Businessmirror november 28, 2017

Anticorruption, data privacy, cybersecurity: why certification matters

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By Henry J. Schumacher

s we continue to develop international and local business in the Philippines, in Asean, in Asia and beyond, there will be more and more pressure on companies to demonstrate that they follow the basic rules in anticorruption, in data-privacy compliance and in cybersecurity. Why?

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Because certification standards, covering the above critical areas in doing business, match the expectations of American, British, German, Canadian and other prosecutorial authorities and of business partners; as

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such, they can be used to benchmark your company’s compliance programs and make sure they align with the expectations of these international authorities and your business contacts. Continued on A2

BusinessMirror A broader look at today’s business

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Tuesday, November 28, 2017 Vol. 13 No. 48

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By Jonathan L. Mayuga

Bucking the trend Manny B. Villar

THE ENTREPRENEUR

@jonlmayuga

he Chamber of Mines of the Philippines (COMP) said it welcomes the plan of the Mines and Geosciences Bureau (MGB) to base the planned increase in mining tax on mineral output, instead of imposing a uniform levy.

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Miners push competitive output-based tax regime

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RECIDORO: “If it [tax] is too high, we will not become competitive; the investors will go elsewhere.”

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But it should be benchmarked globally, or the Philippines will just lose mining investments to countries with a more competitive tax regime.

ith the third-quarter results out, it is safe to say that the economy under the Duterte administration will not suffer the same fate as it did in 2011, the first full year of the Aquino administration, when growth plunged by more than 50 percent compared to the previous year. In terms of GDP, the economy grew by 7.6 percent in 2010, when the country held national elections, which was won by then-Sen. Benigno S. Aquino III. Outgoing President Gloria Macapagal-Arroyo left a robust economy, one of Asia’s top performers, in the hands of her successor.

See “Miners,” A2

Continued on A10

D.O.T. CONFIDENT BREXIT PHL meat BMReports WILL NOT HURT ARRIVALS imports to FROM UNITED KINGDOM Two decades after the Asian hit record By Ma. Stella F. Arnaldo

@akosistellaBM Special to the BusinessMirror

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HE Department of Tourism (DOT) believes the exit of the United Kingdom from the European Union, dubbed Brexit, will have no impact on the number of British tourists coming to the Philippines. In a speech before UK-based media on the sidelines of the recent World Travel Market, DOT Spokesman and Tourism Assistant Secretary for Public Affairs Frederick M. Alegre said: “We remain optimistic about the UK market despite the Brexit challenges, and continue to expand our travel trade partnerships, and conduct high-profile consumer activities.” The weak peso versus foreign currencies, he also told the BusinessM irror, will continue to make travel to the Philippines less expensive than other countries. The British pound is currently referenced at P67.61 per the Bangko Sentral ng Pilipinas, from an average of P61.93 in July 2016. This gives British tourists more spending power in the Philippines. He pointed out that the DOT has been actively engaging British citizens to convince them to visit the Philippines, through the implementation of numerous consumer-promotions projects. Yet, data from the DOT showed the growth in visitor arrivals from the UK slowing down. From January to August 2017, arrivals from the UK increased by only 6.4 percent to 125,008. During the comparative period in 2016, arrivals from

the UK jumped 13.5 percent to 117,535. In the previous year, arrivals from the UK were up 14.32 percent to 103,577. The World Travel & Tourism Council (WTTC), in its Economic Impact Report 2017, pointed out the possible effect of Brexit on UK outbound travel. “The economic impact of the Brexit vote is expected to have diverging implications for domestic and international business and leisure travel spending in 2017. While the spending of international visitors is expected to increase, domestic and outbound spend in the UK will suffer.” In June 2016, UK citizens went to the polls and voted to leave the EU. Following this, the British pound immediately slumped to a 31-year low, at $1.40. The DOT remains undeterred, however. “The UK is the most important market for the Philippines in Europe,” Alegre told the same media gathering. “We came with a big delegation representing the top Philippine tour operators and hotels/resorts specializing in the UK/European market.” He also noted the DOT’s “consumer activations” at London’s major train stations, as well as an outdoor Philippine Tourism Weekend keep up the British citizens’ interest in the Philippines. There was also a consumer promo at the Westfield Shepherd’s Bush luxury shopping center. Alegre enumerated other ways the Philippines was expanding its UK market. For one, he said, pioneering flag carrier Philippine Airlines has deployed its new Continued on A12

PESO exchange rates n US 50.6850

financial crisis: Lessons, risks high–Mita By VG Cabuag

By Jasper Emmanuel Y. Arcalas

@villygc

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@jearcalas

Part Two

HIS year property developer Vista Land & Lifescapes Inc. (VLLI) celebrated a decade of being a publicly-listed company. It held a simple ceremony at the Philippine Stock Exchange (PSE) in June. VLLI needed to celebrate such a milestone after its predecessor firm C and P Homes Inc. took a hit when the Asian financial crisis struck in 1997. The hit wasn’t as swift, but it was a long and arduous one for the company owned by a family that was heavily involved in politics both at local and national levels. “C&P” represents Camella Homes and Palmera Homes, two of the mass-housing brands of the VillarAguilar families that mushroomed within and the outskirts of Metro Manila during the eightees and the ninetees. It was listed at the PSE in 1995. Camella Homes’s operations can be traced back to 1977 through its wholly owned subsidiary, Household Development Corp. (HDC). HDC was a company focused on the development of low-cost standardized housing targeted at homebuyers who rely on government-assisted financing.

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planned-communities with the development of Springville City in Cavite, a development that now encompasses approximately 240 hectares. In 1993 Camella Homes expanded its operations to include socialized housing developments, marketing these homes under the Carissa brand name. In July 1997, just when the financial crisis began to sweep Asia, C&P Homes issued a $150-million six-year floating rate notes. Some two years later in October 1999, C&P declared a default on

he country’s meat imports this year would hit another record high due to the sustained increase in the demand for processed-meat products, according to the Meat Importers and Traders Association (Mita). Data from the Bureau of Animal Industry (BAI) obtained by the BusinessM irror showed that meat imports from January to September this year reached 510,777.572 metric ton, 7.72 percent higher than the 474,163.290 MT recorded last year. The figure is just 135,726.128 MT short of the record-high 646,503.7 MT purchased by importers last year. MITA President Jesus C. Cham said imports in the October-to-December period would likely exceed 135,726.128 MT. “Demand from consumers continues to grow. In the fourth quarter, there’s strong demand from processors for mechanically deboned meat (MDM), bacon, and boneless pork for their hams,” Cham said in an interview on Monday. The Mita chief noted that the increase in the purchasing power of Filipinos helped boost meat imports, such as MDM and offal, in January to September.

Continued on A2

See “PHL Meat,” A12

Photo shows buildings under construction in Bonifacio Global City, Taguig. A real-estate bubble burst in 1997 after Thailand monetary authorities failed to defend the baht and unleashed a contagion that spread to the Philippines and other Asian countries. ALYSA SALEN

At the time, HDC conducted its activities in southern and southwestern Metro Manila, as well as the surrounding areas and its homes under the brand Camella Homes. In 1983 Camella Homes established a wholly owned subsidiary, Palmera Houses Inc., to focus on real estate development activities in northern and eastern Metro Manila and the surrounding areas.

Camella Homes

IN 1991 Camella Homes widened the scope of its activities to include the development of larger

n japan 0.4552 n UK 67.6138 n HK 6.4915 n CHINA 7.6763 n singapore 37.6672 n australia 38.6068 n EU 60.5432 n SAUDI arabia 13.5153

Source: BSP (27 November 2017 )

A2 Tuesday, November 28, 2017

BMReports BusinessMirror

Two decades after the Asian financial crisis: Lessons, risks Continued from A1

the debts—meaning it would stop paying the interest on the bonds and that they wouldn’t be paying the principal amount when it becomes due in 2003. The company also defaulted on all its bank debts and peso-denominated commercial papers sold to domestic investors. W hen the default was announced, current VLLI Chairman Manuel B. Villar Jr. was the speaker of the House of Representatives. Villar declined requests for interview for this story. C&P hired Deutsche Bank, then headed by Joselito Camacho, to be their financial advisor in negotiating a restructuring agreement with its creditors. The bank crafted a restructuring plan for the company’s debt that, on one hand, entailed creditors to take a hit in exchange for equity in the company. On the other hand, the principal shareholders, the Villar family, would have to infuse more capital. Camacho would later on become finance secretary during the time of former President Gloria Macapagal-Arroyo, who became Philippine president nearly five years after the

Miners. . .

Continued from A1

Ronald Recidoro, executive director of COMP, told the BusinessMirror in an interview that COMP’s proposal during the Aquino administration was, in fact, a commodity-based approach to mining taxation, which he described as more accurate and more correct. “It’s more accurate if we treat gold and copper differently from iron ore, nickel and chromite, because they have different economics. That’s the direction to take if we are to renew the fiscal regime for mining; a different treatment for a different commodity,” Recidoro said. However, he added a tax hike based on commodity will require thorough study. Asked if the COMP would be willing to help put in place such system of ta xation, Recidoro said: “We entertained this before; certainly, we will entertain this again. Definitely, this should be studied.” He stressed the need to look at what other countries are imposing under their mineral-tax regime. “If it is too high, we will not become competitive; the investors will go elsewhere. So that should be

Asian financial crisis. Even the Ayala group signified interest in the company but, later, on announced that the deal was off after several months of due diligence. According to a report from nonprofit group Action for Economic Reform, the restructuring plan never pushed through and, instead, the company officials talked to all its creditors one by one, including the banks. There were also issues on how the Villar family managed to convince creditors on their terms of payment for the loans and also on good governance of C&P itself. But the family was able to bring back the company to its feet. Those who held on to the notes that the C&P issued in 1997 were paid some of their investments when Vista Land listed by way of introduction at the PSE in 2007. Listing by way of introduction is defined as not undertaking public offering prior to the initial listing because the marketability of the applicant’s securities can already be assumed. But the company has to make a public offer a year later. In the case of Vista Land, it acquired all of the assets of C&P, including the firms owned by the

a concern for the government. If the tax in Vietnam is lower, they will go to Vietnam,” Recidoro added. He said the plan to impose a tax hike based on commodity or output of the mining companies will need a thorough study of the global market trends and historical records so the government can compare the tax rates in other countries. Last Thursday MGB Director Wilfredo G. Moncano said the agency will soon come up with its proposal for hiking the excise tax on mining companies. An attached agency of the Department of Environment and Natural Resources, the MGB is the government’s primary mining-regulatory body. He added one of the things the MGB is ta l k ing about is whether it will be a uniform increase or a per-commodity basis, and the direction is to push for a per-commodity basis. Environment Secretary Roy A. Cimatu is pushing for a higher tax to increase the government’s share from mining revenue. He also challenged the industry to shape up and increase its contribution to the economy in terms of share to GDP. I n h i s br ie f s p e e c h du r ing the 64th Annual National Mine Safet y and Env ironment Conference held in Baguio City from November 22 to 25,

Villar family, such as Fine, Polar Property Holdings Corp., Adelfa Properties Inc., Althorp Holdings Inc. and Cambridge Group Inc.

DMCI

A former banker once lumped DMCI Holdings Inc., mainly a construction company that diversified into other businesses, such as on housing and mining operations, as one of the firms that defaulted on their debts when the Asian financial crisis struck two decades ago. But ask any DMCI official, and he or she would deny that such a thing happened. “It’s not literally called a default. We’re trying to avoid the word ‘default,’” Herbert M. Consunji, the company’s CFO and executive director, said in an interview. In 1993 the company started preparing for its initial public offering and scouted a good story for its expansion. Back then, as the Philippine economy struggled to grow, the only way for speedy expansion for a company was to buy another firm. DMCI, whose name came from the acronym of its founder, the late David M. Consunji, had set its eye on acquiring AG&P, a company that specializes in steel construction. Cimatu said he wants to see the country’s mining industry contributing to the economy as much as 17percent, like that in Chile and Indonesia. Cimatu’s speech was welcomed with optimism by most of the participants. Jose Leviste Jr., chairman of OceanaGold Philippines Inc. and concurrent vice chairman of COMP, said Cimatu’s message to the industry was “a very positive” message. “The speech is very positive for the mining industry. I recall his decision, to make decisions on the basis of science. I welcome points defining responsible mining. I like his reference to Chile and Indonesia and the use of Chile and Indonesia as a reference point for the target of 17-percent contribution to GDP,” Leviste said. According to Recidoro, such ambitious target is possible for the Philippines, but it will require the government easing regulations and allowing more mining operations to go on stream. “We would really want mining to increase its contribution to GDP. But that can only come about when we increase the number of mines operating in the country. Our mining industry is so small, that is why the percentage contribution to the GDP is also small. If we want that to happen, then

AG&P is the oldest construction company in the Philippines— it was established in 1900 as Atlantic, Gulf & Pacific Co.—and is known for its iconic constructions, such as the Araneta Coliseum and Rizal Monument. “ T hey were heav y in steel construction, and DMCI is on concrete construction. So it’s complimentary to us,” Consunji said. Little did DMCI know that after AG&P was turned over by the Americans to the Filipino owners, the company was mismanaged. It had a lot of unpaid bills to suppliers, even unpaid Social Security System contribution of the employees, retirement pays. A lot of them reportedly sued the company, Consunji said. We had a difficult time turning around AG&P, advancing several millions of pesos to pay for its debt, he explained. And, remember, it was in the middle of a financial crisis, with oil and gas companies—the main customers of AG&P—either deciding to close shop or scale down their operations, Consunji said. “It was really a mess. But we bought it; we have to fix it.” DMCI’s problems didn’t stop there. To be continued we must increase the number of operating mines, which necessarily means we need to issue more permits, which means approving new mining projects. This means lifting the moratorium on new mining projects,” Recidoro said. The moratorium on new mining projects took effect in 2012 upon the signing of Executive Order (EO) 79 by then-President Benigno S. Aquino III. EO 79 calls for a periodic review of the performance of mining operations and a review to put in place a new mining fiscal regime to increase government share in mining revenue. This, even as Recidoro argued that the mining industry is already contributing double digits in the regional GDP where mining is operating. “If you look at Mimaropa and Caraga, the contribution of mining to regional GDP is between 20 percent to 25 percent. If you want to increase the percentage share of mining in other regions, then you have to increase the number of operating mines,” he said. “If we can get Tampakan Project to go online, that will be a big boost to national GDP; King-King Project, Silangan Project,” Recidoro added. These big-ticket projects have been stalled because of the inconsistent and often erratic mining-policy changes imposed by the government. Asked if COMP is willing to sit down with the government to seriously talk about an acceptable fiscal regime that will ensure mining’s increased percentage share in the GDP, Recidoro said the big players in the mining industry are very willing to talk with the government and other stakeholders to come up with a competitive fiscal regime for the industry. “We’ve always offered to help in determining what a competitive tax is,” he said. Finance Undersecretary Bayani H. Agabin said the multistakeholder Mining Industry Coordinating Council, which is cochaired by Finance Secretary Carlos G. Dominguez III and Cimatu, is set to undertake the review of the fiscal regime. The MICC, he added, is looking at the opportunity in conducting the review to be part of one of the taxreform packages. Currently, there is also a pending bill in Congress that seeks to compel mining firms to give the government 10 percent of their gross revenues, or a 55-percent share in their adjusted annual mining revenue.

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Anticorruption, data privacy, cybersecurity: why certification matters Continued from A1

The certification looks at different requirements, and provides guidance on a range of topics relevant to antibribery, data privacy and cybersecurity compliance, such as financial and nonfinancial controls, internal audits and risk assessments. It also covers personnel, leadership and commitment, and the responsibilities of the governing body, top management and the compliance function. It also provides a definition of public officials, controlled organizations and business associates, and provides guidance on due diligence and investigating and dealing with bribery cases, data-privacy breaches and cybercrime. In terms of your compliance program, it sets forth requirements for employee awareness and training, having well-designed policies covering the three areas and having reasonable and proportionate control measures in place. Let me add, that I am not referring to one certification for all three areas; I am talking about certification for each risk area.

Reasonable and proportionate requirements You can think of certification standards as including elements that fall under “shall,” “must,” “should” and “may.”That’s because the requirements have different thresholds depending on the size and complexity of your organization. If your organization is large and complex, for example, you’d have need of more in-depth audits, controls and so on. The key is making sure the requirements are reasonable and proportionate. An important related concept is the relevance of the requirements. Let’s take antibribery training, for example. The training and the message should be relevant to the targeted group and provided at the appropriate frequency. If you’re a very large company with employees based overseas, your training should be tailored for specific groups based on their location and other variables.

The necessity of documentation The certification standards emphasize

Infra gap. . .

Continued from A12

“We have always emphasized that there has to be a systematic way for us to decide when it should be hybrid or when it should be an integrated PPP model,” he said. President Duterte’s economic managers have long advocated the use of hybrid financing to implement infrastructure deals. Hybrid deals, in a nutshell, are infrastructure projects that are funded under official development assistance (ODA) packages or through taxpayers’ money, with the intention of bidding out the operations and maintenance component to the private sector. “One of the key changes in the program is us exploring new financing modes for infrastructure projects. It’s something that our different departments are looking into in trying to explore which ones are more advantageous,” Velasco said. Today, the PPP Center is focusing on development of deals in the local-government level, as opposed to its former push for national infrastructure during the Aquino administration. “We are in a very enormous infrastructure need in the country,” said James Abbott, partner at global law firm Allen and Overy. “The challenge in addressing this is which type of mode carries less risks.” He added it is best to implement projects that are bankable through the PPP Program. These deals, he noted, should be intergenerational in nature and should be commercially viable to the private sector. Infrastructure projects, Abott said, are best implemented under the hybrid mode, if they carry larger risks, including legal and commercial tussles. “The challenge is, there are some weaknesses or strengths in the PPP model that ODA

the need to document your compliance activities, from implementing a program to ongoing monitoring to ensure your program is effective. For example, if your company’s bribery risk has changed because your company has ventured into a new market, for example, you’ll have to reevaluate your risk and document that reevaluation. These documentation requirements should also be proportionate to your company’s size and complexity. Documentation provides some protection in the event of misconduct or a breach of laws. It’s no defense for management to claim ignorance (or “willful blindness”) about a violation. You need to have procedures in place that show you have actively sought to guard against misconduct taking place. Here are three tips for effective documentation: 
■ Create and update documentation on all activities: This may be done manually or through an automated system. 
■ Maintain version control: This helps ensure you always have the latest version of documents readily available and that the right personnel has access to the documents. 
■ Control access rights: Define who has the rights to access specific compliance documents, such as internal investigation files.
 The certification standards are global standards that any company can use to benchmark its compliance program. Key concepts with this standard are keeping requirements reasonable and proportionate, as well as the importance of documentation. When it all hits the fan, your documentation is your best defense; it also helps you evaluate your compliance program and maintain an ongoing assessment of risks. More important, with certifications in place, your business partners are keen and more relaxed to do business with you. You will be ahead of the curve and will have outsmarted your competitors. Of course, you can also sleep better. Comments are welcome; e-mail me under Schumacher@integrityinitiative.com.

can’t do, and vice versa,” he said. Abott also lauded the Philippines for having the “most advanced PPP framework in Southeast Asia”, something that the previous government has worked on to achieve. He said this is a trait that the Duterte administration should capitalize on, as there are many foreign investors looking for infrastructure deals in the Asean. “There is quite a strong appetite in investment in infrastructure in Southeast Asia, provided the regulatory framework,” Abott added. For Burrell, who has experienced the effects of limited infrastructure in Metro Manila, what matters is to develop infrastructure in all possible ways and means, at a rate that is faster than the current. “Deciding which mode is better used for infrastructure development— whether PPP or hybrid—should be weighed as opposed to the speed of implementation,” she said. The Duterte administration is currently implementing its “Build, Build, Build” (BBB) program, which is touted as the government’s “most ambitious infrastructure plan.” It lists 70 priority infrastructure projects that are seen to solve the infrastructure crisis that the Philippines faces today. The new infrastructure thrust was born out of Duterte’s policy on increased infrastructure spending, an avenue wherein the previous administration failed miserably, with underspending plaguing government agencies tasked to develop crucial infrastructure, such as roads, rails and ports. The majority of the projects under the newly minted BBB program—roughly 39 of 70 deals—were contracts either signed, implemented and started during the administration of former President Benigno S. Aquino III, according to estimates made by the BusinessMirror.

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BusinessMirror Special Feature

Tuesday, November 28, 2017 A3

Economy

A4 Tuesday, November 28, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

Local business still not ready to embrace IB concept–survey

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ilipino businesses have been found to have a low level of awareness and engagement with the poor, notably in their operations, a joint survey by the Board of Investments (BOI) and the United Nations Development Programme (UNDP) showed. In the “Business+” study developed by the UNDP and implemented by the BOI involving the country’s top business associations, the survey found that the concept of inclusive business (IB) remains an “unfamiliar” phrase to local traders. “Inclusive business is still an unfamiliar concept to most companies, and the enabling environment for IB is still [has] to be improved. This is where the study becomes relevant. Through the conducted baseline survey, enhanced by in-depth interviews, it was revealed that Philippine companies had low level of awareness on IB, with a mean score of 1.51 out of 7, meaning ‘not aware at all,” BOI Assistant Secretary for Investment Promotion Assistant Secretary Felicitas Agoncillo-Reyes said. The study said a quantitative tool of the UNDP seeks to gauge the inclusivity of the poor in the private sector in different countries to guide development thrusts to a more inclusive economy. The lack of awareness of what IB is led companies to shroud the concept in other terms, such as philanthropy or corporate social responsibility, instead of development concept, with implementation rules and principles. In terms of actual engagement, the survey measured inclusiveness through a seven-point scale that describe to what extent the poor, or those living below the poverty line or earning less than P 9,140 for a family of five, are integrated into a company’s core operations. These “entry points” into the company’s operations, for example, include: being an employee, consumer/customer, supplier, distribution channel member, entrepreneur or local community. On this scale, the levels are modest as well; the highest mean score collectively notched by respondents on indicators of inclusiveness (employing the poor as the indicator) is 4.4.

Companies had the lowest mean score on the inclusiveness indicator measuring to what extent are the poor targeted as customers, with a mean rating of 3.35. “The entry points that would have contributed greatly to sustainable human and economic development—such as doing business with the poor as suppliers, entrepreneurs, or distribution-channel members—had relatively lower scores,” the report read. By type of business, unsurprisingly, social enterprises had the highest level of engagement, with the poor with a score above 5. This was followed by large national companies, and small and medium enterprises. The least engaged with members of the base of the pyramid are multinational corporations. On the bright side, companies do see the value of IB models, when asked to evaluate the effectiveness of the IB model in creating market value and social impact. The BOI, in its latest Investments Priorities Plan (IPP), had already incorporated IB as an area eligible for incentives. However since the concept is new, there has yet to be registrants to the plan as an IB. “BOI has been doing the roadshow of the new IPP, featuring Inclusive Business. Now, we’re doing special road shows on how to become an IB. It’s something new in the IPP,” Agoncillo-Reyes said. Moreover, Agoncillo-Reyes said many companies may be doing what they perceive to be IB­—that is engaging the poor in their own way—but have not met BOI’s criteria to become a full-fledged IB. The IB area in the IPP has already attracted considerable interest from a few big companies, Agoncillo-Reyes said, but declined to name them. There are no registrants yet. To avail themselves of the incentives in the IPP, companies have to disclose their IB plan for the next four years, which should include the generated employment, the percentage of materials are sourced locally, and at least an increase in income of the poor of 20 percent.

BusinessMirror

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Study urges stronger measures to ensure women’s role in governance, workplace

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By Elijah Felice E. Rosales

@alyasjah

he government should adopt measures that will ensure higher level of women participation in governance and in the workplace, the state think tank Philippine Institute of Development Studies (PIDS) said.

A PIDS policy note authored by Clarissa G. David, Jose Ramon G. Albert and Jana Flor V. Vizmanos, said the share of positions held by women in Congress has increased. In the Senate, the number of female lawmakers rose from three in 2001 to six in 2016, but none has ever assumed the position of Senate President. However, the case for elected local officials is different and “is particularly alarming,” the study said. Only 11 percent of elected local officials were female in 2013, a “sharp decline” from 20 percent in 2010, 18 percent in 2007 and 17 percent in 2004. The policy note added that only 19 percent of barangay captains and 27 percent of councilors were female. The study argued the gender gap in governance is not due to the voting public’s bias against women, but because “few women are entering politics.”

11% The percentage of female local officials elected into office in 2013, a sharp decline from 20 percent in 2010, 18 percent in 2007 and 17

Citing data from the Commission on Elections, the policy note said women comprised only 17 percent of the national and local candidates from 2004 to 2016. The same proportion assumed office, resulting to at least 1 woman in every 5 national and local elective positions. Aside from this, the study said

Cabinet positions have remained largely dominated by men. Women were more represented in the areas of social welfare (100 percent), tourism (33.3 percent) and health (28.6 percent) than in foreign affairs (6.2 percent), finance (6.7 percent), economics (8.3 percent) and budget and management (15.4 percent). While female secretaries headed the Department of Social Welfare and Development since 1986, no woman has ever taken charge of the departments of Agriculture, Defense, Interior and Local Government and Public Works. On the other hand, women have recorded average share of positions in the workplace, primarily due to few initiatives crafting “specific interventions to eliminate gender discrimination” in industries and changing “hostile work environments for women,” the policy note reported. The study said the past 15 years have seen women’s share in senior and middle management rising to as much as 43 percent. However, female participation in ownership remained “stagnant” at 69 percent, a number almost on a par with Southeast Asian neighbors Indonesia, Lao PDR, Malaysia and Vietnam. Aside from this, the proportion of firms with female top managers dropped to 29.9 in 2015, from 32.7 percent in 2009, the policy note said. The case was same for other Southeast Asian countries, with the exception of Lao PDR and Malaysia. Citing data from the Philippine Stock Exchange, the study said wom-

en occupy 30 percent of the top executive positions, usually as treasurers, corporate secretaries and finance managers, in the country’s 200 highest market-capitalized companies. The policy note recommended the government to intervene in both the public and private sectors to improve women representation, to implement measures that would encourage and allow female professionals to hold positions in the government and in the workplace, one of which is to shatter political dynasties, the study said. Dynasties make it difficult for women to enter politics without dynastic connections, the study added. “If federalism were to push through, it is likely that current power dynamics will continue, if not become less inclusive, unless political reforms are initiated before federalism takes root,” the policy note said. The study also said the government should review its current regulations on industries to ensure a more inclusive and gender-balanced participation and leadership. This includes demanding private companies to “examine their own existing policies to ensure equity in hiring, retention and promotion that will clear the path for women, especially working mothers.” “These conversations can be strongly promoted by national government agencies…especially those that have mandates over ensuring inclusivity and gender equality in labor and employment,” the policy note concluded.

DA official highlights PHL’s biotechnology advancement

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iotechnology has allowed Filipino scientists to hasten the development of new crop varieties, cutting breeding processes by at least five years, according to the Department of Agriculture (DA). “Biotechnology helps improve rice like it does

to soy sauce, bread and beer. Through biotechnology, varieties are developed [from] five to seven years. In conventional breeding, it takes 10 years to 12 years,” said Roel R. Suralta, head of DACrop Biotechnology Center, in news statement issued on Monday. The Philippine Rice Research Institute (PhilRice), an attached agency of DA, said it has developed 14 climate change-ready varieties through biotechnology, with some of these being resistant or resilient to drought, flas flood and salinity. Varieties include Tubigan 7 (NSIC Rc142), the country’s first product of marker-aided selection; Tubigan 3 (NSIC Rc130), PhilRice’s first variety developed through anther culture; and Submarino 1 (NSIC Rc194), which

can survive after submergence in floodwater for two weeks. Suralta said farmers could gain more income as biotechnology-developed rice varieties are 35 percent more productive than high-yielding varieties in the market. “Promoting these varieties is one of the things that we can do to help the farmers,” he said. “Cleaner and greener environment is also expected through varieties that have high resistance to diseases and harmful insects.” PhilRice noted there is a need to produce climate change-ready varieties, as the Philippines is among the top 10 most vulnerable countries to climate change. “The Global Climate Risk Index for 1996 to 2015 showed that the country suffered $2761-million loss from the 11,000 extreme weather events during the period,” it said. Jasper Emmanuel Y. Arcalas

Senate votes to cut power-project red tape By Butch Fernandez

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he Senate, in a plenary vote, passed on third and final reading on Monday a bill seeking to lower consumers’ electric bills, even as its proponents say the proposed law also aims to it boost “a robust energy sector.” Its principal author, Sen. Sherwin T. Gatchalian, said the Senate Bill (SB) 1439, is “an anti-red tape measure poised to drive down electricity costs and provide significant savings to power consumers by modernizing and streamlining the permitting process behind the construction of power plants.” To be known as the Energy Virtual One Stop Shop (Evoss) Act of 2017, Gatchalian said SB 1439, once enacted into law, is expected to significantly reduce the length of the permitting procedure behind energy-generation projects by establishing an online platform where prospective developers can apply, monitor and receive all the needed permits and applications, submit all documentary requirements and even pay for charges and fees. Gatchalian added that in order to further speed up the process, all government agencies involved will be required to follow a strict timeframe to act on pending applications. “The failure of an agency to act within the prescribed timeframe will result in the automatic approval of said application and potential administrative sanctions against inefficient public officers to penalize the delay,” the senator said.

He added the streamlined procedure embodied by the Evoss Act will “boost competition in the energy sector and drive down power-generation costs, ultimately resulting in consumer savings on the monthly electricity bills.” “In essence, cutting the red tape tying down power-plant projects is a win-win solution for everyone,” Gatchalian said. Sitting as chairman of the Senate Energy Committee, Gatchalian expects the faster, simplified permitting process would allow foreign investors with the capacity to build cutting-edge power plants to enter the market and stimulate competition in the Philippine energy-generation industry. “The increased competition would then drive down generation costs.” He projects that reduced generation costs could result in reduction of consumer electricity prices by as much as P1 per kilowatt-hour (kWh). “Pegged at the average household consumption rate of 200 kWh per month, this would result in savings of P2,400 per household every year,” the senator said. Under the proposed law, he added, the Department of Energy (DOE) will be responsible for the maintenance and modernization of the information technology and infrastructure system for the smooth operationalization of the Evoss. According to Gatchalian, “the passage of this landmark energy legislation is a crucial step toward ensuring that the country’s energy sector will promote the welfare of household energy consumers. This is the beginning of the end for exorbitant power rates in the Philippines.”

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Traders: Delay of billions in tax refunds slows India exports

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ndia’s exporters are a worried lot. Four months after India’s biggest tax overhaul, traders are still waiting for 500 billion rupees ($7.7 billion) they say the government owes them in refunds, leaving them short of operating capital as overseas sales suffer. “It’s an alarming situation,” said A. Sakthivel, regional chairman of the Federation of Indian Exporters Organisation in southern India. “Our working capital is stuck, we’re losing revenues and now we’re having to let workers go.” More than 10,000 workers have lost their jobs in the Tirupur export hub that employs half a million in the state of Tamil Nadu, according to Sakthivel. India’s exports dipped for the first time in 15 months this October, falling 1.1 percent to $23.1 billion, even as the government tinkered with ways to simplify the hurriedly implemented nationwide goods and services tax (GST). While last month’s trade deficit widened the most in three years to $14 billion, exports are expected to fall further in November if prices of crude oil, India’s biggest import, continue to climb, traders say. The decline in exports combined with the slowing of India’s $2.3-trillion economy contrasts with the accelerating global economy. With elections due in key states over the next few months, including Prime Minister Narendra Modi’s home state of Gujarat— India’s second-most industrialized state with annual exports worth $60 billion—his government faces the twin challenges of restoring business and saving informalsector jobs. Nitin D. Wakankar, a spokesman in the commerce ministry, didn’t respond to calls seeking comment. Small, unorganized businesses—especially in traditionally dominant textiles and jewelry sectors—have witnessed the worst supply-chain disruptions since July, exporters say. Two-thirds of India’s exports basket compr ises trad itiona l product groups, including gems and jewelry, pharmaceuticals, textiles, engineering goods, food and fuel. In spite of extended deadlines for tax filing and largescale reviews that eased rates for merchant exporters, the f low of cash refunds remains slow, according to traders. Although exports are likely to stabilize after the GST-driven distortions subside, the traditional product mix will hinder the country’s ability to participate in the ongoing trade upturn, according to Radhika Rao, Singapore-based economist at DBS Bank. “Idiosyncratic drags from GSTrelated uncertainty and the effect of duty drawback” have added to trade headwinds, Rao wrote in a report on November 22. The government’s efforts to address exporters’ concerns will begin to show results shortly, according to Ajay Sahai, director general of the Federation of Indian Export Organisations. But in the meantime, many of the smaller exporters had to stop accepting fresh orders for lack of funds after paying taxes, he said. The liquidity crunch has worsened with banks unwilling to lend exporters for GST payouts while they wait for refunds. Having to borrow more was further hurting profitability, said Ganesh Kumar Gupta, Mumbai-based chairman of Akaash Textiles Pvt. Ltd. and Vijay Silk House Group. “GST will help the whole nation but the system is just not working,” Gupta said. “We’d rather the government kept exporters out of the GST completely.” Bloomberg News

Editor: Lyn Resurreccion • Tuesday, November 28, 2017 A5

Early China indicators signal that economy cooled in Nov

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onfidence among China’s sales managers and steel producers waned in November, matching the mood among international investors, while sentiment among small businesses improved, according to the earliest available indicators. As the country’s leaders underline a shift to more sustainable economic growth rates, and push through reforms to cut pollution and curb financial risk, the world’s second-largest economy is on a long-term slowdown, even though output in 2017 has exceeded expectations. Economists see GDP expanding 6.8 percent this year before decelerating to 6.4 percent in 2018. The earliest official indicator release for October, manufacturing and nonmanufacturing purchasing managers indexes, is due on Thursday. Here are what the private indicators that give an earlier look into the economy show:

Financial experts

International financial-market experts are less optimistic. A survey by the China Economic Panel—a joint project of the Centre for European Economic Research in Mannheim, Germany, and Fudan University in Shanghai—showed expectations for the next 12 months dropped to 7.6 this month, from 17.3 in October. That’s above the long-term average of 5.4. The

6.8%

The percentage expansion of GDP the economists see this year before decelerating to 6.4 percent in 2018 construction sector scored much worse than in the previous month, according to the statement. In the long term, the construction sector’s slight upward trend will probably remain in place, the panel said.

Sales managers

Sentiment among sales managers eased, according to a survey by London-based World Economics Ltd., as the reading fell to 51.5, the lowest in 13 months. Values above 50 indicate growth. “The Chinese economy continued to grow in November but at a slower rate,” Chief Executive Ed Jones wrote in a statement. “Panelists have explained that their companies have been lowering capital expenditure, inventories of stock, and limiting

UK seeking to take sting out of Brexit with industrial strategy

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usiness Secretary Greg Clark said reviving Britain’s flagging productivity lies at the heart of the industrial strategy he was set to unveil on Monday to help chart the future of Britain’s economy as the country leaves the European Union (EU). While Britain would pursue the strategy “regardless” of Brexit, the plan will take the sting out of the uncertainty sparked by the United Kingdom’s EU departure, Clark said in an interview in London before Monday’s publication of the flagship policy. It was preceded by an announcement that health-care company Merck and Co. and diagnostics provider Qiagen NV will set up new research facilities in Britain. “Until we get a final agreement” on Brexit, “clearly there is going to be some uncertainty,” Clark said. “So it seems to me that it’s especially important to cast ahead to the long term and provide as much clarity as you can about what the fundamentals of our business environment are going to be. That’s what we’re doing in the industrial strategy.” Prime Minister Theresa May has put the strategy at the core of an effort to define her administration beyond Brexit, which threatens to overwhelm the civil service and dominates the legislative calendar. It’s intended to provide an anchor for companies, many of which have already begun enacting contingency plans in case Britain doesn’t strike a trade deal with the EU.

Merck and Qiagen

May is trying to persuade her 27 European Union counterparts to agree in December to advance from exit negotiations to discuss future trade, as well as a two-year implementation period to provide clarity for business. To do so, May needs to demonstrate that she’s made progress in three areas:

citizens’ rights, the border with Ireland and Britain’s exit payment. Survey data from the Confederation of British Industry illustrate the urgency: some 10 percent of companies have started implementing plans for a “nodeal scenario.” By March that’s expected to increase to 60 percent. Two days before becoming prime minister in July 2016, May promised an industrial strategy “to get the whole economy firing.” Clark published a draft plan in January, including proposed “sector deals” between different industries and ministers. To highlight the immediate impact of those deals, Clark’s department said in a statement on Monday that MSD, as Merck’s business is known outside the United States and Canada, will establish a new life-sciences research facility in the UK supporting 950 new jobs. For its part, Qiagen plans to develop a genomics campus in Manchester, creating as many as 800 jobs. The Financial Times valued the two investments at a combined £1 billion ($1.33 billion). Clark said other investments will follow in the £64-billion life-sciences industry, one of four to strike a sector deal.

Immediate impact

“This shows adopting a long-term strategy can have an immediate effect,” Clark said. “There is a pipeline of investments that are going to be made over the weeks ahead by companies big and small in life sciences. These investments are because of the strategic commitment that we’ve made to the sector.” The plan is Britain’s first explicit industrial strategy since Margaret Thatcher was prime minister in the 1980s. With it, May hopes Britain will seize the leadership in industries of the future, including robotics, clean energy and transportation. Bloomberg News

their exposure to underperforming accounts to increase their capacity against possible coming risks and future challenges.”

Steel mills

The S&P Global Platts China Steel Sentiment Index edged down to 31.93 this month, from 33.61 in October. The gauge is based on a survey between 75 and 90 China-based market participants, including traders and steel mills. “China’s steel market is still coming to terms with the likely impact of winter production cuts on demand and prices,” Paul Bartholomew, a senior managing editor at S&P in

Melbourne, wrote in a report. “As well as lower output, construction activity will also slow for environmental reasons, so both supply and demand will be affected.”

Smaller businesses

Standard Chartered Plc.’s Small and Medium Enterprise Confidence Index picked up to 56.1 this month, from 55.2 in October, the bank’s survey of more than 500 companies shows. “Current performance of sales and production stays resilient, while the outlook for both eases,” Standard Chartered economists Shen Lan and Ding Shuang wrote

in the report. The central bank’s targeted reserve-requirement ratio cut, which is to be implemented in 2018, will prompt banks to increase credit allocation to the smaller firms, the economists wrote.

Satellite view

M a nufactur ing was little changed from last month, according to the China Satellite Manufacturing Index, which remained unchanged at 51.08. The gauge published by San Francisco-based SpaceKnow Inc. tracks commercial satellite imagery to gauge activity levels across thousands of industrial sites. Bloomberg News

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Tuesday, November 28, 2017

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Bali airport shut; sets for major volcanic eruption

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ount Agung volcano on the Indonesian island of Bali erupted, prompting authorities to evacuate some 100,000 people and shut the airport in one of the most popular tourist destinations in Asia.

T he gover nment has been relocating people from around Mount Agung’s crater as volcanologists warned of an imminent larger eruption. The volcano expelled ash clouds as high as 4,000 meters above the crater and residents as far as 12 kilometers (km) away reported low explosive noises and flares, Sutopo Purwo Nugroho, a spokesman for the National Disaster Mitigation Agency, said in a statement on Monday. From Qantas Airways Ltd. to Malaysia Airlines, carriers canceled flights as Bali’s international airport remains closed until 7 a.m. local time on Tuesday. Volcanic er uption and ash spreading across skies is dangerous for aircraft to fly through. In 2010, when Eyjafjallajokull volcano in Iceland erupted, carriers were forced to cancel more than 100,000 flights with about $1.7 billion in lost revenue. “The big concern would be if this situation prolongs as we get into

the year-end peak season,” said K. Ajith, an analyst at UOB Kay Hian Pte. in Singapore. “For now, airlines can redeploy some of their capacity to other destinations like to Thailand.” PT Garuda Indonesia, the national flag carrier, along with regional airlines scrapped flights to the island’s Ngurah Rai International Airport. The airlines have been monitoring the volcano since tremors increased in lateSeptember, prompting the disaster agency to raise its alert to the highest level. The Bali airport handles about 2,600 international flights a week, according to Capa Centre for Aviation. Countries, including Singapore and Canada, issued travel advisories for Bali. A prolonged eruption would risk disrupting an International Monetary Fund-World Bank Group meeting set to be held on the island next October. T he Indonesian archipelago is lined with volcanoes, and eruptions have often disrupted

briefs

Unicef: Vaccines cargo flown to war-torn Yemen

A man sits at a temple with the Mount Agung volcano erupting in the background in Karangasem, Indonesia, on Monday. Indonesia authorities raised the alert for the rumbling volcano to highest level on Monday and closed the international airport on tourist island of Bali, stranding thousands of travelers. AP/Firdia Lisnawati

100,000 The number of people who were evacuated

flights. A prolonged closure could pose a significant threat to Bali ’s economy, which relies on

Pope’s dilemma in Myanmar: Whether to say ‘Rohingya’

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OME—Pope Francis received a special plea this month in the Vatican from Cardinal Charles Maung Bo of Myanmar, the overwhelmingly Buddhist nation, where the pope will make his 21st, and perhaps most politically perilous, foreign trip beginning on Monday. Don’t say “Rohingya.” “It is a very contested term, and the military and government and the public would not like him to express it,” Bo said in an interview during which he avoided using the word, referring only to Muslims who are suffering in Rakhine state. He said he had urged the pope to focus on the woes of the Muslim minority in “a way that doesn’t hurt anybody,” and suggested that using the word they call themselves could set back the pursuit of peace. The Rohingya are persecuted and stateless Muslims in western Myanmar who are—according to the United Nations, the United States and much of the global community—the victims of ethnic cleansing, mass murder and systematic rape at the hands of the Myanmar military and extremist monks. Francis has said the word in the past, denouncing the “persecution of our Rohingya brothers,” who he has said were being “tortured and killed, simply because they uphold their Muslim faith.” More than 600,000 Rohingya have fled to neighboring Bangladesh, which the pope will visit after Myanmar, where they live in sprawling refugee camps as they await a repatriation deal between the two countries. The Rohingya are, in short, exactly the sort of persecuted and downtrodden people in the global periphery whose rights Francis has made it his pastoral mission to champion and whose plight he has used his papal platform to elevate. The Myanmar trip would seem to present the pope an opportunity to reassert his status as the world’s

moral compass by condemning the violence against the Rohingya. Many hope he will do just that. But Bo said that Francis had gotten the message. “He understands better now the situation,” Bo said. The situation, as it were, is a political, sectarian and religious minefield that some supporters of Francis worry poses a no-win scenario even for a political operator as deft as he is. The pope “risks either compromising his moral authority or putting in danger the Christians of that country,” Rev. Thomas J. Reese, a commissioner of the US Commission on International Religious Freedom, which listed Myanmar as one of the worst countries in that category, wrote this past week in a column for the Religion News Service. “I have great admiration for the pope and his abilities, but someone should have talked him out of making this trip,” he wrote. Reese argued that the pope’s usual, and admirable, willingness to call out injustice could put the country’s Christian minority in grave danger. About 700,000 Roman Catholics live in Myanmar, representing little more than 1 percent of the total population. There are also Baptist Christians and Hindus, but the vast majority in the country, about 90 percent, follow Theravada Buddhism, and the campaign against the Rohingya is wildly popular. On the other hand, Reese said of the pope: “If he is silent about the persecution of the Rohingya, he loses moral credibility.” The Vatican spokesman, Greg Burke, said in a briefing this past week that Rohingya was “not a prohibited word,” adding that, while the pope takes the advice of Bo seriously, “we’ll see together” whether the pope uses the word. “Let’s just say it’s very interesting diplomatically,” he said. Many Buddhists consider the Rohing ya, who have lived in

Myanmar for generations and were stripped of their citizenship in 1982, trespassers and terrorists. In October Rohingya militants attacked and killed nine border officials, prompting a crackdown that has shocked rights activists the world over for its cruelty. If the pope appears to take sides with the Rohingya, he risks angering extremist monks who have warned the pope to steer clear. “There is no Rohingya ethnic group in our country, but the pope believes they are originally from here. That’s false,” Ashin Wirathu, leader of a hard-line Buddhist movement, Ma Ba Tha, told The News Times in August. The reputational cost of silence on the persecution on the Rohingya is already being paid by Myanmar’s leader, Aung San Suu Kyi, a Nobel Peace Prize laureate. Once the darling of rights activists during her years under house arrest, Suu Kyi was elected in 2015 with the goal of putting Myanmar on the path to stable democracy and settling disputes with the country’s many armed ethnic groups. But the military maintained control of the national security infrastructure, and Suu Kyi appears to have no power, and no voice, to stop the attacks on the Rohingya. Bo, an ally of Suu Kyi’s, has argued that she remains the country’s best hope for democracy and that the pope, who is scheduled to meet her on Tuesday in the capital, Naypyitaw, should show his support in the hopes of giving her more leverage to sway the military. But, according to the Vatican, Bo also suggested that Francis meet Gen. Min Aung Hlaing, commander of Myanmar’s powerful military and the architect of the ethnic cleansing. The meeting on Thursday is intended to make sure the military leader does not feel forgotten, but it also presents the pope’s greatest opportunity to have an impact on the humanitarian situation. New York Times News Service

tourism-driven hotels and restaurants for more than 20 percent of its GDP. The island ’s beaches, surfing, culture and nightlife make it among Asia’s most popular travel destinations, attracting about 3.4 million foreign visitors in January to July this year. Mount Agung last blew up in 1963, throwing debris as high as

10 kilometers in the air, wrecking dozens of villages in a radius of about 7 km and claiming more than 1,000 lives. Mudflows caused by heavy rainfall afterward killed an additional 200 people, and a second eruption three months later killed 200 more. Since then, the volcano has occasionally belched smoke and ash. Bloomberg News

Germany edges closer to new govt as Merkel lays down terms

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urope’s biggest economy edged closer to a new government over the weekend as Chancellor Angela Merkel began haggling with the Social Democrats over the terms of a potential partnership. In a speech to members of her Christian Democratic Union (CDU) in the Baltic Sea resort of Kuehlungsborn last Saturday, Merkel said any coalition partner would have to support a balanced budget and broadly pro-business policies. Reaching out to the Social Democratic Party (SPD), her ally during two of her three terms, the chancellor said “we did a good job. We worked well together.” “There is virtually no doubt that it’ll all end with a majority coalition led by Angela Merkel,” UniCredit Global Chief Economist Erik Nielsen said in a note to investors. “Only exactly when such a government will be in place is still unknown.” Merkel and SPD Head Martin Schulz, her defeated election challenger, are scheduled to meet on Thursday at the invitation of German President Frank-Walter Steinmeier, who is urging party leaders to find a way to avoid new elections. The SPD is 63-year-old Merkel’s last option for a fourth-term majority after talks with the Free Democrats and the Green party broke down on November 19. The SPD caucus leader Andrea Nahles, speaking last Saturday at a convention of the party’s leftleaning youth organization, said Germany’s oldest party shouldn’t prematurely tie itself to an opposition role in difficult times, the German Press Agency reported. But Merkel shouldn’t expect the Social Democrats to become “the stopgap for the failed chancellor,” she said. Maria Luise Dreyer, the Social Democrat prime minister in Rhineland-Palatinate state, told the Trierischer Volksfreund newspaper that Merkel “isn’t in a position to table demands” after her failed efforts to build a coalition with the Free Democrats and the Greens.

Voters’ support

Polls suggest that a weakened Merkel can still count on her

party’s support, even though she’s facing persistent criticism from conservative members, particularly for her open-borders refugee policy. A man in the audience in Kuehlungsborn this weekend stood up to call on Merkel to resign, though he was booed by the crowd of about 200 people. “While members were reported to have started to question Merkel’s leadership after the election, her support has increased again,” UniCredit’s Nielsen said. “There’s no realistic probability of her stepping aside.” As the likelihood of another grand coalition increases, so does support for the parties involved. In an Emnid poll for Bild am Sonntag newspaper, backing for Merkel’s Christian Democrat-led bloc rose 2 percentage points to 33 percent while support for the SPD climbed one point to 22 percent, with 52 percent of respondents in favor of a formal alliance between the two parties and 39 percent opposed. Emnid interviewed 1,225 people on November 20 and 23, no margin of error was given.

Talks need time

As Merkel reaches out to the SPD, even echoing the party’s slogan of a “fair society” in her speech, senior CDU leaders are warning the Social Democrats not to set too high a price on their support. “They shouldn’t overdo it now and make new demands every hour,” Volker Bouffier, the Christian Democrat prime minister in Hesse state told reporters as he headed into a meeting of the party’s leadership in Berlin last Sunday evening. “The Social Democrats have to understand that a party with 20 percent can’t get 100 percent.” The SPD will need some time to decide whether they’re ready to ally with Merkel again, especially after a “roller-coaster ride” this week that began with the party ruling out a rerun of the pact that pushed them to their worst result since World War II, Bouffier said. Bloomberg News

AMMAN, Jordan—The United Nation child agency said last Sunday that it has flown 1.9 million doses of vaccines to war-torn Yemen, its first aid delivery since a Saudi-led coalition fighting Shiite rebels tightened a sea and air blockade earlier this month. Regional United Nations Children’s Fund (Unicef) Director Geert Cappelaere described last Saturday’s shipment as a “very small step” at a time of immense need and warned that it must not be a one-off. The coalition had promised to reopen Yemen’s main airport in the capital of Sanaa and the Red Sea port of Hodeida to humanitarian traffic by late last week. However, two Unicef vessels carrying food, water-purification tables and medicines heading to Hodeida have not yet received clearance to dock, Cappelaere said. AP

Mugabe was relieved after quitting CHISHAWASHA, Zimbabwe—Zimbabwe’s former President Robert Mugabe knew it was “the end of the road” days before he quit, and appeared relieved when he signed his resignation letter after 37 years in power, a Catholic priest who mediated talks leading to his ouster said last Sunday. Fidelis Mukonori, who has known Mugabe for decades, said in an interview with The Associated Press that Mugabe, under immense pressure in his final days as president, wanted a gradual and “smooth” transition of power to Emmerson Mnangagwa, the vice president he had recently fired and who is now Zimbabwe’s new leader. Mugabe had to resort to “Plan B”— an immediate resignation—after Mnangagwa did not return from exile in South Africa at Mugabe’s request, according to Mukonori. AP

Pakistan Islamists rally after clashes with police ISLAMABAD—Pakistani security forces refrained last Sunday from cracking down again on an Islamist sit-in, now in its third week, after violence the previous day killed six people and wounded scores. The Islamist protesters rallied near Islamabad in support of a religious party demanding the resignation of the country’s law minister over an omitted reference to Islam’s Prophet Muhammad in a parliamentary bill, as solidarity protests spread across the country. Encouraged by the countrywide protests in their support, a Tehreeki-Labaik Ya Rasool Allah party leader called for a countrywide general strike on Monday against what he called “atrocities” committed by the police last Saturday. Over 3,000 protesters gathered last Sunday at the Faizabad intersection, the sit-in’s epicenter, which links the capital Islamabad with the garrison city of Rawalpindi. Some, angry over the police’s show of force the previous day, torched a car, three motorcycles and a guard post erected near the rally site last Sunday. No casualties were reported. AP

106 Norwegian reindeer killed by freight trains STAVANGER, Norway—A Norwegian reindeer herder says that freight trains have killed more than 100 of the animals on the tracks in three days. Torstein Appfjell, a distraught reindeer herder in Helgeland county, said last Sunday that the worst incident happened last Saturday when 65 animals were mown down. Appfjell told The Associated Press by telephone it was “totally tragic” and “unprecedented” for so many reindeer to lose their lives in this way. A total of 106 reindeer were killed since last Thursday. Appfjell represents four families in the area with a total of around 2,000 reindeer. He said that in the worst previous 12-month period, 250 animals were killed in train accidents. VG newspaper reports that Bane NOR, which operates the trains, has now reduced speeds in the area. AP

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Editor: Jun B. Vallecera • Tuesday, November 28, 2017

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Pagcor licensing function for sale in draft EO

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he draft executive order (EO) selling the assets of the Philippine Amusement and Gaming Corp. (Pagcor), so the agency becomes a purely regulatory body, has already been submitted to Malacañang for the approval of President Duterte, the Department of Finance (DOF) said.

Finance Secretary Carlos G. Dominguez III said the draft proposal includes the creation of an ad hoc special council distinct from the Privatization Management Office (PMO) that in the past handled the sale of government assets to private entities. “We are working on it. We already submitted a draft EO to the President for privatizing Pagcor,” Dominguez told financial reporters. The privatization council consists of representatives from the Office of the

President, the DOF, the Governance Commission for Government-owned and -controlled corporations (GCG) and the Department of Budget and Management (DBM), among others. Dominguez said the special council is necessary because privatizing the Pagcor involves the sale of the licensing function of the gaming agency. “You know we have the PMO. But the Pagcor is a special case. It licenses that we are privatizing and it’s a little more technical than what the PMO can handle.

So we said we will make a special privatization [council] separate from the PMO,” Dominguez explained. In July the DOF said the privatization process would start in the fourth quarter this year to assess in full the asset holdings of the agency. Pagcor operates at least 46 casinos nationwide. Its gross income as at endSeptember reached P42.379 billion, or an expansion by 11.14 percent, from the P38.130 billion posted in the same period last year. D om i n g ue z a l so s a id a n i n it i a l batch of 17 casinos directly operated by the gaming agency will be privatized first. Most of these are outside Metro Manila. The DOF anticipates completing the sale assessment of the 17 casinos by the end of the year. That process would enable the DOF to choose the best privatization method beneficial to the government. Dominguez said the method of disposition could be through a lease agreement or by joint venture or some other mode. According to Finance Undersecretary Karen G. Singson, it takes time to arrive

at a proper assessment of the assets of Pagcor since different rates apply if casinos are run by a group or consortium. The finance chief added that the push for the sale of Pagcor is being done so the agency can focus on its regulatory functions. Duterte had said privatizing the Pagcor helps generate additional revenues for the government. In a related development, the sale of state properties in the first nine months this year generated a total P554.442 million, the PMO said in a report to Dominguez. Acting PMO Chief Gerard Chan said the entire amount was remitted to the Bureau of the Treasury (BTr), but excluded the authorized retention of funds worth P22.8 million. The remitted amount includes cash div idends and other forms of revenue generated from previously unsold government assets. In September the PMO turned over to the BTr a Land Bank of the Philippines check worth P289.485 million representing proceeds from the asset sale. This was

the biggest remittance from the PMO thus far this year. Chan said these were proceeds from the sale of government shares at the Association of Southeast Asian Nations Finance Corp., as well as special cash dividend from Semirara Mining Corp. The nine-month remittance also included lease proceeds from comprehensive agrarian reform program-covered landholdings, interest income and other asset sales. In the July-to-December period last year, when the President assumed the office, the PMO generated asset sales worth P286.4 million. The PMO would eventually remit a total P897 million last year to the BTr. On December 6, 2000, then-President Joseph E. Estrada issued EO 323 creating the Privatization Council (PrC) and the PMO. The PrC is responsible for formulating policies and general guidelines on privatization issues. The PMO remits proceeds from the disposition of assets of government-owned and -controlled corporations to the BTr on a monthly basis. Rea Cu

GSIS sets aside ₧2.7B $300-million ADB loan to support Philippine financial-sector reforms as Christmas cash gift to pensioners T T he Government Service Insurance System (GSIS) will start releasing more than P2.7 billion in Christmas cash gift to its pensioners in December. A c cord i n g to t he s t at e - o w ne d pension fund, the Christmas cash g if t w i l l be g iven to old age a nd disability pensioners. GSIS pensioners whose 2016 Christmas cash gift was above P10,000 will be granted an amount equivalent to onemonth current pension up to a maximum of P12,600. Those whose 2016 cash gift was P10,000 and below are entitled to receive an amount equivalent to one-month pension but not to exceed P10,000. New retirees from 2013 to 2017, who availed themselves of immediate pension under Republic Act 8291, will receive their cash gift five years after their retirement date. Members who were separated from the service from 2006 to 2017 before reaching 60 years old and who started receiving their regular monthly pension between 2013 and 2017 will be entitled to the benefit five years after

regularly receiving their pension. Meanwhile, active members will receive their corresponding yearly cash benefits starting December 15, according to the GSIS. The pension fund has set aside P225 million as dividends for its members this year. Qualified to receive the cash benefits are GSIS members whose compulsory life-insurance policies have been in force for at least one year as of December 31, 2016. However, GSIS members whose compulsory policies lapsed in 2016 are not qualified to receive the benefit. Policies that were terminated due to death, retirement or separation, as well as those with unpaid consolidated loans or premiums for at least 12 months as of December 31, 2016, are likewise ineligible. The GSIS will automatically credit the benefits of qualified GSIS members to their GSIS eCard or unified multipurpose identification card. The GSIS said crediting of the benefit would be in batches to maintain the orderly withdrawal of proceeds. Rea Cu

he Asian Development Bank ’s (ADB) Board of Directors has approved a $300-million loan and a $500,000 technical-assistance grant to support the government of the Philippines’s efforts to develop the domestic capital market to help finance infrastructure. The package is part of ADB’s comprehensive effort to help the government finance, implement and manage sophisticated public-works projects and strengthen the framework for publicprivate partnerships. The Philippine Development Plan, as embodied in the Duterte administration’s “Build, Build, Build” program, ca l ls for publ ic spend ing on inf rastructure to increase to 7.4 percent of GDP by 2022, from the current level of 5.1 percent. To support this increase, the government will utilize a variety of funding sources, including development financing, the private sector and direct government expenditure. As such, increasing the size, liquidity and efficiency of the domestic capital market has taken on ever increasing importance. Reforms supported by the ADB program seek to ensure increased investor

The big banks still ‘Our monetary policy is independent of the Fed’ like Asian equities By Bianca Cuaresma @BcuaresmaBM

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here is no stampeding the Bangko Sentral ng Pilipinas (BSP) into making an interestrate adjustment of its own no matter rather clear signals from the United States Federal Open market Committee (US Fed) that the cost of credit in the world’s largest market is going to be more expensive over the near horizon. BSP Governor Nestor A. Espenilla Jr. made this very clear at the penultimate rate-setting meeting of the Monetary Board when the decision keeping the rates at which the BSP borrows from or lends to banks were unchanged. Espenilla emphasized the apparent no-change bias of the BSP in the wake of the recent release of the minutes of the latest meeting of the US Fed. “Our monetary policy is independent of the US FED. We’re not obliged to follow since we don’t have fixed exchange rate. Instead, our primary focus is on the inflation outlook relative to our target,” Espenilla told reporters. This is after details of the US Fed’s previous meeting show the United States looking to calibrate its own interest rates before the year ends. Markets have since been looking for

clues as to the timing of the BSP rate hike as analysts and economists believe that a tightening cycle is inevitable and that the monetary authorities should soon implement one. Even the International Monetary Fund, in its latest assessment of the Philippine economy, said that while the current monetary policy stance remains appropriate, the BSP should be ready to adjust the policy rates should inflation continue to rise and loan growth accelerate further. At present, headline inflation stands at 3.2 percent in the first 10 months thus far this year. At the seventh rate-setting meeting this year, the Monetary Board kept the rate on the overnight reverse repurchase window at 3 percent, while also keeping steady the interest rates on overnight lending and the deposit facilities. The banks’ deposit reserve ratios were also left unchanged. BSP officials said they was “no reason” to hike the rates as inflation still averages within target for this year at 3.2 percent. They also see consumer price pressures accelerating but still within range for next year at 3.4 percent. The final rate-setting meeting of the BSP will be on December 14.

A

s the 2018 market-strategy notes roll in from banks’ research teams, one call that stands out prominently is further gains in Asian equities, which have already this month hit record highs. The thinking is that the region’s worldbeating economic growth rates will be sufficient to keep up earnings momentum in a year that’s projected to feature a rollback in monetary stimulus by the world’s main central banks. “We maintain our bullish view into 2018 and expect Asian [and EM] equities to double in the next two years,” Bank of America Merrill Lynch strategists wrote on Monday, in one of the most bullish takes on the year ahead. The gains will be driven by “strong” earnings growth and a “rerating” of investors’ views on appropriate valuations, they wrote. Morgan Stanley, however, is barely in the bullish camp. Asian stocks retreated from Friday’s record after analysts at the bank downgraded Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co., saying their shares had risen too much. Strategists, led by Jonathan Garner, downgraded Japan to equal-weight and South Korea to underweight, while having an overweight stance on China, India and Japan. The regional equity benchmark index fell 0.6 percent on Monday as of 2:54 p.m. in Hong Kong. The MSCI Asia-Pacific Index, up about 28

participation in the government bond market, which can be used to directly fund infrastructure. The program also promotes the reintroduction of repurchase agreements, a tool that boosts interest in government bond markets and strengthens the Bureau of the Treasury’s capacity to manage its debt and investments. In addition, the program continues the government’s efforts to encourage long-term savings both by individuals and through the insurance sector. Finally, the program encourages more diversity in funding sources and the business models that provide that financing. “Given the preferred diversified funding mix, the government’s recent initiatives to improve the capital markets are encouraging and well timed,” said Stephen R. Schuster, principal financial sector specialist at ADB’s Southeast Asia Department.

“A well-functioning government bond market with competitive auctions provides direct financing for infrastructure at lower costs, while also establishing a reliable pricing benchmark for private companies to issue debt to fund their own projects. The government’s decision to open the finance sector to foreign competition will also help attract more market participants with a diversity of business models,” Schuster said. The ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, the ADB is celebrating 50 years of development partnership in the region. It is owned by 67 members, of which 48 come from the region. In 2016 ADB assistance totaled $31.7 billion, including $14 billion in cofinancing.

Case clippings

By Justice S J Ranada Jr.

MARRIAGE ANNULMENT–psychological incapacity Psychological incapacity must be characterized by: a) gravity (grave and serious such that the party would be incapable of carrying out the ordinary duties required in a marriage); b) juridical antecedence (must be rooted in the history of the party antedating the marriage, although the event manifestations may emerge only after the marriage); and c) incurability, it must be incurable, or curable, but beyond the means of the party involved. Lontoc-Cruz v. Cruz 11 Oct. 2017 percent for the year so far, is now headed for its best annual gain since 2009. A number of analysts see outperformance by emerging markets more broadly, with bets on China among popular calls for 2018 even as that country moves to rein in credit growth. Here’s a selection from recent outlooks: n Bank of America Merrill Lynch (Ajay Kapur) Asia and emerging-market equities are expected to double in the next two years; n Earnings of about 20 percent expected next year and total returns could be around 30 percent; n New lending boom in the next few years is quite likely for emerging markets, except China, after previous “famine” in most markets; n Overweight on Japan, South Korea, Taiwan and China; and n Underweight on India, Malaysia and the Philippines UBS Group AG (Geoffrey Dennis) n Emerging markets growth may rise slightly to 4.2 percent in 2018, from 4 percent even as global growth slows; n Strongest rebound in returns seen in staples, information technology, materials and energy sectors, aided by rising commodities prices and lower US dollar; and n Sees accelerated 2018 GDP growth

GR 201988 del Castillo, J in India at 7.4 percent and slower growth in China at 6.4 percent. Credit Suisse Group AG (Michael Strobaek) n Emerging-market equities may continue to outperform developed markets amid strong global growth, stabilizing China and moderate inflation; n Small-cap stocks can play catch up in 2018; n Momentum in emerging-market economies will offset the Fed’s tightening; n India may have better growth in 2018 after policy shocks in previous years; and n South Korea, Taiwan should benefit from the global demand, recovery in consumer as well as corporate expenditure. Morgan Stanley (Jonathan Garner) n 2018 is going to be considerably tougher as market is near “euphoric” sentiment; n Economic growth might be “good,” but central banks tightening, China slowdown, elections in emerging market countries may weigh on equities; n Overweight on China, India, Brazil and cuts Japan to equal-weight and Korea to underweight; and n Cuts semiconductor and hardware stocks to equal-weight and raises energy to overweight. Bloomberg News

A10 Tuesday, November 28, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

www.businessmirror.com.ph

editorial

Homeless no more?

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ourteen senators voted last week to relocate the office of the Philippine Senate to Bonifacio Global City (BGC) in Taguig from its current location in Pasay City.

BGC offered a 20,000-square-meter (sq-m) (2-hectare) property at the price of P90,000 per sq m, or a total of P1.8 billion, according to Senator Panfilo M. Lacson, the chairman of the Senate committee on accounts, who conducted hearings on the proposed relocation of the Senate.

Lacson said the construction of the new Senate building in Taguig could start as early as the third quarter of 2018 and be finished by the third quarter of 2020. Well, it’s about time for the Senate to have its own home. The House of Representatives already owns the Batasan Complex, the 19-hectare Batasan property in Quezon City that has been its headquarters since 1986, since the bicameral legislature was restored after the Edsa People Power movement. Meanwhile, the Senate has remained a tenant. Lacson said the Senate, which has been renting its building from the Government Service Insurance System (GSIS) and its parking lot from the Social Security System (SSS) in Pasay City, has paid rental fees of P2.24 billion in the last 20 years or since its transfer from the Old Congress Building in 1996. He rightly argues that the cost of the Senate’s lease payments alone could have paid for its own building. There have been many efforts to relocate the Senate in the past. There was a proposal for the Senate to construct its own structure inside the sprawling Batasan Pambansa Complex, which was broached prior to the Senate’s transfer to the GSIS Building. The Senate and the House together in one complex would have made the work of the legislature easier owing to the proximity of both Houses of Congress to each other. Nothing came out of the proposal. Once, the Senate was looking to transfer to the Manila Film Center inside the Cultural Center of the Philippines, which is very near its GSIS facility. But the structural integrity of the Film Center was questioned by government engineers who inspected it. The cost of fixing the defects was said to be too substantial. It was also deemed too small for the Senate session hall and offices alone, so another building had to be constructed to accommodate all the space requirements, which again would be expensive. Senate employees were also simply afraid to transfer there, as the Film Center is said to be haunted by the ghosts of workers who were killed during the building’s construction in 1981. There was also a proposal to transfer to the Manila Central Post Office in Lawton, Manila. The post office building could not only accommodate the Senate’s space requirements but it also has the historical and structural aesthetics suited for parliament. But this, too, did not push through, perhaps because the postal building still houses the country’s main mail sorting, distribution and other operations. There have been other sites proposed, including an area inside the University of the Philippines in Quezon City, moving back to the Old Congress property, a vacant lot in Antipolo City and, of course, this BGC property, which majority of the senators have agreed on. “It is about time that we turn this long-standing dream into reality. If we do not take action now, I am afraid that there will only be talks and talks, again and again, about this matter in the future till kingdom come. And I tell you, it will be a never-ending comic cycle,” Lacson said. True. Here’s hoping the senators can make this “17-year-old idea” of finding a permanent home for the 101-year-old Senate of the Philippines a reality. The so-called Upper House of Congress deserves its own home, one that could suitably represent its identity, tradition, stability and authority. Since 2005

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Manny B. Villar

THE Entrepreneur Continued from A1

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have always believed that a new administration must hit the ground running to sustain, and not stall, growth of the economy. That was not what happened after Aquino became president. In 2011 when the economy could no longer rely on the one-time gain from election spending, GDP growth dropped to 3.7 percent. Romulo Virola, then-secretarygeneral of the National Statistical Coordination Board, said the “feeble” performance was not unexpected—except for the first quarter, growth had been below the government’s target of 4.5 percent to 5.5 percent. From 4.9 percent in the first quarter, GDP grew by just 3.4 percent in the second, 3.6 percent in the third and 3.7 percent in the fourth quarter. The Aquino administration was criticized for underspending on infrastructure, which the country direly needs, and which was cited

as a major factor behind the disappointing growth. Infrastructure projects were studied and implemented based on good governance and the Aquino administration’s anti-corruption efforts. In 2016 election-related spending helped the economy grow by 6.9 percent, close to the high end of the government growth target of 6 percent to 7 percent. Unlike the economy’s performance after the 2010 elections, results for 2017 show growth staying within or very close to the government’s target of 6.5 percent to 7.5 percent. GDP grew by a revised 6.4 percent in the first quarter of 2017, 6.7 percent in the second quarter and a higher-than-expected 6.9 percent

in the third quarter. This brought the GDP expansion in the first nine months of the year to 6.7 percent, higher than the low end of the target and just 0.2 percentage points from the full-year performance in 2016. The performance in the first nine months, even without the one-time gain from election spending, affirms the government’s position that the economy’s robust growth is sustainable. President Duterte’s economic team presented this position before investors during their road shows in Japan, China, Singapore and the United States. Socioeconomic Planning Secretary Ernesto M. Pernia, director general of the National Economic and Development Authority (Neda), says the Philippines is expected to remain a top performer in Asia this year and the next, with the International Monetary Fund (IMF) projecting the country’s GDP to grow 6.6 percent and 6.7 percent in 2017 and 2018, respectively. Nevertheless, the government is pursuing a number of policy reforms to ramp up spending and investments in order to accelerate growth further to meet our target of 7-percent to 8-percent growth from 2018 onward. Pernia lists three points that suggest that economic growth under the

Asymmetrical risk/reward management John Mangun

Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos Dennis D. Estopace

Online Editor Social Media Editor

Chairman of the Board & Ombudsman President VP-Finance VP Advertising Sales Advertising Sales Manager Group Circulation Manager

Bucking the trend

OUTSIDE THE BOX

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ou may not be familiar with the phrase “asymmetrical risk/ reward management” but you learned the concept at an early age when Mom or Dad warned you not to get run over by a jeepney when crossing the street. Stock-market investors learn quickly that they must figure out some sort of reward- risk-management system. The first part of the formula is deciding what the chances are of profit and loss. Since you do not buy a stock unless you think it is going to go higher, at the very least the odds are 51 percent to 100 percent the price is going to go up. Therefore, the risk is somewhere between 0 percent and 49 percent. Now comes the profit/loss numbers. This is usually decided one of three ways. First might be relying on Technical Analysis, which says that the price should go to the next

resistance. Using fundamental analysis, we can pick some sort of fair value based on whatever corporate value you might want to use. Then there is the “My Facebook friend said the price is going to...” But all that—from the odds of going higher or lower to the potential profit or loss—assumes a symmetrical risk/reward. But you learned at an early age that crossing the street and either getting to the other side or getting smashed by a bus is never ever the same twice. Winning or losing is forever asymmetrical. In the stock market, the odds of going higher or lower are never the same,

just like the amount of potential profit or loss. We attempt to deny the lack of balance with investing tips like “Let your profits run” and “Keep your losses small.” That is like Mom limiting her advice to “Don’t get run over and if you do, make sure your underpants are clean.” Asymmetrical risk/reward management is based on the “possibility”—it might happen—of making a profit against the “probability”—it will likely happen—of losing. You know exactly that the 6/49 odds is 1 in 13,983,816. You are probably going to lose. But you possibly might win. Further, to make the risk/reward equation more in balance, the lotto payout must be 13,983,816 times the cost of your ticket. The last 6/49 payout was P35,204,519 which means your P20 was a bad bet. How then can a stock-market investor manage risk and reward in a world of asymmetrical possibilities and probabilities and unequal profits and losses? The answer is he cannot. You cannot put the possibility of a stock going up or the probability

Duterte presidency is sustainable, thereby capable of generating more stable and gainful jobs. These are: 1. GDP growth has been on a sharp monotonic uptrend over the last three decades. 2. The economy is undergoing structural transformation. Sources of economic growth have broadened. Growth is increasingly being driven by investments vis-à-vis consumption. On the supply side, the industry sector is increasing contribution to growth. 3. Total factor productivity (TFP) growth of the economy in recent years has been the fastest among Asean-6 countries, at 3.3 percent for the period 2010-2014, based on computations by the Asian Productivity Organization. This means that capital efficiency (incremental capital output ratio, or ICOR) has been improving. The third-quarter results, according to Pernia, show a sustained improvement in government spending in a run-up to the massive infrastructure program—the “Build, Build, Build.” This is expected to ramp up public spending even further. Construction activities and public spending are expected to make headway in line with the government’s aim to spend 5.3 percent of GDP this year for infrastructure and up to 7.4 See “Villar,” A11

of a loss no matter how great your analysis is beyond a “really, really good guess.” It is all arbitrary and the best you can do is reduce those numbers from totally bogus to sort of accurate. “Sort of” does not make you money consistently and under all unforeseen circumstances. With experience you can cross the street by figuring out how to manage the asymmetrical risk/reward. Until you gain enough experience, you stay extremely cautious on not generating any losses, and do not worry how large your profits are as in “I want to cross the street right now!” You learn by practice how to keep losses small even if you do not make any money. But the best way to cross the street is at the crosswalk with a traffic signal, where there is almost no probability of loss and great possibility of profit. In the stock market, that is called “buying with the trend and selling on the turning point.”

E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

Opinion BusinessMirror

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Old oligarch fared worse than others

FDA foes failed to do their job Ernesto M. Hilario

Cecilio T. Arillo

database

Part two

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T the end of the nine-year martial law in January 1981, the oligarchy was no longer as omnipotent as it traditionally was.

Historians Salvador Escalante and J. Augustus Y. de la Paz of the Truth and Justice Foundation said: “Today, the oligarchs have lost effective control of our society. If they continued to pursue legitimate economic undertakings, they do so within the purview of the broader goals of democratization set by the New Society.” According to them, some members of the old oligarchy fared worse than others, and were more resentful of the Marcos administration and of the new elite that had emerged. One attempt, they said, to compose a panoramic picture of the changes in the domains of the rich was made in 1982 by the Jesuit priest Fr. John F. Doherty, based on a study of 453 companies covering the period 1977 to 1979. He wrote: “Not all 81 individuals listed in this study are equally favored by the Marcos-Romualdez administration. This is seen in the fact that, since martial law, certain individuals have expanded their corporate empires at a fantastic rate, while the empires of others have either remained stationary or contracted. We have been able to divide the 81 individuals into three groups. “The first group includes the Marcoses and the Romualdezes themselves, the Martels and Disini [their in-laws], Velayo, Benedicto, Cuenca, Silverio, Abello, Tanseco, Tantoco, Ozaeta and Floirendo. The rise to power of this group seems to be related to their connections to the First Couple. Before martial law, few, if any, of them were well known, and none of them were among the traditional elite. Most accumulated their fortunes under martial law. “The second group, also favored by the administration, comes from the ranks of the premartial law elite. The business interests of this group have also grown significantly since martial law was declared, though they had substantial resources to begin with. This group includes the Sycip-Yuchengco family, the Yulos, Elizaldes, Aboitizes, Alcantaras, J.B. Fernandez, Nubla, Palanca, Concepcion and Siguion-Reyna. “The third group, like the second, is part of the premartial law elite. However, this group is not clearly and strongly identified with the First Family. They are not in the inner circle, so to speak. They have managed to hold their own under martial law, but they have to endure periodic harassments and threats to their business interests. They appear to go along, to keep the semblance of loyalty because, if they do not, they realize they could get the way of the Lopezes, Jacintos and Todas, who lost their empires. This

Villar. . .

continued from A10

percent by 2022. The government is pushing for the enactment of a tax-reform package, the Tax Reform for Acceleration and Inclusion Act, or TRAIN, which will fund about half of the government’s infrastructure programs while providing relief to lower- and middleincome earners. The Neda chief notes that the government’s infrastructure program will open more opportunities for the private sector to expand business activities in construction and operation and maintenance and increase

More pronounced was the line between the old rich and the nouveaux riche. This counted in social circles. The old elite must have looked down in contempt at the less-cultured newcomers, as if wealth was made more legitimately in the good old days of smuggling, tax evasion, land grabbing, graft and corruption, illegal logging and labor exploitation. group would include the Zobel-Ayala family, the Sorianos, Madrigals, Olondrizes, Ortigas, Laurels and the sugar bloc in general. Perhaps this segment of the old elite is too powerful for the Marcos regime to take on directly…” The separation between these groups was not that pronounced. As Doherty himself noted, there were many interlocks among them in the directorates of various companies. Those who were outside the “inner circle” had links, one way or another, to those within. One example: in Filipinas Synthetic Fiber Corp., established in 1968 by Patricio L. Lim, among the directors in 1984 were Jose Yulo Jr. and Carlos Palanca Jr., whom Doherty placed in the “second group.” Their codirectors included Pacifico Marcos and Rolando C. Gapud, who would belong to the “first group.” Several “anti-Marcos” figures were also directors or officers of companies associated with Marcos “cronies.” A prominent example was the late lawyer (later senator) Raul S. Roco, who was a director of industrialist Eduardo “Danding” Cojuangco’s United Coconut Planters Bank. More pronounced was the line between the old rich and the nouveaux riche. This counted in social circles. The old elite must have looked down in contempt at the less-cultured newcomers, as if wealth was made more legitimately in the good old days of smuggling, tax evasion, land grabbing, graft and corruption, illegal logging and labor exploitation. Those among the traditional elite who fared badly during the Marcos years bided their time and sharpened their knives. Interestingly, Doherty excluded from his study one of history’s most enduring business empires, the Roman Catholic Church, which remained tax-exempt throughout and beyond the martial-law period. To be continued To reach the writer, e-mail cecilio.arillo@ gmail.com.

their capital spending. With less than two months before the end of the year, Pernia is optimistic that GDP growth in the fourth quarter will be higher, or at least match the third-quarter performance. The economy usually takes a nosedive after elections, but its performance, so far, indicates that the Philippine economy will buck the trend this year, thanks to Duterte’s economic team, whose members continue to dedicate their efforts toward achieving the President’s goal: Improving the lives of Filipinos. For comments, e-mail mbv.secretariat@gmail. com or visit www.mannyvillar.com.ph.

Tuesday, November 28, 2017 A11

ABOUT TOWN

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hatever happened to the much-vaunted opposition to the recertification of some 51 contraceptive products covered by a Supreme Court (SC) temporary restraining order (TRO)? The Food and Drugs Administration (FDA) recently released the results of its technical reevaluation of the contraceptives that it recertified as safe and nonabortifacient. With the FDA recertification, the TRO was automatically lifted, allowing the Department of Health to purchase and distribute them in health centers nationwide. While this is a welcome development, many think that the groups supposed to stop the FDA from recertifying them have failed to do their job. At the forefront of the pressure on the FDA was the powerful, Churchbacked group Alliance for the Family Philippines Inc. (Alfi), which questioned the safety of some of the contraceptives and alleged that they may actually induce or cause unintended abortion. Alfi got the SC to slap the Reproductive Health (RH) Act with a TRO and stalled its implementation for a good two years. It is clear that the SC was not in a position to rule on whether the contraceptives questioned by Alfi were abortion-inducing. The SC justices chose not to pretend that they had the scientific and technical competence to make a judgment on a matter that belongs to the realm of medicine and pharmacology. So, it was clear even to the SC that the matter that should be resolved is that of the safety of the products in question and the certainty that they would not induce unintended abortion. Many had hoped that Alfi would try and prove its point that the contraceptives it questioned at the SC are abortifacient once the FDA begins the review process. That was not what happened. Based on a revelation made by FDA Director General Nela Charade Puno, the agency gave all parties concerned a window, during which they were made to submit new evidence and

present experts to prove their respective position on the contraceptives in question. Puno disclosed that Alfi had previously said it would present two expert witnesses. However, Alfi broke its promise. The presentation of the supposed “expert witnesses” who could prove that some of the contraceptives in the review list may induce abortion never materialized. According to Puno, all that Alfi did during the review process was to question the legality of the FDA review process and its procedures. We can only speculate on the possible reasons Alfi failed to deliver its “experts.” One, it did not really have credible experts who could challenge the scientists and doctors tasked by the FDA to do the reevaluation. Two, Alfi knew all along that the contraceptives in question are safe and that it merely intended to derail the government’s RH program to kowtow to the wishes of the powerful Catholic Church. The speculations appear to have strong basis. After all, if Alfi had solid proof and authentic experts to challenge the safety of the contraceptives in question, the group would have faced the issues head-on. It did not have to resort to pressuring FDA’s Puno and accusing her of “lacking in transparency.” To the credit of Puno and the FDA, the public is convinced of the integrity of the results of its review and recertification. Puno formed two separate groups to conduct the technical reevaluation of the contraceptives. One group was composed of the FDA’s resident scientistresearchers. The other was an independent group of gynecologists and obstetricians certified by their organizations and highly respected by their peers. Puno and the FDA have done a good job. Puno brought the RH

program back on track and battled intense pressure from various quarters that wanted to unduly influence the results of the technical review. Puno’s job was to come up with a credible technical review based on scientific methods and evidence. Alfi’s job was to disprove her findings. That can only be done by tapping experts who are more credible than the groups put together by FDA’s Puno for this task. That is the job that Alfi failed to do. For this, the group cannot pass on the blame to FDA’s Puno.

Anti-poor tax

The latest development in the Senate regarding the bill seeking to impose higher taxes on sugar-sweetened beverages (SSB) is the proposal to slap an average of P5 for every liter of soda, iced tea and ready-to-drink juice. This would translate into the following increases: soda, from P16 to P21 per liter; powdered juice and iced tea, from P9 to P14 per 1-liter sachet; for ready-to-drink juice, from P20 to P25 per liter. Sen. Ralph G. Recto has described the SSB tax as the most controversial provision of the Tax Reform for Acceleration and Inclusion (TRAIN) bill, as it would hurt sari-sari stores and D and E consumers who consume these products the most. “We are going to hit the consumers, especially the poor, who will not benefit from the tax reduction to begin with. We are going to hit them with P280 billion of consumption tax,” Recto said. Aside from the sweet tax, the TRAIN bill will also affect other consumer prices, such as fuel and utilities. The proposed SSB tax, if passed, would be among the highest rates in the world. Consumer prices will drastically increase, beginning January 1, 2018. The inflation rate would no doubt shoot up once the TRAIN bill is passed, exacerbating the already tough daily challenges faced by low-income consumers. Consumers and store owners have urged the Senate to scrap the proposed excise tax on SSBs, which they said will directly hit poor Filipinos. “If the ‘sweet tax’ is passed, prices of our products will definitely increase, and our customers may not be able to afford them. Our sales and income will drop, and many of us may be forced to close our stores,” Philippine Association of Sari-Sari Stores

and Carinderia Owners (Pasco) President Victoria Aguinaldo said. Aguinaldo, whose group represents 1.3 million sari-sari store and carinderia establishments all over the country, said sweet drinks such as soda, iced tea and ready-to-drink juice, account for 30 percent to 40 percent of their total sales. “These are the same products that ordinary consumers can afford to buy, usually in small sachets,” she said. Pasco has already gathered 300,000 signatures from across the country to oppose the SSB tax. The Bantay Konsumer, Kalsada, Kuryente (BK3) supports the campaign of Pasco in opposing the SSB tax, which they said may exacerbate the malnutrition problem in the Philippines. BK3 Convenor Louie Montemar said his group will support any action of Pasco because what is at stake in the issue is the interest of the average consumers. “The bigger problem in the Philippines other than obesity is malnutrition, because many Filipinos do not receive proper nutrition,” said Montemar, a university professor. Data from the 2017 State of Food Security and Nutrition in the World by the Food and Agriculture Organization show that the prevalence of undernutrition among Filipino children is 13.8 percent, exceeding the prevalence of overweight children at 5 percent and the prevalence of obesity among adults at 5.2 percent. “If the government will tax all these sweet beverages, which are among the sources of energy of Filipino consumers, then their prices will increase, and it will hurt the consumers,” he said. Montemar added that, to generate more revenues to support the “Build, Build, Build” infrastructure program, the government should turn its attention to products patronized by the rich and stop the revenue leakage in the Bureau of Customs. “Definitely, the SSB tax is not the answer because it will directly hit the workers who do not earn enough for daily sustenance,” he said. Montemar added the government should shift to the publicprivate-partnership model instead of directly financing large-ticket infrastructure projects with its own budget and foreign loans.

E-mail: ernhil@yahoo.com.

Three problems with Trump’s ‘ultimate’ Middle East peace plan By Ami Ayalon, Gilead Sher & Orni Petruschka Bloomberg View

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ccording to recent reports, President Donald J. Trump is going to unveil a Middle East peace plan early next year. Last month’s unannounced visit to Saudi Arabia by three top White House aides—Jared Kushner, Jason Greenblatt and Dina Powell—to discuss this plan, along with Vice President Mike Pence’s announcement that he will visit Jerusalem, Ramallah and Cairo next month, give the reports credence. As Israelis who have served at the forefront of our country’s security, diplomatic and economic ventures, we want the Trump administration to succeed in this effort. The absence of an Israeli-Palestinian agreement, or at least genuine progress toward one, jeopardizes Israel’s security and its status as the democratic nationstate of the Jewish people. Moreover, a coalition of moderate Arab countries and Israel, which would be the most effective regional vehicle to counter Iran, is simply not possible without advancement on the Israeli-Palestinian track. To make this happen, the White House needs to understand the failures of the past and the counterproductive steps it has taken so far. Three of these stand out. First, Trump’s refusal to declare his administration’s support for a two-state solution—starting with his dismissive comment in February that “I’m looking at two-state and one state, and I like what both parties like”—is counterproductive and needs to be rectified. We Israelis cannot accept a

one-state future. That “solution,” whereby all inhabitants of the land between the Mediterranean Sea and the Jordan River live together in one political entity, can lead only to civil war, as in Syria, or to a Middle Eastern version of South African apartheid. Either outcome will spell the end of Israel as the democratic Jewish homeland and intensify Muslim-Jewish violence, which will metastasize beyond the Israeli-Palestinian arena, becoming another crisis the Trump administration will have to confront. In addition, the majority of Israel’s Knesset and Israelis (and Palestinians) favor a two-state future, even though Washington focuses on the rejectionists in Israeli Prime Minister Netanyahu’s coalition. Second, past attempts to attain an agreement failed primarily because of their nearly exclusive reliance on bilateral negotiations. The goal somehow became just getting the two sides to the negotiating table. Instead, the Trump team must acknowledge that a comprehensive peace agreement is not possible in

the near future, and use an incremental approach: moving the parties toward a reality of two states for two peoples, without shutting the door on negotiations aimed at reaching an accord. This entails pressing Israelis and Palestinians to take constructive steps independently to preserve conditions for a two-state solution and gradually create a two-state reality, arresting the slide toward one state. Israel, for example, should declare it has no sovereignty claims over areas east of the security barrier it built in the West Bank, although it requires a security presence, such as along the Jordan River. And the Palestinians should do more to counter terror and incitement against Israelis and end their campaign for a global boycott of Israel. Third, contrary to Netanyahu’s assertions, settlements pose a major obstacle to progress. Trump should learn from one of his predecessors how to overcome this hurdle: Identify the main settlement blocs adjacent to the 1949 armistice lines (the so-called Green Line) and the Jewish neighborhoods of East Jerusalem, where some 80 percent of the settlers live, and then differentiate these areas from the isolated settlements. President George W. Bush made this distinction in his 2004 letter to Prime Minister Ariel Sharon. Regrettably, the current Israeli government is trying to erase this differentiation. The Trump administration should resist this attempt and make sure that Israel will demarcate

its future borders based on the June 4, 1967, lines, along with territorial swaps, keeping the main settlement blocs under Israel’s sovereignty; halt all settlement construction in areas east of the West Bank security fence; provide full equal rights for all residents within these borders and allow sufficient space for creating a state for the millions of Palestinians outside its borders. This approach will require the eventual relocation of some 100,000 settlers to areas within the future borders. This is not insurmountable, as settlement supporters claim. Rather, a comprehensive survey of settlers commissioned by the nonpartisan organization we founded, Blue White Future, and released in 2014 found that, if compensated, nearly 30 percent of these settlers would voluntarily relocate even without a peace agreement, and many others would follow after one was signed. In addition, the administration’s proposal should allow Israel to keep its military forces in the Palestinian territories until an agreement is reached. And finally, the United States will need to marshal regional support for this plan. As every US president since Richard Nixon has found, this peace process is a difficult undertaking. But Trump and his team must also recognize that the Israeli-Palestinian status quo is untenable. He needs to set his sights on a clear, stated objective—two states for two peoples —and aim to move both sides closer to that reality.

2nd Front Page BusinessMirror

A12 Tuesday, November 28, 2017

Be it via PPP or BBB, PHL needs to bridge infra gap fast–experts

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By Lorenz S. Marasigan

@lorenzmarasigan

IVEN the “chronic infrastructure gap” in the Philippines, the government must look into different modes of funding and project-implementation schemes to improve the speed of the delivery of much-needed infrastructure to Filipinos.

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The number of priority projects listed by the Duterte administration to address the country’s infra lack This was the consensus among panelists at the infrastructurefunding forum of Euromoney Conferences in Bonifacio Global City on Monday. Asian Development Bank Prin-

cipal Investment Offer Alix Burrell said her group believes that there is room for all modes of infrastructure-funding schemes in the Philippines—including the PublicPrivate Partnership (PPP) Program. “The infrastructure gap in the Philippines is really chronic,” she said. “There is room for PPPs to play in the infrastructure-development game.” Burrell added it is a matter of “choosing” the right mode. PPP Center Director Lawrence Velasco agreed, saying the government is now devising ways on how to properly tag infrastructure projects based on risks.

See “Infra gap,” A2

www.businessmirror.com.ph

D.O.T. CONFIDENT BREXIT WILL NOT HURT ARRIVALS FROM UNITED KINGDOM Continued from A1

B777-300 aircraft for its direct service between London and Manila. He also pointed out an ongoing project with STA Travel, which includes the Philippines in its youth travel “gap year” program. There is a joint promotion with Singapore Airlines and Amazon.com that pushes a twinning destination package with Singapore and the Philippines. “This is the biggest tripartite promo,” for travel to the Philippines, he said.

PHL meat. . .

Continued from A1

Data from the BAI showed that the bulk of meat imports during the nine-month period were pork, which accounted for 44.05 percent of the total volume. Pork imports reached 225,004.56 MT, 9.92 percent higher than last year’s record. Poultry-meat imports rose 8.16 percent to 182,517.88 MT, from last year’s 168,750.8 MT, according to data from the BAI. “Imports of leg quarter during the period declined because our local production expanded. However, purchases of MDM grew because of the increasing demand for it,” Cham said. MDM imports during the nine-month period expanded by 11.44 percent to 139,054.429 MT, from 124,778.821 MT recorded in the same period

The DOT also has an ongoing digital marketing campaign with travel-search engine Expedia and Hotel.com, “which generates 40,000 plus travelers a year from the UK and another 28,000 plus from the Nordic region.” A joint TV commercial and digital marketing campaign is, likewise, being undertaken with Secret Escapes, to promote affordable luxury travel programs to the Philippines, he underscored. Secret Escapes is an exclusive members-only travel club, which specializes in luxury holidays.

last year. Imports of MDM abroad accounted for nearly 77 percent of the country’s chicken-meat imports from January to September. Beef imports also posted a double-digit growth, expanding by 11.62 percent to 76,094.678 MT, from last year’s 68,173.319 MT. Cham said the increase in beef imports could be attributed to the expansion of the fast-food sector and the increasing popularity of choice beef cuts served by high-end restaurants. Data from the BAI also showed that purchases of imported buffalo meat and lamb from January to September recorded declines. Buffalo-meat imports slid to 24,833.204 MT, from last year’s 28,879.850 MT, while lamb-meat imports fell by 10.28 percent to 532.353 MT during the period. Duck-meat imports also declined by 17.7 percent to 127.03 MT, from 154.36 MT recorded a year ago.