamed to admit our fault and to ask pardon of people we have hurt. Humility opens the door to a justice that heals or restores dignity and relationships. A humble contrite person who does not run away from justice will receive mercy. “Thirdly, let us not enter the wounds of the people we dislike, of people who have wounded us or make our lives difficult, even of our enemies. By trying to understand their weakness, problems, pains and confusion, we begin to see neighbors, brothers, sisters and fellow sinners in them. We stop being judgmental

Things go on and on in this country of ours because the universe is punishing us for our small mind, for our lack of bravery, for the absence of any kind of maxis to live by. Weeks and weeks of the same thing in our face is a condemnation. What can save us from this daily terror? One afternoon this week we were driving down the wide streets of our old city. It was five o’clock in the afternoon. The sun has changed its orientation. It is November, that’s why, we tell ourselves. The west was a wondrous pale orange. This sunset can happen every day. The sun can kill evil men because our laws are lousy and we are not a country of brave men. This sunset can save us all from evil.

E-mail: titovaliente@yahoo.com.

and self-righteous. With empathy and mercy, our longing for justice is purified. We begin to desire justice, not vengeance. “Dear friends, the ritual of closing the holy door does not close the heart of God. God’s heart will always remain open for us as a haven of mercy, consolation and new life. So we should not be afraid to approach God who is caring and tender. Let us also keep our hearts open to the poor, to those we have offended and to those who have hurt us. Through justice watered by mercy, the wounds of persons, families, communities, nations and the whole of creation would be healed. “Lord, have mercy on us and grant us peace. Amen.” To know more about Caritas Manila, visit www. caritasmanila.org.ph. For your donations, please call our DonorCare lines 563-9311, 564-0205, 0999-7943455, 0905-4285001 and 0929-8343857. Make it a habit to listen to Radio Veritas 846 in the AM band, or through live streaming at www.veritas846.ph. For comments, e-mail veritas846pr@ gmail.com.

Climate collision: Paris accord will be first flashpoint

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limate change is likely to be the first issue where US domestic and foreign policy, under the new administration of President-elect Donald J. Trump, will collide with the international community. The policies of President Barack Obama had America among the countries leading the way on this issue, culminating in the UN Framework Convention on Climate Change accord struck in Paris last year. Obama’s administration’s actions with respect to environmental issues were a mixed bag, but basically consistent with US intentions to proceed with efforts to curb America’s carbon emissions to meet future targets. The positions that Trump took during the campaign, presumably to be implemented once he takes

office in January, appear to go in the opposite direction. Not only did he say he would withdraw America from the pact, he also made promises to the electorate, including to bring coal and steel back, that would put America in a position of nonobservance of its previous commitments, and also have it doing serious damage to the global campaign against climate change in general. The just-completed conference on implementation of the Paris agreement in Marrakesh, Morocco, put the world’s dilemma on the subject under the spotlight. The whole world is, of course, aware of America’s previous commitments. It is also, of course, fully aware of Trump’s stated positions relevant to the subject. The representatives of the current US administration at the conference

were in the position of being unable to commit the country they represented to anything. One interesting aspect is that China, the world’s No. 1 polluter— America is second—showed itself at Marrakesh to stand ready to pick up the banner of world leadership on this important issue if the United States, under Trump, wants to walk off the field of play. Another complicating factor is that state officials in California and other West Coast states have indicated that they intend to proceed with participating in the world effort to take steps to stop or roll back global warming, no matter what position a Trump administration in Washington may take. To drop out of the Paris accord would take four years, but Trump’s government could sim-

ply stop carrying out any actions to implement for the four or eight years it is in power. Part of the confusion over the American position comes from elements in the United States who believe that climate change is inevitable, or cyclical, as opposed to man-made and subject to actions based on that hypothesis. It is also the case that the world—in the strictest sense of the term—is probably capable of withstanding a US policy of dog-paddling on climate change for four or eight years, given the time frame of the phenomenon. Whatever US policy under Trump turns out to be, it will be a bone of contention for the United States and a Europe led by German Chancellor Angela Merkel and an Asia led by Chinese President Xi Jinping. TNS

Turning Points: Global Agenda 2017 is a year-end package of opinion pieces and features, photos and cartoons covering events and trends in 2016 that will influence 2017 and beyond. Out in December

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